Councils ask court if they can get 'full and fair' compensation in water reforms

Tuesday, 16 November 2021

Prime Minister Jacinda Ardern announces a $2.5 billion water reform funding package at the Local Government Conference in Blenheim on July 15, 2021.

Three district councils are asking the court whether they are entitled to full and fair compensation for their water infrastructure when it transfers to publicly-owned entities.

The question is one part of a wider case the councils are pursuing, which ultimately seeks confirmation of their legal rights of ownership with regard to water infrastructure, which they presently own and operate.

The case is in response to the Government’s three waters reform, which will transfer drinking water, wastewater and stormwater infrastructure from councils to four regional publicly-owned entities in mid-2024.

The Timaru, Waimakariri and Whangārei district councils, represented by Jack Hodder QC, filed a statement of claim against Local Government Minister Nanaia Mahuta in the High Court at Wellington on Friday.

**READ MORE:

Timaru mayor Nigel Bowen says the Government's water reforms are redefining ownership.

* Govt had to push past Three Waters misinformation

* Ngāi Tahu blast 'retired politician' Winston Peters for 'ludicrous' criticism of Three Waters reform

* Government wades further into almighty water stoush by forging on with Three Waters reforms

* Mandated water reform 'confiscates' local accountability, Timaru council says

Several councils have described the Government's water reforms as the Government stealing or grabbing the infrastructure. (File photo)

All three councils have been vocal in opposition against the Government’s water reforms.

They are concerned the Government has misunderstood the councils’ rights over infrastructure assets.

The councils have asked the court to declare that their ownership of water infrastructure includes several exclusive rights – including to receive full, fair, and independently assessed compensation if the assets are removed through legislation.

Whangārei mayor Sheryl Mai says the legal case is to understand the meaning of ownership.

Under the reform, ownership of the physical water infrastructure would transfer to the new entities – and the new entities would be owned collectively by councils.

According to Cabinet papers, a council’s ownership rights would be provided for by its arms-length governance role (which is shared with mana whenua/local iwi) in the entities. Councils, despite owning the entities, would not control their day-to-day operations.

Timaru mayor Nigel Bowen said the Government’s water reforms were redefining ownership. “It’s not ownership in a traditional sense that we would all be used to.”

Bowen said if the council was technically not the owner of the water infrastructure assets, it should receive “full and fair compensation”.

He did not say exactly how much he expected would be fair, except to point out the value of his council’s water infrastructure was about $600 million.

“Under the likes of the Public Works Act, if a road needs to go through and someone’s house needs to be purchased, they would be paid full and fair compensation for that house,” he said.

Several councils have described the reforms as the Government stealing or grabbing the infrastructure – though the Government has announced a funding package to help councils financially once the new entities are operating.

Whangārei mayor Sheryl Mai said she believed full and adequate compensation would be the entity paying whatever it would cost to replace the asset.

“In our district, full replacement costs are about $1.2 billion.”

Mai said the wider legal case was to understand what ownership meant and therefore what councils’ roles and responsibilities would be once the assets were transferred to a new water entity.

Waimakariri mayor Dan Gordon said the legal action was a formal step to help persuade the Government to pause the water reforms and work with local government to investigate an alternative model.

Meanwhile, the three councils have also asked the court to declare the Government advertising campaign about three waters should not include misleading or incorrect information.

Earlier this year, an ad campaign for the reforms depicted people swimming in green water, which was met with fury by some councils.

Bowen said he believed the campaign “was probably less than factual”.

He explained that if the court ruled these advertisements should not have misleading or incorrect information, “then we’ve got the ability to say: ‘well did it mislead or provide incorrect information?’”

A Department of Internal Affairs spokesman confirmed it had received the statement of claim from the three councils.

The department was reviewing the statement, and it was too early to make a comment, he said.