New Zealand’s Three Waters scheme a debt trap?
6 July 2022
The Three Waters is part of the New Zealand Labour Party’s drive to create an idealistic vision of co-governance between Maori and non-Maori members of the country’s population.
The scheme was introduced in 2017 and it gave a separate 50 per cent Maori, or ‘iwi’, part of the government the right to govern the country’s waters. In spite of the Maori population of New Zealand only being 17 per cent, the Maori portion of the governing body was granted the authority to veto any proposal or recommendation, effectively giving it full governing power.
As New Zealand’s drinking water, stormwater, and wastewater infrastructure requires an extensive overhaul and upgrade, the implementation of this project has been placed in the hands of a racially exclusive 17 per cent of the population. They have the right to introduce a Water Services Entity Bill, which is expected to cause taxes and water rates to rise astronomically over the next few years. Combined with the current cost of living crisis, more Kiwis will be left in the lurch by a government that has allowed poor economic management to become the norm.
The project has already run into controversy. New Zealand’s Foreign Minister, Nanaia Mahuta, was queried over a potential conflict of interest regarding close relatives being awarded positions and/or contracts to supervise the country’s water systems including her younger sister, husband, and members of her extended family. When queried, Mahuta replied, ‘I have a talented whanau [which translates as ‘extended family’]. Conflicts have been declared and managed appropriately, and in accordance with the Cabinet Manual.’
The project to rebuild the country’s waterways is estimated to require approximately $35 billion in loans over the next 25 years (while an independent review puts the total investment closer to $185 billion over 30 years) and is a huge infrastructure opportunity for the country, which must therefore be negotiated and executed with proportionate expertise.
The government has been split into two governing bodies, the Crown and ‘iwi’ constituents. Should New Zealand default on any highly leveraged international loan repayments, the ‘iwi’ sector will be held liable for any payment defaults.
Where will New Zealand look for the money required for the Three Waters scheme?
Mahuta has already engaged in activities considered favourable towards the Communist Party of China and she may likely look for further trade with China as the answer to facilitating the loan’s repayment. Since 37 per cent of New Zealand’s trade is already with China, an increase over this amount could be considered exclusive of other nations in the Pacific and in Asia.
As the Crown effectively acts as the guarantor of the rights of the Treaty of Waitangi, if the ‘iwi’ proportion of the New Zealand government defaults on an international loan, responsibility will eventually fall back to the Crown for any losses incurred. International hedge funds will be lining up at the door of the beehive waiting to waive Ardern’s government down, assuming that the New Zealand population has not given her the boot before September next year.
However, New Zealand has no anti-corruption or independent investigatory body which can stop a headlong hurl into global debt in its tracks before it has entered into fruition. Its neighbours, both in the Pacific and beyond (particularly in Australia, America, and the UK), may wish to make sure the Ardern government and its ‘iwi’ counterparts do not veer erroneously off track.
The Treaty of Waitangi is a one-page document which effectively denotes that the land within New Zealand is shared, yet governed by the Crown. The world will watch closely to make sure New Zealand does not enter into an extraneous amount of debt with a nation like China which could leave it in a situation similar to that of Sri Lanka when Sri Lanka recently defaulted on its loan repayments.
New Zealand’s ‘iwi’ government has to get the money from somewhere and if it cannot repay the billions required for their infrastructure to be upgraded, the Crown will, by default, be held accountable. Implicit accountability ought not be taken lightly by Ardern, who, similar to Mahuta, may be somewhat out of her depth in this instance.
Similarly, if New Zealand loses a proportion of its trade with China and does not focus on growing its domestic economy through education and investing in businesses, the country will plunge into further debt and the CCP will no doubt use this as a leveraging point – and, for that matter, which major lender – or even trade partner, as it stands today, wouldn’t?
When the management of a whole country’s water and wastewater systems has been entrusted to the supervision of only 17 per cent of its population, it means 83 per cent of experienced management companies and individuals have been excluded from the running of that nation’s basic infrastructure.
Instead of infrastructure being managed by a representative and even democratically elected portion of the country, infrastructure will be managed by a minority that has been appointed, not for its skill, but for the colour of its skin. This is not democratic, nor is it in line with the Treaty of Waitangi, which grants, and always has granted, the Crown the freedom to govern.
Natasha Poole BA & MA Hons Litterae Humaniores, University of Oxford, UK