The long read: Water reforms and the looming threat of compulsion
An AI-generated image of a giant man in a suit standing poised to drop a large boulder in a river.
Just as the previous Labour Government wrestled with councils not wanting to participate in its Three Waters reform, so the National-led Coalition is now grappling with similar issues with Local Water Done Well and is finding itself heading down the same path as Labour did as councils navigate the tricky political currents around water reform.
As Labour went from allowing councils to opt in to Three Waters, trying to create various financial incentives to get them to opt in, making them specifically have to opt out, and then finally mandating participating in their multi-regional entities, the Coalition has also left itself a backstop in the Local Government (Water Services Preliminary Arrangements) Act 2024 where the minister can appoint a either a Crown facilitator or a Crown water services specialist. It’s very much a case of US President Theodore Roosevelt’s “speak softly and carry a big stick” approach in action.
A Crown facilitator is the speaking softly part. A Crown facilitator is essentially able to assist and advise the relevant territorial authority or group of territorial authorities on the preparation and implementation of their water services delivery plan.
If the speaking softly approach doesn’t work, then it’s time for the big stick - the Crown water services specialist. Similar to a Crown Manager in standard local government intervention frameworks, the Crown water services specialist basically takes most of the consideration, deliberation, and decision-making out of councils’ hands and can force them into joint plans and to participate in joint water services council-controlled organisation if they deem it necessary.
Given National’s strong opposition to Labour’s removal of choice from local communities on whether they participated in Three Waters or not, it’s hardly surprising that current Local Government Minister Simeon Brown has avoided talking about the compulsion elements of his legislation. It seems increasingly likely though that Brown may be forced to eat his hat.
In his recent speech to Local Government New Zealand’s combined sectors meeting, Brown made it clear that he expects a regional approach to water services delivery plans, stating that he wanted to be very clear that there was a “strong expectation that councils will look regionally” and that the “Government’s expectation is that, in many - if not most - cases, councils will work together to establish joint water organisations.”
Brown went further in comments that invoked the stick part of his “speak softly and carry a big stick” mentality, “The responsibility is yours to decide, but the expectation is clear: councils should work together, regionally, to deliver sustainable water services”.
Despite the waving about of his stick, Brown did offer at least one carrot, indicating that “Councils that are advancing their Water Services Delivery Plans effectively… will find themselves well-placed to secure Regional Deals.”
So why is Brown having to do this? Well the problem is that no matter how compelling the Coalition thinks the case for regional water CCOs under Local Water Done Well is, councils have to navigate the politics of and be responsive to the views of their communities. Already in the Waikato and Wellington regions we’re seeing sub-regional approaches come to the fore. In Waikato’s case, there’s two competing options with Waipā, Matamata-Piako, Waitomo, and South Waikato District Council going in one direction (a regional option), while Waikato District Council and Hamilton City Council are pursuing an option for a CCO for just the two of them, though are leaving the door open for a regional option.
In Wellington it’s even messier. In a preview of the tense politics to come when consulting with their communities, Masterton District Council has flip-flopped on whether to be a part of a Wellington regional entity or a Wairarapa plus Tararua one, leading to feisty scenes at the council table. Meanwhile in my home turf, Kāpiti Coast District Council has opted to also abandon any Wellington regional entity, and instead explore either going it alone, partnering up with neighbouring Horowhenua District Council, or going regionally to its north with Horowhenua, Manawatū, and Palmerston North. More broadly around the country, the prevailing view seems to be entities that are between two to four councils large, which seem unlikely to deliver the cost-savings the Coalition claims can be obtained under their reforms.
Kāpiti is a good example of the passionate politics surrounding water. The decision to put water meters in place cost Mayor Jenny Rowan her role. Then breaking a promise to not use water meters to charge for usage saw her successor Ross Church voted out at the following election.
Kāpiti also faces the prospect of a referendum, which is required under its Standing Orders, on any change away from council directly delivering its own water services and managing its own water infrastructure. The referendum requirement was inserted in response to fears that water meters would lead to either the privatisation or commercialisation of water services in the district. Any attempt to circumvent that referendum requirement by the council opens up the world’s easiest campaign wedge issue for any mayoral aspirant in 2025, while a referendum itself presents plenty of political landmines for those advocating for a change away from direct council delivery of water services.
I suspect that if councillors were concerned about the community’s reaction to the idea of shelling out to help Wellington’s metro councils fix their water woes, they’re going to find similar concerns when people start to consider how much they’ll need to subsidise Horowhenua, Manawatū, and Palmerston North’s own water issues. On the reverse side, I can’t imagine people in Feilding being too excited about funding what could easily be well north of $100 million for a Maungakotukutuku dam to supply Raumati, Paraparaumu, and Waikanae.
It was these thorny political issues that saw Labour’s move from a carrot to stick approach with Three Waters, and it’s no surprise that the National-led Coalition increasingly finds itself in a similar position. In place of Labour’s combination of Better Off and No Worse Off funding, the Coalition is dangling the prospect of being front of the queue for Regional Deals for councils that play ball with their regional aspirations for joint water CCOs.
Failing that, Brown has so far politely suggested that Crown facilitators are waiting in the wings to “help” councils. Of course, he ignores the fact that Crown facilitators will be powerless in the face of any community opposition to joint regional water CCOs, which councillors will be very mindful of as their water services delivery plans land in the lead up to the 2025 local government elections. The likely script script about communities perceiving a loss of control over the water infrastructure they’ve paid for and ending up having to cough up to pay for neighbouring districts that haven’t invested in the past will sound a lot like the same song-sheet National was singing from while in opposition.
It’s these politics of water reform that are ultimately seeing the Coalition’s approach to local government water reform converge on the same well worn path that Labour found itself treading. The Coalition’s attempts to make this all appear voluntary are going to increasingly come under pressure as elected councillors find themselves caught between the nudges and winks of Simeon Brown to go for joint regional water CCOs, and growing community concerns around cross-subsidisation and a perceived loss of control, all set against a backdrop of councillors trying to ensure the communities they serve re-elect them shortly afterwards.
While the Coalition’s previous lip-service to localism already appears largely dead in the water as central government prepares measures to severely limit councils’ freedom of action around raising revenue and how to spent it, no doubt its death knell will come if and when Brown has to intervene to force a recalcitrant council to participate in a joint water services delivery plan and regional CCO that it doesn’t want to be a part of.
