As it moves to scrap the troubled Three Waters scheme, the government has announced its new plans for water infrastructure.

Over the past few years, water infrastructure has gone from something a few passionate planners and council representatives would speak about in the media to an issue that almost everyone has an opinion on. We’ve seen gallons of water pouring onto the streets of Wellington. We saw hundreds of tractor-driving farmers descend on main centres. In short: it became a key election talking point.

Under Jacinda Ardern’s government, much of the debate was around a proposal called Three Waters. That evolved into the more boringly named “affordable water reforms” under the stewardship of Chris Hipkins and Kieran McAnulty. Now, under Christopher Luxon and minister of local government Simeon Brown, we’ve finally got a new name to remember: Local Water Done Well. 

Announced in the lead-up to last year’s election as a National Party policy, it’s since been adopted by the coalition government and the first steps to its implementation are now known. But what actually is it? How does it differ from what came before? And will it fix the problem?

What’s all this then?

Local Water Done Well was the name given to National’s election year commitment to oversee an upgrade and overhaul of the country’s water infrastructure. At the time, then opposition leader Luxon said his party’s plan would include “strict water quality standards” and require councils to invest in the ongoing maintenance of their vital water infrastructure. 

This week, Brown laid out the path ahead, explaining that two pieces of legislation will be passed over the next year-or-so to push forward with the plan. The first, which will be in force by the middle of the year, will allow neighbouring councils to join forces and separate out their water services into “council-controlled organisations”. These will be allowed to access long-term borrowing to fund water infrastructure separately from the councils themselves.

“It will… provide streamlined requirements for establishing council-controlled organisations under the Local Government Act 2002, enabling councils to start shifting the delivery of water services into more financially sustainable configurations should they wish to do so,” explained Brown.

The second bill will provide for the “long-term replacement regime” and be introduced at the end of the year and passed by mid-2025. This will set out the requirements for long-term financial sustainability and introduce backstop powers that the government can activate “when required” – effectively to make sure the new organisations aren’t racking up too much debt.

“In addition, it will also make necessary amendments to the water regulator’s legislation to ensure the regulatory framework is fit for purpose and workable for drinking water suppliers,” said Brown.

So Three Waters/affordable water are dead?

Not quite, but very soon. In just 10 days’ time, in fact. “The government, as a commitment made in its 100-day plan, will soon repeal the legislation passed by Labour to progress Three Waters. This will happen by February 23,” said Brown. “This will restore continued local council ownership and control of water services, and responsibility for service delivery.” 

Who’s involved in the government’s plans?

There’s a brand spanking new working technical advisory group that will contribute “specialist and technical expertise” to the government.

It will be chaired by Andreas Heuser, the managing director at Castalia Limited (yes, the group responsible for National’s foreign buyer tax costings). “Andreas has a background in economic and policy projects specialising in energy sector strategy, water reform, and natural resource economics,” read a press release from the government.

As Richard Harmon writes for Politik, “Castalia and Heuser have… already been in the thick of the Three Waters debate, having developed an alternative proposal for the anti-Three Waters lobby group ‘Communities for Local Democracy’.” In the Herald late last year, Heuser touted this alternative proposal for Three Waters and noted that it was referenced in National’s plan.

OK but this is a working group, right?

Sure. Writing for Stuff, political correspondent Tova O’Brien noted that while National in opposition had criticised the former government for its overuse of “working groups”, it seemed to now be increasingly fond of them. “The technical advisory group it announced on Monday to help with water is the third such group it’s established in two months,” wrote O’Brien. The prime minister, speaking to reporters yesterday, pushed back on this, saying the Labour government had set up 230 working groups in a very short period of time. “We ain’t doing that.”

And how does it differ from Three Waters?

Remember co-governance? That was one of the primary objections from vocal protesters to the Three Waters plan (though Labour denied that the original proposal – under which responsibility for drinking water, wastewater and stormwater services would be transferred from 67 local councils to four, and later 10, regional entities, each of which would be overseen by a group made up equally of representatives from local iwi and councils – was actually co-governance). Unsurprisingly, it’s gone. As O’Brien writes, time will tell whether the new plan is enough to see the “stop Three Waters” signs that littered rural New Zealand be pulled down.

This time around, councils will be able to dictate the level of involvement that local iwi have. “We’ve opposed co-governance and mandated entities on those communities,” Brown said.

Under the new plan, there’s an increased level of council autonomy, and with great autonomy comes great (financial) responsibility. Under National, councils can choose whether they unify to form the “financially independent” council-controlled organisations, but they’re still council-controlled and therefore the cost will remain with councils. Brown said this was manageable. “If you’ve got a properly balance-sheet-separated CCO, they will be able to take on debt and borrowings separate from the council and ratepayers.”

This process will still involve water being owned by councils and not through private entities, finance minister Nicola Willis said this morning. “The advice that we have received so far is that it is possible to take these assets off council balance sheets into new entities, which still have a modicum of the public ownership occurring.”

The Act Party – which forms a third of the coalition government – is unsurprisingly pleased with the new proposals. “We all know status quo isn’t up to scratch, but Labour’s bureaucratic, co-governed regime was never the answer,” said the party’s infrastructure spokesperson Cameron Luxton. “Three Waters would have been great for middle-managers but a disaster for water users, with layers and layers of bureaucracy separating decision makers from the people.”

But remember, there is a backstop and the government can still intervene if the entities get into financial trouble.

Sounds rosy. Any concerns?

While Labour in opposition has been relatively subdued since the election, the party’s local government spokesperson Kieran McAnulty came out swinging against the government’s water plans. To be fair, these critiques are very similar to those McAnulty raised while still a minister. 

“The government’s confirmation [that] it will repeal the affordable water reforms will see higher rates for every ratepayer – up to 90% in some individual councils – in 30 years,” McAnulty said.

 “The cost of fixing our broken water infrastructure is estimated at $185 billion over just three decades. It is simply irresponsible of National to ignore the problem.”

Writing for his newsletter The Kākā today, Bernard Hickey said that the plan was effectively bumping the issue of water down the road. “The end result? The government and councils point fingers at each other for yet-more-years, the pipes keep failing, the beaches become more polluted and land prices keep escalating as fast as the rents for those not still in motels, tents and station wagons,” he said.

And how did the government respond to that?

Well, it does seem like maybe Hickey’s onto something. “That will be a decision for local councils and those CCO organisations,” Luxon told Newshub when pushed on potential rates rises. “But all I just say to you is, this is the most efficient way of doing it.”

What have councils had to say so far?

There hasn’t been a lot of comment as of yet, but Auckland mayor Wayne Brown was early to celebrate, saying the plan was “in line” with what he had asked for. He wants it established as soon as possible. “I’m working constructively with the government on that, and initial discussions are promising,” he said.

Manawatū mayor Helen Worboys – who was involved with the anti-Three Waters group Communities 4 Local Democracy – was also thrilled. “The good thing is this has been passed back to councils. We now need to pick that up and seriously come up with how this is going to work for our communities. That’s what we asked the previous government for, and this government has given us the opportunity,” she told RNZ.

Less convinced was Clutha District mayor Bryan Cadogan, who was a backer of the Labour government’s earlier proposals. He believed it made sense for the entire South Island to band together when it came to water – something that was now up to individual councils. “Without those efficiencies, nothing else that’s being offered is doing anything other than delaying the inevitable and exacerbating the situation.”