Are councils being stripped of assets? Will Māori have veto? Three Waters explained

The Government has concluded two months of engagement with councils over the controversial Three Water reforms and Newshub has dived into the proposals to provide some clarity.

At this stage, the Government clearly doesn't have full support. The most recent local bodies to push back are Gisborne and Westland, and they join a chorus of others who don't like it, including big players like Christchurch and Auckland.

But Local Government Minister Nanaia isn't backing down, because it's estimated New Zealand needs between $120 billion to $185 billion spent on water infrastructure over the next 30 years to meet standards and provide for future population growth.

Mahuta hopes that with the centralisation of water assets, monitoring and enforcement of compliance will increase, and communities "will not have to put up with second rate water services".

The reforms stem from Havelock North's outbreak of gastroenteritis in 2016 where four people died and 5000 became ill, as well as drought in Auckland and old pipes bursting in Wellington.

Mahuta has signalled a final report in the coming weeks on potential changes to the proposals with council feedback taken on board. Cabinet will then consider the next steps for Three Waters, including a process for public consultation.

National MP Christopher Luxon fears it's an "asset grab" by the Government.

"We will keep fighting the Three Waters asset grab with everything we've got. We encourage every New Zealander to sign our petition to stop it."

Local Government Minister Nanaia Mahuta.
Local Government Minister Nanaia Mahuta. Photo credit: Newshub / Zane Small

What is Three Waters?

Four publicly-owned entities will take responsibility from 67 councils for drinking water, wastewater and stormwater infrastructure.

The four water entities will be governed by no more than 10 board members each, selected by independent selection panels, with the chairperson holding the casting vote to avoid a deadlock situation.

Those panels will be appointed by regional representative groups of no more than 12 council members and iwi representatives - 50 percent council members and 50 percent iwi mana whenua. 

The independent panels will choose people for the water entity boards based on their level of expertise in managing water assets.

Since the four water entities span multiple regions, the regional representative groups will be made up of councillors and iwi from multiple regions. Therefore, they'll be expected to have "appropriate distribution of representation".

That latter part could get messy, but it's still being worked through.

Are councils being stripped of assets?

The councils will by legislation remain the owners of the water entities. But they will not have many of the rights that owners of assets usually have, such as the right to call the shots.

Normally, asset owners exercise their ownership rights through the board. But under the Three Waters proposal, councils will not have that direct presence on the board - calling the shots will be the four water entities.

The influence of local councils will be via the regional representative groups and those appointed by the independent selection panel.


A key part of the reforms is what's called 'balance sheet separation' which essentially means that whilst the water entities will be owned by the councils, they will be completely financially independent, so the financial position of the councils will have no effect on the financial position of the entities, and vice versa.

Will Māori own 50 percent of water assets?

No. Cabinet has agreed to recognise and provide for iwi rights and interests in the reforms and proposed entities once they are set up. These rights and interests are not ownership rights and interests.

There is work going on in parallel to Three Waters, led by the Ministry for the Environment, which is looking at exactly what Māori rights and interests in freshwater are. That work is still going on. 

This was a significant issue back when the previous National-led Government partially privatised power companies. It sparked a big debate and legal action about Māori rights and interests in freshwater under the Treaty of Waitangi.

Will Māori have veto?

They could, over a couple of things, but perhaps not in the way you'd expect.

The regional representative groups - which will be 50 percent council members and 50 percent mana whenua - won't have significant influence over water assets, which appears to be why some councils don't like the proposals.

The groups will have the power to make appointments to the independent selection panels, which then decide who will sit on the water entity boards. They would also vote on any privatisation proposals that come through down the line. Both of those votes require a 75 percent majority.

Some have claimed this gives mana whenua the right of veto over decisions by the water entities. But it effectively gives them the right of veto over those two issues - not the operational or governance decisions by the water entities. 

It's also been suggested that Māori have veto rights over how councils spend the $2.5 billion package announced by the Government to help them transition to the Three Waters proposals.

That springs from the expectation the Government has made clear to councils that any decisions about how that money is spent by councils will consult with mana whenua on their plans for that money.

But there is no iwi veto on the decisions they make.