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Three Waters proposal should be flushed down the drain

28 Oct 2021

by Chris Leitch, Leader

Ratepayers and water users are being forced by the government to provide a guaranteed gold plated return to wealthy bank shareholders and New Zealand and overseas investors who will be salivating at the prospect.

The spurious reasoning rolled out to try and convince the public that the reforms are necessary as a result of a breakdown in water services in Havelock North, South Dunedin, and Wellington are a smokescreen.

The reason for those incidents, and others about to happen, is under-investment in water infrastructure, a responsibility lies squarely at the door of government.

Instead of facing up to that responsibility and providing the necessary funding, the government is proposing to hand that over to the private sector which will effectively tax ratepayers and water users more to generate additional profits for investors.

The monopoly nature of the water companies means millions of customers will have no choice of supplier, no choice but to take the water, and no choice but to pay for it. Millions of captive monthly payments in perpetuity: an investors dream.

This unnecessary impost is all the more galling when the government owned Reserve Bank has the ability to fund infrastructure directly, by providing nil-interest credit lines to district and city councils, removing the need to turn water services delivery on its head.

After all, if the Reserve Bank can create and issue $60 billion, as it has done over the past eighteen months, to purchase Government bonds and local body debt from banks and private investors, it clearly has the ability to create and issue the necessary loans to local bodies directly, without interest, so that they can upgrade and build new water infrastructure and ensure high quality water supply and waste water treatment.

We’ve written to all mayors and councillors throughout the country twice this year predicting the government would move to mandate the takeover of water assets.

The structure and time-line set up to move water assets into the hands of new water services entities bears a striking resemblance to the road taken to ‘reform’ the electricity industry in New Zealand and the water industry in Britain.

Both saw the ownership of the assets and service delivery end up in the hands of private companies (mainly overseas owned) with users paying higher prices - effectively a ‘tax’ which guarantees substantial profit for the shareholders of those companies.

We’re being assured that the “bottom line” for planned reforms is public ownership.

But if funding is provided by private investors, and service delivery contracted out to big overseas companies like Violia, control will effectively be in the hands of private interests and the path will be open for eventual sell-offs.

The Government has spent $3.5 million on an advertising campaign, $761 million on the reforms in 2020, announced $296 million in Budget 2021 for the costs involved with the establishment and transition of the new water entities, $80 million to get councils to opt in to the consultation, a whopping $2.5 billion to bribe them to go along with the proposals in the latter stage of the consultation, $90 million to bribe Whangarei District Council to drop its opposition to the proposals and an unspecified amount to LGNZ to promote the reforms to councils.

Taxpayers, the people who actually own the water assets, will have stumped up over $3.8 billion for the government to try to convince them it’s a fantastic deal to hand control of those assets over to someone else.

And that’s not counting the millions councils have spent on reports, analysis, consultation, feedback, and legal opinions - all paid for out of rates taken from those very same people.

The Three Waters proposals should be flushed down the drain because that is where they belong.

Read the chapter that James Meek wrote about the privatisation of water in England in his book Private Island.