Water In The Ballot Box

A few weeks ago it was reported that New Zealand’s taxpayers were paying 4.66% more tax than the previous year. This was despite the National-led Government’s tax cuts, advertised as its “Back Pocket Boost” by them during the 2023 election.

This tax rise is led by the 11% jump in Local Government rates. The 2024/25 year is the third in a row where local government taxation has been above 10%. Basically, the back pocket was boosted, but immediately taken away.

Councils around the country had to put rates up by over 10% last year, and likely will need to again this year, and probably next year too. Some have kept their rates lower, but by selling public assets off - like Auckland did with the airport (and Wellington tried to). 

The Government knew this was going to happen. Remember Chris Luxon chiding local government about ‘doing the basics’ and David Seymour’s announcement that ACT are standing candidates in the local elections this year. They knew this was going to happen because they made it happen. 

It’s to do with water, and water reforms - both the binned Three Waters/Affordable Water Act and the current Government’s Local Water Done Well reforms.

In 2021 the Labour-led Government announced its reforms would be mandatory. Councils would give their assets to the new water entities. This upset a lot of people. At the same time Councils were nudged to start bringing forward water projects planned over the next decade, so that there’d be infrastructure in-train when the entities started up.

This meant that Councils were, often, taking on a fair bit of debt - recruiting water engineers to sort it all out. This debt would be paid for by nudging rates up. This could be done, safe in the knowledge that the debt, the engineers, the projects and all would be transferred to the new water entities in July 2024.

Except, that didn’t happen, did it?

When Labour lost the 2023 election, the water entities were the biggest casualty.

National leveraged the public disquiet, and never quite condemned the deeply racist campaigning, about the water reforms. Three waters was to be repealed and then replaced, in the first term.

In February 2024 the repeal became law. Councils around the country suddenly had all of the assets, all of the projects in progress, all of the engineers. And all of the debt. 

This spiked rates around the country, because waters weren’t meant to be on the books any more - operating expenditure, capital expenditure, and the debt for it - it was supposed to be in the new entity. And water stuff is extremely fucking expensive.

Having guaranteed that local government rates would skyrocket, the Government issued its Back Pocket Boost of minor tax cuts to most, and massive ones to landlords (you know, who can vote in each local government district they own a house in).

A few months after that, Chris Luxon spoke at the Local Government New Zealand conference and told everyone “Councils should get back to picking up rubbish, fixing pipes, and filling potholes” and wouldn’t get increased government funding until savings were made.

So he had ensured rates in NZ averaged 14% then said local government couldn’t expect any help if they didn’t start cutting back because of the high rates. He could have at least worn a hot-dog uniform to make it perfectly clear what bit he was doing.

Local Government Done Well

With the Local Water Done Well reforms, there’s more work for local government. The preliminary arrangements bill set a September 2025 deadline for Councils to get the financial modelling and joint-working arrangements and all the options together and give the Government a plan.

None of the options in the reforms involve keeping things the way they are. Each option involves a lot more regulation, for infrastructure and finances. There’ll be minimum and maximum pricing and investment that must be adhered to. This isn’t a bad thing, there’s a big infrastructure gap in waters - making sure it gets built and paid for is good.

Privatisation is off the table though, water has to be owned by local government, or a community trust setup. Those are the only options. So that’s nice.

However, like Three Waters, Local Water Done Well is based on letting water organisations set apart from councils borrow a lot more money. 

There’s no answer that isn’t more debt; if Councils work together in a Joint CCO, they can borrow up to 500% of their water revenue. That’s a big increase on what they can currently borrow.

These joint-CCOs stop elected Mayors and Councillors having direct budgeting control over water assets. This is deliberate, because part of how we got an infrastructure gap was elected politicians deferring work to keep water charges (and the rates) down. 

For the councils that are planning to keep services in-house, they have to use their existing debt ceiling of 175% which can go to 250% (with a credit rating) or 380% if you’re a High Growth Area (think Queenstown or Kapiti Coast).

However, that debt-ceiling is also for everything else local government does - everything - roads, parks, property, libraries, housing, sports facilities, heritage, planning, building control. 

When you borrow more, much more, for water infrastructure upgrades - that reduces your ability to do anything else. But remember, there’ll be a minimum and maximum pricing and investment requirement. Suddenly things look a lot more constrained, right.

The Department of Internal Affairs will be assessing all of these plans - both in-house and multi-council options - and deciding which ones are financially sustainable. If they don’t like plans, they can tell local government to do something else - or send in a commissioner to get it done. Local water, done well. 

Democracy manifest

Before the local government puts a plan together, it has to consult with the community. Which is where David Seymour’s announcement of ACT running local candidates comes in.

The animosity, justified or developed by hideous racist misinformation, to the previous Government’s Three Waters reform were a big part of why they lost the 2023 election.

The Local Water Done Well reforms have, so far, put the spotlight on local government. 

It’s local government who are having to explain the Local Water Done Well reforms, and why the options they’re presenting don’t include the status quo, and why the multi-council water organisation option looks a lot like what they were mad about over Three Waters, and how they’ve got to get this done by September 3 2025 because the government says so.

This isn’t necessarily going down very well. There’s a lot of confusion about how you keep ‘local control’ when you put assets into a new council owned company. There’s a lot of aggravation at the only solution being more debt, and the only way it’s paid for is by rates. There’s also the question about iwi, because while the legislation doesn’t allow co-governance, most local authorities have agreements and understandings with iwi. 

Meanwhile the government are extremely quiet about all of this.

That's possibly because there are local government elections in October this year. The government knew that when they set the deadline and passed the legislation bringing it into effect in September last year.

Now this waters decision is big, so naturally, a lot of people are going “You can’t make this decision now, you need to wait until we’ve had the elections!”. You know, like Andrew Little is about stuff in Wellington. But it’s actually out of local government hands - because the deadline is set in central government statute.

At this point David Seymour pops up and announces that ACT will be running candidates in local government elections, saying:

“Kiwis voted for real change in 2023, but our councils seem to have missed the memo. It’s time for a clean-out.”

Now Kiwis did not vote for real change in local government in 2023. The electoral mandate of local government and central government are two different electoral mandates, so Seymour was vastly over-reaching and relying on nobody noticing. He’s been doing this a lot, trying to assert parliamentary sovereignty over universities and also local councils - which he doesn’t have.

Central government policy and legislation decisions have heaped additional costs onto local government in the last 18 months, while simultaneously yelling at local government for putting their rates up as a response to the additional costs. 

Remember how Luxon said there wouldn’t be additional grant money for local government until they make ‘savings’? That was literally the same time they were telling Councils to self-fund planning and implementation of water reforms, knowing how god damned expensive that is.

Fuck around, find out

Three years of above 10% rate rises on average. Plans for the future of water being made by end-of-term Mayors and Councillors, being grumbled at by communities who thought they were getting Local Water Done Well. Animosity from Central Government towards Local Government for doing exactly what Central Government has instructed Local Government to do.

This is not a recipe for happy local elections this October. It’s likely a lot of candidates will run on keeping rates low, and keeping waters in-house - basically on the agenda that Luxon and Seymour have publicised. The Department of Local Government Efficiency, lets call them.

Except if those candidates are elected, they’ll rapidly run into the problem that underlies all of this. Local Government has to do a lot of things that the Central Government tells it to do. Including approving their water plans, and having the final say on any changes to plans which have been submitted. If someone got elected on ‘I will reverse this decision’, they’ll find that extremely difficult to do.

They’re also going to be looking for the “Stop spending” button, and find out that to make the cuts they want - they’re going to have to start with things people actually like - libraries, museums, parks - the stuff that makes the place you live a nice place where you live.

However, if you’re looking for a bright side, it’s also probably not a recipe for a happy general election in 2026.

The water reforms aren’t going away. By early 2026, so election year, every Council in the country will know if their plan has been accepted. The plans that aren’t accepted, well that’s where Government intervention comes in. As in, directing Councils to join up with others - even if that’s not what the community wanted. Local water done well, remember?

So, it’s possible you’ll have communities fuming that even though they wanted to keep water in-house, their Council voted to put it into a Joint CCO anyway. They’ll elect some people to reverse that, who’ll find out they can’t do that. 

You’ll also have some communities fuming that even though they wanted to keep water in-house, and their Council voted to keep it in-house, the Government told them no - go and join up with these other councils.

You’ll also have Auckland and some of the cities, who can actually go this mostly alone - they’ve got the concentration of population to do this. Watercare got a new charter, because the Government realised they couldn’t fuck around with Auckland too much as there’s an election soon.

It’s interesting that the last Labour Government really suffered because they failed to explain their water reforms, and allowed the worst people in the world to take control of the story. 

In comparison, the current National Government has relied on not really explaining their water reforms on the basis that they promised to repeal and replace Three Waters - job done, no further questions, everyone’s happy. Except, it doesn’t look like they are, does it?

The earnest bit

You could read all of this and come away with the conclusion that this is a foregone conclusion. In terms of waters, yes probably. The Government has passed these reforms in about 18 months, which is extremely fast for something so big.

By the time the next general election rolls in, the future of how water is delivered in New Zealand will likely be set - and it’ll look a bit like Three Waters but not quite like Three Waters for most places, but don’t worry about that too much.

But, there’s another election in October this year for Local Government. ACT are running candidates, there’s a whole cooker movement out there who think they can clear out the UN and WEF from Dannevirke or whatever. Things could get real bad.

It really matters that you register to vote, find out about your candidates, and vote for someone who cares about your community.

Because it does matter who makes the decisions locally, because that power is a different mandate to Parliament. Think of it as a warm-up to next year’s general election. Good luck out there, and try to stay hydrated.

Archimedes is a 2200 year old mathematician, who thought he'd come up with the most efficient way to screw with water.