With local bodies facing ratepayer concerns about losing water assets, there are fears the first council's withdrawal from the reforms could break open the dam.
Whangārei is threatening to pull out of the massive project to regionalise the country's water infrastructure, in the first blow to the Government's ambitious plans.
It is just one of 67 councils, but others including Auckland, Christchurch, Napier and Clutha have signalled they could follow.
Local Government Minister Nanaia Mahuta is mounting a determined campaign to win hearts and minds. She met Auckland councillors last week, and phoned Whangārei mayor Sheryl Mai on Friday night to seek an assurance that the council would not opt out pre-emptively.
And the Government is kicking off a big public information and education campaign, to impress on New Zealanders how critical safe drinking water and sound wastewater and stormwater services are for our health, environment and economic development. It will also highlight some of the funding challenges we face as a country in maintaining and renewing the associated infrastructure. A steering committee will have two local government members on a small panel to provide advice on the campaign’s direction and messages.
Whangārei councillors are frustrated that Internal Affairs officials have issued a blanket refusal to their request for information about how the changes will affect them. They say it is the second blow this month to their relationship with the Government, after Transport Minister Michael Wood's sudden and unexpected u-turn on building a four-lane highway to Marsden Point.
The council will vote on opting out of the reforms next week, on June 29. But Mahuta insisted the country's 67 city and district councils would be provided full information about what the reforms would mean for their assets and balance sheets, at the end of this month.
Internal Affairs had been expected to provide individual breakdowns to each council earlier this month, which would have identified how each council would be compensated for having its assets appropriated. But they have not yet been supplied.
"I would be concerned if councils made decisions prematurely before their own ratepayers had a chance to understand the benefits to them directly.” – Nanaia Mahuta, minister
Mahuta told Newsroom she had given an undertaking to the local government sector that council-specific information could be provided over the next two to three weeks.
"By this time they will have information to assess the impact of remaining as they are or participating in the reform programme," she said. "I would be concerned if councils made decisions prematurely before their own ratepayers had a chance to understand the benefits to them directly.”
Whangārei mayor Sheryl Mai said the council's memorandum of understanding with government last year, under which it received $11 million to investigate working across district boundaries, was due to end on June 30. She believed most or all councillors would vote to quit the reforms before then, so as to retain their water infrastructure in council ownership and control.
"If there's an intention from government to encourage local government to think differently about the people that they represent, then we need to swear a different oath. Because we swear an oath that we will do everything in our power in the best interests of the people of our district." – Sheryl Mai, Whangārei mayor
"We have this option to opt out which expires, come June 30. This really identifies our position – because until we receive our data, we don't know for sure how the changes will impact on us. My understanding now is we won't receive the data until mid-July."
She said her district council had been disappointed by the u-turn on the Marsden Point highway, and was now questioning whether it could rely on other government assurances – like those around the Three Waters. "It's around the trust and communications," she said. "We've been burnt by that experience and it will take a bit of time to trust them again."
Mahuta has told Newsroom councils need to think of a wider public good.
But Mai rejected Mahuta's warnings against "parochialism" from councils.
"If there's an intention from government to encourage local government to think differently about the people that they represent, then we need to swear a different oath," Mai said.
"Because we swear an oath that we will do everything in our power in the best interests of the people of our district."
An independently-reviewed report commissioned by the Department of Internal Affairs warns that without reform, some household water bills would reach $13,900 by 2051. But with about four companies, they could stay under $1600.
Christchurch mayor Lianne Dalziel told Newsroom she supported the vision to improve New Zealand's water infrastructure, in principle, but her council was also leaning towards opting out as well. The council would make a decision after it had seen the information on how the city would be impacted.
Christchurch has new water infrastructure, almost entirely rebuilt after the earthquakes. Although the taxpayer picked up 60 percent of the cost, that has still left the city heavily indebted.
Dalziel expressed concern that a new regional water authority might not share the council's commitment to maintaining an exemption to disinfection regulations that allows it to stay chlorine-free. She suggested one model might allow co-investment by the Government and the council, to guarantee no chlorine was used to disinfect the city's waters.
She was also dubious about whether stormwater should be included in the reforms, alongside drinking water and wastewater. She preferred "two waters" reforms.
Like Mai, she said the Government's job was to act in the best interests of the whole country, but her council's responsibility was to act in the best interests of Christchurch residents.
In Auckland, Mayor Phil Goff has told Newsroom Watercare is already serving 1.7 million people and did not need to merge with Northland to achieve economies of scale. He is concerned that if the water infrastructure passed out of ratepayer control, it would be easier for a future government to privatise the assets.
The remaining two northern councils – Kaipara and Far North – have some of the lower rates in the country of connections to clean, reticulated drinking water. Just one in four Kaipara households has reticulated water, yet the council carried more than $30 million in debt. Mayor Jason Smith is concerned if his council is left isolated when neighbouring Whangārei and Auckland opt out.
But last week, Goff wrote to Mahuta saying Watercare was rated the best water supplier in the country. If the reforms went through, he said, it would no longer be clearly accountable to ratepayers. Instead, he wants the Crown to guarantee Watercare's debt while remaining in council ownership.
Watercare is limited in how much it can borrow, so it has announced 10 years of steep rates rises to pay for new and refurbished infrastructure. These will double the average household water bill from $1069 to $2261.
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