Three Waters: Lawyers’ constitutional concerns over entrenched privatisation provision - ‘dangerous precedent’

A group of the country’s top public law academics is urging the Government to change an entrenching provision in the controversial Three Waters legislation they say could set a “dangerous precedent”.

Last week, politicians debated under urgency various stages and amendments to the Water Services Entities Bill - the first in a suite of laws to enact the Three Waters reforms.

Among those was a provision, proposed by Green MP Eugenie Sage, to ensure there was an obligation to maintain public ownership and control of water services and significant assets, something the public has been concerned about.

Sage said her Supplementary Order Paper (SOP) responded to “public concern that we avoid privatisation of water services and we maintain them in public ownership”.

It also retained the “significant revenue involved in operating these services, significant investment involved”.

“We don’t want overseas companies taking the services and operating them primarily for profit.”

The Green Party had advocated for such a provision at the committee stage and Labour had also urged cross-party support - writing to all parties - but was unable to convince National and Act.

As they could not get the support to entrench the provision at the “super majority” threshold of 75 per cent, they settled at a threshold of 60 per cent to overturn such a provision in future.

Other laws require a simple majority of greater than 50 per cent to overturn. Entrenching provisions are currently only used in electoral law, for issues such as the voting age.

Prime Minister Jacinda Ardern said Cabinet would discuss the principle of entrenchment today, after concerns were raised about its use in Three Waters legislation.

She told RNZ’s morning report she did not want to get ahead of Cabinet’s discussion, but described those concerns as “legitimate”.

Labour supported the SOP, while also acknowledging there was a “constitutional threshold” for using entrenching provisions, typically reserved for electoral laws that had wide support.

“We know that while this particular SOP may not pass the constitutional threshold, there is a moral obligation of people who believe that privatisation should not occur to support that particular SOP,” Local Government Minister Nanaia Mahuta said during Wednesday’s debate.

“Core to the design features of this water reform was to ensure that we had a public model for water service delivery that would safeguard against privatisation.”

The issue has sparked the attention of public law academics, who have today published an open letter (see the bottom of the article for a full letter).

Authors include Professor Janet McLean, Professor Paul Rishworth, Professor Andrew Geddis, Associate Professor Dean Knight, Associate Professor John Ip, Dr Eddie Clark, Dr Edward Willis and Dr Jane Norton.

They said they understood the concerns around privatisation, but objected to the way the “amendment was introduced, the absence of a proper debate about its effects and the unfortunate precedent it may set”.

Previously, the only statutory provisions that required special majorities - rather than a “simple majority” of over 50 per cent - related to core provisions of the Electoral Act.

“These provisions, which may properly be viewed as fundamental to our system of representative democracy, have had unanimous bipartisan support over many Parliaments,” they said.

“The just-adopted provision entrenching the protection of water entities from privatisation does not meet the same constitutional threshold.

“We urge the Government to think about the dangerous precedent that this legislative action may set.

“It extends the use of entrenchment protection from a very limited range of matters fundamental to our constitutional system to a matter of contested social policy.

“Not only does this move invite similar attempts in the future, it also risks undermining the seriousness with which entrenchment is taken by Parliament and the public generally.”

National Party justice spokesman Paul Goldsmith said while his party did not support the Three Waters reforms and has pledged to repeal them, they also had no desire to see the assets privatised.

However, they did not agree with the use of an entrenching provision and they were concerned about the potential precedent.

“It is something only used in electoral law-type matters and not applied in a policy setting, rather casually.

“Our view is they should fix it straight away otherwise it could undermine confidence.”

Goldsmith said they were also concerned about how the change occurred while the House was sitting under urgency, during which there was less debate and scrutiny.

“Entrenched provisions in law should be reserved for matters largely above politics, and when used they should be subject to careful scrutiny and debate.

“The exact opposite has happened in this case.”

Goldsmith raised the hypothetical of if National had set a 60 per cent majority to repeal a law such as Three Strikes.

“Labour and the Greens would be outraged,” he said.

The Act Party has also vowed to repeal the legislation if elected, and leader David Seymour said it should be able to do so if it wished.

“A bedrock of New Zealand’s constitutional arrangements is that no Parliament can bind a future Parliament.

“That means the people can choose a new Parliament to reverse rules they don’t like.”

He said the provision could set up a conflict between Parliament and the courts.

Act supported National’s proposed motion to return the bill to committee stage.

A spokeswoman for Mahuta said the Government supported the SOP because it was a “bottom line” that community-owned water infrastructure remained in public ownership and was not privatised.

The Government had sought support from Opposition parties for such protection before introducing the bill but they would not commit to enshrine it in law, she said.

“The intent of the scope of the entrenchment protection from the Greens is narrowly confined to privatisation of water assets, not the whole bill.

“The entrenchment threshold of 60 per cent to overturn privatisation protections is also set at a lower level than that usually required for constitutional changes, which must meet a higher bar of 75 per cent.”

Eugenie Sage told the Herald she did not believe the SOP she introduced could be precedent-setting. It was necessary to protect against privatisation, she said.

She said it had not been done in a covert manner, as the Greens had long sought such a provision. The Greens had also voted against the House sitting in urgency.

THE FULL LETTER

We are public law academics who teach and research the Constitution of Aotearoa New Zealand. We are writing to express our concerns about the way in which an amendment to the proposed Water Services Entities legislation has been adopted by supplementary order paper, and its attempt to entrench a specific policy preference against change. The amendment, added late in the legislative process during Committee of the Whole House, would prevent amendment or repeal of a particular provision of the statute without a special 60% majority in Parliament. The protected provision prohibits the divestment or sale of water infrastructure unless a particular procedure has been followed.

We can understand why some hold concerns about the ease with which government owned assets can be privatised within the present constitutional system. However, we object to the way in which this amendment was introduced, the absence of a proper debate about its effects and the unfortunate precedent it may set. Up until now, the only statutory provisions which require special majorities for their change or amendment relate to certain core provisions of the Electoral Act that specify how electorates are drawn up, the method of voting, the voting age, and the length of the Parliamentary term. These provisions, which may properly be viewed as fundamental to our system of representative democracy, have had unanimous bipartisan support over many Parliaments. The just adopted provision entrenching the protection of water entities from privatisation does not meet the same constitutional threshold.

We urge government to think about the dangerous precedent that this legislative action may set. It extends the use of entrenchment protection from a very limited range of matters fundamental to our constitutional system to a matter of contested social policy. Not only does this move invite similar attempts in the future, it also risks undermining the seriousness with which entrenchment is taken by Parliament and the public generally.

Yours sincerely,

Professor Janet McLean

Professor Paul Rishworth

Professor Andrew Geddis

Associate Professor Dean Knight

Associate Professor John Ip

Dr Eddie Clark

Dr Edward Willis

Dr Jane Norton