Water-treatment-plant.jpg

Three Waters

We're totally opposed to the Government's Three Waters plans.

The reasons being advanced by government for the biggest upheaval in infrastructure assets the country has ever witnessed do not stand up to scrutiny when examined closely and dispassionately. 

While there are some rare exceptions, for the most part an acceptable standard of fresh water is being delivered to the majority of those who receive it from council water systems and waster water treatment is adequate. Standards could always improve, and should, but that could be said for the provision of infrastructure, health, education, safe communities, and public housing, across the board. Failures in the delivery of fresh water and treatment of waste water are not, in the main, due to a lack of expertise, knowledge, skills, or to bad management by local councils.

The key problem is funding.

We repudiate the claim made in a Cabinet paper (18 October 2021) that “losing momentum for reform is not justified given the unsustainability of the status quo [and] the lack of viable alternatives...” . True – the status quo is not sustainable so long as successive governments insist on neo-liberal debt funding for our public sector. 

What we find objectionable is the outright lie that there are no viable alternatives which could and should be adopted. For a democratically elected government to keep the electorate ignorant of the economic facts is despicable, considering the amount of well-researched information Social Credit has presented to various select committees over many years.  

Even the Prime Minister, in her address to the Local Government Association conference recently continued to perpetuate that lie – “The sad reality for all of us is that without change the current system couldn’t afford to resolve what is a looming $185bn problem”. 

There is no shortage of funding and there are viable alternatives.

The first Labour Cabinet in 1935 nationalised the Reserve Bank, then proceeded to use its sovereign powers to fund the first state houses (and eventually more than 30,000 of them), plus road-building and bridges.  Fortunately the legislation is still intact which could be invoked immediately to fund the infrastructure needs for our water reticulation and treatment.  Sadly Labour, supported by the Opposition parties, prefers to continue the policy formally mooted in 2008 - to “deepen the capital markets”.  Hence the statement in another Cabinet paper under the name of the Hon. Nanaia Mahuta that the roll-out of 3Waters “depends heavily on the capital markets”.

Former Labour Finance Minister, Hon. Michael Cullen, in November 2020, called on Finance Minister Grant Robertson to use the money creation capability of the Reserve Bank to fund the government directly, for investment in the economy, saying that if the bank was going to continue printing money, this should be used to buy Government debt directly to finance things such as building homes and infrastructure.

In an opinion piece he wrote “We have an unparalleled opportunity in the current situation to make a quantum leap forward in dealing with some of our needs, which require large amounts of capital. That opportunity could well slip past us: a rethink is needed.”

Reserve Bank Governor Adrian Orr, in an interview with Bloomberg in April 2020 said he remained open-minded about buying the nation’s debt directly from the state. “Direct monetization, I know, has been heresy, taboo for a long time, but it’s only a long time in our lifetime,” Orr said. “It’s not a mysterious issue. It’s just not how we’ve run business.”

The Bank was co-author of an aide-memoire, titled “Quantitative Easing and Monetary Financing Compared”, (attached) which was presented to Minister Robertson in May 2020.

The report says that Monetary Finance could be used to “meet specific funding needs of the Government at lower cost and with greater certainty than QE”. Read that aide-memoire here.

Here's our rethink - Funding Three Waters - and other infrastructure. Read it and our other funding ideas for local government below.

Attachments:

Funding Three Waters - and other infrastructure – Social Credit Proposal July 2022 (pdf here)

Social Credit submission on the Local Government Act 2002 Amendment Bill – 18th June 2010 (pdf here)

Social Credit submission to Productivity Commission enquiry - Local Government Funding & Financing Issues – 15th February 2019 (pdf here)

Press Release - Productivity Commission Recommends Milking Ratepayers More - 13th December 2019 (here)

Treasury and Reserve Bank authored aide-memoire, titled “Quantitative Easing and Monetary Financing Compared which was presented to Minister Robertson in May 2020 (pdf here)