The government has unveiled its shake-up of the Three Waters reforms, abandoning plans to establish four mega water entities, and instead creating 10 of them.
Watch the media briefing:
Prime Minister Chris Hipkins sent Labour's initial plan - to transfer local control of water to four new mega-entities - back to the drawing board after a fierce backlash from many councils.
At this morning's briefing in Greytown, Hipkins says 25 percent of wastewater plants are running on expired consents and in 2020-2021 New Zealand experienced 2750 dry weather wastewater overflows.
He says this is a major cost of living issue that is going to face New Zealanders in the coming decades.
"We can't simply kick the can down the road and avoid making the tough decisions but we have also listened to the feedback that we've received on the water reform proposals that we've had to date.
"We've had the feedback that the solution that we put forward was too centralised and didn't have enough provision for local voice."
He says the government believes the 10-entity solution "strikes the right balance between ensuring cost savings in the delivery of water infrastructure, while also ensuring that those water entities are strongly grounded in their local communities".
"Every council will be represented around the table in guiding those local water entities. Households will still see significant savings."
He says those arguing against the reforms "are effectively arguing for higher rates and higher cost of living for New Zealanders".
Local Government Minister Kieran McAnulty who also attended says the "guts of it" is that councils are individually at their debt cap or if not, their communities can't afford the higher rates.
"So individually they're stuck. If they try to work together through a CCO (council controlled organisation) like Wellington Water, there's a limit to that because the debt that councils hold on their balance sheet still stays there, and if they try and do shared services it doesn't allow councils to be able to borrow the money they need to be able to fund this."
He says the water infrastructure will be funded by borrowing, it's about making that borrowing more affordable.
"We explored all the alternatives put forward through Communities 4 Local Democracy, or even the National Party, and it [sic] didn't stack up. The only way to make this work financially for ratepayers and local communities is to have a separate entity that's still owned by the council but is run independently by an independent governing body.
"That's the only way that credit agencies will allow them to borrow to the extent that they needed."
He says after his visits to all local councils, some said they had never had a minister visit them before but all said they wanted their local voice to be included.
"If we went for 16 entities we wouldn't have got the scale required to allow for the borrowing that is needed," he says, and would have left some councils "totally isolated, set up for disaster, and I couldn't in good conscience propose that to Cabinet".
Kieran McAnulty says the scheme is intended to make borrowing affordable for the country's councils. Photo: RNZ / Angus Dreaver
'It's not co-governance' - PM
Answering media questions, Hipkins says the 50-50 policy for mana whenua and the councils on the representative groups, "it's not co-governance, and it wasn't co-governance".
"There will be regional advisory groups that will include representation from mana whenua and of course representation from every local council.
"The advisory groups are only one form of that, there's also an ability for example for the Te Mana o Te Wai statements, and we've introduced an equivalent for other significant interested parties in water use to also have a say in that."
The prime minister says the modelling suggests fewer groups lead to greater efficiency, "but this is still going to be significantly more efficient than what we're doing now".
McAnulty says only one councillor - in New Plymouth - raised co-governance on his tour of the 55 councils.
"The fact of the matter is that local councils work closely with mana whenua, they have similar arrangements anyway."
"For some councils under what we propose today, the ratepayers are facing a 90 percent cost reduction than what they would face if we didn't reform and that's significant."
He added: "I think for some there is a misunderstanding as to what the intent [is] of this.
"I'm not sure everybody recognises that Māori have a special interest in water that's been established through the courts, and I'm also sure that some political opponents have tried to leverage this for their political gain. They'd rather talk about co-governance than talk about the fact that their proposal doesn't stack up financially."
"In Wairarapa I've had a lot of conversations with people that just want to know what it is that we're proposing.
"Once we explain that group isn't actually a governance group, the governance is going to be independent, it's going to be based on competency but local Māori will have a place on the body that chooses that governance group they're a hell of a lot more comfortable than what it was they've heard alternatively."
McAnulty says he doesn't think the C4LD group (formed to oppose Three Waters) fully represents 31 councils anymore, and he's talked to some members of it who are in support of what's been announced today, even if the chairs aren't.
The minister takes aim at the National Party's proposal.
"Let's not make a mistake, any proposal that says the solution to this is a voluntary CCO model, that's the status quo because it can already happen and it hasn't worked. So when we compare the cost savings under this model to the status quo we're actually comparing it to the National Party's policy."
Merger of some entities possible
He says there's also the possibility for the 10 entities to merge with one another if they decide to do that.
"If one regional representative group gets 75 percent support for a merger and that's matched with the other one, then it just happens.
"If they don't want to merge they don't have to, but I suspect they'll start to recognise the benefits of scale, and they'll have those conversations, but it has to be regionally led."
Reforms 'pretty bloody compelling' - McAnulty
He says from the feedback he's received, there will be a "hell of a lot more" councils supporting this proposal than there were for the previous one.
"When we're looking at figures and keep in mind these projections are made by councils' own numbers, they've been peer reviewed twice, they are sound numbers, and as minister I'm looking at figures that say ratepayers particularly in rural and provincial areas are facing cost savings individually of up to 90 percent if we reform, that's pretty bloody compelling."
He says the fact is C4LD's proposal for a voluntary CCO model is just like National's and doesn't stack up financially.
He says safety of drinking water is not a "nice to have".
"I think we've nailed it. Honestly, there's a balance to strike here. You can't do what Communities 4 Local Democracy and the National Party are calling for - it just doesn't work, and if they think it works they should front up with their numbers, and there's a reason they haven't, because it doesn't stack up.
"And you can't have just four entities because we didn't have the broad support of the local government sector, I think this is a good balance."
McAnulty says feedback from iwi has also been positive.
Hipkins says the government debated a range of options at the beginning including consideration of a single national water infrastucture group, but it was not able to get sufficient support for the four-entity model it landed on.
He says this is "absolutely" Labour's final model that it's committed to for water reform.
"This is the model that we will be taking to the election campaign, so we will put it in place, we will take it to the election campaign. Those who are arguing for something different need to be upfront and honest with New Zealanders about how much extra they're going to be charging on their rates to be able to pay for that."
