The Government’s new Three Waters scheme will take water services infrastructure off 67 local councils and give it to four new entities that are not democratically accountable to the public. At the moment, everyone over 18 can actively participate in the way local authorities administer and charge them for water services by submitting on council Long Term Plans, Annual Plans, and exercising their vote at local elections. The Three Waters scheme will take away all of those rights.
Three Waters was meant to be the long-awaited proposal to reform New Zealand’s drinking water, stormwater and wastewater service delivery following the 2016 campylobacter outbreak in Havelock North.
Instead, Minister Mahuta turned it into a vehicle to roll-out a new co-governance model for critical resources that would give Māori a greater say in how New Zealand’s infrastructure is run than the general public who pay for it.
The Three Waters scheme would see all three waters infrastructure removed from local authority ownership and placed under the control by four ‘regional’ entities. Māori will have a deciding vote in how entities are run and the ability to set strategic direction for service delivery, which will be carried out by board who must be fluent in matauranga Māori.
The entities will be jointly owned by the local authorities within their region. It’s not clear what the ownership structure will look like. The official documents refer to the local authorities as ‘shareholders’ but they likely won’t have the normal rights of shareholders of companies to approve major transactions, sell or dispose of their shares, or to be paid dividends. While the local authorities will owns the entities on paper, they won’t be able to exercise any of normal ‘ownership’ rights of control.
The Government wants to set up four new water services entities across the country, each controlled by a board. Board members are appointed by a four-person Independent Selection Panel. Members of the panel are appointed by a Regional Representative Group (RRG), which is made of 12 members: six people to represent all local authorities in their region and six to represent mana whenua in the region.
The Regional Representative Group can only make decisions with a 75% majority vote. This is a deliberate decision to ensure mana whenua have a controlling vote.
The selection panel will need to consider the individual and collective board expertise in matauranga Māori, tikanga Māori, kaitiakitanga and te ao Māori with respect to Three Waters.
Only six local authority representative will represent local authorities across the entity’s region. This means that some local authorities (likely the larger ones) will have direct representation on the RRG, but others will need to rely on the members to represent their interests.
There are only four local authorities in Entity A, so it’s likely they will each have a representative in the RRG. Entities B, C and D each have 21 or 22 local authorities in their area. Most of these won’t be directly represented.
The RRG won’t have a direct say in how an entity is run. It appoints the Independent Selection Panel to choose Board members and issues strategic and performance expectations and other planning documents.
Board members will need to be appropriately qualified and experienced, free of conflicts of interest and selected based on merit and competency. The competencies listed in the Cabinet Papers for Board members are a general collective competence in mātauranga Māori, tikanga Māori and Te Ao Māori with some members having special expertise in these areas with respect to the delivery of water services.
The Minister deliberately developed the Three Waters scheme to give substantial control and/or influence to iwi/Māori. The Minister said this recognises iwi/Māori interests in three waters and fulfils the Crown’s duty to comply with the principles of the Treaty of Waitangi. This is effected in representation on the RRG and in the issue of Te Mana o te Wai statements to entities, which entities will need to give effect to. Entities will also be required to fund and support capability and capacity of mana whenua within their region to participate in three water service delivery.
The source and scope of iwi/Māori interests in three waters and three waters infrastructure assets and management isn’t defined.
Budget 2021 allocated $296 million to the Transforming Three Waters Service Delivery for New Zealanders: Transition and Implementation tagged contingency fund.
A further $710 million will come from the Three Waters Infrastructure Investment and Service Delivery Reform Programme tagged contingency. This comes from the COVID-19 Response and Recovery Fund.
Cabinet has also agreed to a $2.5b support package: $0.5b to ensure no local authority is financially worse off as a result of the reforms which will be funded by the new entities, and $2b to invest in the future for local government and community wellbeing which will be funded by the Crown ($1b) and the new entities ($1b).
The new entities will have the ability to charge and collect payments from consumers to fund its operations and obligations. They will also have the ability to borrow money to upgrade infrastructure.
The government will likely establish an economic regulator to set pricing methodologies that the entities must use when charging consumers. These may be based on volume of water use, or on a consumer’s ability to pay, or other equity concerns. We won’t have any more details on funding until April 2022.
The Government promised to introduce the legislation in December 2021 but has now decided to delay it until at least March 2022.
The Working Group recommended that councils own shares in their local entity. Councils would receive one share per 50,000 people in their area, with share allocations being reset every 5 years to allow for population changes.
However, these shares do not give rights to any financial returns, equity rights, or any voting rights in governance or operational decisions, except for the decision to sell, privatise or merge their entity. This decision must be unanimous so small councils will retain an effective veto right against sale or merger. This means the number of shares a council holds has no practical consequence. Nor do the shares give councils any of the normal rights of owners.
The Working Group wanted RRGs to have a greater role in their entities, essentially performing the role of shareholders in a company. Sub-RRGs were suggested as an effective way of channeling local voices into RRG decision-making. All RRG and sub-RRG decisions should be made by consensus, or if that isn’t possible, by a 75% majority. Each RRG and sub-RRG should have co-chairs – one for councils and one for Māori – and they will be expected (if not required) to be made up of 50% council members and 50% Māori. RRGs can set additional criteria for entity board members over and above those required by the Act.
The Working Group also doubled-down on the co-governance proposal and identified Te Mana o te Wai statements as the core document underpinning the entire scheme. These give the health and wellbeing of water, not consumers of water, top priority. They suggested the Crown fund a communications programme to help the public understand and accept the meaning and significance of Te Mana of te Wai. This means Māori will have a greater say in the overall strategic direction of each entity, and taxpayer money will be used to convince the public this is a good thing.
A new Water Services Ombudsman was suggested to have jurisdiction over all public-facing activities of entities, guided by a tikanga-based dispute resolution process. The report didn’t say so, but it is likely decisions of the Water Services Ombudsman will also be guided by Te Manao te Wai statements.
The Three Waters Scheme would make water services a plaything of identity politics. Our needs for good reliable water services could not be more universal. Ethnicity makes almost no practical difference to our needs, or to our shared wishes for safe economical delivery of critical services.
We want stop the Government proceeding with Three Waters. In particular, the parts of the scheme that would see water infrastructure removed from Councils, and therefore ratepayer control, and the co-governance model that is proposed for the four new entities.
We need to know if our Courts think that Minister Mahuta’s references to pan-Maori treaty interests are justified in law. We need to know if our Courts think such interests can require or justify taking rate-payer funded infrastructure and turning it into a source of patronage for a tribal elite.
We want the Court to go back to first principles and make sure the Treaty is interpreted consistently with the rules of law. We want the Court to say there is no legitimate legal basis for the proposed co-governance model or any part of the Three Waters scheme that purports to carve out a greater role for Māori than the general public.
In our Westminster system of government, Parliament is supreme and can make whatever laws it wants, whether they are legally legitimate or not. Our Parliament has been relying on a strained interpretation of the principles of the Treaty to duck its responsibilities to decide how far we depart from a society where all are equal before the law.
We want the Court to step in and confirm to the public that the scheme is illegal before it becomes law, putting it beyond the reach of the Courts.
Parliament used the term ‘principles’ in law instead of referring to the Treaty itself but never said what the principles were. That obliged the Waitangi Tribunal, and judges to make them up. They did so with the best of intentions. Our case says that claims about what those principles mean have now moved so far from anything the Treaty could have meant that the Courts need to intervene. Judges in the Waitangi Tribunal started this process. Judges now need to set it straight.
Judge-made law works by judges applying precedent and legal values to the new facts of specific cases. This happens most where Acts of Parliament and regulations are not clear about the rules.
Early indications from judges that the Treaty principles require good faith “akin to” that which partners owe to each other. We are not aware of any decisions showing they intended to create hereditary racial political privileges. But Minister Mahuta (and perhaps CrownLaw) now say the Treaty principles oblige her to to do just that, and to go against other critical limbs of the Rule of Law. Our case will say those who signed the Treaty, and the judges who resuscitated it, intended to reinforce and honour its promises of equal citizenship under law that protected the property of all. The Treaty was to be respected by making the Crown compensate iwi and hapu who had been wrongly deprived of their property. It was not intended to afford special privileges to locally-owned infrastructure based on race.
This case will allow the Court to correct a lot of recent assertions about Treaty partnership. They can say if “partnership” is more than a metaphor that has expanded beyond its intended use. The case involves a wide enough set of propositions to establish new boundaries. The Court can indicate whether rule of law protections can be over-ridden by partnership assertions.
Māori may have customary interests in some of the water that forms part of the three waters, but not the infrastructure itself, all of which was created after 6 February 1840.
Typically, customary rights are only given to specific iwi or hapū over water within their ancestral area. The areas and the customary rights attached to them need to be specifically identified with reference to Māori customary law.
Article Two of the Treaty requires the Crown to recognise and provide for such rights. But the Minister’s assertion of a pan-Māori interest in all water, and in all infrastructure that uses that water, undermines the Treaty rights of self-determination of individual hapūand iwi. By going after some twisted version of the ‘partnership’ principle, the Minister has breached the actual words of the Treaty.
We need to know what Crown Law is advising the government about the scope of Treaty principles. And we need to know what the Crown actually thinks about our claim. Do they agree that Māori don’t have customary rights in three waters infrastructure? Do they agree what customary rights in water only exist at a local iwi/hapū level? So far, the Crown’s statement of defence hasn’t provided us with enough information to know what they actually think.
We also need to see the advice Crown Law provided to the Minister on the need for co-governance. The Minister referred to legal advice in the Cabinet Papers to give the Three Waters scheme legitimacy that it wouldn’t otherwise have. Reference to legal advice dissuades people from questioning things that would otherwise seem problematic. We don’t know if Crown Law actually said the partnership principle requires co-governance of Three Waters, or if the Minister made this up on her own. The public is entitled to know whether the government and its advisors got the law right.
We need to deal with procedural issues first, like the production of Crown Law legal advice and making sure the Crown clarifies the details of its defence. Once that’s done, we can apply for a Court date.
Both sides will need time to prepare and consider evidence and draft submissions before the Court hearing. Our lawyers tell us the Courts are busy. They can’t be sure when we’ll get a hearing, but they don’t think it will be until the second half of this year.
If the Court concludes that Treaty interests do justify putting water infrastructure paid for by ratepayers into bizarre new corporations under the effective control of Māori nominees outside democratic dismissal, New Zealanders will know that the remedy can’t come from Court cases. We’ll know unambiguously that it is idle to look to lawyers and the Courts for protection our inherited rule of law traditions. The remedy will have to come from elections to our sovereign Parliament.