Auckland & Christchurch propose Three Waters alternative where councils keep assets, but get Govt investment & loans; PM rules it out immediately; says balance sheet separation a 'bottom line'
Thanks Andrew. You're right. I uploaded a raw version shorn of my preamble and friendly Morena. I'm re-recording it now and will upload it shortly. Sorry. Bit frantic this morning.
Hi Bernard. I love your theory about the real driver of 3W but I don't understand how politicians would do this secretly. Wouldn't they want voters to know? Labour dropped all the things they campaigned on but won't drop this vote losing initiative or even debate, discuss, or tweak it. Would they pay such a high cost to drive through something without people understanding why? Most people want funding for infrastructure sorted I think
Three Waters is beginning to make my eyes glaze over, just as the debate over who should pay for carbon dioxide and methane emissions does. But this is how I see it:
1. We all want a reliable clean drinkable water supply, and sewerage and stormwater drains that work. This is going to cost billions.
2. I don't think anyone envisages trying to make a bankable profit out of any of the three waters, either supplying water or taking it away. The concept of Māori ownership is meaningless in the sense of reaping financial dividends: the wider community wouldn't stand for it.
3. So ownership seems to come down to (a) who pays and (b) who can borrow against the assets. As for who pays, a 2020 Fonseka Newsroom story said 14 out of 41 council and water bodies were metered; since then New Plymouth has been added. I think user-pays water metering for urban areas will be rolled out over the whole country fairly smartly, and farms will eventually be user-pays too. (See https://www.business.qld.gov.au/industries/mining-energy-water/water/metering)
Bernard has written much about the need for any new structure to be able to borrow the billions needed to restore, expand, and run the infrastructure for all Three Waters. That's what ownership is all about. As long as the infrastructure doesn't pass into foreign, or private, hands, nobody is being robbed, regardless of whether there are four entities, 15, or just one for the whole country.
4. I think the issue of co-governance is a red herring for some and a red rag for others. It's points 1, 2, and 3 that need to be sorted out. I don't see a problem with mana whenua being able to express some degree of kaitiakitanga (co-governance, not co-government) over water resource and wastewater discharge in their rohe, but manners and respect will be needed by all parties for that to succeed.
Three Waters as proposed by the Government is dead. It now must listen to mayors, councils, and a rebellious citizenry, and adopt a Three Waters regime that will survive the 2023 election. Otherwise more years and much money will have been wasted.
I find Bernard overly cynical to imagine homeowners are out there conspiring to raise home prices by denying infrastructure to the nation (which includes themselves).
Thanks Duane. I wish I could see better motivations behind the repeated election results and mountains of rhetoric from politicians that I've listened to over the last 20 years. I agree it's not as conscious as I suggest. But it's certainly unconscious. Our political lizard brains at work. When a system works for you personally, it's easy to say no when someone says any change would be bad, even when the argument is the change would be good for everyone. Sadly, when people draw the curtain in the voting booth, it all becomes very 'them' and 'us' and zero-sum-game.
Great comment John. Interesting case study from the UK where Severn Water agreed a Payment for Ecosystem Services (PES) agreement with upland farmers to establish measures to reduce run-off, sedimentation and pollution in their common watershed. These measures helped reduce the company (read council/government) asset management/capital renewal costs, whilst at the same time providing a steady source of passive income for farmers to reduce stock levels or compensate for reduced crop yields.
Thanks JP F. I think a lot of people say they want infrastructure sorted, but they also say they want lower taxes. A lot of voters think magically, in large part because they've been encouraged to do so by a generation of politicians and bureaucrats who still believe we have a flat (ish) population and starving Government is (of course) a good thing.
sorry - I think I was unsure that if you were suggesting that the project was designed by the politicians to fix infrastructure in a way that avoids the 30-30 restriction, why they would push past the criticism without explaining that bit to voters. It didn't seem believable that any politician in NZ would think long term like that ie; to take all this heat just to separate the balance sheets so they could borrow against it. I see now that you are saying that they were not clear because they needed to avoid the 30-30 thing
Not sure there’s a lot to compare Ardern and Thatcher, other than they’re both female. But yes, no need to cancel Bernard, pointing out little things that can be reflected on isn’t cancelling :)
You need to be more direct Bernard. Too much concern about upsetting people. Your site, your language. If folk don’t like it they can leave. It’s quite liberating when you don’t give a rats ass. Be honest, be critical. No Chamberlain appeasement
I had the same reaction. If they were both men would the line have been written that way? Especially with the ‘turning’ part added, which was recently used to describe Liz Truss.
Sorry Bernard, my training in sociolinguistics meant this put up red flags for me.
Tut Tut Bernard, can you name any political poll that has National 10% ahead of Labour. I can't think of any.
But I do agree with you regarding three waters. Frankly, as a user, I couldn't care less who owns or supplies and takes away our water, but agree that the whole matter has been badly handled by the government, starting with those dreadful advertisements that were meant to promote it. I would have thought that a way out was suggested by the three mayors, but as you have pointed out Ardern and Mahuta didn't take it.
Thanks John P. I don't think I was very clear. I meant to mean Labour vs National-ACT, who I see as one bloc, although you could just as easily say the same for Labour-Green. The key thing is most recent polls say National-ACT can govern alone. I had the Blue boc 10 points ahead of Red bloc in late May. Although, as you say, it has softened since then. https://en.wikipedia.org/wiki/Opinion_polling_for_the_next_New_Zealand_general_election
great work. definitely open this to the public. I am bored with trying to tell people to discuss the issues of cost, functionality and accountability of Three Waters and forget about the co-governance issue. Where I work, Taranaki, the debate is always about race when this has nothing to do with it. Lets get the debate about the real issues. I think this article would help do that.
Oct 31, 2022·edited Nov 1, 2022Liked by Bernard Hickey
Hi Bernard
why don't you take a more critical approach to three waters the basic one is why I this government relying on "false facts" - they are as bad as the Donald - or even worse in that he at least didn't have a sanctimonious bone in his body.
1. There are no 34,000 cases of water borne disease annually from council owned water supplies - there are generally NONE - this estimate of disease burden applies to small private schemes not managed by Councils and the number is speculative and not supported with any factual evidence.
2. There is a plague of the same gastrointestinal disease from a wide variety of non-water sources - numbers that far outweigh anything from drinking water from private supplies.
Government makes much about the state of our rivers but I will bet if you asked for a publication that actually showed the extent of NZs waterways that were in a severely deteriorates state firstly there wouldn't be one that is supported by a single consistent and comprehensive national monitoring program and secondly those that do exist would be local/case by case issues to resolve - not national issues.
3. The issues of water quality in this country are a symptom of regulatory failure and failure to adequately fund and manage environmental science at a national level. The simple illustration of this assertion is that the great majority of farmers are not breaking any rules when they farm as they do -so that means the rule setters have failed not the farmers - indeed it is my experience that a number of farmers are ahead of central and regional government when it comes to addressing this problem.
4. Storm water discharges and sewage discharges are a significant problem as there is really no adequate technology for removing nutrients and other pollutants from sewage except for reverse osmosis/membrane filtration and that is expensive and energy intensive and still ends up with a whole lot of difficult to manage waste that is in a solid form rather than a liquid form. This also raises another issue that is largely ignored which is that the human race is gaily discarding the planet's finite resources of fertility every time the toilet is flushed. Ever thought why farmers need to put all of that nitrogen and super phosphate on the paddocks - it is because without that we would starve - we need to be managing our fertility cycle not treating it as a endless system - this is actually more of an issue for cities than it is from farms as it is relatively simple to capture and recycle on farm wastes.
5. We forget when it comes to urban waste water discharges that NZ has half a million dogs and more than one million cats all gaily crapping all over the place and all of this washes down into the storm water and into our stream and beaches. You will find a large part of the disease burden in our urban stream and beaches actually comes from this source. Marama Davidson has a dog - she is doing her bit!
6. Scottish water - the model for Three Waters - charges between two and three times what most councils in New Zealand charge - think of the impact on wellbeing that will have on lower income households. The remaining water corporations in the UK have been an unmitigated disaster.
Government has been running a population policy that has not been agreed with the general population that is causing our existing infrastructure to be severely overloaded - those moving into an area - whether from an internal or external source are not paying the full cost of the service required to service their new home - the $150billion (just a part of our infrastructure deficit) divided by the 2million people who have moved to NZ over the past few decades indicate that the unfunded per capita infrastructure cost of each new citizen is approximately $75,000. This cost is being imposed on the entire population so is in effect a subsidy on population growth. There are quite swag of other socialised costs from this population growth program as well - which unlike Muldoon's subsidies to farmers in the 1970's - is increasing our costs not our income.
We have a huge range of infrastructure issues that we need to be addressing - not the least of which is an urgent need to become energy self sufficient and free of fossil hydrocarbons
Government is about to commit $150Billion to 3 waters with no comparative analysis of other investment priorities. This week the Otago Daily Times had the following head line " Claims of more capacity cuts at new hospital" This hospital is an investment not just in the future needs for Otago and Southland but also the primary teaching hospital for training New Zealand's future doctors. More people have died sitting in overcrowded hospital EDs in the past month than have died from drinking council supplied water in the past FIVE DECADES!!! If this is not startling evidence of this government having a complete lack of a coherent investment strategy in public health I can't think of what else might be (though there is a long list to choose from!)
Also ever thought that three waters might be a mechanism for sneaking some more indirect taxation into you life? Wont be any different than the power companies - govt will sell 49% of the shares and spend that money and then use the remaining asset base as justification for chiseling a few billion out of water consumers.
You would all be advised to invest in rainwater tanks and composting toilets - - you could install those for less than one year of the hypothetical costs that Ms Mahuta is suggesting your water charges will be without three waters.
Installing rainwater tanks also has the benefit of reducing urban storm water flows substantially, it would also increase society's resilience to disaster, greatly expand the drinking water resources available in our cities - and composting toilets would - in one blow - fix the issue of sewage discharges and your wastes could be given back to farmers to put on the land instead of mineral fertilisers - just like humanity has done for millennia. Check out Bambooloo for an example of an aesthetically pleasing option to do this.
I have voted for labour the past two elections but I wont be this election - this government is doing a great job of resurrecting Winston but a very poor job of everything else!
Darkhorse. I much appreciate the depth and thought you've put into your challenge. Lots of great points that made me think. I'm especially interested in the re-use argument and the self sufficiency arguments. Got any detail on whether we could do a lot more without these expensive networks of pipes? Cheers. Bernard
You might want to check out the expensive treatment systems required by Taumata Arowai as part of their acceptable solutions. There is also the assumption that there will be treated/safe water to supply you in a dry summer - its a bit like putting solar and battery on your house. If you want to be totally self sufficient then you will have to be prepared for outages.
Storing rainwater for non-potable uses has merit.
Having individual wastewater collection and treatment assumes that everyone will comply with good practice and there will be no accidents. The waterborne disease burden that public sanitation systems have reduced to damn near zero will come back with a vengeance. You can also expect to lose a lot of exports, humanure is a big no-no for these - we've just had issues with berries, and remember what happened with lettuce in Europe a few years ago
rain water is fine if you run it through a standard 10micron/1micron filter bank and then through UV disinfection - if you get really picking you could use a reverse osmosis (membrane filtration) system . You can get your fluoride from your toothpaste. I presently live on a restricted rural water supply - the supply provides 900l/day at around 0.6l/minute - it is an excellent scheme with water of the highest quality delivered economically to all of the rural towns in our district from a source over 50km away we are required to have three days storage (5000l is preferred) - there is no reason why a system like this couldn't work in tandem with roof catchment storage. These systems have huge advantages - no need for metering - no ability to waste vast amounts of water, and there is NO PEAK LOAD! Few people understand the impact of peak loads on out networks but just check the motorways - water sewer electricity and telecoms have the same problem - it is cheap to spread demand for a water supply that act alone would transform the capacity of existing networks.
Humanure is simply a matter of how you handle it there is no particular issue with sterilising it - simple composting can do that - the major point that I am making here though is that organically available phosphate is the primary limit to sustaining life on earth - and that is a very limited resource - the we presently flush into the ocean. Without superphosphate NZ wouldn't have a viable agriculture based economy. The reason why we are taking controversial phosphate from contested parts of Africa is that material from this source is free from cadmium contamination which in mamy parts of NZ is no reaching the maximum WHO levels for human exposure through the use of cadmium contaminated phosphates for Nauru.
the second point around this is that the days of flushing everything into the ocean/river/rubbish dump/atmosphere has to stop because lots of what we discard is essential to life and limited in extent - its not a matter of whether you might get a disease from eating food contaminated by sewage- it is that you just might not have any food FULL STOP as there will be no phosphate left to replace what has been discarded. This is not that hypothetical either - globally we consume 250,000,000 tonnes annually there is about 300 years supply left the U.S. Geological Survey, Mineral Commodity Summaries, January 2022 notes that : There are no substitutes for phosphorus in agriculture. A lot of the resource are also contaminated with heavy metals so maybe of restricted usefulness - there are deposits on the ocean floor however deep sea mining is both expensive and controversial.
Hi Bernard - the real big issue in the midst of all of this is that if three waters was such a good idea then surely they wouldn't need to rely on lies and propaganda in their endeavour to sell it - most mayors know that the information government is relying on is mostly fiction and that if you dig deeper all of the issues with infrastructure arise as a result of government agencies failing in their duties - there is nothing new about infrastructure funding that has primarily arisen from our lack of a coherent immigration policy, a lack of national policy direction - you see Im old enough to remember the Ministry of Works town planning division that initiated subdivisions, planned motorways built dams and water supplies (and signed off structural design on buildings to ensure they didn't fall over in earthquakes. All destroyed by David Lange and Roger Douglas. You see these government departments were repositories of knowledge and the home of the longer term view - they certainly weren't perfect but vastly better than the politicised bunch of eunuchs inhabiting the imperial palace now. The old public service side of government was the counterweight to the political side of government - we now lack that balance and that access to knowledge that once served us pretty well and the mess we are now in is the result of too much politics and not enough commonsense. Once the public service was a great place to have a career in engineering or science and these practical people advised governments on the longer term issues - now we just have swags of consultants and other vested interests in their ear.
Hi Darkhorse. It must be age! I really get what you're saying. I too remember the Ministry of Works in the world where knowledge of practical significance was very highly valued.
I go back to despair at the Lange/Douglas governments juggernauts of demolition. Along with that came the Knowledge Economy where one claimed success via required words filling skiploads of paper. We failed the practical youth as we alarmingly failed the country.
Apart from that, I am curiously obsessed at why these discussions ( and economics generally it seems), mainly appeal to men. I am in no way anti men, but what is it about the subject?
And on that subject, I wonder impolitely, if maybe Ms Adern and Ms Mahuta are as foggy as i am on the economics of Three Waters and perhaps much more besides.
Darkhorse could you create a series of educational comic strips please?
Unfortunately it has not a man thing - I'm old and crusty and there were plenty of women doing serious jobs in the old Ministry of Works - this is an issue of systemic policy failure - I got myself on to a Labour party environment and infrastructure policy committee at the time of the election before last and was appalled at the self appointed experts (ive been ceo of both regional and local government so know a bit about the topic) the one thing I managed to do before I chucked it in out of frustration was to convince Phil Twyford that we could never invest in infrastructure fast enough if we kept immigration figures at 100,000 annually. That lead Labour to cut back (temporarily unfortunately) immigration - however the fact that he hadn't figured this out for himself was a worry. This is the point I was making to Bernard in this comment - the real problem is that we need to build back a proper professional public service - we need to complete review the function of both regional and local government - we dont need to fix the RMA we need to fix the policy deficit at the national level - Governments have offloaded all sorts of responsibility onto local and regional government without providing them either the direction or resources to fulfill those responsibilities. We have a failure at central government level not regional or local government - they just battle on usually quite competently/adequately it is the people at the top who are the problem!!
I totally agree. And the malady is spread around the world. Professional public servants replaced now by PR and HR 'professionals. When my father was working for Transport Nelson they had to manouvre the pipes for the Cobb Dam round the twists of the Takaka Hill. When i look at photos of that, it illustrates to me what real knowledge of the real world we desperately need
One way for the government to avoid the horns of the dilemma would be to take the off ramp but make it a condition that, for the good of consumers and investors, the councils will be subject to economic and consumer regulation. Councils believe that they are doing this well and so should have no objections.
The requirements of this, combined with adverse findings from the regulator, would force councils towards amalgamation just to avoid the risk of non-compliance they would now be responsible for. And this would be completely independent of the government.
I’d say not. Taumata Arowai is the drinking water safety regulator. The economic and consumer regulator would be ComCom or a new body. Everyone seems to be ignoring this and the impacts it could have. Ask any of the regulated businesses if they ignore ComCom, especially Chorus and Transpower.
How long have the Mayor’s been working on their alternative proposal? Did they take that vision to the council elections or is it policy on the fly after what, two weeks in the job? (I honestly don’t know the answer to that, when ever anyone 60+ mentions 3 waters these days I tend to zone out.)
Why would anyone listen to these new trainee Mayors for such important reform? The mind boggles that anyone is taking them seriously at this point. At least give them a year of governance under their belt, then if they still feel the same way let’s debate their idea.
Ha! I get it. Although I am 55... This is another version of the C4LD ideas and broadly in tune with the opposition to 3 Waters that was voted for in the elections.
Regarding bank stress tests, there is one significant risk that doesn't seem to be in the tests. The banks are sitting on a $100B foreign currency-denominated debt, roughly the same as our total public debt. Ironically most of it seems to be there to meet RBNZ prudential capital requirements where banks choose to take on "cheaper" foreign currency-denominated debt in lieu of NZD deposits or other options to meet their capital requirements.
This is in contrast to the NZ Govt which converted all of our government debt to NZD-denominated in the 1990s, making default virtually impossible and protecting monetary sovereignty and national security.
Why, then, is there no stress test for the impact on bank balance sheets of a currency collapse/attack? It is not safe to have a debt mountain roughly equal to our public debt sitting on the balance sheets of a handful of Aussie banks and hoping that hedging arrangements to insure risk will do the trick. The recent UK experience with its pension funds shows that is a folly.
I'd like to see a regular exchange risk added to the stress test to make sure we don't lose sight of this - not to mention a change of prudential rules to make this risk unnecessary in the first place.
Hi, the document you linked earlier, for the 2022 stress testing, says quite clearly that the banks use their own modelling (bottom pp 2). The RBNZ can then go back to them and challenge bits of it and ask for refinements.
I don't have a problem with stress testing exercises, but that's just what they are... exercises. Here's a tell... if things are so strong - still profitable even after the proposed conditions - why demand higher capital requirements through 2028?
I have not seen an equivalent reporting from RBNZ. If you look at delinquency rates, non seasonally adjusted, all banks, you can see the rate peaked at 11.3% in Q1 2010. Funny similarity with the NZ 2022 scenario of 11.2% residential default. Are we modelling the last crash?
To be specific, on the stress testing, I am surprised at a modeled 47% drop in residential - value we have elsewhere stated as $1.8 trillion, so around $900B in lost value - resulting in only $6B losses to the banks' mortgage lending programme. It doesn't pass the smell test.
Table 2 in the stress test doc shows an allowance for 1.9% (cumulative loss rate) on residential. This is optimistically low, all the while predicted to occur under conditions more severe than the GFC.
Thanks Duane. The key thing is the LVRs are so low. There is a big hit taken first by households, and in theory that wealth effect is taken account of in the ensuing slump in GDP growth and higher unemployment...rinse and repeat...
True that low LVRs help. The banks are doing 10% of their business at 80% LVR or higher. My fear would be that at 47% drop in value those and a lot of others (the 10% from last year, and the year before, and the year before that) walk, and don't take the hit. A lot of them can't take the hit - unemployment 9.3% !! interest rates 8.4% !! It's an admittedly bleak set of conditions I hope never come to pass. Curious that they want to test it.
I'm curious about the additional cost of the structure of Three Waters that Bernard mentions. Whilst I get that the frequently proposed economies of scale for amalgamations do not always eventuate, I can't quite see the source of these additional costs to get the loans for new infrastructure off the local and central government balance sheet.
Also, I'm left wondering whether Three Waters is a good idea that simply doesn't fit through the Overton Window, or whether it is a bad idea that shouldn't. Either way, whether it fits through the Overton Window seems to me to be a separate issue to whether it is a good idea.
That Three Waters is a effectively an 'end run' getting around having a debate about the 30/30 'rule', our immigration settings and population aspirations, and by implication our housing market (aka pretty much the whole of NZ's economy..) does seem to be an opportunity missed, but for the last couple of decades it seems to me that political parties do not campaign on anything that might be controversial to the median voter, hence they have tepid policies, and even when elected with a solid majority have effectively no remit to do anything that moves the political, economic or social dials much at all. So I guess we will never get such a useful debate in this country, and we'll keep on shafting the poor and the marginalised for the benefit of already wealthy land owners. Sigh.
Essentially, 3W is the "modern" form of privatisation where the public is happy it's "retained ownership" and the financiers are happy that they own the most important thing, the income stream, our water, a fairly non-optional commodity for humans.
As the UK found when it did a detailed analysis of its PPP financing, the financing cost was double that of government bond rates. Given the level of debt, a few (potential) scale-related efficiency savings from centralised purchasing and management won't offset the multi-billion dollar finance premium. But ratepayers will pay via their water bills, not their rates.
Bernard is correct in pointing to the 30/30 pact between National and Labour as the root of this problem. Otherwise, the Government would do what any sane person would - borrow on its own account at the lowest rates in NZ. Until this pact changes, National's solution, whatever it is, is unlikely to be much of an improvement. It will lead them down the same path of an "off-balance sheet" arrangement, formerly known as a PPP, and we will lose effective democratic control of our water assets for several generations.
Martin (and Bernard), given that S&P has given its (A-something) rating based on an implied govt guarantee (without which the WSEs would have a rating just above junk bonds), how does it help to have an off-balance sheet structure and funding?
It's govt-guaranteed debt, no matter what sleight of hand is used to disguise that.
So the structure in itself doesn't help gain lower interest rates – it's the govt's implicit backing that does.
Therefore, why not have the govt just fund (voluntarily) amalgamated councils directly (which is what the Three Mayors are suggesting)?
I noticed Ardern was very testy when questioned by Bernard. She couldn't get away from his line of questioning fast enough.
Hi Graham. You're right. "Off-balance sheet" finance will still be backed by the government, especially when a region's water is at stake. We just get to pay more for it, both for the water and the finance. I wish I knew how the financial hucksters sell this stuff.
What's alarming (and depressing) is that none of our media analysts point this out. Once again, we'll have to wait until Mr Cranmer finds the time to analyse it properly!
I have been reading a few of the big law firms' analyses of 3W and they are no better. I am reluctant to jump to the conclusion that they are part of the "financial hucksters" but I am beginning to wonder if a desire to be in line for fat govt contracts (in whatever field) makes them wary of criticising the hand that might generously feed them.
Surely Thomas Cranmer can't be the only legal expert (and citizen journalist) who can see clearly what's going on.
Although that happened, of course, with Enron. All the financial press shared the company's rah-rah story until two WSJ journos, John Emshwiller and Rebecca Smith, started asking pretty obvious questions. The company was in trouble within a month.
Clare Rewcastle Brown had a similar role in single-handedly exposing corruption in the 1MDB scandal in Malaysia and bringing down PM Najib Razak. (She was very helpful to me in writing about foreign trusts in NZ under Key's govt and sharing her knowledge.)
Sometimes, there's only a single journalist / analyst who sees through the murkiness and spin.
Hi Bernard. Very interested in your analysis but completely foxed by your description of co-governance as a "red herring" — and elsewhere as an "inconsequential sideshow".
If it were either or both of these things the govt would have ditched it long ago. Mahuta explicitly ruled it out of discussion by the Working Group last year.
It is the whole point of 3W as a "Treaty settlement disguised as an infrastructure project" (as David Seymour put it).
Co-governance at the four Regional Representative Groups is only one part of the handover of power to iwi. The more significant provisions are in S140-141 of the WSE Bill that gives iwi and hapu the right to make binding edicts to their WSE over any freshwater body in their rohe.
This is a right denied to non-Maori (and, no, they are not confined to water purity but include anything covered by matauranga Maori / tikanga etc, including the presence of taniwha and any other "cultural" considerations).
Your argument that iwi can't be given the extensive power some allege is that: "Standard and Poor’s would never approve the debt issuance required if actual revenues and assets were to be actually controlled by Iwi groups.”
But do S&P "approve" deals, or just say the numbers they are presented with will likely work or not? They are paid a fee to give a rating.
In the case of 3W, it's up to the water service entities and the govt how they structure the deal. S&P doesn't recommend to do it this way or that.
It's also completely moot whether they understand the power of Te Mana o Te Wai statements, given they are not spelled out in the Bill (and no one in the MSM appears to have noticed their scope).
The only analyst who has grasped their scope as far as I can see is Thomas Cranmer (whose expertise as a lawyer is in international leveraged finance deals).
Nice piece on Breakfast this morning Bernard.
Was the audio in today's Kaka supposed to have more than the Interview? We usually get a Morena at least...
Thanks Andrew. You're right. I uploaded a raw version shorn of my preamble and friendly Morena. I'm re-recording it now and will upload it shortly. Sorry. Bit frantic this morning.
Hi Bernard. I love your theory about the real driver of 3W but I don't understand how politicians would do this secretly. Wouldn't they want voters to know? Labour dropped all the things they campaigned on but won't drop this vote losing initiative or even debate, discuss, or tweak it. Would they pay such a high cost to drive through something without people understanding why? Most people want funding for infrastructure sorted I think
Three Waters is beginning to make my eyes glaze over, just as the debate over who should pay for carbon dioxide and methane emissions does. But this is how I see it:
1. We all want a reliable clean drinkable water supply, and sewerage and stormwater drains that work. This is going to cost billions.
2. I don't think anyone envisages trying to make a bankable profit out of any of the three waters, either supplying water or taking it away. The concept of Māori ownership is meaningless in the sense of reaping financial dividends: the wider community wouldn't stand for it.
3. So ownership seems to come down to (a) who pays and (b) who can borrow against the assets. As for who pays, a 2020 Fonseka Newsroom story said 14 out of 41 council and water bodies were metered; since then New Plymouth has been added. I think user-pays water metering for urban areas will be rolled out over the whole country fairly smartly, and farms will eventually be user-pays too. (See https://www.business.qld.gov.au/industries/mining-energy-water/water/metering)
Bernard has written much about the need for any new structure to be able to borrow the billions needed to restore, expand, and run the infrastructure for all Three Waters. That's what ownership is all about. As long as the infrastructure doesn't pass into foreign, or private, hands, nobody is being robbed, regardless of whether there are four entities, 15, or just one for the whole country.
4. I think the issue of co-governance is a red herring for some and a red rag for others. It's points 1, 2, and 3 that need to be sorted out. I don't see a problem with mana whenua being able to express some degree of kaitiakitanga (co-governance, not co-government) over water resource and wastewater discharge in their rohe, but manners and respect will be needed by all parties for that to succeed.
Three Waters as proposed by the Government is dead. It now must listen to mayors, councils, and a rebellious citizenry, and adopt a Three Waters regime that will survive the 2023 election. Otherwise more years and much money will have been wasted.
What a sensible comment John.
I find Bernard overly cynical to imagine homeowners are out there conspiring to raise home prices by denying infrastructure to the nation (which includes themselves).
Thanks Duane. I wish I could see better motivations behind the repeated election results and mountains of rhetoric from politicians that I've listened to over the last 20 years. I agree it's not as conscious as I suggest. But it's certainly unconscious. Our political lizard brains at work. When a system works for you personally, it's easy to say no when someone says any change would be bad, even when the argument is the change would be good for everyone. Sadly, when people draw the curtain in the voting booth, it all becomes very 'them' and 'us' and zero-sum-game.
Thanks John for that analysis. Plenty deep and sharp. Much appreciated.
Great comment John. Interesting case study from the UK where Severn Water agreed a Payment for Ecosystem Services (PES) agreement with upland farmers to establish measures to reduce run-off, sedimentation and pollution in their common watershed. These measures helped reduce the company (read council/government) asset management/capital renewal costs, whilst at the same time providing a steady source of passive income for farmers to reduce stock levels or compensate for reduced crop yields.
Thanks JP F. I think a lot of people say they want infrastructure sorted, but they also say they want lower taxes. A lot of voters think magically, in large part because they've been encouraged to do so by a generation of politicians and bureaucrats who still believe we have a flat (ish) population and starving Government is (of course) a good thing.
sorry - I think I was unsure that if you were suggesting that the project was designed by the politicians to fix infrastructure in a way that avoids the 30-30 restriction, why they would push past the criticism without explaining that bit to voters. It didn't seem believable that any politician in NZ would think long term like that ie; to take all this heat just to separate the balance sheets so they could borrow against it. I see now that you are saying that they were not clear because they needed to avoid the 30-30 thing
The "ladies"?
“The lady’s not for turning.” It’s a Thatcher reference.
Otherwise we’ll have to cancel Bernard. A pity.
Not sure there’s a lot to compare Ardern and Thatcher, other than they’re both female. But yes, no need to cancel Bernard, pointing out little things that can be reflected on isn’t cancelling :)
Much appreciated. I'm in trouble if my own subscribers cancel me.
You need to be more direct Bernard. Too much concern about upsetting people. Your site, your language. If folk don’t like it they can leave. It’s quite liberating when you don’t give a rats ass. Be honest, be critical. No Chamberlain appeasement
Ironic, as I am sure you appreciate.
https://en.wikipedia.org/wiki/The_lady%27s_not_for_turning
I had the same reaction. If they were both men would the line have been written that way? Especially with the ‘turning’ part added, which was recently used to describe Liz Truss.
Sorry Bernard, my training in sociolinguistics meant this put up red flags for me.
Fair points. Hadn't considered that.
Thanks Kirsten. I was trying to be a bit literary and harking back to Thatcher's 'The lady's not for turning.' Maybe it fell a bit flat.
Yeah. I guess "ladies" and "lady" may be words that kind of feel different when women use them about themselves. Interesting.
Tut Tut Bernard, can you name any political poll that has National 10% ahead of Labour. I can't think of any.
But I do agree with you regarding three waters. Frankly, as a user, I couldn't care less who owns or supplies and takes away our water, but agree that the whole matter has been badly handled by the government, starting with those dreadful advertisements that were meant to promote it. I would have thought that a way out was suggested by the three mayors, but as you have pointed out Ardern and Mahuta didn't take it.
Thanks John P. I don't think I was very clear. I meant to mean Labour vs National-ACT, who I see as one bloc, although you could just as easily say the same for Labour-Green. The key thing is most recent polls say National-ACT can govern alone. I had the Blue boc 10 points ahead of Red bloc in late May. Although, as you say, it has softened since then. https://en.wikipedia.org/wiki/Opinion_polling_for_the_next_New_Zealand_general_election
Three mayors on Three Waters: do open this to everyone.
Thanks John. Have done now. Open to all.
great work. definitely open this to the public. I am bored with trying to tell people to discuss the issues of cost, functionality and accountability of Three Waters and forget about the co-governance issue. Where I work, Taranaki, the debate is always about race when this has nothing to do with it. Lets get the debate about the real issues. I think this article would help do that.
Thanks Josh. I've done that now and you're all welcome to share it.
Please open the Three Waters part to the public Bernard - Sharon
I've done that now.
Hi Bernard
why don't you take a more critical approach to three waters the basic one is why I this government relying on "false facts" - they are as bad as the Donald - or even worse in that he at least didn't have a sanctimonious bone in his body.
1. There are no 34,000 cases of water borne disease annually from council owned water supplies - there are generally NONE - this estimate of disease burden applies to small private schemes not managed by Councils and the number is speculative and not supported with any factual evidence.
2. There is a plague of the same gastrointestinal disease from a wide variety of non-water sources - numbers that far outweigh anything from drinking water from private supplies.
Government makes much about the state of our rivers but I will bet if you asked for a publication that actually showed the extent of NZs waterways that were in a severely deteriorates state firstly there wouldn't be one that is supported by a single consistent and comprehensive national monitoring program and secondly those that do exist would be local/case by case issues to resolve - not national issues.
3. The issues of water quality in this country are a symptom of regulatory failure and failure to adequately fund and manage environmental science at a national level. The simple illustration of this assertion is that the great majority of farmers are not breaking any rules when they farm as they do -so that means the rule setters have failed not the farmers - indeed it is my experience that a number of farmers are ahead of central and regional government when it comes to addressing this problem.
4. Storm water discharges and sewage discharges are a significant problem as there is really no adequate technology for removing nutrients and other pollutants from sewage except for reverse osmosis/membrane filtration and that is expensive and energy intensive and still ends up with a whole lot of difficult to manage waste that is in a solid form rather than a liquid form. This also raises another issue that is largely ignored which is that the human race is gaily discarding the planet's finite resources of fertility every time the toilet is flushed. Ever thought why farmers need to put all of that nitrogen and super phosphate on the paddocks - it is because without that we would starve - we need to be managing our fertility cycle not treating it as a endless system - this is actually more of an issue for cities than it is from farms as it is relatively simple to capture and recycle on farm wastes.
5. We forget when it comes to urban waste water discharges that NZ has half a million dogs and more than one million cats all gaily crapping all over the place and all of this washes down into the storm water and into our stream and beaches. You will find a large part of the disease burden in our urban stream and beaches actually comes from this source. Marama Davidson has a dog - she is doing her bit!
6. Scottish water - the model for Three Waters - charges between two and three times what most councils in New Zealand charge - think of the impact on wellbeing that will have on lower income households. The remaining water corporations in the UK have been an unmitigated disaster.
Government has been running a population policy that has not been agreed with the general population that is causing our existing infrastructure to be severely overloaded - those moving into an area - whether from an internal or external source are not paying the full cost of the service required to service their new home - the $150billion (just a part of our infrastructure deficit) divided by the 2million people who have moved to NZ over the past few decades indicate that the unfunded per capita infrastructure cost of each new citizen is approximately $75,000. This cost is being imposed on the entire population so is in effect a subsidy on population growth. There are quite swag of other socialised costs from this population growth program as well - which unlike Muldoon's subsidies to farmers in the 1970's - is increasing our costs not our income.
We have a huge range of infrastructure issues that we need to be addressing - not the least of which is an urgent need to become energy self sufficient and free of fossil hydrocarbons
Government is about to commit $150Billion to 3 waters with no comparative analysis of other investment priorities. This week the Otago Daily Times had the following head line " Claims of more capacity cuts at new hospital" This hospital is an investment not just in the future needs for Otago and Southland but also the primary teaching hospital for training New Zealand's future doctors. More people have died sitting in overcrowded hospital EDs in the past month than have died from drinking council supplied water in the past FIVE DECADES!!! If this is not startling evidence of this government having a complete lack of a coherent investment strategy in public health I can't think of what else might be (though there is a long list to choose from!)
Also ever thought that three waters might be a mechanism for sneaking some more indirect taxation into you life? Wont be any different than the power companies - govt will sell 49% of the shares and spend that money and then use the remaining asset base as justification for chiseling a few billion out of water consumers.
You would all be advised to invest in rainwater tanks and composting toilets - - you could install those for less than one year of the hypothetical costs that Ms Mahuta is suggesting your water charges will be without three waters.
Installing rainwater tanks also has the benefit of reducing urban storm water flows substantially, it would also increase society's resilience to disaster, greatly expand the drinking water resources available in our cities - and composting toilets would - in one blow - fix the issue of sewage discharges and your wastes could be given back to farmers to put on the land instead of mineral fertilisers - just like humanity has done for millennia. Check out Bambooloo for an example of an aesthetically pleasing option to do this.
I have voted for labour the past two elections but I wont be this election - this government is doing a great job of resurrecting Winston but a very poor job of everything else!
Darkhorse. I much appreciate the depth and thought you've put into your challenge. Lots of great points that made me think. I'm especially interested in the re-use argument and the self sufficiency arguments. Got any detail on whether we could do a lot more without these expensive networks of pipes? Cheers. Bernard
You might want to check out the expensive treatment systems required by Taumata Arowai as part of their acceptable solutions. There is also the assumption that there will be treated/safe water to supply you in a dry summer - its a bit like putting solar and battery on your house. If you want to be totally self sufficient then you will have to be prepared for outages.
Storing rainwater for non-potable uses has merit.
Having individual wastewater collection and treatment assumes that everyone will comply with good practice and there will be no accidents. The waterborne disease burden that public sanitation systems have reduced to damn near zero will come back with a vengeance. You can also expect to lose a lot of exports, humanure is a big no-no for these - we've just had issues with berries, and remember what happened with lettuce in Europe a few years ago
rain water is fine if you run it through a standard 10micron/1micron filter bank and then through UV disinfection - if you get really picking you could use a reverse osmosis (membrane filtration) system . You can get your fluoride from your toothpaste. I presently live on a restricted rural water supply - the supply provides 900l/day at around 0.6l/minute - it is an excellent scheme with water of the highest quality delivered economically to all of the rural towns in our district from a source over 50km away we are required to have three days storage (5000l is preferred) - there is no reason why a system like this couldn't work in tandem with roof catchment storage. These systems have huge advantages - no need for metering - no ability to waste vast amounts of water, and there is NO PEAK LOAD! Few people understand the impact of peak loads on out networks but just check the motorways - water sewer electricity and telecoms have the same problem - it is cheap to spread demand for a water supply that act alone would transform the capacity of existing networks.
Humanure is simply a matter of how you handle it there is no particular issue with sterilising it - simple composting can do that - the major point that I am making here though is that organically available phosphate is the primary limit to sustaining life on earth - and that is a very limited resource - the we presently flush into the ocean. Without superphosphate NZ wouldn't have a viable agriculture based economy. The reason why we are taking controversial phosphate from contested parts of Africa is that material from this source is free from cadmium contamination which in mamy parts of NZ is no reaching the maximum WHO levels for human exposure through the use of cadmium contaminated phosphates for Nauru.
the second point around this is that the days of flushing everything into the ocean/river/rubbish dump/atmosphere has to stop because lots of what we discard is essential to life and limited in extent - its not a matter of whether you might get a disease from eating food contaminated by sewage- it is that you just might not have any food FULL STOP as there will be no phosphate left to replace what has been discarded. This is not that hypothetical either - globally we consume 250,000,000 tonnes annually there is about 300 years supply left the U.S. Geological Survey, Mineral Commodity Summaries, January 2022 notes that : There are no substitutes for phosphorus in agriculture. A lot of the resource are also contaminated with heavy metals so maybe of restricted usefulness - there are deposits on the ocean floor however deep sea mining is both expensive and controversial.
Hi Bernard - the real big issue in the midst of all of this is that if three waters was such a good idea then surely they wouldn't need to rely on lies and propaganda in their endeavour to sell it - most mayors know that the information government is relying on is mostly fiction and that if you dig deeper all of the issues with infrastructure arise as a result of government agencies failing in their duties - there is nothing new about infrastructure funding that has primarily arisen from our lack of a coherent immigration policy, a lack of national policy direction - you see Im old enough to remember the Ministry of Works town planning division that initiated subdivisions, planned motorways built dams and water supplies (and signed off structural design on buildings to ensure they didn't fall over in earthquakes. All destroyed by David Lange and Roger Douglas. You see these government departments were repositories of knowledge and the home of the longer term view - they certainly weren't perfect but vastly better than the politicised bunch of eunuchs inhabiting the imperial palace now. The old public service side of government was the counterweight to the political side of government - we now lack that balance and that access to knowledge that once served us pretty well and the mess we are now in is the result of too much politics and not enough commonsense. Once the public service was a great place to have a career in engineering or science and these practical people advised governments on the longer term issues - now we just have swags of consultants and other vested interests in their ear.
Hi Darkhorse. It must be age! I really get what you're saying. I too remember the Ministry of Works in the world where knowledge of practical significance was very highly valued.
I go back to despair at the Lange/Douglas governments juggernauts of demolition. Along with that came the Knowledge Economy where one claimed success via required words filling skiploads of paper. We failed the practical youth as we alarmingly failed the country.
Apart from that, I am curiously obsessed at why these discussions ( and economics generally it seems), mainly appeal to men. I am in no way anti men, but what is it about the subject?
And on that subject, I wonder impolitely, if maybe Ms Adern and Ms Mahuta are as foggy as i am on the economics of Three Waters and perhaps much more besides.
Darkhorse could you create a series of educational comic strips please?
Unfortunately it has not a man thing - I'm old and crusty and there were plenty of women doing serious jobs in the old Ministry of Works - this is an issue of systemic policy failure - I got myself on to a Labour party environment and infrastructure policy committee at the time of the election before last and was appalled at the self appointed experts (ive been ceo of both regional and local government so know a bit about the topic) the one thing I managed to do before I chucked it in out of frustration was to convince Phil Twyford that we could never invest in infrastructure fast enough if we kept immigration figures at 100,000 annually. That lead Labour to cut back (temporarily unfortunately) immigration - however the fact that he hadn't figured this out for himself was a worry. This is the point I was making to Bernard in this comment - the real problem is that we need to build back a proper professional public service - we need to complete review the function of both regional and local government - we dont need to fix the RMA we need to fix the policy deficit at the national level - Governments have offloaded all sorts of responsibility onto local and regional government without providing them either the direction or resources to fulfill those responsibilities. We have a failure at central government level not regional or local government - they just battle on usually quite competently/adequately it is the people at the top who are the problem!!
I totally agree. And the malady is spread around the world. Professional public servants replaced now by PR and HR 'professionals. When my father was working for Transport Nelson they had to manouvre the pipes for the Cobb Dam round the twists of the Takaka Hill. When i look at photos of that, it illustrates to me what real knowledge of the real world we desperately need
One way for the government to avoid the horns of the dilemma would be to take the off ramp but make it a condition that, for the good of consumers and investors, the councils will be subject to economic and consumer regulation. Councils believe that they are doing this well and so should have no objections.
The requirements of this, combined with adverse findings from the regulator, would force councils towards amalgamation just to avoid the risk of non-compliance they would now be responsible for. And this would be completely independent of the government.
Thanks Andrew. This proposal accepts the authority of Taumata Aromai, so I think that's already in there.
I’d say not. Taumata Arowai is the drinking water safety regulator. The economic and consumer regulator would be ComCom or a new body. Everyone seems to be ignoring this and the impacts it could have. Ask any of the regulated businesses if they ignore ComCom, especially Chorus and Transpower.
How long have the Mayor’s been working on their alternative proposal? Did they take that vision to the council elections or is it policy on the fly after what, two weeks in the job? (I honestly don’t know the answer to that, when ever anyone 60+ mentions 3 waters these days I tend to zone out.)
Why would anyone listen to these new trainee Mayors for such important reform? The mind boggles that anyone is taking them seriously at this point. At least give them a year of governance under their belt, then if they still feel the same way let’s debate their idea.
It looks like its the C4LD work that's been given some polish, and now has the big cities fronting it.
People listed to it because it supports their views (I must be getting cynical)
Indeed Andrew. I use the words experienced and realistic, rather than cynical.
Ha! I get it. Although I am 55... This is another version of the C4LD ideas and broadly in tune with the opposition to 3 Waters that was voted for in the elections.
Regarding bank stress tests, there is one significant risk that doesn't seem to be in the tests. The banks are sitting on a $100B foreign currency-denominated debt, roughly the same as our total public debt. Ironically most of it seems to be there to meet RBNZ prudential capital requirements where banks choose to take on "cheaper" foreign currency-denominated debt in lieu of NZD deposits or other options to meet their capital requirements.
This is in contrast to the NZ Govt which converted all of our government debt to NZD-denominated in the 1990s, making default virtually impossible and protecting monetary sovereignty and national security.
Why, then, is there no stress test for the impact on bank balance sheets of a currency collapse/attack? It is not safe to have a debt mountain roughly equal to our public debt sitting on the balance sheets of a handful of Aussie banks and hoping that hedging arrangements to insure risk will do the trick. The recent UK experience with its pension funds shows that is a folly.
I'd like to see a regular exchange risk added to the stress test to make sure we don't lose sight of this - not to mention a change of prudential rules to make this risk unnecessary in the first place.
I'll go further. I trust no stress test that start with, "And you bankers do the modelling."
Thanks Duane. My understanding is the RBNZ stress tests are done by the RBNZ itself, although the banks do their own as well. Here's the detail. Welcome your thoughts on whether this is wrong. https://www.rbnz.govt.nz/-/media/df2798d6a30846f48b6d65386cd8b5a0.ashx
Hi, the document you linked earlier, for the 2022 stress testing, says quite clearly that the banks use their own modelling (bottom pp 2). The RBNZ can then go back to them and challenge bits of it and ask for refinements.
I don't have a problem with stress testing exercises, but that's just what they are... exercises. Here's a tell... if things are so strong - still profitable even after the proposed conditions - why demand higher capital requirements through 2028?
A good page for historical delinquencies and charge-offs at US banks is here https://www.federalreserve.gov/releases/chargeoff/default.htm
I have not seen an equivalent reporting from RBNZ. If you look at delinquency rates, non seasonally adjusted, all banks, you can see the rate peaked at 11.3% in Q1 2010. Funny similarity with the NZ 2022 scenario of 11.2% residential default. Are we modelling the last crash?
Interesting angle that hadn't occurred to me. Thanks Martin. I'll ask the Reserve Bank tomorrow.
To be specific, on the stress testing, I am surprised at a modeled 47% drop in residential - value we have elsewhere stated as $1.8 trillion, so around $900B in lost value - resulting in only $6B losses to the banks' mortgage lending programme. It doesn't pass the smell test.
Table 2 in the stress test doc shows an allowance for 1.9% (cumulative loss rate) on residential. This is optimistically low, all the while predicted to occur under conditions more severe than the GFC.
Thanks Duane. The key thing is the LVRs are so low. There is a big hit taken first by households, and in theory that wealth effect is taken account of in the ensuing slump in GDP growth and higher unemployment...rinse and repeat...
True that low LVRs help. The banks are doing 10% of their business at 80% LVR or higher. My fear would be that at 47% drop in value those and a lot of others (the 10% from last year, and the year before, and the year before that) walk, and don't take the hit. A lot of them can't take the hit - unemployment 9.3% !! interest rates 8.4% !! It's an admittedly bleak set of conditions I hope never come to pass. Curious that they want to test it.
Prefers earlier B52's
Rock Lobster? https://www.youtube.com/watch?v=n4QSYx4wVQg
I'm curious about the additional cost of the structure of Three Waters that Bernard mentions. Whilst I get that the frequently proposed economies of scale for amalgamations do not always eventuate, I can't quite see the source of these additional costs to get the loans for new infrastructure off the local and central government balance sheet.
Also, I'm left wondering whether Three Waters is a good idea that simply doesn't fit through the Overton Window, or whether it is a bad idea that shouldn't. Either way, whether it fits through the Overton Window seems to me to be a separate issue to whether it is a good idea.
That Three Waters is a effectively an 'end run' getting around having a debate about the 30/30 'rule', our immigration settings and population aspirations, and by implication our housing market (aka pretty much the whole of NZ's economy..) does seem to be an opportunity missed, but for the last couple of decades it seems to me that political parties do not campaign on anything that might be controversial to the median voter, hence they have tepid policies, and even when elected with a solid majority have effectively no remit to do anything that moves the political, economic or social dials much at all. So I guess we will never get such a useful debate in this country, and we'll keep on shafting the poor and the marginalised for the benefit of already wealthy land owners. Sigh.
This post from Thomas Cranmer explains the off-balance sheet structure and funding well: https://cranmer.substack.com/p/three-waters-and-the-debt-that-will
Essentially, 3W is the "modern" form of privatisation where the public is happy it's "retained ownership" and the financiers are happy that they own the most important thing, the income stream, our water, a fairly non-optional commodity for humans.
As the UK found when it did a detailed analysis of its PPP financing, the financing cost was double that of government bond rates. Given the level of debt, a few (potential) scale-related efficiency savings from centralised purchasing and management won't offset the multi-billion dollar finance premium. But ratepayers will pay via their water bills, not their rates.
Bernard is correct in pointing to the 30/30 pact between National and Labour as the root of this problem. Otherwise, the Government would do what any sane person would - borrow on its own account at the lowest rates in NZ. Until this pact changes, National's solution, whatever it is, is unlikely to be much of an improvement. It will lead them down the same path of an "off-balance sheet" arrangement, formerly known as a PPP, and we will lose effective democratic control of our water assets for several generations.
Martin (and Bernard), given that S&P has given its (A-something) rating based on an implied govt guarantee (without which the WSEs would have a rating just above junk bonds), how does it help to have an off-balance sheet structure and funding?
It's govt-guaranteed debt, no matter what sleight of hand is used to disguise that.
So the structure in itself doesn't help gain lower interest rates – it's the govt's implicit backing that does.
Therefore, why not have the govt just fund (voluntarily) amalgamated councils directly (which is what the Three Mayors are suggesting)?
I noticed Ardern was very testy when questioned by Bernard. She couldn't get away from his line of questioning fast enough.
Hi Graham. You're right. "Off-balance sheet" finance will still be backed by the government, especially when a region's water is at stake. We just get to pay more for it, both for the water and the finance. I wish I knew how the financial hucksters sell this stuff.
What's alarming (and depressing) is that none of our media analysts point this out. Once again, we'll have to wait until Mr Cranmer finds the time to analyse it properly!
I have been reading a few of the big law firms' analyses of 3W and they are no better. I am reluctant to jump to the conclusion that they are part of the "financial hucksters" but I am beginning to wonder if a desire to be in line for fat govt contracts (in whatever field) makes them wary of criticising the hand that might generously feed them.
Surely Thomas Cranmer can't be the only legal expert (and citizen journalist) who can see clearly what's going on.
Although that happened, of course, with Enron. All the financial press shared the company's rah-rah story until two WSJ journos, John Emshwiller and Rebecca Smith, started asking pretty obvious questions. The company was in trouble within a month.
Clare Rewcastle Brown had a similar role in single-handedly exposing corruption in the 1MDB scandal in Malaysia and bringing down PM Najib Razak. (She was very helpful to me in writing about foreign trusts in NZ under Key's govt and sharing her knowledge.)
Sometimes, there's only a single journalist / analyst who sees through the murkiness and spin.
Hi Bernard. Very interested in your analysis but completely foxed by your description of co-governance as a "red herring" — and elsewhere as an "inconsequential sideshow".
If it were either or both of these things the govt would have ditched it long ago. Mahuta explicitly ruled it out of discussion by the Working Group last year.
It is the whole point of 3W as a "Treaty settlement disguised as an infrastructure project" (as David Seymour put it).
Co-governance at the four Regional Representative Groups is only one part of the handover of power to iwi. The more significant provisions are in S140-141 of the WSE Bill that gives iwi and hapu the right to make binding edicts to their WSE over any freshwater body in their rohe.
This is a right denied to non-Maori (and, no, they are not confined to water purity but include anything covered by matauranga Maori / tikanga etc, including the presence of taniwha and any other "cultural" considerations).
Supplementary!
Your argument that iwi can't be given the extensive power some allege is that: "Standard and Poor’s would never approve the debt issuance required if actual revenues and assets were to be actually controlled by Iwi groups.”
But do S&P "approve" deals, or just say the numbers they are presented with will likely work or not? They are paid a fee to give a rating.
In the case of 3W, it's up to the water service entities and the govt how they structure the deal. S&P doesn't recommend to do it this way or that.
It's also completely moot whether they understand the power of Te Mana o Te Wai statements, given they are not spelled out in the Bill (and no one in the MSM appears to have noticed their scope).
The only analyst who has grasped their scope as far as I can see is Thomas Cranmer (whose expertise as a lawyer is in international leveraged finance deals).
https://cranmer.substack.com/p/the-unbridled-power-of-te-mana-o?