Government's new water reforms plan explained: Three Waters branding no more

Three Waters is no more.

The Government on Thursday unveiled what it's calling a major shake-up to its controversial water policy. It'll now be called "affordable water reforms".

Ownership of water infrastructure will remain local and councils been given more of a voice. A major change is the proposed four regional public water entities will be expanded to 10 across the country. 

But possibly the aspect that has caused the most consternation among some - co-governance - will remain as part of the policy - although the Prime Minister didn't want to admit it. 

A little shipping container has a big job in getting water to Wairarapa. The little machine inside has an enormous price tag of $5 million.

But that's nothing compared to the eyewatering water infrastructure bill the entire country's facing.

"So here's the guts of it. Up to $180 billion local councils need to find and they can't do it by themselves," said Local Government Minister Kieran McAnulty. "Because councils are, individually, they are at their debt cap and if they are not, their communities cannot afford to pay any higher rates."

Councils are on the hook for that cost and they can't afford it. 

It's the problem the Government's controversial Three Waters reforms were trying to solve, but they became so much of a problem themselves they've had to be rebranded.

Goodbye, Three Waters and hello "affordable water reform."

The Government wants to create new "water entities" to own and manage water infrastructure. 

That means the debt for that infrastructure will be taken off debt-ridden council books and handed over to the entities which start with a fresh page, good assets and are therefore more attractive to lenders.

The entities are large enough to borrow much more money than councils can.

"The country can't afford it, the councils say they don't wanna do it by themselves," said McAnulty.

Under the old proposal there were just four entities, but the Government has increased it to 10 to include everyone.

"Every mayor will have a seat at the table," said McAnulty.

But Manawatū District Mayor Helen Worboys said there are still issues.

"Concerns still remain around the community property rights and the loss of meaningful local decision-making," she said. 

The trade-off - because the entities are smaller now - they won't be able to essentially bulk buy as much infrastructure, so things get a bit more expensive than the four-entity model.

"We're trading a guaranteed seat at a representative group table that has some influence for quite a significant increase in cost for my people and that's what troubles me," said Central Otago Mayor Tim Cadogan.

But the Government says every ratepayer in every region will be better off than they are now. 

For instance, households in the Auckland and Northland regions on average are set to save $2770 a year by 2054 - that's at the lower end of the scale.

Households in Gisborne, Hawke's Bay, Otago and Southland on average save over $5000.

"The alternative is a significantly higher rates bill for New Zealanders," said Prime Minister Chris Hipkins.

But National leader Christopher Luxon isn't impressed.

"This Government has decided to change the name, change the website but we're still stuck with Three Waters. It's a dumb policy. We're going to repeal it."

The big controversial "co-governance" bit still kind of exists.

On what's known as Regional Representative Groups - the mayoral seats at the table - they'll be split 50-50 between council and mana whenua.

"Let's be clear about this, it's not co-governance and it wasn't co-governance. These entities will be governed by a skills-based board appointed for their knowledge and expertise around water and other issues," Hipkins said.

So there's no requirement for Māori to be on those corporate-style boards which actually run the entities. But the board is chosen by those 50/50 regional groups.

"I'm not sure everybody recognises that Māori have a special interest in water that's been established through the courts," McAnulty said.

The minister is confident he's crushed the reset.

"I think we've nailed it," he said.

That, of course, is for the voters to decide.

Jenna Lynch Analysis

This policy has been dogging the Government for years, so are these changes enough to take the heat out of it?

The damage has possibly already been done. People who hate Three Waters may not be won over by a rebrand.

They lost the argument on affordable water by not saying the words 'affordable water' until now.

This watering down of Three Waters actually means ratepayers will end up paying more than under the prior proposals. They lose the economies of scale by whittling down those mega entities, but that's the tradeoff of getting the mayors on board. 

From the Government's perspective, when they head out on the election campaign, they can still trumpet savings to households.

National can't. Their policy - repealing this - is very similar to the status quo. Their main plank is ordering councils to invest in infrastructure and make sure water services are financially sustainable.

They haven't released costings and they haven't said how councils can foot this monumental bill, so Labour has every right to turn out on the hustings and say: show me the money.