Prime Minister Christopher Luxon and Local Government Minister Simeon Brown plan to set up council-controlled organisations, known as CCOs, which will manage water. Photo: RNZ / Marika Khabazi
Analysis: The government's plan for water management raises questions about who is going to pay as it is revealed Labour spent $1.2 billion setting up the now repealed Three Waters scheme. Benefit rates are changing amid criticism that the poor will suffer and the "old and slow" 111 call system needs fixing.
The government announced on Monday it was going to repeal Three Waters and by Wednesday lunchtime it was gone, the bill passed under urgency.
That launched a new round of water wars, with Labour accusing the government of leaving councils "carrying the can" for expensive infrastructure upgrades they could ill afford, RNZ reported.
"They've got to figure out how to pay for something they simply don't have the capacity to pay for," party leader Chris Hipkins said.
Under the government's replacement plan, explained by Local Government Minister Simeon Brown and Prime Minister Christopher Luxon, councils will set up council-controlled
organisations, known as CCOs, which will manage water.
The ill-fated Three Waters envisaged establishing 10 mega entities separate from councils, which caused a great fuss about ownership of existing infrastructure.
The government says it's giving councils what they asked for - and they're going to have to pay for it. It won't help financially with setting up the CCOs and it's not going to underwrite their borrowing.
Luxon and Brown said they were giving councils the tools they needed to ensure long-term, sustainable management of clean water.
It believes they will be able to borrow the money they need because they're separate from the debt-burdened councils.
Labour has challenged that.
Kieran McAnulty, the former minister who handled Three Waters before the election - after it was re-named Affordable Water in an unsuccessful attempt to detoxify it - said it wouldn't work.
Brown said the CCOs would be different to those currently operating - Wellington Water is an example - because they were separate from the councils.
"They'll be able to access the long-term funding and financing separate from councils' borrowing for council services, and they'll be able to have ring-fenced revenues so they're able to make those long-term investments," he said.
McAnulty said that couldn't be done, RNZ reported.
"You can't have council control and balance sheet separation: that is a consistent thing in all the advice and peer reviews and actually the peer review of the Castalia report which the
National Party plan is based on," he said.
"Their own advice says that if they get rid of the [Three Waters] entities they won't be able to have balance sheet separation. It doesn't add up, it's not going to work."
Whether it works or not won't be known for quite a while. The government will have to pass two bills to get its scheme up and running, with the second going to Parliament next year.
When he announced the plan Brown said Labour spent about $1.2 billion setting up Three Waters "and getting nowhere". He was implying the money was wasted, consistent with National's constant claim that the previous government spent vast amounts of money and didn't deliver.
That caused a separate row, and Hipkins hit back.
"If a government starts building a house and the next government says 'we don't like that house' and demolishes it, whose fault is that," he said on Newshub's AM Show.
McAnulty also said Labour didn't have anything to apologise for, RNZ reported.
"The decision to repeal things is not on us, that's on this government," he said.
"They are the ones that need to justify reversing a system that is now set up that can be proved to save ratepayers' money - and their alternative will not, it will cost ratepayers money."
Kieran McAnulty says Labour doesn't have anything to apologise for over its plans for water. Photo: RNZ / Angus Dreaver
Luxon was asked several times whether the government's scheme would cost ratepayers more than Three Waters would have, and his reply was that the new plan was much more efficient.
Brown, when asked the same question, said it was up to councils to set the rates.
Stuff's chief political correspondent Tova O'Brien said both the main parties were to blame for the $1.2 billion that's gone down the drain.
"Labour, for advancing contentious legislation without properly communicating it to the public and therefore failing to bring people with them or make amendments before the damage was well and truly done.
"National, for repealing for the sake of repealing without finding a way to capitalise on what had already been spent or redirect funds to build on what Labour had started."
The amount that has to be spent to fix water infrastructure is mind-boggling. "We're talking about $185 billion… and we found a way in which we could do that in an affordable way," McAnulty said.
The figure he mentioned is an "up to" amount spread over 30 years, according to previous reports.
There's not much doubt that during the next three decades there will be huge cost escalations.
Everyone knows who is going to have to pay eventually - the ratepayers. Horrific increases could result, and McAnulty raised the spectre of homeowners having to sell up because they couldn't afford to pay.
According to LGNZ's website there are 78 local authorities in New Zealand, so there are going to be a lot of CCOs. The government wants councils to amalgamate and says some are already talking to each other.
There will almost certainly be a multitude of problems to fix before National's plan, which it calls Local Water Done Well, is delivering what it's meant to deliver.
But it has three years to do it, unlike Labour which brought in Three Waters late in the cycle and then had to scramble about trying to fix it.
Failings in 111 system
Getting funding for a new 111 emergency call system could be Police Minister Mark Mitchell's first big test, Peter Wilson writes. Photo: RNZ / Sam Rillstone
It was revealed by RNZ this week that the previous government was warned a year ago the 111 emergency call system was so old, slow and fragmented that it was causing deaths and injuries.
Citing police documents, the report said Labour was working on a replacement but dropped the project last August.
"Police on Tuesday morning told RNZ the system continued to work 'despite the current challenges' and they had made improvements to it," the report said.
That put Police Minister Mark Mitchell in the hot seat - what was he going to do about it?
"It is a big job, make no mistake about that," he said.
"But we are working through that, we're coming into a bidding process now with the Budget… and this is one of the things that's been raised with me as incoming minister, it's extremely serious and I'm working through it with the police."
This could be Mitchell's first big test - can he squeeze the money out of Finance Minister Nicola Willis?
She's made it abundantly clear how averse she is to spending money but surely this "extremely serious" situation has to be urgently dealt with.
Mitchell didn't seem sure he'd get the funding and wouldn't commit to implementing the changes before the next election, nearly three years away.
"I'm committed to making sure that we've got a proper communication system for both the public to use and also our frontline first responders," he said.
Labour's police spokesperson, Ginny Andersen, said her party stopped working on a replacement emergency call system last year because of Cyclone Gabrielle.
She said she made a pitch for funding as part of last year's Budget but was not successful.
"There were some big calls to be made post-Cyclone Gabrielle and another big project, which was the next generation critical communications, which required a big build, a billion dollars, to provide a secure digital network for all emergency services was funded," she said.
Govt moves on benefits
Louise Upston wants to ensure "the cost of the benefit system to taxpayers is sustainable and manageable in the long term". Photo: RNZ / Angus Dreaver
The government began pushing another bill through under urgency this week which will align benefit increases with inflation rather than wage growth.
Wage growth has typically increased faster than inflation and the government is reversing a change brought in by Labour, RNZ reported.
It will mean savings for the government with smaller increases to benefits than would otherwise be the case, the report said.
The estimated saving is $669.5 million through to 2027/28.
Social Development and Employment Minister Louise Upston said in a statement the move would "protect the real income of benefit recipients and low-income workers for years to come, while also making sure the cost of the benefit system to taxpayers is sustainable and manageable in the long term".
She said that over the longer term taxpayers would gain from savings in benefit expenditure while benefit recipients retained a consistent level of income.
A Stuff report said child poverty advocates were warning there would be more homelessness and desperate families living in cars.
"The government's advice, laid out in a regulatory impact assessment, said using inflation as the benchmark for determining how much benefits increase each year could stop it from reaching child poverty reduction targets, enshrined in law," it said.
"It estimated a further 7000 children could be brought into poverty."
Upston said the change could not be viewed on its own.
"Things like income tax relief, and the tax credits for working households will have an impact on child poverty," she said.
*Peter Wilson is a life member of Parliament's press gallery, 22 years as NZPA's political editor and seven as parliamentary bureau chief for NZ Newswire.
