Is National's proposed water reform enough?

I've been critical of the Labour Government's Three Waters' proposals, primarily because of the bizarre excessive centralisation, the opaque accountability and the lack of any serious measures to link the provision of water services to consumers. The co-governance element has little value and is only an inching forward of a ideological agenda to change public sector governance from one monopolised by liberal democratically elected politicians to one shared with appointed tribal elites.  It is the wrong solution to the right problem.  Besides, it was the hard-left, in the Alliance, Greens and the post-Douglas Labour Party that stopped water reform in the 1990s, so why trust them now?

If it were up to me I WOULD take water off of local government, I'd vest it in companies, owned directly by ratepayers, required to make a profit and transition income away from rates, towards user fees (even if it is a flat fee).  The bogeyman of privatisation, so carefully cultivated in the 1990s, and spread through the education system and much of the media is so stultifying that even ACT is quiet on it, but I think water SHOULD be privatised by handing it to property owners.  Inevitably these companies would merge and acquire one another, going from around 60 to around 10 or fewer, but that should be led by the market, not by Cabinet directed by the Department of Internal Affairs (DIA) and its consultants. For all of the best will in the world, the odds they know what the optimum structure of the water industry should be, are remote. 

It's fair to say the two biggest reasons people are opposed to Three Water are co-governance and loss of local control. 

Regardless of the various theories behind what people think co-governance is, the fundamental point is that it introduces Iwi appointments of half of the members of a selection panel, which itself selects the Board members for the four water entities (which have boundaries that appear to look like they suit some Iwi boundaries, rather than the structure for the water industry).  There is a point that there is traditional Mana Whenua governance of waterways, but fresh, waste and stormwater infrastructure is not about that.  It is quite different to have power over the use of waterways that might feed a water treatment/reticulation system, or may receive waste/stormwater, where there is a genuine interest in the use of the resource (and discharge into it) and the infrastructure feeding it. Indeed I think there is LESS accountability under co-governance, as it is easier for Mana Whenua to hold water entities to account if they aren't part of the management of them.

The loss of local control I care relatively little about. Local government has in so many cases demonstrated that it is incapable of taking a long-term view of water infrastructure, and certainly is uninterested in concepts like user-pays, asset management and other ideas that, I suspect for too many local politicians, are either seen as a "neo-liberal free market" conspiracy, or something confusing to rip off ratepayers. 

So National has proposed the following:

Councils (TAs and unitary authorities of course) will need to deliver a plan for how they will transition their water services to a new model that meets water quality and infrastructure investment rules, while being financially sustainable in the long-term.  The Minister of Local Government will approve such entities.

It essentially means that structural reform will be led by local government, not the DIA and Cabinet, and it gives local government flexibility to determine how best to set up institutional arrangements that will be financially sustainable in the long-term.  It seems difficult to see how this can be achieved without being entities that are politically at arms-length, that are guaranteed revenue from either user fees or a proxy for user fees (hypothecated water rates for example, particularly for stormwater services).  Commercial Council Controlled Organisations may be obvious, but it seems likely that Councils will need to cluster together to be viable.  Central Hawke's Bay, Hastings, Napier and Wairoa have talked of this, but I suspect there needs to be a lot more of that, perhaps no more than four such entities in the South Island and eight in the North Island.

Finally, there is provision for the Minister to step in if Councils are slow in providing viable proposals, which seems appropriate, although you might wonder what happens if a Council that wants to merge its services with others that don't want it.  It has potential to get messy, but options can be developed for this.

Supporting the Water Quality Regulator to exclusively target water quality. It will also cover wastewater and stormwater, with a goal to reduce or eliminate contamination of local beaches and waterways.

It isn't unreasonable to have oversight of drinking water quality, but the inclusion of waste and stormwater is odd, as this is a function of regional councils. Should regional councils lose this function?  If not, will the regulator cover others who discharge waste into waterways?  If regional councils are to retain responsibility for waterways and water catchment, then shouldn't they be expected to perform these functions, and if not, why should they have these functions?  It seems overkill.  The Water Quality Regulator should best just focus on water quality, but it also needs to be moderated itself, so it doesn't seek standards that are excessive.  There are also questions about how it will operate in relation to the water entities.

National will establish a new, independent Water Infrastructure Regulator within the Commerce Commission to work alongside the existing Water Quality Regulator (Taumata Arowai). Water services will be regulated under Part 4 of the Commerce Act, alongside other essential infrastructure such as electricity lines.

This is economic regulation and is effectively a way of ensuring oversight of the new water entities not overcharging or over/under spending on water infrastructure.  It is encouraging to treat them like electricity lines companies, although a lot of work is needed to establish the value of the regulatory base of those assets.  It seems odd that it would report to the Minister of Local Government, it would be more appropriate to report to a Minister of Infrastructure (who also looks after energy and communications).  

BUT..

National is terrified of the p. word. 

The public ownership of water is not up for debate. Councils will not be able to propose water service models that involve privatisation. National’s plan is to return water assets to their rightful owners: the local communities who paid for them. We want local, public control and ownership of water assets, and that’s what this plan will deliver.

Even Rob Muldoon once considered selling minority shareholdings in Air New Zealand.  This is a pathetic surrender to left-wing scaremongering.  What is actually wrong if one or more Councils say they want private capital to invest in their water infrastructure, in a corporate model that pays dividends?  This would access new capital, and with an economic regulator there is no risk of any form of "profiteering" that Marxists claim would occur under this?  Have a backbone why wont you?  National did, after all, part privatise electricity generation and retail companies, why be scared, or is it up to ACT to propose allowing this?

Finally, what about user pays vs. rates?

The policy essentially leaves this open, so it could be user fees or could be rates based, but rates would need to be hypothecated. The only issue is that if Councils choose to go the user pays path, should there not be means to regulate Council rates downwards so they don't use it as a chance to maintain rates levels as well as user pays?  Why should only water entities have fees regulated, when Councils should have rates regulated more generally?

Conclusion

The proposal has merits, in fact it IS arguably enough. Just.  It lays the groundwork for water being treated as a utility, a service for consumers, and it is difficult to see how the entities that Councils propose can be viable for borrowing large amounts of capital if they are NOT commercial in some form (even in the form of consumer trusts), and it would seem easier to deliver long-term financial sustainability if there is user pays rather than rates (which are, after all, still Council determined).  However, I can imagine it might be necessary to be heavy-handed in making Councils set up entities that will be able to borrow and manage the enormous infrastructural uplift required. It also seems unlikely that central government can avoid putting significant amounts of taxpayers' money into uplifting the infrastructure deficit, but only on a one-off basis.  I suspect the end point in a few years will be around a dozen water companies. 

The fear of privatisation is pathetic, weak and disappointing, when there should be no reason to not argue for the right of local authorities to choose privatisation if they wish.  I know it's there to fend off the even more pathetic, scaremongering hysteria from the left, which will be amplified by idiotic leftwing journalists, but if you believe in local empowerment (!) then let it include the private sector. After all, most of the country's electricity lines companies and all telecommunications are delivered by the private sector, how is the party of business so terrified of it?

Still is it better than Three Waters? Yes, it is.  It has at least some requirements around performance, and oversight. It gives Councils a short time to get their act together to set up entities that will meet water quality requirements, and infrastructure investment requirements.  It is less centralised, at first, and offers more opportunity for some innovation locally, and ultimately both central government regulators will direct the water entities to deliver.

Sure it isn't what I would do, but it has the potential to get not too far away from what would be a good model for the water sector.  

The horrors of water privatisation are largely imaginary hysterics in the heads of leftwing politicians

What has been the biggest farce of the attempt to entrench an anti-privatisation clause in Three Waters legislation? 

The attempt by the Greens to entrench their policies in Parliament is not necessarily surprising for a party that regards private property, enterprise and individuals with scepticism, but state property, state enterprise and public servants with benign intent.  Eugenie Sage is hardly the sharpest knife in the kitchen from the Green caucus either.

Jacinda Ardern's claim to be ignorant of the proposal is also farcical. On the one hand is seems difficult to believe that one of the country's most centralising governments doesn't have a handle on the detail of policy of one of its most controversial proposals. On the other hand, if she doesn't then why not?

What virtually NO-one in the media has asked (certainly not RNZ), is why the fear of privatising water? 

You see it is precisely because of hysteria about water privatisation that New Zealand's fresh and waste water infrastructure was not substantively reformed (outside Auckland with Watercare Services) in the 1990s, and that hysteria was largely fuelled by the likes of the Greens in the form of the Alliance. The Alliance, along with the then "Water Pressure Group" (led by the completely loopy, and now late, Penny Bright) that painted a picture of doom and gloom from supplying water with user fees, in a commercial structure, that saw Auckland being the beginning and end of water reform.

It is thanks to muddled-headed Marxists like Eugenie Sage that water remained the most unreformed infrastructure sector, leaving it in the idealised world of "local democracy", "local empowerment" and of course largely staying far away from people paying for what they use, but rather taxing everyone so the biggest users of water (typically businesses) get subsidised by the smallest users (typically people living on their own). That's socialism for you.

Yet what does privatisation of water look like?  DIA's own report called "Transforming the system for delivering three waters services - The case for change and summary of proposals - June 2021" has a handy chart depicting the relative performance of ten English water companies, with government owned water companies in Northern Ireland and Scotland, and New Zealand council owned water providers. 

All of the private water companies outperform the others across a range of measures regarding customer service, and the conclusion of the report is:

• New Zealand has a long way to go, to catch up with the performance of more mature systems overseas

• We are at a starting position similar to Scottish Water, before the Scottish reforms. In the last two decades, Scottish Water has been able to close the performance gap and is now among the top-performing water services providers in the United Kingdom.

In other words, not only are private water companies in England performing better than the New Zealand council owned examples, but they have been outperforming Scottish Water - which has been the pin-up case study for the Ardern Government.

So let's be very clear.

Privatisation of water is not something to be scared of, in fact had it happened 30 years ago (not that it was even on the agenda) then there wouldn't be an infrastructure deficit in the billions for water.  Rates would be lower, yes you'd be paying a bill for water, but if it had followed the English model, there would be a water sector regulator capping the rate at which water prices could be increased, and ensuring that the natural monopoly water and sewerage companies had to meet key service standards.

Even the Government's own report acknowledges that it is PRIVATE water companies that perform well.

So what's actually wrong with private companies providing water infrastructure and services?

Why wont any Opposition MPs say there are benefits from letting the private sector take over?

Why do hysterical leftwing lightweights dominate this narrative and why do journalists never challenge it? (I mean it can't be because two of the major broadcasters are state owned can it?)

Three Waters: The wrong solution to the right problem...

I've already written about what the problem is and what is wrong about the Three Waters proposals and what an alternative could be.  So let's be brief here...

There is a major problem with the status quo

The records of territorial authorities in managing fresh, waste and stormwater infrastructure vary wildly, and some are absolutely dire. People have died as a result, and annually thousands get sick.  Anyone who says the status quo is ok is kidding themselves.

Local authority democratic management of the Three Waters is democratic socialism at work notice the Greens are opposed to Three Waters because it challenges their own philosophical point of view.  This is not a model anyone who believes in capitalism, free enterprise, individual rights, user pays and less government should ever support. So National and ACT supporting winding back the reforms is one thing, but it is pure political opportunism to not suggest that there needs to be fundamental reform.

ACT after all was once founded by some of the greatest reformers in New Zealand's history, but that seems to have been forgotten in favour of tinkering which only has merits around the edges.

In the 1970s and 1980s, electricity blackouts were far more common, primarily because the incentives and governance around local authority politically controlled power retailers and distributors, receiving power from a central government politically controlled generator and grid operator, were appalling. Gold plating in some places, underinvestment in others, with undercharging of residential consumers, overcharging of commercial consumers.  That's democratic control of the means of production, distribution and supply, and it's a failure. Chronic underinvestment, lack of innovation, service breakdowns and no serious accountability. 

This is in spite of Labour giving us in 2002 the Power of General Competence for local government in the Local Government Act 2002, which gave local government to pursue any activity to advance the social, economic, environmental and cultural "well-being" of their community. That statist mumbo-jumbo encouraged local government to take the eye off of core infrastructure, and engage in whatever they liked that they thought was good for everyone. It is hardly a surprise that water wasn't that sexy to politicians who were empowered to get involved in any sector they saw fit.

The Clark and Key Government's effectively endorsed the status quo.  The current system is a FAILURE of the philosophy of this government, that political control of infrastructure and funding services through taxation, not user fees, and running services based on bureaucratic and political incentives, not commercial, is preferable to the much-hated model of free enterprise, private investment and capitalism.

You're absolutely deluded if you think there is real accountability in a local authority politicians risking being voted out because the sewers are broken.  After all they are ALL responsible, and ALL pass the buck either to officials or central government for not giving them more of other people's money. By and large, many local politicians are statists more often than not they distrust markets, distrust the private sector and don't like losing control. It is not surprising that in some cases the lack of water infrastructure hold up property development, because far too many local politicians want to allocate infrastructure through central planning funded by taxes, not commercial incentives funded by user fees.

Water should not be subject to political control from either local or central government.

So what about the Iwi involvement in governance?

So why is Minister Mahuta and the Ardern Government looking to turn water on its head, to take it off of local government (in practice) and to share governance with Mana Whenua? Presumably because she sees this as a way of strengthening the application of the Government's philosophy around the constitutional arrangements of the country, by implementing the concept of Te Tiriti partnership in governance of a sector of the economy, even if it doesn't involve any assets owned by Mana Whenua. 

Obviously water in rivers, lakes, harbours and other waterways are deemed a taonga, but these do not define water infrastructure assets. Those assets affect waterways, in particular either drawing from them or discharging into them, but that's a reason why Mana Whenua should absolutely NOT control Three Waters, but have a role in applying their property rights up against water service providers.

There is an obvious role for any entities in the water sector to consult and engage with Mana Whenua regarding the use of public waterways, and discharges into them. Indeed, the idea of Mana Whenua having ownership rights on at least some such waterways that need to be respected by water entities is entirely consistent with private property rights and a free market economy.  However, to blur this by giving them a say in governance of the water entities blurs this, and weakens accountability regarding outcomes over waterways. Although Peter Cresswell is right to consider providing some Mana Whenua control as a form of privatisation, it is a fiction because they can neither sell it, nor hold any financial accountability for failure (nor benefit from success). Mana Whenua are obviously consumers of water infrastructure as most everyone else is (whether as individuals consuming water and waste water services, or property owners protected by stormwater infrastructure). 

There is no more reason to include Mana Whenua in governance here than in other sectors of the economy. Either be transparent about it, set up companies and hand over shares (and let them get dividends and pay tax on that income), or just ensure the consultation and engagement process obligations exist for the new entities.  It is difficult to see what is added by including them in an opaque governance process other than the potential for cronyism, indecision and blurring of interests between consumers, property owners, custodians of waterways and the provision of infrastructure distinct from those waterways. The irony is that this Government has pushed and pressured local authorities to introduce separate ethnically defined Maori wards for local government, but is now seeking to dilute local authority power, and so the scope of influence of those elected to such wards. It would be much more effective to include Mana Whenua participation with the regulator, as this ought to be the key entity monitoring and enforcing performance around drinking water quality and discharges from waste and stormwater. Good public policy avoids conflicts of interest, so it is much better if Mana Whenua do not have a governance role in water assets, but rather a regulatory role as property custodians of waterways.

This appears to be an opportunistic move by Mahuta to appease the Maori caucus and sideswipe Te Pati Maori (or even ingratiate herself with it, if Labour needs Te Pati Maori support after the next election, which is an entirely plausible scenario).  

It's a poor governance model for water and for Maori, as consumers of water services, but also custodians of waterways.

Success depends on getting the right level of investment and in ending taxpayer funding of water infrastructure

Is there a case for reform? Sure there is.  In fact it is palpable.

So reform of water is needed, the current model is broken, and reform ought to take water away from being funded by ratepayers and be funded by consumer, through user pays of some form of another.  Matt Burgess from the NZ Initiative is right that a mix of commercial incentives and user pays are necessary to achieve the purported goals of the reforms.  He further notes in NZ Herald (paywall) how local authorities have used the inability to pay for water infrastructure as a reason to delay or oppose property development, harming housing supply. 

However, Labour politicians have for years been distancing themselves from successful reforms their predecessors implemented in other sectors that have never been seriously revisited, such as in electricity.  The bogeys of unpopular privatisations from the 1990s haunt the 2020s, even though this isn't privatisation, there is great fear there could be privatisation.

However, there are two approaches to this.  One is simpler, just leave it up to local authorities to decide whether or not to own shares (Three Waters "rules out" shares!) in water companies, or to divest themselves of it to use in other sectors.  This has happened with ports, airports and bus companies.

I much prefer issuing shares to both water consumers of fresh and waste water (those who own property or rent properties they live in) and property owners (for stormwater), and let them decide whether the public wants to own water infrastructure.

This is a complete anathema to Labour, the Greens and doesn't even seem to warm the cockles of much of the National Party - genuine PUBLIC ownership by giving the public shares. Shares in companies that charge for the use of their infrastructure, of both private and government landowners (Councils will have to pay for stormwater infrastructure protecting their roads, for example).  

I believe the public would embrace being given shares in these companies. Now they will need to raise capital, but they will be in a much better position to do this with the powers to borrow, powers to directly charge for water infrastructure and to raise capital in markets.

Watercare Services are already partway there, but the 2002 Local Government Act diluted the provisions for Local Authority Trading Enterprises, hindering their ability to borrow against income.  Watercare services could fairly easily be converted into the shareholder model.

We've been here before - with roads - and Labour abandoned reform initiated by National, to take control of local roads off of local authorities.

The case for reform of water has parallels to the case for reform of local roads that the Shipley Government tried to implement up till 1999.  

The Shipley Government had a proposal called Better Transport Better Roads which sought to take local roads off of territorial authorities and placed them into half a dozen or so roads companies.  The difference being that central government was looking to put its own roads (the State Highways) into a roads company too.  The roads companies would be required to deliver high standards of service to road user, and would be fully funded from road user fees (road user charges and fuel tax), but empowered to let road users choose between paying road user taxes or paying them directly.

A major flaw of the proposal was that it wouldn't regulate rates down after removing rates funding of roads, but you can see the parallels with the Three Waters proposal.  The merits were that National saw that councils in many cases didn't adequately fund local roads, and that there was too much diversion of council attention onto politically sexy activities (stadiums, conference centres, art works and sports events), moreover it wanted to move to a model of full user pays - and that roads ran as businesses, with the ability to borrow and directly charge road users, would do that.

Local authorities HATED it, SO DID LABOUR. Labour complained that it was taking away local democratic control and would be a precursor to privatisation.  Of course roads companies weren't going to be sharing governance with Mana Whenua either.

This is a chance for worthwhile reform that engages the public and gets incentives right

But the Ardern Government has been dishonest with local government. It consulted, and didn't like the response it got, so it is doing what it wants anyway. Minister Mahuta claimed on TV that 30 options were looked at, but only a handful are depicted in the consultation documents. 

It is also completely uninterested in letting the allocation of resources and investment be determined by user preferences and market forces.  Water reform in the UK has been extraordinarily successful, with similar issues to New Zealand, through commercialisation and privatisation. It's pure blinkered ideology to ignore that, but Labour need not privatise water to get many of the benefits of a commercial model that applies user pays.

Three Waters reforms as they stand risk creating entities with poor incentives for efficiency, poor incentives for high quality customer service and poor incentives to avoid gold-plating or green-plating investment from funding provided by central government. There will be poor incentives for users to use water more wisely, and without generating a return on capital little indication as to what are the most efficient use of resources across the sector.

However, given the grotesque level of malinvestment being directed into other sectors (see Kiwirail), it's hardly surprising that the Government doesn't really understand the merits of stepping back and letting a sector be professionalised away from political and bureaucratic control of investment.

So what's an alternative to the Three Waters Reform?

I’ve already written critically of the Three Waters reforms in a polemical way.  It's rather curious that Nanaia Mahuta is so committed to these reforms given she has no record in her political career of ever having passionate views about structural reforms of any sectors of the economy.  You wouldn't know what she thinks about energy, transport or communications sectors, so why water? Surely it can't be because of the transfer of some power to Iwi under the new mega-water "entities"? 

Regardless of her motivations, I think the problem definition is largely correct.  The status quo has failed appallingly, and that status quo is combination of leftwing ideology about the "power of general competence" of local government (and it being committed to "economic, social, environmental and cultural wellbeing") and rightwing ideology about supporting localisation of power (although that power still lies with politicians, apparently local politicians that fewer people vote for are more accountable than MPs).  

Yet it is abundantly clear that the options assessed (at least from the public documents) were remarkably narrow minded, apparently only considering:

• Sector-led reform: This would be returning to the philosophy of the “power of general competence” that local government is capable of reforming itself to address the problems listed. This seems unlikely and is in effect a “status quo” option.

• National Three Waters Fund:  This option is frankly bizarre. It is touted as being similar to the National Land Transport Fund (NLTF), yet there are so few useful parallels. The NLTF is funded mostly from user fees on motorised road users, through fuel tax and road user charges.  There are NO centrally collected user fees on water users, and many local authorities don’t even impose user fees at all. Furthermore, the NLTF fully funds the State Highway Network, which is central-government owned and operated, there is no equivalent in water.  This looks like a brain fart from some politician.

• Regulatory reform only: This has its merits, if only because there is poor oversight of what territorial authorities do with water already, but existing governance structures range widely from being promising (Watercare Services) to being very poor. This is unlikely to be enough.  

It might be too much for me to expect a Labour Government to have assessed privatisation, even if it dismissed it on grounds of being contrary to the policies and principles of the Labour Party, but it should have been included to see what the benefits and risks would be.

So assuming privatisation per se would fall on deaf ears, here’s my quick and dirty alternative. Quite simply it is to commercialise and transfer control of water assets to ratepayer or consumer owned companies, those entities would carry the local authority debt associated with those assets. My proposal is:

1. A water sector regulator would be set up, which in association with the Commerce Commission, would oversee the water entities, particularly the transition of the reform, but also ensure that these monopolies don’t abuse their position, and are accountable for the effects of failure on consumers and property owners.  Yes yes, I would MUCH prefer some consumer association that would test water quality and seek transparency in these entities, but that's too much to hope for.  A regulator is likely to be necessary at least for the first five years, particularly to enforce some basic standards of drinking water.

2. All territorial authorities would be required to transfer fresh, waste and stormwater assets into water companies.  This would also include debt associated with those assets (which would have to be agreed with the Commerce Commission, to stop local authorities transferring unreasonable levels of debt to the new entities). These companies would be at arms-length control from territorial authorities, with independent boards prohibited from taking direction from councillors as to specific capital spending decisions. The companies would be required to make a return on capital and pay taxes. This would help avoid both over and underspending on infrastructure and remove politics from decisions around water infrastructure. The companies would be required to provide services to end users and to make a profit. They would be allowed to merge and consolidate as they see fit, and if the efficiencies claimed are real (and some no doubt are), this will become abundantly clear as being the right choice. Those that lag and perform 

3. The water companies would have all shares initially owned by the territorial authorities, but within twelve months shares would be transferred either to ratepayers with property serviced by their networks (with some proportionality by those served to different degrees by the three networks) or to consumers (which in some cases is ratepayers at least for stormwater). These shares would be tradeable, although there could be limits on foreign ownership if desired. However, the companies would essentially by owned directly by the public, rather than by local authorities. It would leave accountability at the lowest possible level, those who have paid for it and who own it. It’s actual people power.  I am ambivalent about whether ratepayers or consumers gain shares, and tend to prefer consumers (i.e. those who will be responsible for water bills) take fresh/waste water shares and ratepayers stormwater shares.

4. Water companies would be required to move towards full user pays and rates would be regulated downward. This will include but may not require water metering. Metering is appropriate for fresh and wastewater, but not stormwater, so the water companies would levy consumers for fresh and wastewater (not necessarily property owners), but property owners for stormwater. The charges would be subject to oversight from the Commerce Commission initially to ensure water companies weren’t seeking to gouge consumers. However, EQUALLY important is that territorial authority rates that have been used to pay for any of the three waters are regulated down. That regulation should not be for a one-off reduction, but the Commerce Commission should be required to authorise any territorial authority rates increases above inflation to ensure that territorial authorities are not using the reduction in rates as an opportunity to increase rates to grow other functions.  The net burden on property owners and consumers in each district (adding rates and water charges) will be taken into account.  

5.    Water companies should borrow to fund upgraded infrastructure and recover this from user fees.  Ultimately consumers should pay and as with electricity lines companies, and airports, the Commerce Commission should have oversight over the financial performance 

Opposition to the Three Waters is well justified, but taking power away from local authorities is a good thing. Yet proposed opaque governance structure, which inexplicably adds the Iwi element, is not a recipe for significant efficiencies going beyond some economies of scale and bargaining power in procurement. The forced amalgamation is unlikely to be the best outcome, because neither the Minister nor DIA officials are likely to know what's best.

So Three Waters reforms should stop, but the need for reform remains.  However, even ACT has taken a very pathetic, limp approach to this issue. 

Three Waters Reform: The left opposed water reform in the 90s, why trust them now?

You might have noticed the childlike cartoons the Government has chosen to communicate to you about one of the most radical infrastructure policy reforms proposed for over twenty years – the Three Waters Reforms. Those cartoons might have put you off, but they shouldn’t. For all of the fluff government is involved in, one of the most important activities it unfortunately is responsible for is the supply of reticulated water and the collection of wastewater and stormwater. Forget Covid19, because if the water systems fail you really ARE in for a public health crisis. Millions of people worldwide don’t have access to clean drinking water and don’t have safe sewage collection and disposal, and it costs lives. This is important, too important to have those who use and pay for it talked down to like primary school children, and too important for you to ignore.  Bear with me, this is complicated...

What’s the problem?

The current system of managing water infrastructure is, in many parts of the country, a failure. Who could miss the regular reports out of Wellington, the capital, which has systematically failed to put enough ratepayers’ money into the water and sewage systems? Stories of drinking water from Hawke’s Bay to Otago being infected or tainted. So the case for reform is overwhelming. The Government’s own papers indicate 40,000 people lived under temporary or permanent “boil water” notices for their reticulated supply in the year 2018-2019. Four people died and over a third of the population in Havelock North became ill because Hastings District Council didn’t effectively manage the town’s water supply. An earlier study indicated 35,000 people get ill annually because of the quality of drinking water.

The Government’s own report estimates there is at least a $120 billion gap in capital spending on water infrastructure. Another stat is it is estimated that 21% of water is lost in reticulation – 1 in 5 litres of water that Councils collect to reticulate to homes and businesses is wasted in the distribution. That is frankly outrageous.  Local authorities are often reminding us all to look after the environment and not to waste water, but their own ineptitude results in enormous waste.  It is notable that there are limited statistics about the state of stormwater infrastructure, because local authorities just don't know. If your home or business has ever flooded due to rainfall, then you might care, because stormwater infrastructure is what helps protect your property.

Why has this happened?

The Government claims the problem is a matter of:

· Lack of economies of scale: 67 local authority entities supply water infrastructure (there are small private operations as well) without the capacity and capability to address issues. Career paths for those in the sector are limited with multiple small entities and small scale capital spending generates insufficient competition in the contracting sector to put price pressure on those costs. It claims water entities need customer bases in the high hundreds of thousands to be viable.  There is definitely merit in this.

· Unaffordability of needed investment: Under the current approach, the money ratepayers would need to be forced to spend to remedy historic underspending is enormous. Government estimates increases of 300-1500% in spending are needed over the next thirty years compared to current levels. This is quite credible, indicating a desperate need for both new capital and for ways to obtain efficiencies to reduce these costs over time.  However, it would be dishonest to pretend that those who use water shouldn't pay for this, albeit over many years. 

· Poor incentives and lack of effective oversight:  This is where the Government lays bear what’s REALLY wrong. It is that the model of “democratic control” of the provision of water services, and the “power of general competence” of local government in overseeing that control is a failure.  It is worth remembering that "democratic control" is a touchstone of leftwing political philosophy.  

To quote from the Government’s own report:

Local authority service providers operate in a political environment, in which investment decisions are made by elected representatives who have a duty to consider broader community interests (for example, other investment priorities and affordability of rates increases) and a constrained financial environment, in which the main funding and financing  mechanisms are via ratepayers and council borrowing. These factors combine to limit the level of three waters investment.

In short, local politicians prefer spending rates money on other stuff and prefer not to raise rates to pay for water infrastructure. It talks of misaligned incentives, which is surely a euphemism for politicians care most about being elected, second most about getting attention for shiny stuff they made ratepayers pay for, third most about other stuff they can get credit for in three years. How many local politicians campaign on fixing the pipes, especially when such work can literally take years to complete, is largely only visible as a disruption and the end result is… continuity of what you had before?

These failures are a legacy of opposition to water reform in the 1990s

Electricity, gas, telecommunications, aviation, ports, road transport, public transport, all were subject to significant reforms in the 1980s or 1990s, but water was largely left alone. With the sole exception of Auckland, with the creation of Watercare Services in 1991, all other water provision was left in the hands of territorial authorities. Water is a legacy of the Muldoon era and beyond, with the exception of some local authorities consolidating and in some cases implementing water metering, not a lot happened.

Some Aucklanders might remember the Water Pressure Group, led by the late, conspiracy theorist, Penny Bright.  One of the cause célèbre of the hard left was opposition to the commercialisation of water in Auckland seen in the creation of Watercare Services, which supplies water and wastewater (not stormwater) services in the city. The New Labour Party, later the Alliance (when it included the Greens) were loudly opposed to what they saw as the bogey of privatisation (which never happened).  As the Alliance was on the ascendancy, after the 1993 General Election, National pursued little in reform of the water sector, and as Labour went back to the left under Helen Clark, the idea of reforming water was parked.  After MMP, there was no majority for any serious reforms in the sector, and from 1999-2008 the Clark Government proceeded, with support from the Alliance and the Greens (who had now left the Alliance) to pass the Local Government Act 2002 to grant local government a "power of general competence".  In short, the left trusted local government to get on with the job. Of course the Key/English Government from 2008 until 2017 did nothing either to reverse it.

The power of general competence and community empowerment have been a failure

The implementation of the power of general competence was to usher in a new era.  Then Local Government Minister Sandra Lee said "It is both a reaffirmation of the place that local government has within our democracy, and of the rights of local people in their communities to exercise controls over their aspirations, their decisions, and the democracy that affects them."   

So communities were "empowered" which of course is code for empowering local politicians. Sandra Lee even made it clear that water privatisation was to be prevented. "We are not going to agree to allow councils to sell what is not a commodity--the access to clean water--but a fundamental human right."  I'm not sure how the people who died in Havelock North had their "fundamental human right" protected, and how asserting that right works if the Council has let the local infrastructure fall into disrepair.  Indeed then Associate Local Government Minister Judith Tizard later claimed credit for having including "cultural wellbeing" in the objectives of local government.  Not much culture if you're sick because the Council supplied water is contaminated.

Backed wholeheartedly by the Greens, the reforms were to usher in a new era of “local democratic accountability” with more powers to deliver what “the community wants”. Indeed, it is the heart of the mantra of the economic left that justice is achieved by more “democratic control” of resources. Well we’ve seen how democratic control of water has been going, and the results are in – it's been a failure.

 What needs to be fixed?

Users, in many cases, don’t pay for what they use. With the cost of water infrastructure for many hidden in rates bill, there are no incentives to manage water use, and those who need water face rationing alongside those who waste the resource. Furthermore, those who benefit from stormwater infrastructure don't necessarily pay rates reflecting the protection of property value they obtain from it (nor do insurance costs reflect that adequately).

Local authorities get paid rates regardless of how much water is used or wasted. So they have poor incentives to stop wasting 21% of the water collected and distributed, to plug leaks so that they can sell the water they collect. 

Local authorities aren't required to spend money on water infrastructure so they may levy water rates, or pay for water from general rates, but they have a "power of general competence" and they are accountable to you every three years at the ballot box.  They spend money how they like, and your power to change that is tiny.

Politicians are no better able to decide how best to spend money on water infrastructure than they are on electricity (which they don’t) or telecommunications (which they don’t) or on farms. Bear in mind local politicians are primarily responsible for housing shortages because they are the controllers of permission to build housing and to allow land to be used for housing. Expect them to make similar quality decisions around provision of essential infrastructure.

Imagine if your local power company spent the money raised from your power bill on a convention centre. The reason that, by and large, electricity and telecommunications infrastructure work is because you pay for its use and the providers spend the money on maintaining and providing the service. It’s capitalism working, because those companies borrow money based on future earnings and invest in the network to continue providing reliable service.

Given that the Ardern Government is the most leftwing government in New Zealand in nearly 40 years, you might think that with reality confronting ideology, they might actually think that this is a failure due to their own philosophy not working empirically. You see if the Douglas/Richardson reforms had NOT progressed, you’d be seeing the same malinvestment in electricity (which was beset with blackouts in the 70s and 80s before reforms), and telecommunications (which famously, before the mobile phone era, saw it take weeks to get a phone line installed).

What is proposed?

It’s curious that the Government has relied somewhat on Scotland as a source of advice for how to implement water, especially when its own report indicated much better performance in England (see above)– which DID famously reform water by privatising the lot in the 1980s. It notes that privatisation of water in England  improved productivity by 2.1% per annum over 24 years (64% all up) after adjusting for quality of service improvements. Achieving a net saving of 64% in cost over such a period has to be tempting.

That is, of course, the right answer.

It isn’t proposing that, because you see, the Ardern Government is in many ways, continuity Alliance,

It is proposing:

· A water regulator to set standards for water quality, with powers to direct water providers to act to meet its directives;

· Consolidating 67 entities into 4;

· The new entities will be owned by local government

· Two boards will govern the new entities. A professional independent board, akin to boards supplying other infrastructure (a semi corporate board) and a regional representative board, which is to be split 50/50 between local government and Iwi.

· The Regional Representative Board will appoint members to the independent selection panel to select the Board, which will then select the board. In effect local authorities and Iwi will indirectly appoint the board.

· Setting of charges must be done transparently, with no changes to how people are charged in “the initial years”. The new entities will have powers to borrow.

· Protections against privatisation, mostly by local government and Iwi having to have a 75% majority in favour of it.

· The entities be statutorily required to uphold “the principles” of Te Tiriti, with the board needing to have competence in Te Tiriti, Tikanga, Matauranga and Te Ao Maori;

· The entities must direct water users funds towards the capacity and capabilities of mana whenua to support delivery of water services

· To throw taxpayers’ money at the entities to lure in local government to agree.

So it is resisting commercialising the delivery of water, preferring to largely aggregate water into entities similar to what governs water in some parts of the country already. They will be, in effect, very large Non-Commercial Council Controlled Organisations with co-governance with Iwi.

What other options were considered?

Well not commercialisation or privatisation.

The report indicates that three other options were considered:

· Local government led reform: This of course would be consistent with the Government’s philosophy, but has no merit because there are few incentives to make it work.

· A National Water Fund, akin to how land transport funding operates. Except there are no fees charged for water use nationally, and it wouldn’t really fix anything other than enable consumers in places which have well managed water systems to subsidise those in areas that don’t.

· Regulatory reform only, in other words introducing a regulator without structural reform. This would not achieve efficiencies and achieve only limited accountability.

So privatisation wasn’t considered, but the Government should be transparent as to why – which is ideology and politics. Why wasn’t commercialisation considered, by creating genuine arms-length council owned water companies, similar to Watercare services? Why not vest those companies in shares held by ratepayers (noting that it is property owners that primarily benefit from stormwater infrastructure, which protects their property from damage) or even just citizens and permanent residents as consumers? After all, the success in England in holding companies to account for quality of service, levels of investment and addressing systemic underinvestment is considerable. Why does the Ardern Government acknowledge that success then steer down another path? It seems like it is purely ideological.

What's good about the proposals?

Large entities will be able to be more professional, achieve significant capacity building and attain economies of scale. There is no doubt that there are far too many local water entities. Having borrowing powers and the ability to levy charges on consumers is also critical, but these powers largely exist now within local government.  Regulatory oversight ought to result in better outcomes than just leaving it to local government and iwi to manage, and more money will ease the pain, but that's transferring a burden from ratepayers and water consumers to general taxpayers, with no sense of the distributional impacts of that.  

What's wrong about the proposals?

The new entities wont be companies, wont be required to make a return on capital or to pay tax, meaning it will be less transparent as to whether they are operating as efficiently as they could be, or maximising the utility of their assets. As a much larger version of the current model, there isn’t so much incentive to treat those who consume water and use wastewater and stormwater services as customers. Having a customer, provider relationship more directly would provide much more input into consumer preferences than by having an advisory board.  What's fundamentally wrong with considering water similar to electricity?

Local government will still own the entities, although this ownership effectively diluted because governance is now shared with iwi, who own none of the infrastructure, nor are accountable to ratepayers.

There are probably too few entities proposed and Watercare Services, which has fewer problems compared to many other water entities, will be required to be decommercialised and merged with Northland water provision, which may mean Aucklanders cross subsidising water infrastructure in Northland. There is no need to dis-establish Watercare Services and no options given as to the number or geography of the proposed entities. Local authorities that are successful ought not to be forced to be subsumed by entities of those that are not, noting that the three waters are NOT an integrated network like energy, telecommunications and roads. There is little need for disjointed networks to be managed together, except to achieve economies of scale and professional capacity for competency.

Governance remains highly political. With local government half responsible for appointing the panel that then selects the board, the incentives are there to offer positions to those they know and trust, in short local authority nepotism. With four entities, headquartered and dominated by Auckland, Hamilton, Wellington and Christchurch, expect the local authorities of those cities to take charge.

The introduction of iwi governance is a vast increase in power for iwi over core infrastructure that has no precedent in other industries, and which assumes that Maori as both consumers or voters is insufficient in protecting and promoting their interests, although it might certainly promote iwi interests. The iwi role will be to share oversight with local government, which already has a growing mandatory iwi co-governance role in any case. Iwi have the same incentives as local government in appointing people to select a board to govern water. The outcomes expected from this are extremely vague such as enabling mana whenua to express kaitiakitanga, but what will this achieve in terms of outcomes such as water quality, quality of investment and accountability? Embedding Te Mana o Te Wai is harmless enough, but this is hardly unique, because Te Mana o Te Wai is universal to humanity. More fundamentally, the Government is effectively proposing a transfer of 50% of the power around the water sector to iwi, with neither the responsibility of ownership, or accountability to consumers or the owners of that infrastructure. It is a significant uplift from current obligations around consultation with Iwi, to hand over an equal share of governance, with no indication of outcomes or what it means for other sectors such as electricity, gas or telecommunications. It is a form of privatisation of governance, to iwi. I

Now there IS a valuable point in “iwi/Māori have roles within the current three waters service delivery system that will need to be acknowledged. They are suppliers and/or recipients of water services (particularly to rural marae, papakāinga, and rural communities).” As suppliers, they should be subject to the same oversight as other suppliers, but as recipients they are little different from anyone else. They receive a mix of good and poor service, but it is unclear why their role as consumers is more special than anyone else. Sure, water is a taonga, but it is to all humanity. It’s ludicrous to claim that it is more special to iwi than it is to any other.

However, this is more fundamentally about the Government’s interest in what is, in effect, creeping constitutional reform, by redefining the Te Tiriti partnership of Crown and Iwi, into one that goes beyond meaningful consultation and engagement, to sharing powers over assets that do not belong to iwi (the three Waters are about infrastructure, not lakes, rivers and streams after all). There IS a role for consulting iwi about the use of property they own or control, but to privatise half of the control over ratepayer owned infrastructure, to iwi deserves to be justified in terms of outcomes, when the reforms themselves are based on addressing serious problems with the status quo. Should this really be used as an opportunity to facilitate more iwi control?

What should happen?

Reforms are badly needed, primarily because many local authorities have proven themselves utterly inept in managing and funding water infrastructure. However, the Government is proposing to consolidate existing water entities, including successful ones, into four entities which largely resemble Council Controlled Organisations and share governance with iwi. Yes, having professional large water utility entities will be a step forward, but continuing to have significant local authority governance, which has proven to fail, and using the reforms to implement iwi co-governance, with no sense as to what improvements to outcomes this could deliver, is missing an opportunity.

Government should be bold, it should transfer the water assets of local government into a handful of specialist water companies, and issue shares in them all to all property owners connected to their networks and float the companies on the share market (and as a sop to fear over foreign takeover, you could even cap foreign ownership at 49%). Let the water companies meter or flat fee property owners for their services, and force councils to drop rates proportionately and NOT increase them by more than inflation. Given their quasi-monopoly status, central government should oversee the water companies in terms of drinking water quality, but by having popular share ownership concerns over water companies gouging consumers can be ameliorated.  If the Government did this, I'd accept the value of an independent regulator, to monitor and report on performance.

 It’s time to take the three waters out of the hands of politicians and put it in the hands of consumers as shareholders, and run it like a business. You have no more reason to trust this Labour Government with water reform than you would Jim Anderton, who opposed competition and privatisation of telecommunications, electricity, aviation etc etc.

We've seen the results of having a utility sector entirely at the behest of democratic accountability to the community under local government. It's been a failure.  The water sector needs reforming, it needs bold moves resembling what happened and succeeded in England in the 1980s. Shame the Government is willfully ignorant and unwilling to even consider that model as an option.

The Government claims significant benefits from their reforms, over thirty years. This may well be credible, but is based on many assumptions around efficiency savings seen in Scotland with consolidation, and that these efficiencies wont be lost in a strange new co-governance model.  However, since the Government didn't even look at the option of following England  - even without privatising the companies - we wont know if it chose the best option, as the options analysis has clearly been politically cauterised, by people whose political ideology has so demonstrably failed in this instance.

Why would anyone trust them to get this right now?  

Local authorities are currently consulting on whether communities support the Three Waters Reforms, and many oppose it, not least because local government never likes losing power and influence.  You should let them know that you oppose the proposals, but not because it takes powers away from local communities (whatever that is), but because it puts power in the hands of people who are NOT primarily interested in delivering efficient, high quality services to consumers.

So tell your territorial authority AND tell your local MP what you think of these reforms.  Be grateful also that electricity and telecommunications aren't being run by your local authority.  Imagine the blackouts.

Water - the last utility of the Soviet era

You could hardly not notice the growing list of scandals seen in local authority supplied water, sewer or stormwater services in recent times and wonder what has gone wrong.  From lead in water supplied by Dunedin City Council in a number of small towns, to the Havelock North water supply contamination and the breakdown of multiple parts of Wellington's water networks.  Imagine if a private water bottler had been caught with the contamination of supply seen by some local authority systems, the howls of outrage from politicians would be palpable, but it isn't quite that way - you see water in New Zealand is perhaps the last bastion of what socialists call the "democratic control of the means of production, distribution and exchange" of the key utility networks.

Unlike electricity, gas, telecommunications, ports, airports, railways and even roads, water (outside Auckland) in New Zealand was shielded from any serious economic reform during the 1980s and the 1990s. That was a time, which seems so long ago now, when there was widespread commercialisation and in some cases privatisation of utility networks, and either liberalisation of market entry or the application of independent oversight and regulation of the management and supply of the services concerned.

Before then, local electricity distribution was led by local authorities, which managed them much like water and the results were underinvestment in power line networks in some places, gold plating in others, and frequent power cuts as parts of the networks failed.  Now these networks are either privatised or run by local trusts, but all subject to regulatory oversight around capital spending and how much they can charge consumers for maintenance and renewal of their assets. 

You see local authority issues with infrastructure don't mean all infrastructure, because they actually have little struggle at all with the infrastructure they are not responsible for owning, managing or funding.  Electricity, gas and telecommunications networks all grow, expand and get maintained with little recourse to ratepayers or indeed the "democratic control" that the left is so keen on.  Now that isn't to mean that there isn't some government intervention, such as the vast spending on fibre optic networks funded by central government but undertaken by private enterprise, but this is not the model by which water networks are funded or managed in New Zealand - you see water remains the last bastion of the Soviet style era of socialist management of a utility.

If you want to take a nostalgic trip back to the era of Rob Muldoon, the era that the late Jim Anderton and his Alliance Party, and indeed at one point Winston Peters, pined for, you need only look at how the "three waters" (supply, waste and stormwater) are supplied and managed in New Zealand today.  Indeed, it is a case study in exactly how the principles of democratic socialist economics work in practice.  You can see the vestiges of this thinking in Green Party policy today, which says "Ensure Council Controlled Organisations are only used where this has benefits over direct service provision by local authorities".  

Leftwing opposition to reform of water is long standing.  It is almost laughable today to recall when former Green MP (and still Wellington Regional Councillor) Sue Kedgley regarded reforms to the Local Government Act allowing local authorities to choose to contract private companies to provide water infrastructure for contract periods of longer than 15 years as  "the potential to be hugely harmful to the public".   She much prefers a democratically controlled water supply that sees lead enter it, with the ultimate penalty being... you might not get re-elected as a city councillor.

However, it is the late (conspiratorially minded) Penny Bright, who founded the wittily named "Water Pressure Group" in Auckland that for many many years was the squealer that regarded any private sector involvement in the water sector as beyond the pale.  She regarded water as "a basic human right", albeit one that she thought was best delivered by a bunch of politicians re-elected every three years directing a bureaucracy.  She was passionate about her beliefs, but wrong.

The problem with water is the problem that was seen with telecommunications when it was run by the Post Office, or electricity when it was run by the Municipal Electricity Department of Wellington City Council (or whatever council) et al, which is that political control of the funding and of the taxation needed to maintain and renew a complex utility was extremely poor at being accountable to those who "own" the infrastructure and consume its services, because there is little link between what you pay, where that money is spent and how much is spent on the water networks.  The NZ Post Office once thought it was a great idea to install "triple twisted copper cable" for telephone lines in the Wellington suburb of Khandallah, despite it not being the international standard for phone lines, because some engineers thought it would improve its robustness - at the same time upwards of 50% of coin operated public phone boxes did not work (there were no mobile phones then).  Bureaucratic service delivery agencies don't get driven by customer needs, but their own internal imperatives and those of their political masters, which understandably are pulled in many different directions - but customer service (being a monopoly, funded from taxes) isn't upper most (unless of course, in a few cases, it is to help a Councillor or his mates out).

Local politicians almost never campaign for election on issues like renewing water infrastructure, but they sure like big shiny showoff things like convention centres, sports stadiums and "visions".  After all, why campaign on something that involves digging streets up and nobody really notices, when you can get your name put on a park or a building instead?  Imagine if the issue of installing more mobile phone capacity were up to local government and it were paid for by rates, would it ever get done?  Water supply pipes, wastewater pipes, stormwater pipes, none of them matter much to most people most of the time, until their service stops or their property is flooded - so they are easy for politicians to defer spending on. 

There is one exception in New Zealand, which is Auckland.  Watercare Services was set up in 1991 as an example of how to commercialise water delivery (albeit not stormwater), and it is from this that the leftwing backlash against water reform arose.  Opposition to commercialisation, opposition to people paying for the water they use was central to this.  The idea that it is somehow fairer for the single pensioner who uses barely enough water for a few cups of tea and a shower a day to cross subsidise the water used by a family of four was not an argument worth having with the organised, almost hysterical, opposition to reform.  So Watercare Services was not replicated elsewhere, albeit that local government reforms did allow local authorities to do so if they wished - but rare is the local politician willing to relinquish control.  It's notable that Auckland doesn't seem to have the issues with supply or wastewater of other cities, although stormwater remains a major issue (and is outside Watercare's remit).

So water, as it remains, has all of the symptoms of a centrally planned, "democratically accountable", bureaucratically delivered service.  It's funding for capital is entirely dependent on local politicians choosing to allocate rates money to it or to borrow to pay for large investment, and so it has to plan from year to year based on how councillors manage their priorities - whether it be convention centres, minimising rates increases or getting elected.  It is only when water infrastructure gets critical (i.e. pipes bursting, supply running out or being poisoned) that political attention is given, and that is frankly too late. Water in New Zealand is socialism in action, and it demonstrates that it is profoundly difficult to get politicians to focus on long-term priorities that are not seen as trendy (note that some are extremely eager to make interventions under the auspices of trying to stop climate change, even though the impact of those interventions is infinitesimal, it's much more about being seen to do the right thing).

Ironically, the recently elected Labour Government has decided to reform water in a way that a previous Labour Government refused to do so for roads - by encouraging local government to take water out of its control altogether and putting it into a handful of centrally government controlled organisations.  Yes it is arguably nationalisation, but it is a transfer from barely capable local control to something else.   It is almost admitting that local democratic control of a critical utility has failed as a delivery model, and that having arms-length professional organisations (let's call them State Owned Enterprises maybe?) that charge consumers for the services they provide, recover capital costs from consumers over the lifetime of those assets and seek to optimise costs and service delivery (with regulatory oversight) is a much better model - i.e. the model that many politicians on the left would have called "neo-liberal" and a precursor to that nastiest of words "privatisation".

However, NZ has had decades of water being supplied "not for profit" and with "democratic control", maybe it's about time it was left to professionals, with the political role being to set up the legal framework to ensure that water is run as a business like other utilities.  The Government's proposals are encouraging, although I would be much more draconian and just take it off of councils and legally require them to cease charging water rates or cut general rates that fund water, and then establish a mix of metered or uniform charges for water consumers.

Of course the UK privatised water many years ago, and hasn't looked back. Some stats on that experience (source: Statement of Professor Chris Binnie, former President of the Chartered Institution of Water and Environmental Management (not uncritical of the water privatisation process):

• Drinking water quality measured at tap increased from a 99% pass rate to 99.96%
• Properties at risk of low water pressure reduced from 2% to 0.001%
• Properties subject to unplanned water supply interruptions of 12 or more hours reduced from 0.4% to 0.003%
• Leakage dropped from 4,980ml/d to 3,306ml/d by 2000, but is still too high (3,183ml/d) in 2018
• Residential water meter use raised from zero to 55%, with a target of 80% by 2040.
• Per capita water consumption dropped from 155 l/h/d to 141 l/h/d (with more households, each household using less water)
• Household properties at risk of internal sewer flooding reduced from 32,000 to 3,000.
• Non-compliance with the EU Bathing Water Directive (regarding dumping of wastewater at sea) reduced from 16% to 1%
• Failures to respond within 10 working days to complaints dropped from nearly one third to 0.4% failure within five working days.
  

Sure there is plenty to criticise (e.g. Thames Water remains slow in addressing leaks, but it has reasonable incentives to address it, because it can't charge consumers for water leaking from its system and it is generally more costly to provide more capacity for storage than to fix leaks), but it is notable that the water problems are as much about an ideological resistance to reform as they are due to the failings of a system that is not well set up to incentivise investment, supply of services to consumers and deliver long term outcomes.

It looks like New Zealand (except Auckland) is coming to an end of its Soviet-style/Muldoonist era in water management, thanks to a left-wing Labour Government acting to implement reforms that are not far removed from what the Lange/Palmer/Moore Labour Government or the Bolger/Shipley National Governments might have done. It's also telling that the much vaunted "power of general competence" that the first term of the Clark Government granted local government has proven to not be competent in managing the three waters in so many cases.  

Perhaps there are other compentences that local government should be freed from as well?

Yes I do own water

and I don't mean buying a bottle of Evian.

If I have land, and collect water on that property, it is mine.

Just because the state treats the sea, rivers and lakes as owned by it and local authorities, doesn't mean that water can't be owned.  It is ludicrous to claim otherwise.

Reticulated water costs money.  It requires people to work, people to construct, lay, maintain and replace pipelines, dams, pumps and the electricity required to operate them.  That isn't free.

There is no good reason why that can't be owned and operated by a private profit oriented company.  In England they are, under tight regulation, but that water is owned, and you buy it.

Socialists may argue against this, ignoring the disaster of state ownership seen recently in Northern Ireland, or the crass incompetence that saw government fail to upgrade infrastructure over many decade in places from London to Dunedin (in England and Wales investment in infrastructure increased by 83% after privatisation).

Swedish analyst Fredrik Segerfeldt concluded that water privatisation can generate enormous benefits:


For example, before privatization in 1989, only 20 percent of urban dwellers the African nation of Guinea had access to safe drinking water; by 2001 70 percent did. The price of piped water increased from 15 cents per cubic meter to almost $1, but as Segerfeldt correctly notes, "before privatization the majority of Guineans had no access to mains water at all. They do now. And for these people, the cost of water has fallen drastically. The moral issue, then, is whether it was worth raising the price for the minority of people already connected before privatization in order to reach the 70 percent connected today."


he concludes by asking... "why anti-privatization activists do not expend as much energy on accusing governments of violating the rights of 1.1 billion people who do not have access to water as they do on trying to stop its commercialization".


However, the National Party has never been that good at selecting politicians who can argue principle over fear and scaremongering.  

Why do the Greens get such an easy ride? Part Two - 50 questions that should have been asked of the Greens

As I wrote previously, it appears the Greens are having a media honeymoon.  However, is this justified?  Do the Greens not have policies that could be seen as controversial?  Do their MPs not make statements that deserve further scrutiny?

Well I have composed a long list of questions I think journalists should ask, and more importantly questions YOU should ask your local Green candidate, especially if you are thinking about voting Green.   You may wonder if the Greens are quite so cuddly and inoffensive as the media makes them out to be.

So here it is - 50 questions to ask the Green Party (and one light-hearted one at the end)

My only other question is, why hasn't anyone else been asking them?...

Does your Treaty of Waitangi policy that “All claimants to have the opportunity to have their land and resources returned to them” include claims of private land?  If not, why is that not clear?

Do the Greens still believe Sue Kedgley’s claim that it is wrong to “shift responsibility for health and improving diets from the state to society and to convince people that public health is all about personal responsibility"?  If so, how do see the state leading responsibility for people changing their diets, how would the state adequately replace personal responsibility?

What are “all reasonable steps to prevent immigration numbers and the sale of land to rich immigrants from having an adverse impact on Aotearoa/NZ and its Taonga.”?  How can they have an adverse impact?  What is a rich immigrant?  What will an immigrant do to land than a locally born New Zealander wouldn't? 

How does the Green Party plan to implement its policy to ”Minimise exposure to electromagnetic radiation especially for children and pregnant women”?  How many TV and radio stations would you shut down?  Will you want to close wifi networks at schools and home?  Will you demand children and pregnant women not use laptops, TVs or any other electrical appliance?  Will you demand all homes with children and pregnant women to be outside mobile phone coverage?  Does the party understand how pervasive EMR is and has been for decades?  Does it understand that visible light is electromagnetic radication, and if not, how can anyone trust the Greens on science in other fields?

Do the Greens still believe it is ok to frighten people about non-ionising radiation from mobile phone towers, despite the complete absence of evidence about negative health effects? Is it appropriate for the leader of a major political party to engage in name calling when someone calls him out on not scaremongering Radio NZ transmitter sites, which emit more of the same type of radiation and have done so for decades?

Do the Greens still believe there is a media conspiracy against them on this issue because telcos advertise in the media? What evidence do they have of this?  Could it just be that your science is extremely flimsy and the media refuses to engage with such ignorance?

Do the Greens trust potatoes still, or do they stand by Jeanette Fitzsimon’s press release of 1999 that it was then "the last Xmas when you could trust potatoes"?  Wasn’t all of the fuss over genetic engineering in 2002 just scaremongering?  How many people have been killed, hurt or harmed by genetic engineering anywhere in the world? 

What do the Greens mean about  “Recognise ancestral land ownership in rural areas” for Maori?  Why shouldn’t private land owners in rural areas be worried?  What will you stop them doing?  What isn't recognised now?

What did Catherine Delahunty mean when she said that the Pakeha nation is "racist"?  Does she stand by her use of the term “genocidal spindoctors” to describe National Party speechwriters in 2005?  Does she stand by her hope that Maori will be the largest cultural grouping in New Zealand by the late 21^st century?  Is this also Green policy?  Why is it that other parties don't care about the ethnic composition of the country?

When Catherine Delahunty said “We have plenty of beaten women; gutted communities and whanau living in state housing that have never had proper electricity or water supplies. But lots of Pakeha are drinking wine and surfing, and they say so loudly without saying a word, would you please shut up about the connection between racism and poverty” is she blaming Pakeha for Maori women being beaten up?  Why are Pakeha who drink wine and surf to blame for beaten women?

Do the Greens agree with Catherine Delahunty when she describes Pakeha as having "colonial privilege" even if they were born in New Zealand?  At what point can Pakeha be described by Catherine Delahunty as being equal to Maori as New Zealand citizens with equal rights, if ever?  Do you think Pakeha voters of the Greens know that you believe that?

Do the Greens agree with Kennedy Graham when he said “The political rights we enjoy today are to be calibrated by the responsibility we carry for tomorrow.”?  What political rights does he think should be “calibrated” and what does he mean by that?  When he said “Individual freedoms are no longer unlicensed, but henceforth subordinate to the twin principles of survival and sustainable living”, what freedoms do the Greens want to “licence”?  What individual freedoms must be subordinate?

Don’t the Greens think Kennedy Graham flying to London to discuss climate change at taxpayers’ expense is remarkably hypocritical?  How many more long haul flights will Green MPs seek to undertake to support fighting climate change and why?

Does the Green Party still share the view of Sue Kedgley that “We need to challenge the doctrine of free trade and accept that people's right to food, to be free from hunger, must have priority over an ideological fixation on allowing market forces to prevail at all costs” so abandoning New Zealand’s long standing bi-partisan trade policy goal of opening up markets to its agricultural products?  Does it share her view supporting the official French policy to effectively continue the EU’s highly subsidised highly protectionist Common Agricultural Policy?  Does it believe that free trade actually really means highly subsidising exports?  If so, why? What future do the Greens see in New Zealand's farming sector if farmers face a world that is protectionist, subsidised and engaging in "food sovereignty" policies?  

Why is it good value for taxpayers to have spent $1.3 billion on a railway that private companies would only have paid a quarter of that for?  Why do you think the private sector hasn't bothered investing in it, despite you being convinced of "peak oil" and that the end of mass use of the private car and road transport is nigh?

Do the Greens still think that it was appropriate to blame the Brisbane floods on climate change linked to the coal exported from Queensland, as if Queensland was getting its just desserts?

How do the Greens think that making membership of student unions voluntary “takes away choices”?  Isn’t it the exact opposite?  Would you think differently of student unions if they had been  hot beds of free market capitalist and pro-entrepreneurial activism?  Doesn't this make you claims about believing in human rights superficial?

The Greens want to force electricity companies to generate a proportion of their power from expensive renewable sources.  In the UK a similar policy is estimated to be putting up prices by an average of 50% in real terms by 2020, with a fully privatised sector. How much will this policy of renewables put up power prices to New Zealanders? 

When Metiria Turei says “We need to get smokes out of our homes and out of our shops” what will you do to achieve this? Do you really want to stop the sale of tobacco products altogether? Why don’t you have the same attitude towards marijuana?  Why don’t you think tobacco smokers should be left alone? 

Do the Greens still believe Don Brash wants to smash Maori culture and force women to be subservient?  Do you have any evidence for such exagerrated claims?

How will the Greens “Support equitable access for Māori to secure employment and decent wages”? How do Maori not have equitable access?  Who is stopping them? 

Do you think Maori can be racist? Why do you think people of Maori descent should be given different political structures from those of other citizens? Why do you think this should be constitutionally entrenched?  Why should the accident of your birth determine how the state interacts with or consults with you?

How does offering Maori the same democratic rights as all other citizens shut them out of participation?

What examples do the Greens have of “unnecessary production and consumption”, and how do they propose to curb them?  Will this mean banning the production and sale of certain goods?  If so, what ones?

What products will be banned when the Greens implement their policy to  “Require domestic and imported products to be durable and recyclable”? Does this mean every producer of goods that are neither will be regulated out of business?  Does this mean no New Zealander could import a product that is neither durable nor recyclable?  Doesn't this ban anything perishable?

What exactly is "hugely harmful" to the public in private companies being contracted by local government to manage water services?  Where in the world has this proven to be the case?

Does the Green party still believe all of the Cuban government’s claims that its health care system is fantastic?  Is it in the habit of believing the official reports of one party states that imprison political dissidents as mental patients?  Why is Cuba exempt from the sort of scrutiny on human rights that the Greens apply to China or Burma?

Why do the Greens think parental choice of schools is a myth?  Why do they think the state always knows what’s best in education?

When you want to “Ensure all new houses and buildings fully comply with disability access requirements unless specifically exempted.”  Will this mean anyone building a house on a hill about a road having to build a ramp or lift unless they get a special exemption from a bureaucracy?  Wont this make it prohibitively expensive to build homes anywhere that isn't on flat land adjacent to a road?  Wont this just increase the price of homes and reduce the supply?

When the Greens want to regulate broadcasting and the press with an authority that will “have the power to impose appropriate sanctions against media outlets in cases where it can be clearly demonstrated that it has exhibited wilful or negligent abuse of power and by doing so has either visited material harm on another party or pursued its own self-interest at the expense of the public interest.”, what examples of the media pursuing its own self interest do they have in mind? Doesn’t this mean introducing newspaper censorship in New Zealand for the first time in decades?

Why do the Greens fear foreign investment?  Do you share this fear of New Zealanders owning land and businesses in other countries, if not why not?  Why do you want to welcome refugees and migrants from all and sundry, but if anyone from another country wants to own a business, you treat them like the devil?

More specifically, what was the security threat posed by a Canadian company buying a New Zealand airport?  Should the British government be fearful that New Zealand company Infratil owns Prestwick Airport near Glasgow for the same reasons?

The Greens repeatedly criticise the trade choices made by New Zealanders in such banal terms as “swapping water with China”.  What exports do the Greens want stopped? What imports do they want stopped? Why do they think they know best what people should sell and buy?

Does the party’s support for taxpayer funding of the voluntary sector not make it the state sector?  Why should taxpayers be forced to support political advocacy groups?

What are the implications of “Requiring the inclusion of environmental science and ethics in all study programs.” involving science education?  Why is this relevant to physics for example?

What does “Support legislation that increases the reliability of the Internet” mean?  How do the Greens propose improving the reliability of a disaggregated global network by a law passed in New Zealand?  Can you pass laws to fix most problems?

Why do the Greens think that if central government doesn’t tell primary schools how to teach arts,science, technology, or physical education, that the schools are incapable ofknowing what or how to teach?  Does only the Ministry of Education know how to write a curriculum?

How many other traffic laws do the Greens endorse breaking besides walking on a motorway?

Do the Greens still stand by the view of Sue Kedgley that heavy freight be forced to go by rail?  Do the Greens still believe it is ok for their MPs to make speeches that are full of errors, hyperboles and misrepresentations?

Does Russel Norman still think that if customers of a shop want plastic bags, the shop shouldn’t offer them?  How is that democratic decision making?

Does Russel Norman stick to his belief that the London riots were caused by poverty, not opportunistic criminals seeking designer goods and electronics?

Do the Greens support the view of their blogger “Toad” that democracy doesn’t have to be secular, or liberal, and that it’s “ok” if democracies start a war if the people support it?  In which case, would the Greens support a Christian theocratic state that sent troops to Iran if it was democratically elected?

If the Greens think there should be fruit in schools, why don’t they set up a charity to raise money for it?  In fact, why don’t they ever advocate people raise money themselves voluntarily rather than make taxpayers pay?

When you expect that “significant time for environmental education” will be included in the teacher training curriculum, what should be excluded from the curriculum to allow for this?

Why do you think small business owners should be criminalised because they want to open on a religiously based public holiday?  How do owner-operator shops with no employees exploit people by merely opening their shops for people to choose to enter?

Why is it that a New Zealand Government following the US when a Republican is a President is “imperialism” but when a Democrat is a President, New Zealand should follow the US which is “leading the way”? Isn't it just about what policies you like and dislike? 

Why do you dismiss electric cars so flippantly, but treat electric trains as being the saviour to all of Auckland’s transport problems?  What proportion of trips in Auckland do you expect will be by train by 2014?

Do the Greens still support a Hamilton-Auckland train service, even though it would be slower than a bus, lose money and the local authorities wont pay for it? 

What’s Green about banning foreign ships that happen to be going from port to port within New Zealand as part of an international voyage, from selling empty space to carry cargo around New Zealand –when the ships would still be sailing regardless?  Isn't that policy just about pleasing militant  maritime unions?

The Greens paint a picture of the environment getting worse,and Russel Norman selectively quotes the Environment 2007 report from the Ministry for the Environment to support stopping road building, even though the report does not say that and provides plenty of facts that are inconvenient such as “Home heating is the main cause of air pollution in populated areas in the winter”  yet the Greens beat up on cars and trucks. The report also said  “Levels of PM10 particulates at roadside locations in Auckland appear to have fallen over the past 10 years”.  Why does a party that purports to be about the environment ignore good news about it?

Do any of you laugh at Catherine Delahunty’s tweets too? Like “Despite the pretty words and new clothes am hoping new puppy at white house will stop killing afghanis and funding Israel wars on Palestine"?

So ask yourself if the Greens DO get around 10% of the vote on Saturday, how much they might have got if a few of those questions had been asked over the campaign, or the past few years, and why the mainstream media seems to have its tongue up the Green Party's proverbial.  Moreover, ask yourself why the National Party hasn't been doing that - is it because it has seen this party as a partner?  If you're planning to vote National, how will you feel if that is exactly what happens?

P.S.  Go here, register instantly and tick an up for this post if you like what you see, it seems the obvious people have been doing the opposite (and I have inspired over 100 comments there).