The Government created 10 water corporations to give local communities more control, but new changes to the Three Waters reform package ensure they will share the same employment contracts and the same IT systems
A last-gasp law change seeks to avert an exodus of council workers unsure about their futures in the delayed Three Waters reforms.
Auckland and Northland are to shift their drinking water, wastewater and stormwater assets to a new regional water corporation in 12 months' time; mayors expect Wellington and Wairarapa to follow three months later, and Christchurch in July 2025.
But council staff in some parts of the country face "uncertainty, disruption and distraction" until July 2026, the government administration committee acknowledges. Officials told the committee that 100-500 existing council senior staff were considered vital to the continued operation of water and wastewater treatment around the country.
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"They were concerned that should these individuals leave councils prior to the transition of that council's assets to a water services entity, then there is a risk around continuity of service," says Act MP Simon Court. "These incentives are not costed, and will simply add to the billions in debt the Water Services Entities are taking on, before they even open for business, let alone lift a manhole lid.
"This is yet another clear indicator that the transition risks and costs of Labour's Three Waters reforms are much greater than they would admit."
Already, Waimate District Council says it's lost some employees and others are worried about their future. Chief executive Stuart Duncan has expressed “major concern” the four yet-to-be-formed mega entities will require skills and expertise to run, “to a point that they could possibly drain the local government sector of its skills and expertise, and cause massive operational issues”.
The retention payments are one of a number of amendments that the committee's made to the reform package, in an attempt to make the changes somewhat more liveable (and saleable) for unhappy local councils.
Some changes will allay fears; some will likely spark new concerns: for instance, there are mixed views about staff at the 10 new water corporations being covered by a multi-employer collective agreement, negotiated even before some of the entities come into existence and know their personnel budgets.
National MP Ian McKelvie chairs the select committee – and he says it has tried to make the best of a bad situation.
"The recent extreme weather events, and the growing impacts of climate change, have given us a very stark reminder that the resilience of our water systems is under pressure." – Chris Hipkins, Prime Minister
"The changes the committee made do not improve what in effect is a very poorly constructed proposition. Some of the changes make the proposed governance roles very prescriptive."
Because the entities won’t be in place when the retention payments are made and the collective agreements negotiated, the Department of Internal Affairs will effectively be loading them up with debt and liabilities before they come into existence.
"It might as well be one water entity for New Zealand as they could all end up in an identical position – and the minister could use the merger and shared services provisions to create very different entities than the act currently envisages."
McKelvie is referring to provisions in the amended act for the Government to direct that the entities share back-office operations such as payroll or IT.
Already, Newsroom has learned the US-based tech firm Infor has been selected as the cornerstone provider of the big ICT "Systems of Record" for the 10 water corporations. That's a $107 million contract, out of the $532m budgeted for the Systems of Record, which includes more than $100m contingency.
At the Local Government NZ conference in Christchurch, the Prime Minister acknowledged mayors' concerns about Three Waters.
"The water reforms may well continue to be a confronting topic for some," Chris Hipkins told them.
"But the recent extreme weather events, and the growing impacts of climate change, have given us a very stark reminder that the resilience of our water systems is under pressure. There's no doubt that reform in this area is essential."
Three Waters once dominated council concerns. But aside from Hipkins' comments, they didn't even appear on the agenda of this week's Local Government NZ conference in Christchurch.
Mayors indicated they were all talked out on Three Waters, and just waiting to see whether they would go ahead under a re-elected Labour government, or be repealed by a new National government.
McKelvie says he is "very surprised" the reforms aren't on councils' agenda.
Newly elected LGNZ president Sam Broughton said yesterday that there was nothing new to talk about. "There's been so much conversation about three waters over the last three years," he told Newsroom. "It's in the Government's hands at the moment."
But that was before the select committee report was tabled in Parliament. Three Waters is likely to force its way onto the agenda when Local Government Minister Kieran McAnulty takes questions from mayors late on Friday.
Green MP Eugenie Sage spoke to the 750 gathered mayors, councillors and executives, in a Newsroom-sponsored political debate at the conference.
Afterwards, she said the select committee changes had improved the bill – though she and many councils would have liked to go further.
"It is disappointing that the compressed timeframe for the bill meant there was not time to make changes to respond to requests, from some councils, that the bill enable voluntary mergers before the entities are established; and not just afterwards."
The broad powers of ministerial direction around shared services have had some checks put on them, she says.
"Information communication technology systems appear to be an area where direction is likely to be provided because of the Government’s desire to standardise and integrate the ICT systems of 67 local authorities.
"Whether the Department of Internal Affairs has the capacity and expertise to organise this and avoid a Novopay-style debacle requires investigation and active scrutiny, including by ministers."
Simon Court, who also sat on the committee, expresses concern about the multi-employer collective bargaining. "These entities might not yet be established and not had an opportunity to determine their strategy and objectives, yet they would still be bound to engage staff in roles and at salaries and wages which may not be appropriate for the scale, size and location of an entity."
He says Act policy is to return the water assets to councils, share GST revenue with councils to fund infrastructure upgrades, and allow councils to enter into voluntary “shared services” agreements, gaining the benefits of scale, while retaining local ownership and control.
Variations of this already exist: Wellington Water provides water services for six councils in that region, and Waikato District contract's Auckland's Watercare to manage its water services infrastructure.
Wearing his other hat, as mayor of Selwyn District, Broughton says councils like his will learn from those such as Auckland and Wellington that have gone before.
Local Government NZ chief executive Susan Freeman-Greene says the organisation is continuing to talk with the Government and officials, as long as the reform process continues.
"It's fair to say that everyone's feeling like it's uncertain. But what we hear is that it's pressing on. So we will remain engaged in the process, working with what's on the table in terms of the legislation, and advocating for the changes that the councils want to see."
The Internal Affairs national transition unit has recently met with councils in all entity areas to providing an update on the reset.
A spokesperson said initial feedback was sought from councils on their view of preferred go-live timeframes for each water service entity and where they saw themselves in the sequential delivery of the water services entities through to July 2026. "These were initial discussions and no decisions have been made at this time," he said.
