The murky fate of Three Waters – election special

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The murky fate of Three Waters – election special

The murky fate of Three Waters – election special

October 12, 2023

The final suite of water reform legislation, comprising the Water Services Legislation Act (‘WSLA’) and the Water Services Economic Efficiency and Consumer Protection Act (‘Consumer Protection Act’), has passed just in time for the election.

Three Waters reform (now rebranded as “Affordable Water”) remains a key election issue, although arguably there is now less to separate the Labour and National visions for the sector than there was a year ago. The fundamental contours of the debate have not materially shifted since National came out with its alternative “Local Water Done Well” proposal earlier in the year, and Labour rebranded the reforms and increased its proposed four ‘mega-entities’ to ten.

We reported on those developments here. In the meantime, the need for reform (of some kind) appears no less urgent, with water quality woes in Queenstown and sinkholes in Auckland recently dominating the headlines.

This article takes a brief look at the WSLA and Consumer Protection Act, and where the other political parties stand as we head into the election.

Where the reforms have got to

In an announcement back in August, Local Government Minister Kieran McAnulty estimated that ‘under the reforms that establish the new entities, households are projected to save up to NZ $2,770–NZ $5,400 per year by 2054 on average, depending on which region they are in’.

The WSLA brought in changes to the Water Services Entities Act 2022 (the ‘WSE Act’) and other local government legislation, in order to further detail the functions and powers of the new entities. Briefly, these include:

Mechanisms for the transfer of assets and liabilities from local government to the new water services entities;
service delivery functions and powers, to enable water services entities to deliver water services in place of local authorities;
regulatory functions and powers, to enable water services entities to make rules, plans, and other instruments relating to water services, and engage in compliance and enforcement activities;
pricing and charging arrangements for water services;
protections for vulnerable consumers including an extension of the current rates rebate scheme to cover water charges;
new mechanisms to support the comprehensive management of stormwater; and
detailed changes to local government legislation, the Water Services Act 2021, the Resource Management Act 1991, and other legislation relating to regulation and service delivery of water services.

The Consumer Protection Act is intended to provide a detailed longer-term framework for ensuring Water Services Entities provide affordable and well managed services. It also establishes a Water Services Commissioner within the Commerce Commission as a public watchdog to promote consumer interests, given the new entities would be natural monopolies and will likely fund upgrades (in part) through water levies.

These two Acts join the wider water reform legislative programme, which also includes:

Taumata Arowai–the Water Services Regulator Act 2020: which established Taumata Arowai–the Water Services Regulator and provides for its objectives, functions, and governance.
Waters Services Act 2021: which established drinking water standards and regulates all persons and organisations that supply drinking water.
The WSE Act 2022: which established the new water services entities so they are ready to provide services from their ‘go live’ dates. The WSE Act was amended by the Water Services Entities Amendment Act 2023 to establish the 10 water services entities based on existing regional boundaries, and introduce a staggered timeframe for their establishment.

What the political parties are promising

While the water reform legislative set is complete, with an upcoming election, nothing is set in stone. Under a future Labour-led government, water reform would continue to progress under the existing legislation, should they be re-elected. National, in contrast, has promised to “repeal Labour’s Three Waters Legislation” as part of its 100 day plan.

We summarise the parties’ public positions (including those of their potential coalition partners) below:

Party	Water Reform Position
Labour Party	Continue to deliver Water Services Reform under the legislation already passed. Ten Water Services Entities would be established based on existing regional boundaries. The entities will start to deliver water services in a staggered fashion by 1 July 2026 at the latest, starting with the Northland and Auckland Water Services Entity (covering the Far North, Kaipara, Whangārei, and Auckland), on 1 July 2024.
National Party	Repeal the Water Service Reform legislation within 100 days in office. In its ‘Local Water Done Well’ policy, National has stated that it would: Restore council ownership and control but with stronger central government oversight. Set strict rules for water quality and investment in infrastructure. Ensure water services are financially sustainable (either from rates or from user-pays, to cover the maintenance and depreciation of infrastructure and investment in new assets). Introduce a new Water Infrastructure Regulator within the Commerce Commission which will be responsible for fair pricing and charging of water services. Have the Water Services Regulator (Taumata Arowai) continue to be the primary vehicle for water quality regulation.
ACT Party	The Act Party promises it would: ‘Return water assets to councils. Allow councils to enter into voluntary “shared services” agreements, gaining the benefits of scale, while retaining local ownership and control. Establish 30-year central-local government agreements to plan water infrastructure upgrades tailored to specific regions. Share GST revenue with councils to fund infrastructure upgrades. Establish public-private partnerships to attract investment from financial entities such as KiwiSaver funds and ACC. Expand the exemption from domestic supply for a single dwelling to also include all small water suppliers supplying fewer than 30 endpoint users.’
Green Party	No specific election promises on water sector reform. However, the Green Party has previously argued that the Three Waters reform does not go far enough to guarantee public ownership or protect nature. The Green Party suggests that options such as a Crown guarantee for borrowing should have been investigated further to allow councils to be more closely accountable to their communities, while allowing them to invest in improving services. It also argues that not separating stormwater management out from the other two waters was a missed opportunity, and that it should have stayed as a local council responsibility because of the connection between land use and stormwater volumes and quality.
Te Pāti Māori	No specific election promises on water sector reform. However, Te Pāti Māori has committed to overturning the Crown’s position that ‘everyone owns water’ and instead adopt a position that acknowledges Māori proprietary, customary, and decision-making rights and interests to freshwater Te Pāti Māori did not support the passing of the water reform bills. Specifically, co-leader Debbie Ngarewa-Packer stated that the Water Servies Entities Bill did not implement co-governance or self-governance, and that the tino rangatiratanga of tangata whenua was being ignored.
New Zealand First	No specific election promises on water sector reform.. However, NZ First leader Winston Peters has been vocal about his opposition to the three waters reform. In particular, NZ First have been critical of the so called ‘co-governance’ aspects. Relatedly, in relation to freshwater, NZ First’s manifesto states that it would: ‘Deliver a freshwater plan that actually works for the productive sector and the environment by replacing the Te Mana o te Wai in RMA planning and reinstate the ‘Four Wellbeing’ provisions’. Support Farm Environment Plans administered by Regional Councils and targeted at a catchment by catchment level. ‘Slash red tape and regulatory blocks on irrigation, water storage, managed aquifer recharge and flood protection schemes through the Regional Infrastructure Fund.’

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The murky fate of Three Waters – election special

The murky fate of Three Waters – election special

Where the reforms have got to

What the political parties are promising

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The murky fate of Three Waters – election special

The murky fate of Three Waters – election special

Where the reforms have got to

What the political parties are promising

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