Three Waters: Law Society writes to Nanaia Mahuta urging she drop 'constitutionally objectionable' clause

The Law Society has labelled the entrenchment clause in the Three Waters legislation "constitutionally objectionable" and introduced in a way that is "undemocratic".

Newshub has obtained a letter sent to Local Government Minister Nanaia Mahuta from the President of the Law Society on Thursday raising "serious concerns" about the provision and urging it be removed.

National says the letter is "damning" and the Government is "undermining the constitution".

Mahuta's office told Newshub the minister is currently in Australia - where she is meeting her Foreign Affairs counterpart - and will respond to the letter in due course.

Green MP Eugenie Sage, who proposed the entrenchment clause, said keeping water assets in public ownership is of prime importance to Kiwis and deserves such protection.

Labour last week supported a proposal from the Greens - via a Supplementary Order Paper (SOP) - to entrench part of the Water Services Entities Bill which puts an obligation on water service entities to maintain public ownership of the assets.

Entrenchment means the legislation cannot be repealed unless a a public referendum is held or a special majority of MPs agree to it. Normally this is set at 75 percent, but in this case the threshold was 60 percent.

The move caused outrage among constitutional law academics as entrenchment has previously been reserved for electoral law matters. In an open letter, they said it risked creating a "dangerous precedent" to extend entrenchment to "contested social policy".

Prime Minister Jacinda Ardern on Monday admitted the concerns were "legitimate" and referred the matter to Parliament's Business Committee. There was no commitment to reversing Labour's support.

Now, the Law Society, the national regulator of lawyers which also provides submissions on law, has called for the provision to be removed.

"In the Law Society’s view, the clause is constitutionally objectionable, and the process used to introduce it was inappropriate," President Frazer Barton told Mahuta.

While the entrenchment of electoral laws is "necessary to protect the integrity of our democratic system", Barton said the ownership and privatisation of water services is "widely debated policy". He said the Law Society agreed with the concerns laid out in the academics' open letter.

"If this Bill passes in its current form, future Parliaments may be bound by the policy decisions made by the current Government regarding the ownership of water services and infrastructure. The use of entrenchment provisions to hinder policy reform in this manner undermines democracy, and is, in our view, unconstitutional."

Barton also took issue with the use of urgency in Parliament, during which the entrenchment provision was passed. The Government said it was necessary to make up time lost after the Queen's death.

The Law Society President said it removes the ability to seek advice from officials about the impacts of proposed amendments and called the process "undemocratic".

"We believe the use of urgency has compromised Parliament’s ability to scrutinise this Bill and the numerous SOPs," he said.

"The Law Society believes it is constitutionally inappropriate to introduce an entrenchment clause under urgency by SOP."

Concluding his letter, Barton called on the Government to recommit the Bill to the Committee of the Whole House before its third reading and remove the provision. 

"Should the Government choose to pursue an entrenchment provision in future, that should be by way of a separate amendment bill, enabling public and legislative scrutiny."

In a separate statement to Newshub, Barton said the entrenchment clause "breaches a well-established convention observed by successive Parliaments". 

"Under this convention, entrenchment provisions are reserved for significant constitutional matters outside the scope of general policy debate.  The entrenchment clause is undemocratic: it proposes to bind the hands of future governments on a contestable policy position.

"The Law Society also believes it is constitutionally inappropriate to introduce an entrenchment clause under urgency by SOP.  Legislating by SOP at the Committee of the Whole House stage leaves no room for cross-party dialogue or public consultation."

'Damning letter'

Chris Bishop, National's shadow Leader of the House, told Newshub this was a significant move by the Law Society.

"I haven't seen a letter like this from the Law Society in recent memory. It is a damning letter," he said.

"This is pretty stern stuff and the Government would be well advised to listen to them and the numerous other commentators who have said the same thing and back down."

He said the Government should admit it made a mistake either through "incompetence or conspiracy" and send the Bill back to the Committee of the Whole House to fix it.

"This Government is undermining the constitution and every day that goes by where they don't fix it, it gets worse for them."

During debate on the SOP last week, Mahuta said the Government had written to other political parties earlier in the year seeking their support for entrenchment. But National and ACT hadn't supported it. 

She said that by supporting the SOP, parties would show they opposed the privatisation of water assets.

Mahuta acknowledged the amendment "may not pass the constitutional threshold", but believed there is a "moral obligation of people who believe that privatisation should not occur to support that particular [SOP]". 

In a statement, Mahuta said she recognised the SOP was "novel" and may not pass that threshold "but it was still worthy of consideration".

"Since then the Government has decided to more fully consider the entrenchment question via the Business Committee.

"But the bottom line remains that critical water infrastructure should not be privatised, and safeguards are needed to protect public ownership of water delivery."

Bishop said sending the matter to the Business Committee was a "distraction" and the Government could simply move to return to the Committee of the Whole House, which National would support.

Ardern has confirmed the clause was discussed in caucus, despite previously saying the SOP is "not something I would necessarily be aware of". She said entrenchment is usually set at 75 percent.

"Everyone in Labour was very aware of that," she said. "What would have been happening in real time is you had both an entrenchment provision but a different threshold."

Future privatisation?

Sage - who proposed the SOP and was cc'd into the Law Society letter - said in a statement on Friday that the Greens agree entrenchment should "be reserved only for matters of utmost importance".

"Retaining the public ownership of water assets is of prime importance to New Zealanders, and the Greens believe meets this threshold. We have been clear about this for over 12 months. Entrenchment was originally proposed by Government early in the Three Waters discussion."

Sage said the Greens would have welcomed more debate about entrenchment and opposed urgency. 

"However, the Committee of the Whole House is the stage where amendments to Bills are debated and voted on and that happened under urgency."

She previously said in the House she was responding to public submitters on the Bill concerned about the potential future privatisation of the water assets. 

As energy companies have been privatised in the past, she was also worried the same could happen with our water assets.

Sage said in the House last week: "This SOP responds to that public concern that we avoid privatisation of water services and we maintain them and public ownership with the public interest in ensuring that all New Zealanders have access to affordable water services of high quality, and that the significant revenue involved in operating these services, significant investment involved - we don't want overseas companies taking the services and operating them primarily for profit."

A Select Committee report on the Water Services Entities Bill said the Department of Internal Affairs advised a 75 percent majority entrenchment was "inappropriate for legislation unrelated to constitutional matters".

The report said the Greens disagreed entrenchment should only be for constitutional matters and felt a 60 percent majority "would be appropriate as a check on future privatisation of water infrastructure". 

Sage has pushed back on suggestions of the Greens trying to sneak the SOP in, pointing to comments about it in the Select Committee report. She's said she informed the Government of the Greens' position before the SOP was tabled.

National leader Christopher Luxon has dismissed suggestions National could privatise the assets in the future.

"We want them in local control and ownership so we can get that responsiveness in place that we desperately want to see."

On Tuesday, he described privatisation as being used as a "squirrel to distract from the real issue", which he said is the formation of four water entities through the Government's Three Waters programme.