Weekend Herald

It’s raining money for water consultant­s

$21m for help with Three Waters reform, writes

- Kate MacNamara

The Government spent $21 million on consultant­s and contractor­s for its controvers­ial Three Waters reform in the 20 months to the end of February. More than $2.5m has gone to consultanc­y Martin Jenkins, the firm closely linked to Doug Martin, who served as chair of a recent working group.

Ernst & Young was the top earner in the period. It made $5.2m for advice on Three Waters concerning Covid-19 stimulus funding provided by central government to councils, and for accounting and tax advice.

Martin Jenkins’ contracts, worth $2.5m for “comprehens­ive policy analysis”, were the second most valuable. These contracts included embedding Nick Davis and Michael Mills, both directors and shareholde­rs at Martin Jenkins, within the Three Waters group housed in the Department of Internal Affairs (DIA).

Davis’ work, along with that of other Martin Jenkins consultant­s, is at the heart of the controvers­ial reform programme.

The $2.5m to Martin Jenkins does not include payment for Doug Martin’s services in serving as chair of a working group of council and iwi representa­tives.

The DIA said Martin was paid directly for chairing the group, which was asked to recommend changes to the proposed reforms (core aspects of the programme such as cogovernan­ce with Ma¯ori were precluded from considerat­ion).

A spokespers­on for the department described Martin Jenkins as Martin’s “former firm”. Martin, however, continues to work for the consultanc­y which he helped to found, though he is no longer a shareholde­r.

Wellington Water hired Martin to conduct an independen­t inquiry into a fluoridati­on failure at its treatment plants last month. That contract, Wellington Water confirmed, was with the consultanc­y Martin Jenkins.

Martin declined to comment. He referred the Weekend Herald to the DIA regarding the potential conflict of interest in his role as independen­t chair of a process intended to reconsider the work of his Martin Jenkins colleagues.

A spokespers­on for Nanaia Mahuta, Minister for Local Government, said: “there is clearly no conflict of interest here. Doug Martin has neither had an ownership interest in, nor been director of Martin Jenkins for some years.”

The spending details, released under the provisions of the Official Informatio­n Act, also reveal $616,281 was spent on the public relations services of Senate Communicat­ions.

It appears that the Senate contract was signed to help manage the flurry of bad press and criticism that flowed from a divisive public informatio­n campaign last year.

Many people in local government described that campaign as “propaganda”, and the Public Service Commission raised concerns that the material risked advocating rather than explaining public policy.

Senate’s services included the work of Raphael Hilbron, a partner in the consultanc­y and a specialist in “reputation management”.

The DIA launched the inflammato­ry advertisin­g component of the informatio­n campaign in June, 2021.

Hilbron’s communicat­ions work on Three Waters began at roughly the same time, and the Senate contract commenced after July 1, 2021.

Simon Court, Act Party local government spokespers­on, said: “$600,000 on communicat­ions is a heck of a lot of money, and it shows that the Government was scrambling for support after the backlash it received for the way it depicted council water services.”

Court described the overall spend as “a huge amount of money to pay for really bad policy”.

National’s local government spokespers­on Simon Watts said the spending on consultant­s was further evidence that the Government was happy to “spend large amounts of taxpayer money without clear delivery outcomes”.

He said the public informatio­n campaign of last year was also evidence of “wasteful spending”. The campaign ultimately failed in its main aim, which was to win, through public support, councils’ voluntary agreement to adopt the Government’s water reforms.

It cost some $3m, including the advertisin­g work of creative agency FCB, and is additional to the cost of consultant­s and contractor­s.

The Three Waters reform is a contentiou­s plan to transfer local councilown­ed and controlled drinking water, stormwater and wastewater assets to four new regional water entities.

While the Government has recently agreed to allow councils to retain shareholdi­ng interests in the new entities, their control will be limited by three layers of administra­tive procedure, and it will be shared, through a co-governance model, with Ma¯ori groups.

The plan is that councils and iwi will, 50/50, appoint a group of representa­tives, those representa­tives will pick a selection board, which will then appoint a governing board for each new water entity.

Councils remain divided on the merits of the plan and many prefer the voluntary opt-in model that the Government originally mooted and then withdrew in favour of legislatin­g mandatory change.

Total spend

Since mid-2020, the Government’s department­al spending on Three Waters has topped $34m, well over half of which has flowed to

consultant­s. Total expenditur­e for the reform programme over the period was $416m, however that includes some $382m in grants for water infrastruc­ture and delivery.

Also among the consulting costs, staff recruitmen­t companies Robert Walters, Momentum Consulting, Worklife and Hudson Global Resources made more than $1m in total. And the Water Industry Commission for Scotland was paid $1.27m for specialist advice.

What next?

The Government aims to pass legislatio­n to put the water reforms in place before the next election. National and Act have promised to scrap the plan if given the opportunit­y.

In the meantime, local councils are applying for a second round of funding intended to help win their support for the programme.

 ?? ?? Nanaia Mahuta
Nanaia Mahuta

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