Treasury warned Government against $2.5 billion Three Waters package for councils

Come hell or come high water, the Three Waters reform is going ahead. 

The Government revealed on Friday it's adopting the majority of its working group's recommendations, including the controversial co-governance structure.

And Newshub can reveal the Government was warned against rolling out a $2.5 billion dollar sweetener package, designed to get mayors on board with the programme. 

On the day our Three Water reforms were announced, contractors were fixing another burst pipe in Wellington, this one in Island Bay.

"Personally, I was really worried about my toilet, it was getting a bit full because we couldn't flush it," a local told Newshub. 

It's situations like that the Three Waters reforms aim to fix.

On Friday, the Government announced exactly how drinking water, stormwater and wastewater will be managed.

Power over those assets will move from our 67 local councils to four regional entities but those entities will be overseen by regional representative groups to make sure locals have a voice.

The groups must be made up of a 50-50 split of council members and local iwi - a co-governance arrangement.

"It's an outstanding outcome," said Te Rūnanga o Ngāti Toa Rangatira CEO Helmut Modlik. "The pattern for that structure was set on February 6, 1840. We just had to wait a long time."

The Government also confirmed that councils will maintain ownership over their assets, despite losing control of them. 

"Ownership of the entities themselves will remain with councils alone through a shareholding model that is directly proportional to the size of council populations," said Local Government Minister Nanaia Mahuta. 

There's been plenty of debate on the topic. The minister was adamant the announcement will smooth things over, but there are still mayors not on board with the reforms. 

"The reforms don't help us much but they do hinder us if they take away our control," Auckland Mayor Phil Goff said. "We want to see further changes."

Waimakariri Mayor Dan Gordon is also not a fan. 

"It's a dark day for democracy," he said. "It's tantamount to theft of community assets and we'll be fighting this as hard as we can."

Last year the Government dropped a $2.5 billion dollar cash pot for councils to spend in a bid to get more mayors on board.

But Newshub can reveal Treasury warned against the handout, essentially calling it a bribe.

"The financial incentives package is intended to increase local authority goodwill towards the reforms and reduce political barriers," Treasury wrote. 

It also said the Government didn't provide any analysis for the cost of the package, nor any evidence it would be value for money.

"The paper does not include any analysis or basis for the quantum of the financial incentives package... nor does it provide evidence as to the value for money of this funding."

As such, Treasury concluded it was not "good use of Crown funding".

ACT leader David Seymour described the funding as a bribe. 

"If you're buying political good will, in most countries that's a bribe," he said. "I'm not sure what the Government's going to call it in New Zealand."

Finance Minister Grant Robertson rejected that.

"No," he replied, when asked if the funding was a bribe. 

"Not at all," added Mahuta. 

Bribe or no bribe, one thing's for sure: Three Waters is going ahead.