The Government will force its Three Waters reforms on local councils after it was first pitched as voluntary, Local Government Minister Nanaia Mahuta has confirmed.
Three Waters is the Government's plan to establish four publicly-owned entities to take responsibility for drinking water, wastewater and stormwater from local councils.
The reforms stem from Havelock North's outbreak of gastroenteritis in 2016 when four people died and 5000 became ill, as well as drought in Auckland and old pipes bursting in Wellington.
The proposals have faced opposition from local councils, including big players like Christchurch and Auckland, over concerns about losing control of their water assets and uneasiness about the new management structure.
But Mahuta isn't backing down, because it's estimated New Zealand needs between $120-$185 billion spent on water infrastructure over the next 30 years to meet standards and provide for future population growth.
"I will be introducing legislation to progress the establishment of the entities. The select committee process will provide an opportunity to get public feedback on the reforms," Mahuta said in an update on Wednesday.
"The case for change is too compelling to ignore. It is clear that without the establishment of these publicly-owned entities we will continue to see a frail network and contaminated water in many communities. To delay will only push the problem on, increase future household costs and put livelihoods at risk."
National MP Christopher Luxon has long speculated that the Government would force councils into line by legislating the reforms.
"National has been on the record for months warning that a forced, legislated approach is inevitable," Luxon, National's local government spokesperson, said last month.
National and ACT have both promised to roll back the reforms if elected in 2023, but Mahuta insists they are necessary.
"It is a bottom line for the Government that the entities remain in public ownership," she said.
"New Zealanders simply cannot afford to follow the status quo facing costs of between $1900 and $9000 over the next 30 years, depending on location. Under reform proposals with four entities those figures significantly reduce to between $800 and $1640, saving each household thousands of dollars.
"Local councils are trying to deal with the upkeep of aging infrastructure, which is literally crumbling in some of our biggest cities. They face the additional strains of growing population, climate change resilience and extreme weather events, as well as competing for a limited number of skilled workers to do the job.
"It would be irresponsible to pour taxpayers' money into propping up a broken system, or let households face unprecedented rises in water costs. Currently 43 of the 67 councils do not have the revenue to cover their water services operating expenditures at the moment, let alone once the infrastructure starts failing."
The Government has spent $3.5 million on an advertising campaign to bring the public on board, but a Curia poll paid for by the Taxpayers' Union found just 19 percent of New Zealanders were in favour of the reforms, while 56 percent were opposed and 24 percent were unsure.
The Government tried to make the reforms easier for councils by announcing a whopping $2.5 billion package in July to ensure they were not only "no worse off", but "better off" from the restructure of water assets.
The package came on top of the $761 million committed to the reforms in 2020, and $296 million announced in Budget 2021 for the costs involved with the establishment and transition of the new water entities.
The four water service entities are scheduled to begin operating in July 2024. It's expected to grow GDP by $14 billion to $23 billion over the next 30 years and create an estimated 6000 to 9000 jobs.
How will it work?
Local councils will by legislation remain the owners of the new water entities. But they will not have many of the rights that owners of assets usually have, such as the right to call the shots.
The influence of local councils will be via regional representative groups of no more than 12 council members and iwi representatives - 50 percent council members and 50 percent iwi.
The regional representative groups will appoint members to the four water entities, who will be chosen for their expertise.
Since the four water entities span multiple regions, the regional representative groups will be made up of councillors and iwi from multiple regions. Therefore, they'll be expected to have "appropriate distribution of representation".
A key part of the reforms is what's called 'balance sheet separation' which essentially means that whilst the water entities will be owned by the councils, they will be financially independent, so the financial position of councils will have no effect on the financial position of the entities, and vice versa.
Work is underway to establish a working group of local government, iwi and water industry experts to work through elements of design. The group will work to look at the governance and accountability arrangements of the entities, and provide an opportunity for public participation.
Cabinet has also tasked the Department of Internal Affairs with establishing a unit to focus on the implementation of the reforms. It will work with local government, iwi, water industry and other stakeholders to "ensure a smooth transition".
