What's wrong with Kiwirail?

Kiwirail has been in the news a lot recently, many due to disappointed about it failing.  It includes the breakdown of the single track evaluation car in Wellington (and scheduling of track inspections as well), the programmed closure of Auckland's rail network to enable significant reconstruction, and the simple answer given to this is that it is a failure either of rail privatisation (which was reversed partly in 2001, 2003 and ultimately 2008.

In 2001, the Clark Government bought the Auckland rail network for $81 million, in 2003 it bought the rest of the rail network for $1, but with a $44 million investment in TranzRail (and the buy back of the network then included a monopoly being retained by TranzRail). Finally in 2008 the entire business was bought for $690 million, which was well above the market price at the time.

So there have been 15 years of state owned enterprise Kiwirail, which is exactly how long the privatised NZ Rail/TranzRail existed for, but some pundits still claim that all of the problems stem from privatisation. Surely government ownership is meant to fix everything, after all the country had government owned railways for well over a century beforehand, weren't they wonderful?

To some extent there is some bad luck with a few incidents regarding Kiwirail, but it is pretty clear the incentives around the company are very mixed indeed.  

For example, Auckland the commuter trains are owned by Auckland Transport, although they are operated by Auckland One Rail, a train operating company contracted by Auckland Transport to operate the trains for eight years (starting 2022).  The rail infrastructure is owned by the Crown through Kiwirail, but the stations are owned either by Auckland Transport (Waitemata, Newmarket and New Lynn), or a mix of Auckland Transport (for the buildings) and Kiwirail (for the platforms). Of course the train services themselves are subsidised by Auckland Transport as the contractor, which gets 40% of its funding from Auckland ratepayers with the remainder from Waka Kotahi (i.e. taxes paid by road users).  Fare revenue only recovers around 30% of the costs of operation in normal times (whereas at present taxpayers are halving that to 15%).

In Wellington, it is similar, with the commuter trains owned by Greater Wellington Regional Council, operated by TransDev, with infrastructure owned by a mix of the Crown through Kiwirail and the regional council (Kiwirail owns the track and the main railway station, the regional council owns the other stations). 

The railfreight system is all owned by the Crown through Kiwirail, as is the long distance passenger rail system.

However, what isn't widely known is that whether it is Kiwirail's freight trains, or the commuter trains operated in Auckland and Wellington, that the Track User Charges paid for trains to operate on the tracks don't go to Kiwirail, they go to Waka Kotahi.  This bizarre situation is the brainchild of the current Labour Government.

Instead of Kiwirail getting its day-to-day operating revenue, for maintaining the track and related infrastructure from the trains operating on the network (whether its own trains, or in Auckland and Wellington the commuter trains contracted by the relevant authorities), the Track User Charges, set by politicians, go to a central government bureaucracy - Waka Kotahi - which then gives Kiwirail money to maintain the tracks, based on the Rail Network Investment Programme.

So Kiwirail's infrastructure business is not paid based on trains operating, but paid on whether it can convince a bureaucracy, guided by Ministers, to give it the money it requests for its network. Michael Wood and Grant Robertson have broken the link between use of the track and being paid for the track.

Of course this replicates the road network, but road funding has always had that separation and the separation is an artifact of how motor vehicles are charged to use the road network. Because all petrol-powered light vehicles pay petrol tax, it is impossible to reliably link your car to what roads you drive on, so the revenue from petrol tax is all collected by Customs, and handed over to Waka Kotahi to fund road maintenance and improvements.  Road controlling authorities (Waka Kotahi for the State Highways and territorial authorities for local roads) have to bid for funding from Waka Kotahi (yes you noticed that?) for road maintenance.

However Kiwirail's network isn't like that.  It is effectively a controlled private network as Kiwirail knows exactly what railway vehicles are on its tracks at any time, and charges them Track User Charges, which could be based on whatever it needs to charge to maintain and develop its network. Indeed if the track infrastructure was run as a separate business, setting its own Track User Charges, then it would expect to not get paid if it didn't enable trains to operate.

That's not what the Government has done, it has disconnected payment to use the tracks from the provider of the tracks, which is a retrograde step.  Every other piece of effective infrastructure operates with user pays. Airlines pay airports fees for landing, taking off and parking aircraft at terminals and on their tarmac. Shipping companies pay port companies fees for docking and other services. Indeed if structured appropriately, as in some other countries like Austria, Czechia, Japan and Slovenia, there is no reason why trucking companies and motorists couldn't be paying to use the roads directly to road companies.

However, the Ardern and Hipkins Government has chosen to weaken the link between providing rail infrastructure and getting paid for doing so by customers, by Kiwirail getting paid by Waka Kotahi instead.  $1.2 billion is being spent by Waka Kotahi to Kiwirail to maintain and develop the rail  freight infrastructure, of which $834.4 million comes from general taxpayers (the remainder from the National Land Transport Fund, which Track User Charges are paid into).  Not only that, unlike the National Land Transport Programme (which outlines the road and public transport projects funded from the National Land Transport Fund), the Minister has to approve the Rail Network Investment Programme.  It's a highly politicised funding system. Kiwirail has to respond to what the Minister wants, not what its customers want, in relation to the infrastructure.

It's worse than that of course. Because Kiwirail runs two businesses, an "above rail" business (hauling freight, carrying long-distance passengers and running rail ferries), and a "rail infrastructure" business (providing the tracks, signals, etc so trains can operate on them), it will prefer the "above rail" business which it directly gets revenue from. Consigners of containers on freight trains pay Kiwirail directly, which it then includes its accounts (even if it has to pay Track User Charges to Waka Kotahi).  Whereas the train operating companies running Auckland and Wellington commuter trains don't pay Kiwirail directly at all for the tracks, but pay Waka Kotahi.

Bear in mind also that Kiwirail, as track provider, has a literal iron grip on access to its network for competitors. Now there may be a low chance of a rail freight competitor emerging, because of the high cost of acquiring rolling stock, but likewise if another business wanted to operate say a passenger train from Christchurch to Dunedin, then Kiwirail could effectively decide whether it would let it do it.  Kiwirail's "rail infrastructure" business is not incentivised to try to find a way to let a new customer use its network because it wont get paid for it, but it's incentivised to do what works for its staff and contractors, and for its own trains.

One can argue about whether enough taxpayers' money was put into the rail network since it was renationalised, or whether it is good value for money at all. After all, why should the rail freight network not pay its own way, given trucking companies pay road user charges, which fully fund the state highway network?  However, if the government is going to keep owning the railways then maybe it should follow a model seen in some European countries.

Split it up.

Have a Kiwirail holding company for oversight of the assets (including the land held by NZ Railways Corporation), but have three separate companies underneath it:

1. A railway infrastructure company. Have it receive Track User Charge revenue directly and let it charge what it needs to do to maintain its network.  If the government wants to upgrade tracks, then it can put taxpayers' money into it transparently and have arguments in the public sphere about whether new cancer treatments are better to pay for than a faster railway line somewhere.  Ensure that company has open access, and seeks to encourage new entrants into the rail industry.  It may also include stations and freight terminals not held by local government, but also be willing to enable competing operators with access to those facilities.
2. A freight company.  Have it own the locomotives and rolling stock Kiwirail currently has to run and operate freight trains.  Arguably it should also have the Interislander as it is core to that operation, and it makes more sense than it being in the railway infrastructure company or the next company.
3. A passenger company.  It may only be four passenger trains at present, but let it be willing to expand on a commercial basis. It might even run the commuter trains in Wellington and/or Auckland if it  wins contracts to do so.  It should own the locomotives and rolling stock for passenger rail, or it might seek to lease locomotives from the freight company. 

There is an argument that there isn't really enough business for rail to have competition in New Zealand, and it may be right, but given the government owns the network, it ought to at least enable the possibility of competition. 

A hard-nosed look at railways in New Zealand would confirm that the rail freight business is the core, followed by commuter rail services (which require subsidy as long as pricing of roads at peak times in Auckland and Wellington does not target congestion).  Rail freight is about containers, logs, milk and coal, and a handful of other commodities.  

It should have nothing to do with Waka Kotahi (except its role as safety regulator), nor should Michael Wood or any other Transport Minister be deciding how much money the railways get to maintain their tracks (after all, what would they know?). If more money is going to be poured down the black hole of railways in New Zealand, it should at least be incentivised to operate trains reliably.  At present it has poor incentives, is costing taxpayers a fortune in money that will never be recovered, and has been set up into a bizarre funding structure that has no parallels elsewhere in the world.

Oh and for all of the calls to "restore" intercity passenger rail services, there isn't a business case for it, but at least if the rail business is structurally separated, those who think there is a business case for a lot more long-distance passenger rail can put their money where their mouths are (not their glued hands though). Intercity bus services and airline services are not subsidised in New Zealand, so it is appropriate that intercity passenger rail isn't either.

Two types of environmentalism

From Allister Heath, Editor, Sunday Telegraph:

There are two kinds of environmentalism. The first is the one exemplified by conservationists, nature lovers, green technologists, free-market environmentalists, Elon Musk, Boris Johnson before No 10, or my colleague Ambrose Evans-Pritchard. They love human civilisation as well as the natural world. They believe that new technologies – hydrogen, nuclear fusion, geoengineering, carbon capture, electric cars or cultured meat – are the solutions to environmental degradation. They dream of near-free, abundant clean energy and high-yielding agriculture; they seek new ways of enhancing our quality of life, feeding the world and growing our economy while not disrupting the environment. They support democracy, reason, choice, international travel, rising living standards and the universalisation of consumer goods.

The second kind of environmentalist are control freaks who have hijacked and warped a great cause (LS- Green parties of Aotearoa, Australia, England & Wales, Scotland among others). They don’t want to save the planet so much as to control its inhabitants. They love net zero – an extreme vision incapable of nuance, trade-offs or cost-benefit analysis – because it is a form of central planning. They are eternally disappointed by real-life human beings and their individualism.

Many have adopted a woke, quasi-religious worldview: we have sinned by damaging Gaia, we must repent, we must self-flagellate. They believe in “degrowth” and a weird form of autarkic feudalism. They dislike freedom and don’t want us to choose where to live, shop, eat or send our children to school. They want to reduce mobility. The Welsh government has banned road- building. One French minister called for the end of the detached house: we should all be forced into flats to minimise our carbon footprint...

A small country far away of which they know nothing

It is the biggest foreign and defence policy news in the South Pacific since the end of the Cold War, that is the formation not only of the AUKUS defence alliance, but the agreement for Australia to be the seventh country to have nuclear propelled submarines.  Seventh after the five formal nuclear weapons states and India (which is an informal nuclear weapons state).

It's big news in Australia.  Indeed the issue is bipartisan, with it all being started by the Morrison Coalition Government, and continued by the Albanese Labor Government.  It's big in the UK too.  A country that from the late 1990s appeared to be withdrawing from the Pacific (having pulled out of Hong Kong), is now a key second level nuclear power operating globally. Again, it is not controversial in the UK, helpfully since the British Labour Party has sidelined its hard left tankie faction. It's also news in the US.  It solidifies Western liberal democracies against the totalitarian aggressors in Beijing and Moscow, a sign that there wont be tolerance for Beijing seeking to claim the Republic of China on Taiwan.

It ought to give pause for thought in New Zealand. Remember ANZUS? Yet no.  The Cold War-era policy, instituted by the Fourth Labour Government to ban nuclear weapons and nuclear propulsion from New Zealand waters and territory, ostensibly to protect New Zealand from nuclear attack in the event of a world war and the fear of nuclear power, looks obsolete and childish.  That's because it is.

The fact NZ Labour politicians talk of a "nuclear free moment" with pride, and neither the media nor the Opposition take them up on this is a sign of the abject paucity of any serious critical discussion about foreign policy in New Zealand politics, and it is disgraceful.

There is little from broadcasters or journalists on this at all, and it is in no small part because the National Party, which once took on this issue and folded, has given up on asserting the importance of defence and alliances.  What NZ is stuck with is a policy that fits rights into the mould of the Green hard left which the Fourth Labour Government let rip (or rather David Lange did), in order to placate the left faction in the face of far-reaching economic reforms. 

On the face of it, NZ's exclusion from AUKUS is primarily presented as showing an "independent" foreign policy, whatever that means. At best it means keeping our head down in the hope that all sides will trade with NZ exporters, which is simply economic realpolitik. It also means NZ having a channel to the side of authoritarianism, between the West, which is useful in itself.  However, that's not really how Labour presents it (and let's be clear, the Labour Party has led foreign policy in NZ since 1984 continuously, even though it has been tended by the Nats). 

At worst, this "independent" foreign policy is akin to the "both sidesism" that Te Pati Maori expresses openly. TPM stated this in its foreign policy that it wants to be enemy to none and friends to all.  It effectively puts a distance between NZ and other Western liberal democracies, and pulls NZ closer to expansionist totalitarian autocracies like Russia and the PRC (and its friends in Tehran, Pyongyang and Damascus). It says NZ isn't really that concerned about having friends that get attacked, because "everyone has done bad".  

Sure you can be Switzerland if you like, but be honest about it. It is not a moral foreign policy, it is one based on realism and giving up on being allied to those you no longer think are any better than their enemies.

What AUKUS means for NZ is pretty clear. Australia will soon be the nexus of military deterrence and defence in the South Pacific like never before and NZ law will ban its new submarines, in due course, from sailing into NZ ports.  That is worthy of at least debate.

Why does NZ still ban nuclear propelled vessels? Is this some fear of pollution in an age of concern over climate change? Is it science based (as Labour and the Greens claim is behind their policies on climate change), or is just scaremongering?  If it is the latter, why persist with it?  Because politicians are scared of Greenpeace?

The nuclear weapons ban has more substance, if there remains an idealistic campaign that the world should be rid of nuclear weapons. However, it deserves debate as well. Does NZ banning nuclear weapons on its territory achieve anything?  Does NZ seriously want the US or UK to give up nuclear weapons unilaterally, or does it think that peace, for example, on the Korean Peninsula would be enhanced if the US refused to use nuclear weapons in the event of war breaking out there?  The notion is absurd. 

I'd scrap the nuclear ban, both of them.  The nuclear propulsion ban is anti-scientific nonsense, and should be ridiculed for what it is.  The nuclear weapons ban should be shelved because it achieves nothing, as many NZ allies and friends are protected by the presence of nuclear weapons. From South Korea to Japan to Poland, Finland, Slovakia, Israel, India, Pakistan, Lithuania, Latvia, Estonia. The reason countries join NATO is to have the US and UK nuclear umbrellas deterring aggressors.  

I wouldn't have NZ sign up to AUKUS - as it has nothing to add, but I would be clear that NZ is with Australia, and that NZ's moral foreign policy is that it opposes the use of force to change internationally recognised borders. 

I know the National Party would run a mile from this issue, because it sees no traction in it domestically, and because Labour can frighten legions of fearful low-knowledge people raised on the religion of NZ's "nuclear free moment" as a bizarre piece of smug-nationalism. That smug-nationalism achieved nothing, because the Cold War ended a few years later because our side won.  Liberal democratic capitalist economies beat the USSR, and the threat of nuclear annihilation in Europe was defeated not because of NZ's nuclear-free policy.  Likewise, there is no remote reason why Iran, India, Pakistan, Israel, the DPRK or any other country will surrender nuclear weapons, because a Minister in New Zealand said they should. It is because NZ is a small country far away of which they know nothing. NZ is blessed with isolation, an isolation that saved it so often in the past, but which should not be the basis of an arrogant smug attitude to the geo-politics of those without the luxury of isolation from threats.

It would, however, be nice if one or two journalists took this on, and maybe even ACT. Can someone in Parliament at least ask the question as to why NZ will continue a ban that will stop its closest ally sending its future submarines to our ports?

Addendum:  As I thought further about this, NZ arguably has four paths of foreign policy to take in relation to its allies:

1. Be a full-status ally: Scrap the nuclear-free laws, contribute 2% of GDP to defence and work with Australia, the US, UK and other allies to effectively be a bulwark against neo-nationalist authoritarian aggression.  There is little sign that there is a willingness to do this.

2. Fence-sitting realist trade maximisation: Claim to be an ally, but spend underwhelming amounts on defence, ban vessels and aircraft of some allies, seek to maximise economic advantage by not being tied to allies based on principle while proclaiming this fence-sitting to be "independent" and "moral" (status quo).

3.  Fortress neutrality: Declare friendship with all, no interest in military aggression or in defending others, but arm to the teeth so there is no doubt that if confronted you will bite (Swiss option - no interest in that).

4.  Unarmed neutrality: Declare friendship with all, giving up on military to take advantage of isolation, focus on patrolling EEZ and let Australia take the hit, cut defence spending to spend on "ourselves" (Costa Rica option - what the Greens probably really want and Te Pati Maori appears to want).

Greenshirts for Aotearoa

Imagine relaxing, going about your day and finding two people arriving on your doorstep, one with a clipboard, both wearing green shirts, labelled the Environmental Protection Authority or perhaps the Ranginui Papatuaunuku Whakamarumaru Ti'amâraa (perhaps?).

They ask you about your employment, and perhaps you are self-employed, or unemployed, or retired, in which case they will ask why you have not presented yourself at the local Whare O Te Aorangi to be given task to save the planet. Your age is unimportant they say, you could be making cups of tea for the younger volunteers, you could be helping manage the archives. What is your excuse for not helping the people and the community?

You wont have been ignorant of it, because the New Aotearoa News Agency (NANA) will have been saying for months about the exciting new initiative that means ALL citizens and permanent residents get to help save the planet and save us all, all species from the desecration of over two centuries of colonialism, capitalism and selfish individualism.

The two people invite you to pack up a few belongings and come with them, for you are to be assigned duties in Takaka for 6 months. You’ll be so welcomed, and you’ll be helping to save the planet, the land and te tangata from the climate emergency.

You object, but they smile and say there is no need to get the Police involved, and they understand if you’ve forgotten or been confused, but they’ll be back tomorrow. It gives you time to remind your loved ones that you are going to go work in the countryside, to help rebuild what was destroyed by past generations.

In the meantime your read on the NANA website that community spirit will be raised through the creation of a network of groups of neighbourhood associations. Every street will have at least one, some will have several, high density housing estates will have one of their own. Every week, citizens will meet to discuss what they are doing for society and the environment, to plan new initiatives and to bring up issues of each others’ behaviour that harms the environment, and encourage each of us to do better. It will be a voluntary arrangement, at first, but everyone’s attendance will be noted.

You seem to remember you’ve heard of this sort of thing before…

(Inspired by former Dunedin City Councillor and RMA Commissioner, Fliss Butcher's proposal in Newsroom)

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.