Auditor General John Ryan

The Auditor General, John Ryan, yesterday delivered a broadside to the Government over the accountability arrangements in its proposed There Waters legislation.

That legislation will make its first public appearance in front of the Finance and Expenditure Committee today, where the majority of local Government submissions either totally oppose it or want substantial amendments.

Much of the opposition is centred on the governance arrangements. However, none of the major local bodies has directly opposed the co-governance proposals.

But Ryan’s objections centre on the accountability of the Water Services Entities. (WSEs).

He is concerned that they cannot be held to account by ratepayers like local authorities, nor can they be held accountable by Parliament because they are not Crown entities.

“This makes direct accountability to their respective communities more important,” the submission says.

“I am concerned about whether these mechanisms will be sufficient, individually or collectively, to enable comprehensive and effective public scrutiny and accountability.”

The WSEs will be governed by two separate bodies; a Regional Representative Group (RRG), which will include representatives from local bodies in the entity’s region along with Manu Whenua representatives.

The other body will run the water infrastructure in the region and will report to the RRG.

But the RRG is on its own with no specific accountability to anyone, though, in practice, it would be likely that the Councils and Iwi would require their appointees to at least report back.


Ironically it has been the work of the Auditor General in his annual audits of local bodies, which has had a big influence on the debate over the need to reform three waters structures.

He has persistently reported that most Councils have been spending less than the annual depreciation on their water assets which is why so much of our water infrastructure is in need of replacement.

In his submission on the Bill, Ryan says it proposes no equivalent requirement for a WSE’s planning documents to be audited.

I consider this to be a serious diminution in accountability to the public for a critical service,” he says.

“There is also no proposed audit scrutiny of the WSE’s engagement with local communities.”

“I strongly recommend that the Committee consider the requirements for independent assurance in all aspects of the operations of these new entities, and whether we should be required to produce a 10-year plan similar to (Long term plans) LTPs that is also audited.”

Ryan’s submission will be one of the most important to be considered by the Committee, but he has been given only ten minutes today to present it.

That is a consequence of the deluge of submissions received by the Committee. Many are just one-page protest letters.

But most local bodies have submitted, and most, to varying degrees, oppose the proposals.

The response from the Councils was paradoxical.

Many supported the principles of what the reforms were trying to achieve, but when it came to the crunch, they were more ambivalent.

The Ashburton Council went as far as to survey its residents and found that only  27% were prepared to pay more for higher standards, with a further 21% happy to do so if the improvements were localised, justified, and-or decided upon by local representation.

The question of localisation and representation was to the fore of the Auckland Council’s submission.

While Auckland will contribute over 90 per cent of the population served by the Northern Water Services Entity and will contribute 93 per cent of its assets, “the governance role Aucklanders have through their elected representatives will be reduced to having a minority say,” their submission said.

“Independent polling of a representative cross-section of Aucklanders and submissions made by Aucklanders during consultation in late 2021 shows an overwhelming majority of Aucklanders agree that any new water entity should be kept accountable and responsive to the public through their elected council representatives and agree that Auckland Council should have majority control in any new entity.”

But the smallest Council in the Northern Water Services Entity, Kaipara District Council, fears that Auckland will squash it.

The Bill provides that decision-making at Regional Representative Groups be by consensus, but if that fails, then a decision will need to be approved by 75% of the members.

Kaipara argues that such a requirement would mean that Auckland would be able to overpower the Committee.

The  Auckland Council would have  four seats and one for each of the three  Northland councils  with equal seats for iwi, which it calls “a lopsided formula.”

“If the majority required were shifted more towards consensus, to 90% (12 of the 14 votes), then, again, Auckland could never be outvoted, but any majority decision would require votes from each of the four voting shareholders,” their submission says.

“This would be an improvement, as it is closer to consensus. For good governance.”

But Kaipara’s fundamental objection is that the reforms could force it to go out of business.

Mayor Dr Jason Smith says 28 per cent of its revenue comes from Three Waters assets and those assets make up 16 per cent of its total asset base.

At the other end of the size scale, the Greater Wellington Regional Council is largely supportive of the proposals but has raised questions about the future of these water catchments, some of which also double as regional parks.

“The forests of the catchments are defined as ‘key native ecosystems’ that are actively managed to maintain and enhance biodiversity and water quality outcomes,” its submission says.

The Council wants to retain ownership of the catchments.

Outside Parliament and the submissions, one contentious issue has been the manu whenua representation on the RRGs, which has been described as “co-governance.”

Few submissions address the issue, but the Hastings District Council says it is already doing it.

“Hastings District Council has been co-governing wastewater with our mana whenua for decades; we have led the way, demonstrating that co-governance is not only possible but can lead to better outcomes and leading practice in the industry,” its submission says.

However, it  “is unclear how this co-governance committee would continue to operate under the proposed changes.”

The Tauranga City Council is seeking assurances that Māori “are given full functions, duties, and powers under this legislation.”

The Rotorua Lakes District Council, which has been at the centre of controversy over its establishment of a Maori ward, is sceptical about the reforms.

Its CEO, Geoff Williams, says: “The business case for the proposed reforms, to date, relies heavily on assumed economic benefits. However, the economic benefits that are promoted rely primarily on the ability of the WSE to deliver substantial cost efficiencies. This attracts a significant and healthy degree of scepticism.”

And it is worried about the impact the reforms might have on the Council’s relationship with local iwi.

“The Council has faithfully endeavoured to give meaningful effect to its partnership commitments with Te Arawa.

“Our iwi/Māori/hapu relationships are currently very strong and have been built over many years of solid commitment by all parties.

“The reform proposals have not as yet adequately addressed the possible effect of the reform on those relationship commitments, nor on the Crown’s existing Treaty settlements obligations.

There is a justified concern to ensure that the proposed reforms must both protect existing settlements as well as ensure that the Crown (and local government and the Entities) continue to have the ability to put right historic wrongs and reinforce these relationships through direct and respectful mechanisms.”

The submissions thus tend to focus on the same issues that have been highlighted by the Auditor General; the questions of governance and accountability.