John MacDonald: Why you should be nervous about government's water reforms

Canterbury Mornings with John MacDonald

It’s time to get nervous. Very nervous.

I’m talking here about the Government’s big water announcement. It’s starting with Auckland but, right around the country, changes are on the way.

Auckland is first cab off the rank because it already has an outfit separate from Auckland Council’s other operations running drinking water supply. That’s Watercare.

But, once it gets the laws it needs, the Government is going to be rolling this out everywhere. And council controlled organisations - or CCOs - will do the same thing as Watercare.

And the gist is that if you have a separate outfit running water, it can borrow money specifically for water. It is ringfenced. It isn’t money that disappears into the big black hole of the council coffers.

It’s National’s arms-length alternative to 3 Waters.

The reason I say it’s time to get nervous, is that Local Government Minister Simeon Brown was on Newstalk ZB this morning likening the Government’s water reforms to what a previous National government did with the electricity sector back in the day.

For some reason, I can still remember Max Bradford standing at the lectern promising us that his power reforms were going to mean cheaper electricity for everyone. Cheaper electricity for everyone. And we all know what happened there.

Which is why, when I saw Simeon Brown, and the Prime Minister and Auckland mayor Wayne Brown on the news last night banging-on about this new deal meaning lower water bill increases, it took me right back to the cheaper electricity promise.

And the only reason they can promise lower increases now, is because this new thing the Government’s bringing-in is going to enable them to borrow more money specifically for water infrastructure and to take longer to pay it off.

So maybe ratepayers might be slightly better off now. But not in the long run.

The immediate increase in their water rates has gone from 25.8 percent to 7.2 percent under the Government’s new model, which will mean more borrowing to pay for water infrastructure and services.

Which will probably be attractive to some people. For a couple of reasons.

One: we are so shortsighted, aren’t we, that we only care what we’re paying right now?

The other reason some people will like this, is that councils don't tend to invest properly in water infrastructure because it’s pretty much out-of-sight, out-of-mind.

So ratepayer money gets spent instead on flashier stuff.

The Government’s thinking is that, by allowing councils to borrow more specifically for water infrastructure and pay it back over a longer period of time, then money will get spent fixing the pipes and keeping them up-to-scratch before they start to fall apart.

Either way, it will mean ratepayers burdened with more debt for longer.

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