Jobs slashed as Three Waters dismantling continues

Saturday, 27 January 2024

ANALYSIS: As Local Government Minister Simeon Brown presses Wellington politicians to fix the city’s leaky pipes, he has been dismantling at pace the “Three Waters” reforms that would have taken woeful water assets from council control.

But big questions remains about how the new National-led coalition Government will deliver on its own promise to reform of the country’s drinking, waste and stormwater systems, how it will fund this, and how quickly it will come.

Brown in December announced he would pass law to repeal Labour’s Three Waters legislation early in the New Year. He hasn’t waited for Parliament to return to take the axe to the nascent reforms.

The Department of Internal Affairs confirmed on Friday that 188 jobs within the water services programme – almost half its workforce – have been culled in little more than a month, as the department works to close it down by the end of March.

Before Christmas, there were 397 full-time employees working on the water services reforms, including those in the National Transition Unit that had previously hired four chief executives to lead the planned public water agencies.

As of earlier this week, 209 workers remained and “consultation” with these people continues.

A more than $500m IT project to build nationwide systems for the management water assets have also been halted, but not before nearly $200m was spent. Unspecified “parties” were interested in taking over elements of the IT project, the department said.

In total, $448m was spent on the water reforms that will no longer go ahead – a figure that excludes the $550m provided to councils infrastructure investment and “better off” initiatives.

Policy staff will continue to work on what comes next “as required” by the new National-coalition Government, the department said, but what exactly is required remains to be seen.

Brown was not available for an interview on Thursday or Friday and his office did not respond to a list of questions about his intentions for the reform, including when he plans to repeal the legislation and produce new policy.

One certainty about the new reforms is that it will be down to councils across the country to come up with answers for how they will fix ageing and deficient infrastructure, and maintain what works as populations grow.

Councils were trying to work out what solutions might suit them, Manawatū District mayor Helen Worboys said, as across the country local politicians produce 10-year plans required by law.

Some would need to delay the adoption of their plans to factor in the new Government’s intentions, Worboys said, as they had followed the previous Government’s instructions to factor-out water infrastructure.

Worboys, who led a group of councils opposed to Labour’s reforms, said of particular concern to councils was how the new Government’s plan would be funded.

“What’s the funding model? Because how we currently do it doesn’t work.”

Labour’s plan, developed over years but never quite breaking ground, would have taken water assets from councils and given it to 10 new public water entities tasked with raising debt to fix infrastructure problems many councils have proven unable to.

But the reforms got bogged down in controversy over the compulsory claiming of water assets, a perceived lack of public ownership and control over the assets, and Māori representation within oversight groups.

National campaigned strongly against the reforms.

Councils were promised a year from the repeal of legislation to deliver Brown a plan to transition to a new model of water management that met this water quality and infrastructure criteria and would be “financially sustainable in the long-term”.

No single model would be specified, meaning councils could amalgamate and create council-controlled organisations like Wellington Water to obtain efficiencies of scale, or continue to go it alone.

The big questions about funding will also have to be answered by councils, be it by charging for water use or other mechanisms.

A major reason Labour’s desire to take water assets from councils was the need for “balance sheet separation” to fund significant investment.

Creating new public entities managed at a distance by councils, with mana whenua representation diluting council control, would enable the entities to raise debt in a manner not possible if the assets were tied to already the balance sheets of already debt-laden councils.

Whether “balance sheet separation” is required, and whether the Government would commit to underwrite organisations that manage water assets, if needed for this, remains unclear.

Worboys said investment would be required somehow, and this is what the Government was investigating. She said balance sheet separation could be achieved with councils retaining ownership of the assets.

“There’s a whole heap of options involved in this, about how it could happen.”