“Ownership” without any benefits

With the passing of the Water Services Entities Act, the shift in control over water assets affected by the “Three Waters” reform is massive. Essentially, the local councils that once enjoyed direct ownership and control of local water assets will now be “shareholders” of the new mega Water Services Entities (WSEs). For each WSE, the corresponding local councils will be given 1 share for every 50,000 people. Each council would have at least 1 share.  

The councils will lose all substantial rights of ownership. Section 166 of the Act specifically denies owners the rights to distributions, profits, and any direct or indirect financial benefits from the water assets.

Despite the Government’s aggressive messaging over “ownership” staying with the local councils, the real game is in how the WSEs are managed and controlled: through an unprecedented national form of co-governance. 

Try to follow along…

Regional Representative Groups (RRGs) will be made up of 50/50 unelected iwi representatives and elected councils. These groups will then appoint the Independent Selection Panel which will determine the make-up of the boards of the 4 WSEs. 

In addition to the fact unelected iwi reps have 50/50 representation even though Māori make up less than a sixth of the nation’s population, they enjoy the added privilege of having the exclusive right to provide the entity with binding orders in the form of Te Mana o Te Wai statements. In addition to that, board members will not only be required to have technical competency, but also be required to have “collective competencies” in the Treaty of Waitangi, mātauranga Māori, tikanga Māori and te ao Māori (Māori knowledge, customs and worldview).  

Why such a byzantine management structure is required is a mystery and built in complexity like this invites problems; from inefficiency to confusion to self dealing. It also increases the risk of public debt ballooning.

The Auditor General has previously blasted the governance structure of the entities as being unaccountable to ratepayers in the same manner local councils are. 

Most of the dramatic changes have nothing to do with water quality. Notably, it has always been the responsibility of the national government to regulate water quality and it remains so, albeit with significant elements of democratic oversight now removed.