Watercare, Water Fear

This one is a template you could use to write to your local council. The issue concerns public water supply, but you could substitute any issue that involves a public utility.

The particular issue generating this template?

Auckland City Council bonds are being used to (fake) fund the water supply, run by a company Watercare. S&P threaten to downgrade the Council! (What a joke, the ratings agencies have no idea!) The NZ government cannot run out of money, so can always redeem any bonds, issued on behalf of the State, the RBNZ simply marks-down the bond holders Tsy (or Auck.C.C bond program) account, and mark-up the bond holders cheque account. The credit risk is near zero. There is only a risk bond holders will not be redeemed if the politicians say they will not be redeemed.

Auckland rate-payers are going to be asked to pay higher rates, for no good purpose, for no need. Paying higher rates will not provide Watercare with any more real resources which the central government cannot immediately employ today without any rate hikes.

This “rate hikes” talk “is crazy.

Watercare are Auckland Council owned and operated. They do not need to charge rate-payers for the services. Public water supply could easily be rationed using water-credits, redeemable for NZD denominated tax payments if you save them. The Smaller households can save and sell their water-credits to Bigger households and Firms at a mark-up from fair market price.

If Watercare cannot find enough employees to do the work, the government needs to tax those resources into unemployment in use in the private sector, and immediately employ them again in the public sector.

Letter to Auckland City Council

… and all local councils and concerned citizens.

The Funding for Municipal Water is not “tax dollars”

The funding is in terms of tax credits and these are issued by fiat — by marking up bank accounts with a computer — by the central government.

So-called “water costs” are always in real terms not monetary terms if the purchaser is the government or municipality via government budgeting. The government/council believe it is tax-payer funded, but it is not. The tax return is a redemption, not a pay-for (and helps limit some inflation impact in the case water supply capacity becomes scarce or under-resourced in real terms).

The real cost is the amount of workers and machinery resources etc employed by Watercare that is not then available to the private sector. The money is not an issue for the governments except because of false psychology. See the film Finding the Money https://findingmoneyfilm.com/ .

MMT Solutions

(Very “macro” picture here, we all know the votes in parliament are not available!)

A solution no neolibs will contemplate: stop selling bonds. They are not funding the public sector. They are pro-inflationary (given propensity of savers/resp. borrowers to spend/resp. save is equal) and serve an interest rate floor purpose. This policy is so incredibly stupid since the NZD is on a float. Government issues the currency first, from inception.

It is even worse issuing bonds: it amounts to little more than basic income but only for people who already have money in proportion to how much money they already have. This is because the natural rate of interest with a currency on a float is zero.

All these public utilities are cases for government-pays, not user-pays, not bond-buyer pays. If the work done by Watercare is paid for at market price there is no inflationary impact, even if they are a private firm contracted by the State. The currency does not need to come from the “tax payer” or municipality rates. Those are redemption operations, not funding operations. Auck.C.C. is a branch of government, so they inherit fiat currency issuance capacity, provided central government marks-up the Auck.C.C. bank account.