Dear Department of Internal Affairs,

Can you please provide the following information:

From Jan 2017 until now -

1. All written communication between DIA & Deloitte regarding Three Waters.

Of particular interest is communication regarding this report:

https://www.dia.govt.nz/diawebsite.nsf/F...

Yours faithfully,

Micky Turner

Dear Three Waters,

Yes, I am happy to refine the request to be specifically for all written communication, between DIA & Deloitte regarding the following report; https://www.dia.govt.nz/diawebsite.nsf/F...

Yours sincerely,

Micky Turner

Dear three waters advice,

Thank you,

We are still waiting for the promised release of information.

Yours sincerely,

Micky Turner

Dear threewatersadvice,

This is now 9 months on and it really seems like there is an attempt to hide information which could be relevant to the Labour Governments proposed water infrastructure costings.

Can you please start releasing information on this? In parts if you need to.

This is of significant public interest right now.

Yours sincerely,

Micky Turner

Thanks Rashad,

There is software available at low cost which handles bulk redaction of email addresses within minutes.

Other than that, the only potentially commercially sensitive information is the price the Government paid Deloitte for this report.

I hope the release is not going to be full of heavily blacked out documents.

Thank you in advance.

Cheers - Micky

Dear Three Waters,

This is now 10 months from the original request and one month since we were advised that you had two staff members working full time on this request.

700 emails isn't a huge quantity. You should be able to read one email every 2 minutes - which would be 30 per hour. That is 480 per day between two people.

Can you please now release the information unredacted - because clearly there is something untoward going on here.

Cheers - Micky Turner

Thanks Water Services Reform,

The information gives an insight into the mythology used to produce the report.

I will provide a quick overview...

The first 2 tranches show that Deloitte was struggling to gather enough information to string their report together.

The 1st tranche is basically emails setting up meetings and workshops - to set up more meetings and workshops.

They identify an opportunity for growth for large private (mostly foreign owned) companies and make a list of those companies.

There is a lot of uncertainty about the size of the current water workforce. They are unsure if it is 4000 in total, or if that number is only those working for the councils, or if the number is even accurate at all.

They talk about -
- time pressure in producing the report...
- concerns their cost analysis could be viewed as too high...
- concerns about their analysis being seen as a "sugar hit"...
- concerns a discrepancy between a 3.5% or 5% rate would significantly throw out their calculations...

Deloitte NZ obtain a report from Deloitte UK about UK's privatized water system for non-households. The UK privatization experiment seems to have been a failure in that the attempt to create a competitive market - ended in many of the new water retailers exiting due to low or no profits. That experiment seems to be currently in a state of turmoil and uncertainty in terms of infrastructure investment.

(note: some believe a type of asset stripping took place when the UK privatized its water supply - in that the private investors obtained the customers, but as they are purely profit focused - they do not invest in upgrading infrastructure)

At this stage the methodology Deloitte have used to create the Three Waters report is effectively a lot of assumptions, guestimates and crystal ball gazing.

The emails indicate the objective of the report is to show Three Waters as the most viable option - rather than to provide an accurate analysis of all options.

Cheers - Micky Turner

Dear Water Services Reform,

Thank you - I will read the latest releases soon.

I have sent the information onto politicians who have an interest in this matter.

Yours sincerely,

Micky Turner

Dear Water Services Reform Programme,

Thank you for the information release.

The emails show that there was a lot of difficulty in trying to reconcile the 'loss of' or 'growth of' full time jobs in the water sector with a positive social and/or economic outcome for Three Waters.

The emails mention a number of data anomalies and concerns are raised numerous times around the report being "unrealistic", and there was a lot of talk about how best to 'frame the narrative'.

In terms of the privatization of New Zealand's water assets - there was a demonstrated interest in how the reforms would 'most certainly create more interest in private sector investment in the infrastructure' - and an Australian company is noted as being very eager to invest.

In Tranche 3 part 1 page 1 - questions are raised about the credibility of digital utilities delivering actual benefits vs costs - yet Labour have seemingly already announced they will blow over half a billion dollars on software from an overseas (USA) company:
https://www.reseller.co.nz/article/70784...

There is very little redaction in the information provided - but one very concerning redaction occurs
on page 120 of Tranche 3 part 1 – and it follows talk of how to 'recalibrate the model by inserting assumptions'. I speculate the redaction involves team talk about how to manipulate the 'modelling’ ‘framing’ and ‘narrative’ to achieve a more desirable report outcome.

I will detail excerpts from the information release in a following message.

My opinion is that contrary to the National and Act party's outward political display of opposition to Three Waters - they will in fact be very keen to continue the rollout of privatizing New Zealand's water assets for their financial backers.

Labour also has a strong history of privatizing assets - most recently in 2023 the MP in charge of these very water reforms 'Kieran MacAnalty' quasi-privatized the TAB to a UK corporation. It should be noted that Labour's strongest privatization advocate 'Roger Douglas' went on to form the Act Party.

New Zealanders should be very concerned about the way this report has been compiled and request a pause on the reforms - so that the report and data can be more properly examined.

Cheers - Micky Turner

Excerpts from the email information released - internal communications between Deloitte and the DIA:

TRANCHE 3 PART 1:

PAGE 110
"Given that we know that some parties such as Castalia have already taken pot shots at the process, giving them less detail/ammunition to work with could limit the amount of third party engagement required."

"our main concerns are to do with the dramatic reduction in employment in the water sector which seems at odds with the current thinking around what a transition path might look like but also poses a credibility risk in terms of the scale of reduction that is indicated immediately post reform which looks unrealistic. As agreed we’ll have another look at the investment profiles given these appear to be driving these results to look at better reflecting the likely transition / ramping up of spending, consistent with the current policy thinking and also the insights from the second part of the report."

"These are largely points of clarification, terminology / framing and some questions to consider when finalising the report."

PAGE 117
"there’s still a little confusion on our end as to how we’ve ended up with a negative shock. on this – there’s still a little confusion. Campbell can run the numbers reasonably quickly but we just need to make sure we’re agreed on the policy parameters."

PAGE 118
"has briefed me on the shape of the latest Mafic data and the effect on our modelling – which is to make the capex shock on some of our regions negative – which clearly doesn’t make sense."

"The other thing that I am a little worried about is that the existing Mafic profile has quite a bit of capex front ended – and if this is switched to the back end of the profile that it could have a big swing effect in terms of reported NPV."

PAGE 120
"Re-modelling all 4 core scenarios + the sensitivity assumptions. Unlike financial models, ‘dynamic’ CGE models, sometimes require assumptions and logic to be re-calibrated within or in between scenario runs"

"(recalibrating the narrative and model updates)"

"If Deloitte REDACTED..."

PAGES 124, 125, 139, 164, 165 are also notable

PAGE 170
on this page the scenario data for each City is REDACTED - which is very odd

Excerpts from the email information released - internal communications between Deloitte and the DIA:

TRANCHE 3 PART 2:

PAGE 28
"We are going through the report with a view to taking out some analysis that might be peripheral to the core narrative, that may be subject to criticism by a wider audience."

"(there is no strong argument for including this, and we don’t include any further analysis or explanation beyond the one line)"

"Both of these pieces of analysis in particular require whole model runs – which we are struggling to do before Friday as well"

"We’ll proceed on the current format."

"Thanks for your email and the suggestion of developing a summary report for public consumption. I’ve discussed with Nick and we’re still of the view that the full report should be released for several reasons:
If it isn’t released, it is likely the report will get OIA’d in which case we are unlikely to have sufficient grounds for withholding it, particularly given the high public interest threshold that exists under the Act"

PAGE 29
"You raise a valid point in relation to mitigating the risk of unfair or misinformed challenges to the work and underlying assumptions. As is common in any complex modelling of this sort, we think it’s best to mitigate this risk by focussing on the description of the method / results in the main report and ensuring that any limitations are clearly outlined and key judgements are explained so that we are front-footing any potential challenges. DIA will also seek to do this through its usual comms channels (media briefings, supporting comms, Q&As etc) that would follow a proactive release"

"One other suggestion that I’d like to raise for consideration: is to potentially release an abridged version of our report, something akin to the exec summary + the addition of some of the additional charts in the main body of the report. A document of that size could also potentially be published in the format of an externally published report, rather than the ‘report to DIA’ style format at present. Given that we know that some parties such as Castalia have already taken pot shots at the process, giving them less detail/ammunition to work with could limit the amount of third party engagement required."

PAGE 34
"We had a quick discussion following the meeting yesterday and we think it’s important to provide the right framing around the workforce impacts section of the report to help the audience to understand the potential factors driving this and to ensure consistency with how we’re thinking about the transition. There is an opportunity to also bring in the insights from the industry study to a greater extent here to ensure a consistent narrative throughout the report.

I’ve checked with Scotty on this as he’s leading on the transition workstream and we’ve drafted the attached narrative which we think helps to describe the model outputs in the context of the current workforce constraints and the potential impacts of reform. Note we will need your help with describing the mechanics of the industry definitions in the model and also how the “other services” sector fits in given this covers public administration ( which I understand includes local government).

Let us know what you think and if you’re comfortable with including this or some adaption of it in the narrative."

PAGE 36

"The expectation is that the new entities will be run as commercial entities ( albeit in delivering a public on delivering a public good) which suggests they would at least be expected to investigate these sorts of opportunities. In any case, any insight about the potential that exists for this sort of innovation is useful to include from the perspective of providing a sense of the opportunities that reform could generate."

"Just working through the last lot of comments provided. On the capital side one question related to whether the reforms would create a greater appetite for the private sector to invest in NZ Infrastructure. The answer to that is almost certainly – if it is allowed to. And I had an
hour long conversation on that topic today with an Australian based investor keen to put together a fund designed to invest in the sector in NZ – and understanding that any investment could not be in the entity itself but could be in the infrastructure. My question is whether government expects/is open to that sort of innovation?"

PAGE 173
"I’ve added some responses below. We can certainly have another look at these on Monday – although we are close to reaching diminishing returns."

"I think the changes particularly around how we define the water sector are helpful and add clarity to the narrative.
Some final comments from me which I don’t think should require major changes:
In the executive summary I thought we had agreed to retain the graph on the water sector workforce comparing the counterfactual and system transformation increase – I think the omission of this graph while retaining the stacked bar charts makes it look like there will be a
total decline in the workforce. Is it possible to include this in the executive summary as per the previous draft?"

"Slide 43 – appreciate the attempt here to show the initial increase in the workforce but I wonder if this is going to create more confusion and ultimately given we’re saying reform kicks in from 2022, that will be the anchor point that people use. Can we revert to the original graph (don’t think the text needs to change so hopefully not a big change)? This graph also truncates the transition and makes the dip look more start than it actually is"

Similarly on slide 43, can we make sure references to the water delivery sector throughout? It might also be helpful here to refer to the analysis on page 66 of the report that notes the employment in the water sector and wider water supply chain could be 2,900 to 5,700 FTEs higher, on average (at the moment this is a little buried and I think bringing it forward could provide a useful crosscheck to the modelling and reinforce the points made)"

PAGE 174
"On slide 11, I don’t know that it’s fair to assume a reduction in the council workforce given there will be other activities within Council that will likely be expected to ramp up following reform. Appreciate you might not be comfortable to go so far as to say what the net impact is but if that’s the case I wonder if it’s better to refer to a change to the composition of the water workforce following reform, including staff employed by Councils rather than trying to predict
the direction of impacts?"

DIGITAL UTILITIES CONCERNS

Excerpts from the email information released - internal communications between Deloitte and the DIA:

TRANCHE 3 PART 1:

PAGE 1
"We are aware of thinking/actual initiatives around digital utilities – including having access to the plans from some of the Australian water utilities specifically related to that issue. From a credibility perspective we have been reluctant to go too hard down that route given where the industry is starting from and at least some feedback that suggests that there are still questions re the benefits v costs of going too hard, too early around all things digital.

COMMENTS:

TRANCHE 3 PART 1

Pages 8 & 9 highlight how Deloitte believe they can supposedly scrap up to 2,387 ‘duplicate’ full time jobs... which from memory Labour said wouldn’t happen.

They then give the example of Scotland which cut 2,500 jobs in the water sector and supply chain – but those jobs appear to have then increased by 4,000 in the private sector - yet Scotland’s population only grew by 400k in the 20 years after the water reforms in 2002 (from 5.06m to 5.47m)

So they cut 2500 water sector jobs to gain efficiencies – but then the water sector jobs increased by 4000 – effectively doubled – but the population didn’t double.

Unless the 2,500 jobs they cut were on very high incomes – it doesn’t seem to stack up.

Then we jump back to pages 1 & 2 where Deloitte is very concerned about labour shortages and skills being lost to Aussie (where they pay high incomes) – and nothing much about this package makes sense.

Deloitte stands to pick up a lot of the water consultancy work from the private sector, as the company appears to have a lot of clients who have an interest in the privatization of water infrastructure.

EXCERPT:

• We expect the number of FTEs in the water sector may initially decline by approximately
[1,191 to 2,387 FTEs pa initially], relative to the counterfactual, as a result of efficiencies
gained through the removal of duplicative jobs as a result of the reform, more efficient capital,
and limited mobility as a result of an aging workforce. This initial decline is relative to an
assumed current water sector workforce of [~9,000 FTEs]. However, overall we still expect
total water sector employment to be nearly 80% higher than current levels after 30 years.

• Scotland had a similar outcome in its water reform with Scottish Water’s headcount reducing
by 2,500 FTEs as a result of the reform, but total employment in the water sector and supply
chain has increased by a net estimated 4,000 FTEs. WICS noted that New Zealand could
experience something similar.