30 Comments
Aug 8, 2022·edited Aug 8, 2022

Why doesn’t Labour just dump 3 waters now? Seems like we’re heading for a Evangelical Christian PM and Sam Uffindell for Police minister…

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Good question. Last night's poll might just push Cabinet in that direction.

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Thanks Bernard, do you feel the PM herself wants another term?

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Don't know. Maybe. Maybe not. My feels aren't very valuable. I think there's a single-digit-percentage probability (ie <10% chance) the PM retires in December or January to hand over to Grant Robertson, in the same way Key did in 2016 to English. But that number is higher than I reckoned a year ago because the polls are not looking good for Labour's re-election.

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Presumably because they genuinely believe water is and will continue to be a disaster if left to the councils to manage.

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Aug 8, 2022Liked by Bernard Hickey

Without doubt this needs to be opened up. Your views are well expressed and explained as usual Bernard and discussion in this section should centre on how best to be heard by as many as possible.

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Aug 8, 2022Liked by Bernard Hickey

Agree, open it up

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Thanks Graeme. Will do that. now.

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Aug 8, 2022Liked by Bernard Hickey

"Standard and Poor’s would never approve the debt issuance required if actual revenues and assets were to be actually controlled by Iwi groups." ???

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Yep. You have doubts?

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That comment also stuck out to me as something that is so specific that I thought to myself "citation needed".

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Sounds like an 'everyone knows' comment, but I don't know how we know this. Have you written something on this previously that I can read, or can you explain a bit more. Feels like a big statement to me.

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Hi Bernard. An excellent analysis again; great work explaing this in a straightforward way for the public inc. I can see that really, the real elephant in the room that keeps being ignored yet requires a deep national discussion is the unsolved 180 year issue of how do you reconcile and get ''on board'' in a meangingful, participatory way for the greater well being of all the first people of this land who continue to feel unheard and not part of ''general society''? Because that's a vexing problem. How do you resolve one groups needs, wants and desires without alienating others who were also born here? I have to say, that in spite of being born here, I have never felt welcome or a part of this country-ever. Perhaps it's my particular unique experiences, but I think there are others who also may feel this. It's time to actually have the ''difficult discussion'' and put it to bed once and for all; for the sake of all N.Z.

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Yes. Some tough questions to debate around who owns what, who is responsible for what, how we share resources and costs, and who has priority in what timeframe (ie now or future). We built a political consensus around the idea that Govt was useless and bad and should be caged to save us all an allow us 'freedom' to spend how we liked. Until the cage started rusting and breaking and we didn't like what leaked out.

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Hi Ben

We could "have a difficult decision and put it all to bed", but the day after someone, or more likely someones, will be moaning about the decision. And you can probably think of the groups and the angle their complaints will come from: - politicians dog whistling, minorities bemoaning their share isn't bigger; the entitled worried they won't be as entitled, etc.

I'm not dis-agreeing with you Ben, just being sceptical about human nature.

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I am sad to say your are likely correct; which is why the waka of ''N.Z. Inc.'' continues to be stuck in the middle of a river going round and round instead of making progress into the future. I like to be an optimist though; there are other countries of a very similar size and population as N.Z. who have dealt with similar issues and advanced exponentially compared to our abysmal efforts. You could look to Singapore, Norway, Denmark and 1 or 2 others who have dealt with issues in an effective way and made wise economic decisions at the same time. One country that is hard to ignore is Norway; zero debt, second most wealthy country in the world, consistently rates best on H.D.I./transperancy/health outcomes etc.......

Look at Singapore as an example for respect and tolerance among the many different religious/cultural and ethnic differences in a country about the size of central Auckland.

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Singapore's Lee Kuan Yew is probably the world's only modern benevolent dictator. And Norway is probably the only modern economy to survive the resource curse, and did it as a democracy - five gold stars to them.

However NZ's resource curse (dairying) is indeed a curse as they are exempted from taking any meaningful climate change and environmental action.

Sorry, I seem to wandered off-topic a little there.

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Key difference with Norway: vast oil wealth. Though they have managed it well, and in the public interest.

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Yup, to repeat myself

David Mohring

Jul 21

https://thekaka.substack.com/p/thursdays-chorus-building-inflation/comment/7867245

Yes - Three waters is Hollywood level creative accounting solution to the overall problem of decades worth of under funding public infrastructure by shuffling around ownership of council owned assets to an organisation that can use them to as collateral for structured loans (+*).

The silly thing is that in theory it is actually a potential solution that in the medium term (decade ), would cost the tax payers the least. Which is why in this current centrist political climate it is probably the only type of action that will be taken.

My only major complaint with it is the split into separate "local" regions - a mistake that Labour is finally undoing with the DHB health system.

(+*) Never mind the fact that effectively it is only the land that the water treatment are sitting on that is usable as collateral with the water treatment plant removed, the plant itself being a sunk cost, since no centrist government in its right mind is going to raise user charges to actually cover the loans.

David Mohring

Jul 21

https://thekaka.substack.com/p/thursdays-chorus-building-inflation/comment/7867245

The vast majority of NZers DO NOT want to have broken pipes, sewage flowing in the street, undrinkable town water supply, increased stream and river water pollution, disproportionally huge rates bills.

Almost all of NZers DO NOT want any and all solutions to all of the former problems forever kicked down the road by political do-nothing numb-nuts who are mostly elderly enough to prefer to be well in their graves before any solution is actually implemented.

https://thekaka.substack.com/p/thursdays-chorus-building-inflation/comment/7873923

Also one of the biggest problems in building new subdivisions and housing intensification is exactly the lack of public water/waste infrastructure capacity.

Any extra housing results in new rates for the council by default. It is the financing of any expansion or extending water/waste capacity is what the Three Waters Initiative is going to solve.

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Great analysis.

It’s a frustrating situation.

The nation (in the main) would agree with the problem , and the general thrust of the solution (strategic investment , economies of scale ) - or at least you could expect that the current majority that voted Labour would .

Yet playing politics sinks the ship. The lack of meaningful debate between the parties , poor government communication - intentionally or otherwise , and the spectre of dog whistling around co-governance leaves us with a situation where the likeliest outcome is no outcome at all.

Sigh

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Exactly this.

If the issues with infrastructure were clearly communicated by Government, the historic underinvestment quantified and the potential impact of doing nothing explained well, we might move somewhere. Basically, exactly what you have been writing about, succinctly, for months now Bernard, in respect of the infrastructure issues.

Unfortunately the mix of poor communication and execution has scuttled any attempt to reach a national, bi-partisan solution. New Zealanders shall continue to put off doing anything and passing on that ballooning cost to the next generation.

I'll say this too... the fact the word 'iwi' is even visible would've immediately turned a whole swathe of people of it before they even bothered to understand even the slightest detail.

Most who oppose the thought of iwi... and understanding only the inclusion of the word, iwi, still probably don't understand the detail behind any of this - their role, responsibilities or otherwise.

That reality should've been known and considered more carefully and, coming back to the communications and positioning issue, positioned far more positively too. Sadly, the acceptance of this involvement is probably the hardest challenge that nobody wants to openly admit to.

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> Unfortunately, Nanaia Mahuta and the Government did want to

Small typo, pretty sure you meant "didn't" want to

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What role can the Infrastructure Funding and Financing Act 2020 play in allowing councils to increase debt financed infrastructure, while avoiding balance sheet issues?

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It goes some of the way - Wellington are using it for the new sludge treatment plant so the Southern landfill can be kept going. However its tightly bound to a process that means its on a project by project basis that has a special purpose vehicle created each time. There is also a lot of administrative overhead in the monitor function that means its really only useful for the exceptional cases, rather than the wholesale renewal and upgrade that end of life networks need.

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Do you know who takes the role of monitor on those projects? Is it crown or local govt?

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You would expect that such a profound reform of the management of water supplies wastewater treatment and water resource that is supposedly going to cost many tens of billions of dollars would be supported by a substantial body of factual research. You would also expect that any such investment of public money would also be undertaken in the context of a value for money assessment and also an assessment of relative priority when compared to all other investments required to be made in the public interest.

The simple and stark reality is that there are no facts to support the creation of Three waters. There is no evidence that it will be more cost effective. In contrast, it is very likely that water services will be more expensive and less responsive to community needs than the present service model. If fees charged by Scottish Water which is the model for this proposal are compared with council charges in NZ then the cost of water and sewage disposal would double or treble.

The only fact-based government funded research into adverse health effects from New Zealand’s drinking water supplies is presented in an MOH document An Integrated Approach to Infectious Disease Priorities for Action 2002-2006 (November 2001 Ministry of Health) This report on the burden of communicable diseases in New Zealand that was based on actual reported cases of communicable disease from all sources.

This report stated that …

Although drinking-water in New Zealand is now very safe for the majority of New Zealanders and water-borne enteric disease is rare, maintaining current quality standards requires ongoing monitoring and preventive action. In addition, some poorer rural communities, as well as institutions such as rural schools, hospitals and marae, still lack good-quality water systems. Past efforts must be maintained to maximise health gain and to ensure that safe drinking-water is available as of right. The public health implications of an outbreak of water-borne disease are potentially huge due to the large population served by many water supplies.

In the intervening two decades councils have invested billions in water supply and waste water treatment, and process monitoring technologies have improved substantially. If anything, the state of drinking water is now generally safer than it was in 2001.

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The only guide to how the proposed reforms will impact on cost to the consumer is to go to the source of the model in action – Scottish Water - and see what they are charging their consumers.

• Scotland is the same land area as Canterbury and Otago combined

• It has a population of 5.45 million people

• Canterbury and Otago have a combined population of 743,000

If the Scottish model is superior and more efficient it should be evident in its charges. Scottish Water should also have significant economies of scale it serves a much larger population that is more concentrated than in New Zealand and that is simply assessed by comparing Scottish Water charges with those in New Zealand.

So, what does it cost the average Scottish household for water and waste water services under Scottish Water? The following figures are based on water consumption of 900l/day/328m3pa)

Scottish Water fees and charges comparison

SW Water meter charge £166.23 and supply at £0.9457/m3 = £476 (NZ$923)

SW Wastewater £170.72 fixed charge volume charge £1.5959/m3 = £692 (NZ$1342)

Charges in South Island

• Dunedin unmetered residential water $469.00

• Dunedin Sewer/Storm UAC $618.50

• TImaruDC Sewer $339.00

• TImaruDC Water $442.00

• Waitaki DC rural restricted supply $500pa for 0.9m3/day

• Waitaki Oamaru urban $240.00 plus 1.19/m3 over 202m3 = $390pa

Scottish water is charging double what DCC charge

Scottish water is charging treble what Waitaki charges

Both Waitaki and DCC have good to excellent water supplies

To compare the economies shows the impact of the operation of Scottish water even more clearly as NZ house prices and household gross incomes are both substantially higher than those in Scotland. As a proportion of household income water and wastewater services present comprises roughly 3% of household gross income whereas in New Zealand water and wastewater costs are equivalent to 1% of average gross household income.

Average house price

Scotland $649,143 (£330,461 )

NZ $1,006,632

Average household income (gross)

Scotland $71,826 (£37,024)

NZ $107,196

Water charges are even higher in Scotland than New Zealand if measured as a proportion of average household income.

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As in all enterprises, the State has limits to its available capital and has many demands on it.

Nowhere in the discussions of 3Waters has any comparative benefit analysis assessing the cost and benefits of 3Waters against the many other functions requiring government investment.

Three Waters is allegedly an investment in improving public health and reducing adverse environmental effects of the consumptive use fresh water. The policy documents suggest that New Zealand will have to invest somewhere in the order of $150billion in enhancement to water supplies.

What other investments does New Zealand need to make over the next several decades?

1. 1 Remove carbon-based energy from our economy

i. We need to treble the amount of renewable energy presently produced in the country

ii. We need to electrify rail and extend the rail network throughout provincial New Zealand

2. We need to expand our electric vehicle fleet

3. Properly fund public health

4. Resolve the housing crisis

5. Address poverty

6. Properly fund mental health

7. Adequately fund environmental science and pest species control

8. Assist farming, the mainstay of our economy to become more efficient in the use of energy and fertility and less impacting on the nations water resources.

9. Defence

10. And that is just a short list!

To put 3Waters in perspective …

• More people die waiting for health services in a week

• More people die on our roads from poorly engineered or poorly maintained surfaces in a month

• More people die from the consequences of poor mental health services and poverty in a month

• More people die from drug overdoses in month

… than have died from disease caused by public drinking water supplies in half a century

And those five people who died during the Havelock incident were already severely health compromised and all died from one event that was caused by an untreated urban supply. If this event had arisen from a food sourced pathogen someone would have been criminally liable. This event was an extreme exception not an example!

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