Policy sinkhole
Wellington’s leaking pipes showcase the need for national and local government to fill the void left by the demise of Three Waters.
As temperatures soared a few weeks ago, a staffer at Wellington Water, the capital’s water services provider, published a video on social media titled “Council Engineer – Challenge one day slacking off and do no work. Making money while I play,” explaining that she spent her working hours catching up with friends, lying on the couch and watching movies.
This came at an awkward time for the organisation, which was – and still is – in the midst of a water crisis. There’s a serious risk that the region will enter a state of emergency in which residents will need to boil their drinking water. But to walk around the city and its suburbs, past wilting gardens and dying lawns, is to splash through deep puddles and swiftly running streams of clean water draining into the gutters, occasionally mixing with eruptions of raw sewage, all bubbling out of leaks in the pipes owned and theoretically maintained by Wellington Water.
The water entity insists it is working as hard as possible – so the revelation that one of its engineers took pride in doing literally no work was unwelcome news, met with swift damage limitation. But a recent report for the Wellington City Council described an entity with poor reporting and little accountability. Its maintenance costs had jumped by 71% in the past three years and it was hard to see where that money was going.
Wellington Water does not have a glorious track record. In 2020, it was caught spending $354,000 on PR consultants in an attempt to put a positive spin on the collapse of some city streets into sinkholes and sewage spills into the harbour.
The city is losing close to 50% of its drinking water.
These are the kinds of problems Labour’s Three Waters policy was supposed to fix. Having rejected it, National will shortly announce its alternative, Local Water Done Well – which is not a million miles away from Three Waters, but without the co-governance. Involvement will be optional rather than mandatory.
Both were designed to solve the problem of local governments pilfering ratepayer revenue destined for infrastructure maintenance and spending it on more media-friendly things like convention centres.
Although Auckland’s armslength agency, Watercare, generates most of its funding from user charges (most properties are metered), Wellington Water – and most other water providers around the nation – must beg their councils for money.
FLUSHING IT AWAY
The true villain in Wellington’s water saga is the city council. Every year, going back decades, it has carefully estimated how much money it needs to maintain its water infrastructure and factored this into its rates bills. And every year, it has then diverted much of that revenue into other projects. The most infamous of these is the earthquake-proofing of the town hall, the estimated cost of which has soared from $43 million to $329m – almost half the council’s entire revenue for last year.
It has built a $180m convention centre and allocated another $180m to rebuild the library, $226m for bike lanes and $140m to revamp the Golden Mile retail area on Lambton Quay. Mayor Tory Whanau – who responded to the water crisis by launching a PR campaign celebrating all the time she was spending at the gym – would like to spend $32m buying a derelict cinema complex. Wellington Water is seeking $1 billion a year over 10 years to repair the pipes.
What has gone wrong? The government believes the council has lost sight of its core functions, distracted by more glamorous, high-profile projects. Council insiders observe that rather than being distracted, many councillors over the years seemed unaware the pipes were even down there to begin with. Others note that senior officials make most of the council’s significant decisions, springing them on elected representatives at the last minute and advising them they have no alternative but to support them.
Many councillors over the years seemed unaware the pipes existed.
There are material factors: some of the water infrastructure is over 100 years old; many of the pipes laid down in the mid-20th century were made of concrete asbestos now coming to the end of its life span; they’re vulnerable to seismic events and the 2016 Kaikōura earthquake seems to have inflicted serious damage that becomes apparent only when the streets start caving in. These are factors that you may think might have led to more investment in upgrading infrastructure, rather than less.
THE METER IS TICKING
The Labour and Green factions in local politics believe low rates are the underlying cause of the crisis. But a New Zealand Initiative survey found Wellington’s residential rates are equivalent to Christchurch’s and higher than Auckland’s. It has the highest commercial rates in the country, and the city is filled with empty shops as businesses migrate to more-affordable areas.
Three Waters was supposed to solve the water infrastructure problems of councils around the country, or at least take them out of council hands. In Wellington’s case, its pipes and the multibillion-dollar liability hanging over them would have been transferred to a new co-governed water entity which could then take on more debt and spread the cost of repair across several regions. The new National-led government seems bemused by the notion that taxpayers or ratepayers from other regions should bail out a city that has systematically destroyed its own infrastructure. Wellington is realising, to its horror, that it will have to pay the repair bill itself.
The most likely mechanism for this is one of the new councilcontrolled organisations that will be set up under Local Water Done Well. Although this will allow the council to get the water infrastructure bill off its balance sheet, it will almost certainly require the installation of water meters and a user-pays regime like Auckland’s. This gets you awfully close to the privatisation of water – a solution that will be anathema to the Labour and Green constituencies that dominate the capital’s politics. But the mayor has indicated support for water meters, explaining that “times have changed”.
There have been rumours that the government would sack the council and install a commissioner, and this may still come to pass. But for now, it’s more than happy to step back while left-wing politicians impose right-wing policies – without any mandate from their voters – because they have no other choice. What could be sweeter and more refreshing? ▮
You may think these factors might have led to more investment, not less.