While NZ is scrapping over the illusion of 50/50 iwi/council ‘control’ of the three waters entities, the real issues of control are flying well below the radar.  With just a week left to submit on the Three Waters Entities Bill, we need to put the co-governance debate to one side and start questioning the corporatisation of our wai, and where that might lead given the pressure on water resources locally and globally. 

Christchurch Water Rally December 2019. Photo credit Ezra Holder

Link to the Bill: https://www.legislation.govt.nz/bill/government/2022/0136/latest/LMS534587.html

At the risk of sounding insensitive, in the context of these reforms co-governance is a gigantic ‘red herring’.  Co-governance is vitally important but right now the debate is a diversion, or at least a distraction. Why?  Firstly, no matter how water is governed it can be done in partnership with iwi.  Secondly, neither iwi nor the council ‘owners’ will have any meaningful control of the Water Entities – not if the Bill is passed as drafted.  

Whether this ‘red herring’ is some PR firm’s clever tactic or not, the point is we have allowed ourselves to be distracted – by our fears or philosophy or a long-fought-for precedent.  What should matter right now, because we all love this country, is that Aotearoa/NZ is facing the corporatisation of its public water assets, and a huge cut to its local democracy.  And that’s not good for any of us – not with conflict over water increasing.

The drafting of the Bill points to corporate control:

  • The council shareholding is not ownership – there are no meaningful or enduring rights or responsibilities attached to it.  The only thing the shareholding does at this point is provide a right to vote on a proposal to sell. However some asset sales can occur despite this right.  We’re not even sure that shares will matter when establishing the 50/50 iwi/’owners’ Regional Representative Group (RRG) (see ss115 and 116)
  • The Entities cannot be ‘bailed’ out by their council ‘owners’, making an eventual share sale more likely (see s116)
  • The Working Group’s big win (removal of the Board between the RRG and the Entity) has been foiled by two words – ‘just cause’. The RRG, representing the territorial owners and iwi, can remove the entity board (via its Appointment Committee) but only for very narrowly defined ‘just cause’.  ‘Just cause’, as defined in the Bill, has nothing to do with the Board’s interpretation of the high level guidance from iwi and the RRG (see s68)
  • There is no ability for the RRG to amend an entity’s Statement of Intent (SOI)
  • The Entities are legislated to be completely independent and can not be directed by the Regional Representative Group or the Government Policy Statement – to do anything (see s115)
  • The Entities are not limited by, nor required to implement, Councils’ Spatial Plans or Future Development Strategies.
  • The entities’ constitutions are legislated to be short on scope and are ultimately controlled by the Minister.  The first constitutions will be written by the Minister and he or she will not have to consult the council ‘owners’ (see ss 94 and 95)
  • There is a lot of consultation ‘window-dressing’ and consensus building, which will consume time and money. It will also frustrate the hell out of us because even if we manage agreement, we can’t ensure the entities will act on recommendations.
  • The entities will be able to enter 35-year joint arrangements with other water and non-water entities to supply infrastructure and services, as long as they retain control of policy and pricing (ss 117 and 118). 
  • Under those joint arrangements they will also be able to sell or transfer assets at the end of an ‘arrangement’ if the Board considers the sale of those assets to be incidental to and consequential on the joint arrangement – whatever that means (see s118(3)(d)(i)and (ii)).  Bus-sized loophole right there.
  • The entities are also empowered to sell assets if they can retain the capacity to exercise their duties functions and powers (s116(2)(ii)).  The ‘owners’ can’t prevent this, nor can the RRG or the appointment board.
  • Conflicted Board members can be authorised to act despite having an interest in a matter.  And this can be done by the Chair acting alone.  Reporting on these permissions is retrospective (ss 107 and 108).
  • Recent interests in the water industry are not considered to be a conflict, so there appears to be plenty of scope for the Entities to be captured by the industry via its ‘experts’ (see s100)

N.B. you can oppose all of this and more by submitting on the Bill. Submissions close 11:59pm on 22 July. Submit here: https://www.parliament.nz/en/pb/sc/make-a-submission/document/53SCFE_SCF_BILL_124081/water-services-entities-bill )

Of course, this is what the Reform was always meant to deliver – not co-governance but a governance model completely free from meaningful community and iwi control and political ‘interference’. The industry’s aim has long been to enable a steady and secure pipeline of works, with sufficient ongoing funding – public or private – to enable growth. And that is what it looks set to get.

It wasn’t iwi leaders that convinced staff from the DIA and Treasury to fly across the world to Scotland in March 2017 – it was Infrastructure New Zealand (INZ). And given current tensions in the Pacific it’s worth mentioning that INZ’s membership includes the the China Construction Bank, Industrial and Commercial Bank of China, Bank of China, and MUFG (a Japanese Megabank). See membership of INZ here: https://infrastructure.org.nz/membership/

That trip led to a report: “Building National Infrastructure Capability – Lessons from Scotland” https://infrastructure.org.nz/wp-content/uploads/2021/08/Infrastructure-New-Zealand-Scotland-Report.pdf. The recommendations include reform of the water sector – specifically, consolidating water supply and wastewater services into a smaller number of large operators. It even recommended investigating the partial or full sell down of Watercare to fund growth.  INZ has also lobbied hard for years to reduce the size of local government, and it has been very effective…

This Bill creates 4 water entities and gives all tangible control of those entities to industry experts and to the companies doing deals with those entities.  The Bill is also part of a huge reform program that diminishes the role of local government and the democratic accountability that comes with it. 

Local government is not perfect but it’s not driven by profit, it works as an integrated system rather than a series of silos (which is critical if we’re to address climate change), and it really does have the community at heart. Corporatisation, on the other hand, is neo-liberal policy driven by aspirations of ‘efficiency’ (in the narrowest sense) and is the halfway house on the road to privatisation and a focus on profits. 

We are, of course, being assured that there are very strong protections against privatisation in the Bill.  In reality they are just words and can be removed by a future government just as easily as this government will override the s130(3) protections that reside in the Local Government Act (see clause 14 of Schedule 1 of the Bill).  All it will take is one Entity nudging its debt ceiling and a bit of scaremongering in the name of public health.  History repeating itself.

So, this is my plea to Iwi leaders and councils, the DIA, and MPs:  get out of your singular-focus silos and forget about your reputations and your small wins for a minute, because retaining control of our water infrastructure, and the large water permits associated with it, is more important than either. It is time to think more holistically…

  • Think about the global and regional context, including water shortages, climate change, and tensions in the Pacific. Think about water security.
  • Think about the impact of this Bill in the context of our trade agreements – what do those agreements prevent us from doing if the entities sell water infrastructure to global corporates?
  • Think about localism and local democracy – what will be the social, financial, economic and cultural, effects of reduced place-making powers, reduced of economies of scope, and reduced local democracy?
  • Think about the potential consequences of corporatising, and eventually privatising, the most basic of needs, which also happens to be a limited resource and a source of growing conflict. Who will decide who gets how much of a finite reticulated supply?

We all still have a chance to stop and redirect this industry-driven reform. Failing that, we still have a chance to push for amendments to the Bill to at least give local communities (as the ‘owners’) adequate control, to prevent asset sales and capture by the industry, and to ensure competition.   The alternative is a future in which the big foreign corporates are calling all the shots.

Clean water and local control – we can have both if we stop arguing over red herrings.

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