Co-governance and centralisation would be kicked for touch under National’s alternative policy for Three Waters reform - its first policy launch of election year.
Released on Saturday morning, the policy envisages scrapping Labour’s four co-governed mega-entities and returning water assets to direct council ownership.
Leader Christopher Luxon said the “sub-standard status quo where pipes are too often allowed to fail, creating pollution, wastage and massive bills for ratepayers, will not be allowed to continue”.
But while the policy does away with the two most unpopular parts of Labour’s Three Waters reform, it is also silent on the reason why the Government jumped into the reforms in the first place: cost.
Councils with constrained balance sheets and no appetite to hike rates have struggled to invest in adequate water infrastructure, leading to leaky pipes and occasionally contaminated water. The Department of Internal Affairs reckons that without water reform, households would be hit with costs of $1900 to $9000 a year to fix broken water infrastructure.
With reform, those costs drop to $800 to $1640 a year. National disputes the scale of the investment the Government says is required, but there is no denying the bill will be large.
National’s alternative policy is aimed at ensuring councils do not shirk water investment, but there is little detail on how councils and ratepayers will come up with the cash to pay for it, beyond a tacit approval of allowing them to pass on Watercare-style water bills to households that do not already get them.
Under National’s plan, water assets would return to council control. The new water quality regulator, established by Labour to ensure councils deliver quality water, will be kept - as per National’s existing policy.
The big difference is the establishment of a new water infrastructure investment regulator, which would ensure that councils are investing adequately in water infrastructure - something that has been a problem in the past.
It would also ensure that councils are charging appropriately for that investment, either through rates or through charging for water services directly through Watercare-style water bills.
Some councils, particularly smaller ones, may still struggle to fund investment.
National said councils will have the ability to voluntarily link up to create regional Council Controlled Organisations, which they say will have balance-sheet separation from the councils that own them.
This would look something like a cross between what the Government is currently proposing and Wellington Water.
In Wellington, the many local councils banded together to form Wellington Water, but still own their pipes and manage how much investment they get separately.
National’s plan would allow councils to go further, with balance-sheet separation allowing Wellington Water-type entities to borrow their own funds - separate from the councils that own and control them.
Labour is likely to be critical of this plan. Former local government minister Nanaia Mahuta has already said one of the reasons for the unpopular levels of limited local control under her scheme was that ratings agencies needed to be satisfied the new entities were separate from the councils that owned them for them to achieve the balance-sheet separation that underpinned their low borrowing costs.
National has also said that in some cases, it would also allow the Government to step in and provide funding to the entities on a “case-by-case” basis.
Luxon said the answer to water woes was not “Labour’s unpopular Three Waters scheme that the Government has pushed through Parliament”.
He said National would “set and enforce strict water quality standards and require councils to invest in the ongoing maintenance and replacement of their vital water infrastructure, while keeping control of their assets that ratepayers have paid for”.
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