A Newsroom survey shows local election candidates are overwhelmingly opposed to water reforms; councils are renegotiating funding agreements that they say 'gagged' them from criticising the Government's changes
A $2 billion "sweetener" to persuade councils to take part in the Three Waters reforms has turned into an expensive farce for the Government.
The so-called Better Off funding was a last-ditch effort to buy the support of the country's 67 councils; councils were required to spend the money on climate transition, community wellbeing, or infrastructure and services that supported their community.
"If central government is offering money that I can put to good purposes on behalf of Aucklanders, am I going to say no?" – Phil Goff, Auckland mayor
But before last week's applications deadline for the first $500 million, councils sought to renegotiate the funding agreements to remove the attached strings that required them to engage constructively in Three Waters. They say that will free them to take the money while still working to prevent the Government implementing its reforms – and more than 40 have told Newsroom they're applying for the funding.
There were councils that previously said they would turn down the funding; now even the most strident critics of the Three Waters reforms such as Whangārei, Manawatū, Waimakariri, Westland and Auckland say they are accepting the money.
Auckland has included $127 million in Better Off funding in its 2022/23 budget, to pay for operating expenditure projects. Outgoing mayor Phil Goff makes no bones about it: "If central government is offering money that I can put to good purposes on behalf of Aucklanders, am I going to say no?
Council candidates’ support or opposition to Three Water reforms
"Forty percent of that money has been raised from Auckland residents because we pay 40 percent of the taxes in this country," Goff told Newsroom. "So why would I punish Aucklanders by saying I won't take the money that, actually, they've raised from Aucklanders?"
Some councils are signing off their applications in the final days before voting closes: Marlborough District Council had an extraordinary council meeting on Wednesday, and Gore District Council is meeting on Thursday to confirm the projects it's seeking funding for.
When the Prime Minister announced the money to mayors and councillors at the Local Government NZ conference in Blenheim last year, she said it would be conditional on their participation in the water reform programme.
“We had to fight to stop them gagging us if we took the money.” – Tina Nixon, Masterton councillor
But a few months later, council opposition to losing control of their drinking water, wastewater and stormwater assets had become overwhelming – and so the Government made the decision to make participation mandatory.It no longer needed the Better Off funding to induce councils to take part; instead officials used the funding agreements to require councils to play nice.
Masterton mayoral candidate Tina Nixon said the funding agreements would have constrained councils from working to stop the Three Water changes.
“We had to fight to stop them gagging us if we took the money.”
"The Department of Internal Affairs acknowledges the importance of councils being able to independently express their views of the reform programme. The Department clarified with councils earlier this year that the Better Off funding agreement does not prevent them from doing so." – Hamiora Bowkett, Internal Affairs
The Department of Internal Affairs has not yet decided the funding applications, nor made any changes to the funding agreements*. Hamiora Bowkett, the executive director of the Three Waters Reform Programme, emphasised that no changes had been made to the terms of the Better Off funding agreement.
"The Department of Internal Affairs acknowledges the importance of councils being able to independently express their views of the reform programme," he said. "The Department clarified with councils earlier this year that the Better Off funding agreement does not prevent them from doing so.
"The agreement includes a common and prudent clause in public funding documents as a safeguard to protect against the misuse of public funds, or the government funding an entity that may be engaged in activities that bring the government into disrepute such as illegal activity. It is not intended as a 'gagging clause'."
The Ministry of Housing and MBIE used similar clauses in funding agreements, the department said. The clause requires that the funding recipient "must not at any time do anything that could reasonably be expected to have an adverse effect on the reputation, good standing or goodwill" of the department, or the Government.
According to Manawatū mayor Helen Worboys, who chairs the anti-reform Communities 4 Local Democracy council grouping, the agreement in effect constrained council opposition to the reform model. On the basis of legal advice, the group had recommended to its 30 members that they change four clauses before accepting any funds.
Those revisions made their funding agreements palatable to members, Worboys said. "Accepting the tranche one funding does not bind a council or community to supporting the government’s entity model or stop us speaking out against it."
The $2b comes in two parts: the first $500m tranche is funded by Government; the second $1.5b tranche will be borrowed against the infrastructure assets of the four big new water services incorporations. Because the water assets will remain in council ownership, managed by the new incorporations, that means the second tranche is borrowed against the council's own assets.
Speaking for the Manawatū local authority, Worboys said most of their elected members had been "morally opposed to accepting the funds" until they knew they wouldn't have to support the reforms.
"Our council have only accepted tranche one funding because it is not a debt to ratepayers – unlike the next proposed tranche – and we are able to use the $3.76m towards a major project already planned for, rather than dreaming up new projects."
That project is the redevelopment of the Feilding Library – which is not a new project. It was already in the council's long-term plan, but the council says Internal Affairs has indicated a willingness to fund it nonetheless.
The deadline to apply for the first $500m tranche was last week, but 16 councils, including Christchurch and Hamilton, have come back seeking an extension – conveniently, until after voting closes in the local election this weekend.
Bowkett said the extensions were granted because of the workload required to complete the application, not because of politics. "None have been granted in relation to local government elections."
The money is still contingent on working with Department of Internal Affairs officials on some aspects of the Three Waters transition, he said, but only those aspects required by law.
Bowkett said the Better Off funding agreement still included some obligations relating to the Three Waters reforms that councils must adhere to. "These relate to councils collaborating and cooperating with the Department’s National Transition Unit in its undertaking of the activities required to give effect to Three Waters reform legislation, when passed."
But he noted these same obligations were also included in the Water Service Entities Bill. "There is nothing included in the Better Off funding agreement that precludes councils, or their elected members, from making comments on or opposing Three Waters reform."
Changes to the funding agreement would be welcomed by incoming mayors and councillors who are successful in their election campaigns this weekend.
Newsroom has surveyed all 1800 council candidates. It finds that in most cities and districts, they are overwhelmingly opposed to the Government's water reforms. Sixty-eight percent of the 600-plus respondents say they oppose the reforms; only 12 percent support them.
The antipathy is most pronounced in the South Island, and in provincial districts with smaller populations. Only in Porirua and Hutt City does support for the reforms outweigh opposition.
Details of how the new system operates will be disclosed when Local Government Minister Nanaia Mahuta tables a second reform bill, which may happen as early as the end of this month.
What are councils hoping to spend their Better Off funding on?
Whakatane: The district is entitled to $5.66 now, and another $16.99m in 2024. Strategy general manager Steven Perdia says the council hopes to spend the money on: - planning for Murupara and Minginui regeneration, and amenity projects ($700K) - developing shared-use cycle trail from Edgecumbe to Thornton ($900K) - enhancing Civil Defence preparedness and strengthening Waimana and Te Teko community halls ($1.36M) - commencing a two-year commitment for a collective Iwi Policy Hub ($1M) - delivering Hono Hapori - mobile community outreach for Council services ($500K) - providing for a CCTV upgrade and expansion ($1M) - accelerating the Whakatāne-Kawerau Spatial Plan ($200K). "Government has made it very clear that application for the funding does not compromise any council’s opinion of the reform," Perdia says. "Whakatāne District Council submitted its concerns about some aspects of the then proposed Three Waters Reform model, while accepting that there needed to be some form of change so that required infrastructure upgrades and compliance with the new water regulations can be affordable."
Stratford: The Taranaki district has been allocated $2.57m this year and another $7.7m in 2024. Councillors are applying to spend it on their Brecon Road Extension, Town Centre Development, Skate Park development, Victoria Park Drainage Project and enabling wastewater infrastructure. Mayor Neil Volzke says acceptance of this funding does not imply that the council agrees to the Three Waters Reforms, and they have previously made their concerns and opposition known to the government. "Simply, this application is about taking up the funding opportunity that has been presented to us. It’s nothing more than that. In this situation, I think it would be remiss of us to leave $2.57m sitting on the table at a time when there are so many projects the community wants us to do."
Manawatū: The first $3.76m, if approved, will to go towards the Feilding Library redevelopment project. The council is "strongly opposed" to the water reform model, but chief executive Shayne Harris said meetings with the Department of Internal Affairs resulted in strong indications that the redevelopment project would qualify for funding under the criteria. Councillors had earlier questioned if by putting in an application that was successful, they would waive any right to vocalise their opposition to the Three Water Reforms. They received an assurance that they could continue to pushback against the reforms. The council has not yet decided whether to apply for $11.29m in tranche two funding in 2024, which it describes as a "direct debt" to the new water services entities.
Palmerston North: Chief infrastructure officer Sarah Sinclair says there are strict requirements for how they could spend their $8.16m funding this year, and $22.47 million in 2024. Councillors and board members held two workshops, where they expressed a strong desire to support projects that will create a legacy for the city. These are: - Investigations and design for housing developments at Summerhays, Huia Street and in the City Centre: $1.5 million - Construction of housing at our Summerhays site: $4.6 million - Detailed design and consenting work for Te Motu o Poutoa development: $1 million - Investigation and design of a multicultural community hub: $500,000 - Upgrade of Te Hotu Manawa o Rangitāne Marae wharenui and wharepaku: $500,000 - Rangitāne Better Off funding resource: $500,000
Horowhenua: Acting chief executive Jacinta Straker says the council has recently submitted its application for its first $4.99m entitlement, which includes: - Levin town centre development ($2m) - Manakau Domain shared pathway ($400,000) - Waitarere Surf Club development ($500,000) - Te Marie Park development ($500,000) - Foxton Aquatic Centre ($500,000) - rural hall drinking water ($400,000) "The funding will assist our Council with some key projects to improve outcomes for our community but does not mean that the Council cannot continue to advocate through the reforms for what is best for our residents," Straker says.
Tararua: Chief executive Bryan Nicholson says the first $3.8m will be spent on building iwi capacity, future community urban design, better understanding of urban water assets, executing the council's play and recreation strategy, and developing community gardens. The council is entitled to $11.39m more in 2024. The funding agreement doesn't stop councils freely expressing their views, he says. "For the avoidance of doubt, publicly criticising or expressing opinions on reform cannot reasonably be expected to have an adverse effect on the reputation, good standing or goodwill of the Department or the New Zealand Government, and would not represent a breach of the funding agreement."
South Wairarapa: Chief executive officer Harry Wilson says if the council’s application is successful, it will work closely with mana whenua, community groups and councillors to ensure the funding is equitably and constructively used. “It will be a big shot in the arm for sports, cultural, and economic development initiatives across our wards." The first $1.88m would be used for the creation, governance and funding of a South Wairarapa Community Wellbeing Fund. Council can apply for another $5.63m in 2024. The Council understands the obligations attached to the Better Off Funding package and Funding Agreement are not binding, and do not commit the Council or a future Council to the reform process, Wilson says.
Kāpiti Coast: Councillors agreed 14 projects, totalling $5.26m, to be submitted for this year's Better Off funding. They include - a $900,000 increase for progressing the Waikanae Library; - $1m contribution to the Paekākāriki Surf Lifesaving Club to help replace their building affected by coastal erosion; - four new public toilets; - a low emissions power source for the Ōtaki Pool; - funding for economic development initatives; - changing rooms, lighting improvements, and landscaping and cultural storytelling about Kāpiti Island at Maclean Park; - operational funding for Mahara Gallery; - a new Climate and Sustainabilty Fund to help drive and support Kāpiti’s overall emissions reductions, increase community resilience, and expand sustainability education; The council is entitled to apply for another $15.79m in 2024. Mayor K Gurunathan says: "We are unable to use the funds to reduce rates, however, we are confident that the projects we have put forward provide a good balance of progressing significant planned work as well as investing in our community’s future social, economic, cultural and environmental needs."
Upper Hutt: The council's asset management director Geoff Swainson says the first $3.9m would be used for: - Development of a new Integrated Transport Strategy – $500,000 - Sustainability Community Engagement programme – $200,000 - Sustainability Stimulus Grant additional funding – $200,000 - Maidstone Park sand turf floodlights installation – $1,000,000 - City centre upgrade project water main renewal – $1,000,000 - Pinehaven Stream flood protection project additional funding – $1,000,000; "Uptake of the better off funding package does not limit council’s ability to continue expressing its views and position on the reforms, and in itself does not commit council to the reforms process, which has been mandated by central government," he says.
Hutt City: Chief executive Jo Miller says extreme weather events in July and August had led Council to ask officers to consider how “Better Off” funding could be used to bolster city resilience. It is entitled to $8.36m this year and $25.07m in 2024. The council has been granted an extension to submit its funding application early next year. The incoming council will consider this matter early in the new triennium.
Waimate: The council is consulting with residents on whether to apply for Tranche 1 of the Government’s Three Waters Betters Off Funding Package, which is worth $2.42m. (It's second tranche will be $7.26m. Chief executive Stuart Duncan says the new council will meet and make a decision on Tuesday 8 November. Internal Affairs has granted Waimate a deadline extension until November 30 to apply for the funding.
Queenstown Lakes: The district council is entitled to $4.03m in the first tranche, and $12.09m in the second tranche. Strategic growth manager Anita Vanstone says they have submitted a funding application, which includes the council's share towards transport demand management, encouraging mode shift and alternative transport. Waka Kotahi would match that contribution. The application includes transport demand management, economic diversification, strengthening community partnerships, implementing a destination management plan, developing and managing biodiversity plans, and planning for priority development areas. "The Government has advised that signing the funding agreement after a successful application would not preclude councils from participating in the reforms or being part of a democratic process," she says. "The incoming Council will determine our position on Three Waters reform."
Correction: A previous version of this article said the Department of Internal Affairs had agreed to the proposed changes to the funding agreement. It has not yet decided the funding applications, nor made any changes to the funding agreements.
