Newshub Nation extended interview: Local Government Minister Kieran McAnulty

After revising Three Waters into the new affordable water reforms, Local Government Minister Kieran McAnulty has criticised Labour's use of the term 'co-governance' to defend the policy. 

On Thursday, the Government unveiled its new affordable water reforms.

Ownership of water infrastructure will remain local and councils have been given more of a voice. 

A major change is that the proposed four regional public water entities will be expanded to 10. 

Prime Minister Chris Hipkins now denies the Government's water reforms feature a co-governance arrangement, saying the 10 proposed water entities will be governed by people appointed "for their knowledge and expertise".

Speaking to Jenna Lynch in an extended interview with Newshub Nation, McAnulty said: "I do accept that the term co-governance has been used by ministers in defence of this policy, I think that was a mistake." 

Asked if he was referring to Nanaia Mahuta, the former Local Government Minister who initially spearheaded Three Waters, McAnulty said he was "just talking about the Government in general". 

"They have used that term, and it was ill-defined in my view," he said.

"What we're proposing here isn't all that dissimilar to what's common in the local government sector already."

McAnulty said that during his trips around the country, visiting various councils and mayors, co-governance usually doesn't come up, "because they're used to it". 

He believes that using the term co-governance, "allowed other people to say 'they're handing over assets to Māori, Māori are taking over', and there was no basis for that". 

A significant part of the backlash to Three Waters was based around the idea of co-governance, but the measures that people rallied against are still included in the new affordable water reforms. 

"I couldn't be more relaxed about the concept of having mana whenua alongside local councils on that representative group because the board that's governing is competency-based," McAnulty said. 

McAnulty stands by the need to have Māori at the table, making decisions about water reforms. 

"There's a Treaty obligation here, that's been tested and proven in the courts. It says that Māori have a special interest in water as tangata whenua, I'm not shying away from that."

He also said rating agencies have told them that to ensure balance sheet separation, outside voices are needed, so "if it should be someone else, it should be mana whenua".

"I think it's clear to everyone that this whole thing wasn't explained well."

He believes that the upcoming election will be New Zealand's opportunity to decide whether the measures are appropriate. 

"They have a clear choice this election. They've got one option that we can prove will save them money, and another where the finances haven't been provided by the National Party.

"Their one doesn't have mana whenua representation, our one does.

"At the end of the day, what do New Zealanders care about at the moment? It's bills that they can afford and I think ultimately that's why, when people sit down and look at these new reforms, they will support our proposals over National's."

McAnulty doesn't think the water reforms will become a political football this election but said that National "might try" to make them one.

"We're committed to getting this done," he said. "This will be passed by the election". 

McAnulty doesn't see the reforms becoming an election-defining issue because "most New Zealanders will see that we've listened, we've taken advice on board, we haven't been arrogant and stuck to our guns and tried to get policy purity here".

"With something contentious, that's what people expect of their Government."

While McAnulty has confidence in the new reforms, he has had to compromise a lot to get there. 

McAnulty admits the new affordable water reforms are far from perfect, but defends the compromise as striking the right balance between efficiency gains while also maintaining local voice.

He admitted that, under the new affordable water reforms, ratepayers "will be paying more compared to four entities" as would have been the case with Three Waters.

"They'll be paying significantly less compared to the status quo," he added. 

"That's what compromise is about, finding that middle ground, and I think we got there."

Under Three Waters, ratepayers were projected to save around $7000, but under the new affordable water reforms, households in the Auckland and Northland regions on average are set to save $2770 a year by 2054.

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

McAnulty said, "when we look at what the two options are now, what the Government is doing, and what the National Party are proposing, the savings are significant under ours, and almost non-existent under theirs". 

National's Christopher Luxon admits his party's alternative plan to Three Waters could result in some councils "having a slightly higher charge".

The backlash to Three Waters was fierce across the country, and the forced change to the affordable water reforms has come with heavy compromises. 

The regulatory impact statement for Three Waters said that the new entities needed a population of at least 600,000 to 800,000 to see any real efficiency gains. 

McAnulty admitted that the populations of the new 10 entities will be "significantly less than that".

"We're not pretending that this is the best policy solution," he said.

However, McAnulty believes 10 entities strikes the right balance between saving money by scaling up while also maintaining the voices of local communities.

"Any more than that we couldn't justify because the savings wouldn't be there.

"Any less than that, local councils couldn't be guaranteed a voice, so that's why I'm confident 10 is that compromise."

McAnulty stands by the need for centralised reforms, saying that "by themselves, councils can't do this".

"The only way to do this is to create entities that have separate balance sheets to councils."

The Taranaki entity will serve a population of only 90,000 Kiwis, which makes achieving an increase in efficiency harder than under the previous, larger, Three Waters reforms. 

McAnulty said there will still be efficiency gains, but they will be "nowhere near what they were going to get under four entities."

After speaking with councils and mayors across the country, and gauging whether they can fund their own reforms, McAnulty believes that "we can justify 10, and this is what Taranaki asked for". 

McAnulty has defended further delaying the reforms and said, "delaying it out by two years is what many in the sector asked for because if we didn't we might not get things in place by the 2024 deadline". 

Despite the compromise, there is still dissent from some councils. McAnulty doesn't think any set of reforms would have had universal support.

"There are some mayors that believe that local control should be absolutely guaranteed, so there's a fundamental disagreement there," he explained.

"Entities are the only financial way forward here."

While there have been compromises, McAnulty is sticking by his guns.

"I think we've nailed it," he said. 

Watch the full video for more. 

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