Three waters: If not four entities, then what?

With opponents of the government's three waters reforms saying they're dangerous, wasteful and unpopular, what's their alternative?

Nearly six years on from the deadly campylobacter outbreak in Havelock North that sparked it, the government's first piece of water service legislation is now out for consultation.

It would move water service management for drinking, waste and storm water from 67 local authorities to four large bodies corporate, arguing councils cannot sustainably fund the water infrastructure upgrades needed on their own.

Government-funded analysis puts the cost of those upgrades somewhere between $120 billion and $185b.

National and ACT have both promised to scrap the government's reforms, but despite vocal outcry over the government's plan most opponents agree there is a problem that must be solved.

Council-controlled organisations - C4LD

Perhaps the most detailed alternative is from a group of more than 30 councils who banded together to oppose the reforms, Communities 4 Local Democracy (C4LD).

Its chair, Manawatū mayor Helen Worboys, said three things were needed: regulation, enforcement for failing to live up to those expectations, and sustainable funding not reliant on rates.

The first has already been introduced through the regulator, Taumata Arowai. The government's proposal aims to solve the latter problems but Worboys said they could be achieved through jointly and singly owned council enterprises.

"It protects the community's property rights and the community voice ... the key thing here is to allow councils and communities to come up with the solutions that work for them."

She said the group had met with Local Government Minister Nanaia Mahuta several times, and had not been challenged on its proposals or its criticisms of the government's model.

They had heard no explanation of why the government had rejected their plan, she said.

"Let's have that discussion and go through it, there has been no discussion on the detail of this.

"The government seems hell-bent on charging ahead with the reform model that they've made mandatory for councils. And so it's now up to the councils around the country and the people of the country to stand up and say that they are opposed to the mandated entity model."

Mahuta argued many models had been tested over the past four years the government has spent developing its proposals, and the four-entity model offered big enough customer bases to achieve economies of scale, and benchmarking between similarly sized organisations.

She suggested many councils did not have a good picture of the health of their water networks.

"All we had, perhaps, was a operational view of how much leakage was occurring. We had some asset management plans which gave an indication of renewals, repairs and maintenance schedules, things like that.

"We still don't have a complete picture - so people only know how much they're investing into their infrastructure, but not really, whether it's operating effectively and whether it is at the optimum level."

Worboys said that was simply trying to lump all councils together again.

"One size fits none. Every community across the country is different, some have invested incredibly well."

"We're saying yes, we do need reform, yes, we do need to understand our infrastructure, and some councils know the infrastructure really, really well."

Central and local government working together - National

National's Local Government spokesperson Simon Watts said the government had gone about the reforms in totally the wrong way and needed to start again from the beginning.

He acknowledged water infrastructure would need improvement in some areas, and rates alone would be unable to fund it.

"We need to be looking at alternative mechanisms to fund and finance that," he said.

His solution bore similarities to that of C4LD. He said National would target the areas that needed investment, by working with councils to explore other ways of supporting debt.

"One size fits all is not the answer, you need a toolkit of different solution options. And they need to be adopted and customised based on the specific requirement.

"If you look at what happens in roading in terms of the way in which roads are funded - in combination between local and central government - there's some opportunities in that space that would be applicable in water as well."

He said many councils around the country were not as badly off as the government had been trying to portray.

"This whole concept that our entire water infrastructure across our entire country is broken is simply not the reality."

However, Mahuta argued the reforms were also about preparing for challenges like climate change and population growth - and communities could not wait any longer.

"The amount of investment that councils have made in infrastructure, probably only been able to address repairs and maintenance and then perhaps some occasional significant investments on a case-by-case basis. So that's been a real challenge for councils, and they themselves would admit that too."

She said the government's solution was designed for New Zealand's specific circumstances, and would enable councils to focus on other ways of serving ratepayers.

The government has pointed to additional plans for an economic regulator and consumer protection body to resolve concerns about value for money and loss of local voice, but the details are not yet public.

"National support the concept of economic regulation within this model, but I've seen no detail in terms around how that will work or how that will be structured," Watts said.

"And, you know, that is an area that is is complex in itself."

Public-private partnerships - ACT

ACT's Simon Court proposed bringing in private investment, saying developers were already in the business of building pipes and roads.

"That's a model where people who are going to benefit from the infrastructure pay for it over over a reasonable amount of time, but in the end, it still transfers to public ownership," he said.

"It's exactly the same model we have with motorways like Transmission Gully, and with schools and hospitals built under the private public partnership model over the past 10 to 15 years."

The public-private model has not always been cost efficient, however: Transmission Gully was delayed for years, with costs blowing out dramatically.

Court was quick to defend it.

"Here's the thing. Any Wellingtonian who's driven out of Wellington on Transmission Gully knows that that's the best thing that's happened to Wellington in over a generation in terms of infrastructure," he said.

"While it's true that the initial scope and final costs weren't clearly understood at the time, if you think about it, what Wellington has got for a little over a billion dollars, there's no way you could have delivered that for less than double that price now."

Some estimates have put the true cost of the motorway to taxpayers closer to $3.5 billion.

Court argued private sector investors like KiwiSaver, ACC and iwi trusts could be persuaded with a guaranteed rate of return, in exchange for a commitment to funding and maintaining the infrastructure for a longer period of time.

"While there might be disagreements about certain aspects of costs or scope along the way, they can be resolved through the contract."

Select Committee submissions on the first piece of legislation close in a month's time, on 22 July.