GUEST BLOG: Tadhg Stopford – Why Is Watercare – a Public Water Monopoly – Borrowing from Private Banks?
It doesn’t compete. It doesn’t operate like a private business. It just pipes water and bills the public – as it should. It’s essential infrastructure. It’s Life in pipes.
So why is it borrowing billions from private banks – instead of being financed directly by the people who own it? Surely the RBNZ should be funding sovereign infrastructure?
Because (let’s be clear): there is no advantage whatsoever to New Zealand in having Watercare – a 100% publicly owned asset – debt-funded by private lenders. None.
In fact, it costs us billions more.
Here’s how: If Watercare borrows $1 billion at 5% interest over 30 years, it ends up paying nearly $1.93 billion – almost doubling the cost of the project. And who pockets the interest? Not the public. Not the council. Private banks – many of them foreign-owned.
That’s not “funding the future.” That’s bleeding the present.
The absurd part? New Zealand, as the issuer of its own currency, can fund infrastructure directly through Treasury and the Reserve Bank – just as we did with hydro dams, state housing, and roads under Michael Joseph Savage.
We’ve done this before. It worked.
But instead of using our own tools, we’re told we “have to borrow from the market.” What that really means is we hand power to credit rating agencies, increase costs for future generations, and allow private financiers to dictate public terms.
This isn’t fiscal discipline. It’s a failure of imagination; or loyalty.
It’s a failure of commonsense. It’s economic incompetence. …or is it corruption?
Every dollar we pay in interest is a dollar not spent on pipes, nurses, classrooms, or resilience. There is no competition. No market test. Watercare can’t go bust. It’s public. So why pay twice?
This is a textbook case of financial extraction – inserting a profit layer between need and delivery. Normalised. Hidden. Quietly draining future capacity.
It doesn’t have to be this way.
A confident country would fund its own essentials, keep the returns, and reinvest in its people. It wouldn’t mortgage its water infrastructure to private creditors.
We say: No more tribute for banksters. Fund the future, not the financiers.
It’s time for a post neo liberal world.
It’s time for an economics of integrity and wealth stewardship.
It’s past time to get the financial crime out of our politics. The public is not a purse to be looted. We are a taonga to nurtured.
That is the essence of public service.
Tadhg Stopford is a Historian and Teacher. Join him at www.thehempfoundation.org.nz. Support change by purchasing at www.tigerdrops.co.nz
Ellen Brown has been saying this for years in an American context. Her stuff is worth reading. The banks intermediate and take their cut whenever allowed. It’s what capitalism is about. See Federal Reserve, City of London, etc.
In the early nineties local bodies did not have to budget for depreciation on infrastructure. Instead they simply maintained the assets on a pay as you go basis. Post the early nineties local government reforms, local bodies have to provide for depreciation in their budgets. A recent report found that local bodies have been fully funding depreciation but not maintenance. Depreciation is simply an accounting charge. It helps a profit making business ensure capital is well allocated by capturing the decrease in the value of assets employed by the company. In the case of a local body they are providing a monopoly public service. The service must be provided. If we reverted to the pre 1990s process the depreciation charges could be spent on maintenance again, solving many of our infrastructure financing issues overnight.
So true Alan, Councils were required to rate for depreciation. I know, I certainly received rates bills identifying depreciation charges. Where has the money gone? My guess is lost in the labrinth of councils internal borrowings.
Alan – allowing for depreciation which is not important to us the holders of the services, but not maintenance which is important – actually essential. Same is happening to our political system and Wellington Water bursting and splodging all over the place is a good comparison, analogy or something.
Getting philosophical. Blood spilt all over the place in WW1 and WW2 was dismissed relatively quickly, and now water is being spilt which is actually more needed than blood. I wish I had been born an ant as they seem to be more in touch with each other and look out for their needs. Or shall I choose to come back as a dog or a horse maybe. But humans are pretty grotty, I’m ashamed at how predatory and mendacious we are as a whole. But I guess I should think about Rudyard Kipling’s ‘If’. He wasn’t perfect but he had good thoughts. Perhaps I’ll come back in his footsteps.
https://www.poetryfoundation.org/poems/46473/if—
If by Rudyard Kipling
…If you can dream—and not make dreams your master;
If you can think—and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ’em up with worn-out tools:…
@Tadhg Stopford. That’s some plain speaking. Will Labour go back to its roots and refinance in the people’s interest?
SCAM WATCH
Why is Watercare being burdened with $3.4 billion of debt plus commercial interest?
The next step is for the council to inform us that the rates are too high and that there is no alternative but to sell Watercare and because it’s burdened with commercial interest, it can only be sold at a fire-sale price to International Water Inc.
It’s to be hoped that one day the treachery we see around us today, will be punished.
We know who they are.
So simply does not happen