New warning sounded by Standard & Poor on local water infrastructure.
Back on October 5 I published an article titled, Start boiling your water, which asked: “Have you noticed the deafening silence on 3 Waters from HB political leaders lately?”
And noted the recent water quality travails of Auckland and Queenstown, the latter issuing ‘Boil Water’ warnings.
The point? Repeal of Labour’s 3 Waters scheme would be catastrophic for Hawke’s Bay’s local councils, demolishing their balance sheets for years to come given the extraordinary costs of providing us with First World water infrastructure.
Yet that’s exactly what the new National/ACT (NZ First?) Government plans to do enthusiastically in its first 100 days.
A great choice ahead: Go broke or get sick.
Standard & Poor Global, which credit rates the NZ government and 25 of our local councils, sounded this fiscal warning back in March. No one in Hawke’s Bay – certainly not Mayors Walker, Hazlehurst, Wise or Little – paid any attention. Or if they did, they deliberately buried their heads in the silt, since this financial reality confounds the absurd rhetoric they have spewed continuously since the 3 Waters scheme first took shape.
Now Standard & Poor has repeated its warning.
Here’s how Newsroom reports it (October 20):
“Contrary to popular belief, public debt is not a major constraint on the credit rating,” says S&P director Martin Foo. “In fact, net general government debt in NZ, by our measures, is comparable to Australia’s and well below most other advanced economies.
“The sovereign balance sheet is in decent shape. We would emphasise that local council balance sheets are under more strain. The former Labour Government’s Affordable Water reforms were unpopular, let’s face it. They were politically unpopular. But the reforms could have been an escape valve for some of this high debt.”
Foo says council credit ratings will come under pressure if they are forced to borrow more for water assets. “Now that National has threatened to repeal the laws, the question for us is, ‘what’s next?'”
If our new Hawke’s Bay MPs want to serve us well, I suggest they get a prompt tutorial in water infrastructure financing.
And then explain the local government fiscal realities to colleagues Luxon and Willis, who have chosen thus far to over-hype NZ’s national debt. Their focus on reducing the government debt – which the leading global credit agency considers reasonable – by $3.4 billion in the face of a crushing need for $185 billion investment in water infrastructure is as misguided as our local ‘leaders’ posturing on 3 Waters to date.
It would take some admirable guts on the part of tenderfoot MPs Wedd and Simon to deliver unwanted news to their party chiefs. Or will they simply ‘carry water’ for their party on 3 Waters?