Water Services Economic Efficiency and Consumer Protection Bill

I present a legislative statement on the Water Services Economic Efficiency and Consumer Protection Bill.

ASSISTANT SPEAKER (Hon Jacqui Dean): That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon Dr DAVID CLARK: I move, That the Water Services Economic Efficiency and Consumer Protection Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 25 May 2023.

By protecting the health and wellbeing of our water, we protect the health and wellbeing of our people and our environment. Sixty-seven different councils own and operate most drinking-water, waste-water, and stormwater services across New Zealand. These councils are facing significant challenges in the form of ageing infrastructure, historical under-investment, and source water contamination. A report by the Water Industry Commission for Scotland estimated that New Zealand will need to invest between $120 billion and $185 billion in water infrastructure over the next 30 years to catch up on that historic under-investment.

Without reform, these costs will be shared unevenly between New Zealand households, and cost increases could be up to 13 times higher for rural households and seven times higher for many metropolitan households. For this reason, from July 2024, New Zealand’s three waters services will be provided by four multiregional, publicly owned water services entities. These entities will have the scale, expertise, operational efficiencies, and financial flexibility to invest in safe, high-quality water services.

To ensure that these new entities provide high-quality water services at efficient prices, this bill establishes an economic regulator and a consumer protection regime for the water sector. The bill complements Minister Mahuta’s Water Services Entities Bill. The bill introduces economic regulation and consumer protection to ensure that services are delivered efficiently, effectively, and responsibly. This is the same sort of regulation used in other industries in New Zealand, including for the international airports in Auckland, Wellington, and Christchurch; electricity lines businesses; and natural gas pipelines businesses.

The Commerce Commission will be the agency responsible for implementing and enforcing economic regulation and consumer protection for the water sector. The commission is a high-performing regulator that does great work in helping markets to function well. It is well equipped to regulate the three waters sector, especially given its experience regulating other utility sectors and ensuring that consumers are fairly treated.

However, to further reflect the unique nature of the water sector and the importance of Te Mana o te Wai, the vital importance of water, the position of Water Services Commissioner will be established on the commission’s board. The Water Services Commissioner will be responsible for leading the roles and functions of the commission.

The new entities will be subject to economic regulation from 1 July 2027 in the form of information disclosure and quality-only regulation. There is presumption that price-quality regulation will apply to the entities from 1 July 2030 and there is flexibility to adapt regulation for different entities and services or to bring these dates forward. Information disclosure regulation will promote transparency and accountability by shining a light on the entities’ performance and expenditure.

As I’ve mentioned, it’s a similar regulation that the commission uses for airports and it has proven to be an effective way of using reputational incentives to influence the profit, investment, pricing, and service levels of these businesses and to encourage better performance. Members of this House would be familiar, indeed, with those examples.

Quality-only regulation will ensure the entities meet minimum quality standards, especially relating to resilience and reliability, and will complement the oversight provided by Taumata Arowai, the water services regulator.

Price-quality regulation will further influence the behaviour of the entities by limiting what they can charge consumers. The entities will be constrained either by the maximum average prices they can charge, or the total revenue they can recover from consumers. This is the same regulation that the commission uses for electricity businesses and is an effective way of encouraging businesses to be efficient.

If businesses do not comply with regulation, the commission can take a range of enforcement steps, including pecuniary penalty orders, compensatory orders, and injunctions.

Economic efficiency is a key piece to these reforms but is not the only factor at play. There is a clear power imbalance between consumers and monopoly businesses in the utility sector, and consumers often struggle to have their voices heard and, indeed, to engage with the technical issues involved. Therefore, the bill introduces consumer protection measures that aim to ensure consumers’ needs are met and that entities provide the high-quality services we would expect them to provide. These protections will focus on the quality of water services and be distinct from Taumata Arowai’s role in regulating the quality of drinking water itself.

The bill introduces a service quality code and sets minimum requirements that entities must meet. This complements the standard customer agreements provided for in Minister Mahuta’s Water Services Entities Bill, and covers standards relating to outages and faults, minimum flow, pressure rates, billing practices, consumer rights, and customer services.

The bill also establishes a comprehensive, independent consumer disputes resolution scheme so consumers can easily escalate complaints that they cannot resolve with the entities themselves.

So, in conclusion, New Zealanders expect and deserve safe drinking water, sewage infrastructure, and stormwater systems. The economic-regulation and consumer protection regime established by this bill will help achieve this and will help safeguard and enhance critical water infrastructure and services for generations to come. I commend this bill to the House.

The question is that the motion be agreed to.

Thank you, Madam Speaker. It’s a pleasure to be talking on the Water Services Economic Efficiency and Consumer Protection Bill first reading, and this is the trilogy of this disaster that we are all just watching unfold before us. We’ve heard the speeches just before on the previous bill—that 275 changes were made and incorporated in the last bill, a mere 131 hours after the first bill was passed last week. So I now calculate that it’s 143 hours since we passed the first bill, and we’re on to the third bit; here we go.

This is all about economic regulation—hey, but don’t worry, we’ve got a new Minister this time! It’s not the Hon Nanaia Mahuta; it’s the Hon Dr David Clark, so I think we’re going to be saved.

So I suppose it’s important, first of all, to maybe have a quick canter through what this bill does. It’s an interesting part, but the first major aspect of it is it requires a Water Services Commission to be established under the auspices of the Commerce Commission, and, of course, that gives rise to why that particular structure—because in overseas jurisdictions, normally, it is outside of the commerce or monopoly’s entity; it’s normally a stand-alone. But it’s probably not an issue—it would be an issue we’ll be interested in at the select committee, but it is an interesting choice.

The second thing is: what this bill does is that it requires extensive information disclosure requirements on the new entities, and, of course, there’s not going to be four entities if Mr Simon Watts is going to have his way, because we want to make sure that all the water companies—in what form they may be, hopefully at the end of next year—meet information disclosure requirements. These include financial statements, asset values, pricing, contracts, asset management plans—commonly referred to as AMPs—and quality performance measures, and so we don’t necessarily have an issue with that.

The second thing is that we’ll require service quality statements, and that is something that, again, we don’t have a problem with: service quality code, which will need to be in place by 1 July 2027. Who’s going to do that? Not the water entities, which is an interesting one, but, of course, the commerce commissioner, the Water Services Commissioner—which, again, seems a slightly odd way of going about it. Normally, it would be interactive, but, in this case, it’s going to be that the commission does it: talking about outages and faults, minimum flow pressures, billing practices, blah-blah-blah. Again, that’s nothing out of the ordinary, and one would expect that.

Then there’s the issue of price-quality regulation that may involve setting maximum prices and providing transparency across the capital valuation of the assets and cost allocations. This is an issue I’m going to return to shortly, but the interesting thing—it allows the commissioner to set price paths, so now we’re talking about a very heavy-duty set of regulations under this regime. Four entities under our proposal will be more than that, with local ownership.

The fifth thing is that the ability of the code-of-conduct reviews to confirm if the entities are complying with regulations—as Matt Doocey talked about before, the compliance officers have a great deal of power under the previous bill, and, I presume, under this bill, there will be a great deal of powers for the commissioner to request information, but certainly, as it’s noted, as a minimum, funding and pricing plans are subject to review.

The next element is a mandatory dispute resolution scheme, and, again, we would expect that and don’t have a problem with that. Then there’s the issue of imposition of levies on the water companies to fund the commissioner—hopefully that’s going to be reasonable. And then the final one is the commissioner has wider general powers to issue warnings, reports, and guidelines, and undertake monitoring, compliance, and take appropriate actions in respect of persons. Whew! Let’s go. So some of this, we don’t necessarily have a problem with—particularly around requiring businesses to disclose certain information and the businesses to be subject to consumer protection measures, which the code will have to be in place by 1 July 2027, and setting up the formal independent consumer disputes resolution service. Those are all good things, but the interesting thing is, in terms of the cut-and-paste around the price regulations that involve setting maximum prices, providing transparency of cost of capital, valuation of assets, and cost allocations, and allows the commissioner to set price paths.

So I think it raises two issues: what are we trying to require of, or what’s the purpose of the economic regulation we need? And if you look at jurisdictions around the world, where you have private entities or publicly-listed companies operating in a particular sector, the level of economic regulation in those particular areas is often of a much higher and exacting nature, and, in those cases, gives the commissioner—or whoever it might be: an officer, or regulator-general, or the Ofwat as they’re normally called overseas—the ability to impose and undertake a lot of economic analysis.

However, if you accept the Government’s argument that these water companies are acting for the best interest of their consumers—and I look at the original Water Services Entities Bill, clause 10, which then says, under clause 11(e), to “act in the best interest of present and future consumers and communities”. The issue is: are these entities in the game of deriving a profit? And I think one of the issues with this form of regulation is that I don’t think for a moment that the Minister ever intended that these entities are there to derive a profit. And what I think we’ve ended up with is that we’ve got a form of regulation—and I noted the Minister’s reference to the existing economic regime in Part 4 of the Commerce Act, and it specifically talks about the Telecommunication Act, the electricity lines services, gas pipeline services, specified airport services, and fibre fixed line access services. All of those involve private sector entities, and that’s why you have a higher level of economic regulation.

I’d suggest to you that—we’ve had officials cut and paste regulation from what would normally require quite heavy regulation, and shoved it into this bill without thinking for a moment that, actually, the nature of these entities is quite different, if we are to accept the Government’s proposition that these entities are essentially for the public good, and not there to derive a profit. So the only issue around—the second bit is the Commerce Commission—the Water Services Commissioner may be able to set a price path. And I’d have to ask the Minister—and certainly we’ll be covering it in the select committee—why would the Commerce Commission be required to set a price path? Because I think if we accept, again, the Government’s proposition—and again, the Minister quoted it earlier; it’s a deficit of infrastructure spending of between $120 billion and $185 billion, which is obviously subject to a lot of dispute, particularly by councils—are we expecting the Commerce Commission to say that the entities are not spending enough money, not investing enough and therefore being over-aggressive in their pricing regime, or are we requiring the Water Commissioner to review every asset management plan and funding plan, and use of equity and debt, to come up with an optimised structure and then reflect that into a price path? This seems an extraordinary level of overcomplication in terms of economic monitoring of these four water companies as proposed in this bill, and, as I said earlier, I think what we’ve seen is officials cut and paste provisions from other Acts, put it into here—of course, we haven’t had a Minister of inquiring mind to say “Why in the Dickens have you done that, why have you put this into this bill?”, because it’s inappropriate, and it’s certainly something we’ll be looking forward to canvassing in the select committee. But here we go again, the third of the trilogy—wow.

Thank you, Madam Speaker. I rise to take a call as the chair of the Finance and Expenditure Committee, who will be happy to receive the Water Services Economic Efficiency and Consumer Protection Bill. I just want to acknowledge the comments made by the speaker on the opposite side of the House who just sat down, Andrew Bayly. Thank you for your considered speech. A number of the policy issues that you raised in your comments are actually issues which this select committee needs to pay attention to, and that is the purpose of the select committee: to actually make the bill workable, or to make a bill more workable. You know who actually told me that comment? It was David Seymour. It was David Seymour during a select committee process for the Water Services Entities Bill. As we were sitting on a select committee in Auckland on the Water Services Entities Bill, David Seymour actually said to me that the purpose of the select committee is to make a bill more workable, and I absolutely agree with that statement.

As we know, this bill is around bringing in some economic regulations. When you have a market that is rare and is usually for an infrastructure such as gas, airports, and other measures such as fibre, what you do is you bring in some economic regulation, because it is such a unique market. So it’s going to be really great to be able to receive some submissions, hopefully from other markets such as airports and gas and fibre, as to how it works in their industry, in their market, so that we can take those learnings, like the previous speaker who just sat down, and customise this bill for water services.

I just want to pay attention to two parts of this particular bill which I’m hoping we will get submissions on. In Part 2, Subpart 3, “Input methodologies”: input methodologies are rules, requirements, and processes that underpin regulations which will regulate these particular water services. I’m hoping to see that we can get some more information around what are the types of frameworking regulations; what are, sort of, the boundaries we need to set in order to make these regulations work better for this market.

The second part of the bill I will touch on briefly is in Schedule 2, which is the “Consumer dispute resolution service”—again, another type of framework, type of schedule, within this bill. It is something that we need to look at as to whether we need to customise it for water services entities. So the rules which are set out in Schedule 2, clause 3, the “Rules of approved service”—there is a whole list within this bill of areas that we’re hoping we will get submissions on. Does this work? Do the local authorities who do have shares in water service entities—would this work for them if they had to get into a position where they needed to dispute a particular part of the water services infrastructure?

So, as the chair of the Finance and Expenditure Committee, I’m looking forward to having really constructive debates within our committee, and I commend this bill to the House.

Thank you very much, Madam Speaker. It’s a pleasure to rise as a member of the National Party and as a member of Parliament for North Shore, on the Water Services Economic Efficiency and Consumer Protection Bill. As my colleague Andrew Bayly outlined in his opening address, this is the bill which looks to introduce the concept of economic regulation and consumer protection in regards to the four co-governed mega-entities that the Government are going to be establishing in order to manage the three waters infrastructure across this country. National will be repealing that bill when we are in Government in the future, and as such we will also be opposing this bill.

I’ll outline, this morning, in regards to some of the context, but I think it is important, firstly, to outline that the National Party do support the concept of sound economic and commercial regulation, including economic and consumer protection in regards to water infrastructure. But the challenge here is that this legislation is applying that regulation to a four-entity co-governed model which we do not believe is the appropriate model in order to achieve the outcomes that we require in order to produce a safe, a reliable, and a sustainable water infrastructure model in this country. And so, on that basis, we will be opposing it.

There are a number of issues within this bill that will be canvassed through the select committee process, but what is clear is that the regulatory impact statement notes, and I quote, “Over time, it may become evident that scope or form of economic regulation is not in the best interests of water consumers.” It is clear that this is a complex area, and if we look at the challenges that the Government are facing at present, the headwinds in which they are sailing into—into 2023—they have a huge agenda, wide-ranging reform that is currently under way, and the Prime Minister has indicated that that scope of the reform agenda and policy positions that the party are undertaking will be narrowed. But the concept of economic and consumer protection regulation, in itself, is a complex burden that will be placed upon the sector, and why that is the case is because this does not currently exist today. And so the reality for us moving into a new model is going to create significant burden on top of all the other aspects of reform.

Don’t forget they are going to, at the same time, transition all the assets and liabilities out of 67 councils around the country into one of these four mega-entities. That in itself, as we’ve seen play out in the conversations over the last 141 hours since the bill was passed on Thursday, articulates the complexity and challenge that the Government is still trying to work through—i.e., what is even in scope in terms of those assets and transfers that will move into these new entities? And this bill is going to, therefore, have the regulation elements around that. The other aspect that we hear, as the Minister outlined in his opening comments in regards to this bill, is in terms of the basis or the case for change for this legislation. And, as I’ve said continually, no major party in this House believes that our water infrastructure in this country does not need to be improved. It does. The question is: how do we achieve that future state, which will be a future state which is sustainable and achieve the outcomes that we require? The difference between the National Party’s position and that of the Labour Government—and only the Labour Government, because it is important to recognise that no other party within this Parliament, other than Labour, are supporting the current reform agenda on the table. And I think that is something, as well, across to New Zealanders watching, that this isn’t a bipartisan reform programme for one of the most fundamental aspects of human life, which is the provision of water to our country. And so that is what it is. But I think that also sends a signal in terms of the fact that this reform agenda is not going to last very long.

The element around the case for change is based upon the Scottish water model, as the Minister said in his opening statements, and the comments in regards to—the Minister quoted $180 billion of capital expenditure required in regards to that reform. I mean, the assessment by the Scottish water authority has been reviewed continuously through the Water Services Entities Bill process, and has, on multiple occasions, been found to be based on inaccurate assumptions. It is not comparable in terms of the New Zealand context, and the concept or the comments in regards to the capital savings that are available in terms of achievable have also been assessed as they’re not available in the New Zealand context. So the case for change is a house built upon sand. It is well known that when the Government stands up and uses these numbers, they are simply unsubstantiated and not evidenced by independent assessment, and that, in effect, just puts the whole case for change, you know, where it should be, which is one that is not substantiated.

The other element that you hear from the Government, and the Minister articulated as well, is the cost implications in regards to costs on consumers. He noted a 13-factor increase of water bills for rural consumers and a seven-factor increase for urban households. This is simply, again, in my view, scaremongering the New Zealand consumer in regards to trying to create a case for change for a reform programme that has been destined to failure right from the start. An independent assessment undertaken in a number of councils across this country in regards to exactly this point, you know: will the alternative models that have been put on the table by councils deliver the implication and the savings—

Hon Stuart Nash: But nothing by National.

SIMON WATTS: —in regards to water charges? And you can hear the Minister on the other side—

Anna Lorck: Where’s your plan?

SIMON WATTS: —adding a little bit of comment and stuff like that, and it’s interesting because in the time that we’ve heard—

Hon Stuart Nash: Where’s your plan?

SIMON WATTS: And you can hear the Minister, you can hear them all saying—we’ve got the member from Tukituki there commenting in the background, but they’re only taking 60-second calls. Isn’t it ironic on the day before this Parliament—

Hon Stuart Nash: We’ve got a plan, and you’ve spoken for eight minutes and provided no solution.

SIMON WATTS: And I can hear the Minister again—Minister Nash is commenting again and he is outlining—but he hasn’t taken a call, because this Government, this Labour Government, on the day before this Parliament breaks, is ramming through another piece of legislation, taking the opportunity to undertake only 60-second calls while they ram through legislation which is strongly opposed by Kiwis across this country. This is a Government that is under pressure. This is a Government that is struggling in order to get any cut-through, and this is another example of legislation which, at a conceptual level, has benefits, but, in terms of detail, is significant overreach. And, as I said, it isn’t going to last beyond next Christmas.

The outline in regards to further implications, in regards to the asset management considerations in regards to this bill—the councils have already submitted through the select committee process that they believe that what they’ve been told by Government and the numbers within the Government plans do not correlate with what the councils on the ground have seen. And we had submissions on the prior bills in regards to the capital expenditure required in order to undertake what is the future capital expenditure required in councils around this country. And the numbers that the Minister articulated, around $180 billion, simply don’t correlate to where the councils believe the capital investment is required in order to improve their systems. And this bill, in terms of the asset management plans that will be incorporated, will, in effect, substantiate what that actual number is.

And it’s interesting that so far through this process the Government still does not know what exact assets will actually transfer to these new entities. Isn’t that remarkable? After four to five years of planning, they still do not know what assets will transfer from local councils into these four mega-entities. And that is testament to a fact that the complexity that this Government came into this was completely underestimated, and also the fact that the bottom lines that the Government had in regards to the structuring of the reform solution for water infrastructure were based on a four-entity co-governed mega-entity model that had no basis—

SPEAKER: Order! The member’s time has expired.

When it comes to the water infrastructure reforms, this particular bill is about ensuring that there’s value for money for all New Zealanders so that New Zealanders can get clean, safe, and affordable water. What this bill does is it creates a water services commissioner to ensure that the market is competitive but also fair, that there’s monitoring of services, and that there are consumer protections. The Mayor of Clutha, Bryan Cadogan, advocated very hard to get consumer voice fairly into the mix, and I think that this piece of legislation is a good reflection of that consumer voice that will ensure value for money for New Zealanders.

We’ve got similar types of regulations in the electricity sector, with airports, with natural gas, and currently in my electorate there is still a boil-water notice in place. Although the infrastructure has now been fixed, I am told, a week ago, this week the boil-water notice is still in place as the water flushes through, which means people need to boil water in order to drink, in order to cook, and so on. That’s exactly what we’re trying to fix, and this is the legislation that will ensure that when we do so there will be value for money, that it will be done in a fair and regulated way. I commend it to the House.

Tēnā koe e te Māngai o te Whare. I’m pleased to take a call on the Water Services Economic Efficiency and Consumer Protection Bill. The Green Party will be supporting this bill. Obviously, we need an economic regulator and we need some consumer protection mechanisms, because these four new entities—given that Labour has the majority to get the legislation through—will each service between 800,000 and 1.7 million customers. They’ll be big organisations, and big organisations are not always the most efficient. They can have quite cumbersome bureaucracies, they can have additional layers of management, and they can have inflated overheads. And when you’re a big entity and when you’re in a natural monopoly, there won’t be the same incentive to be innovative, to maintain and operate assets cost-effectively, and you won’t have the ability that citizens have at the moment when they have an issue with their three-water services to raise it with their elected representatives, whether that’s a member of a local board or a city councillor.

And, certainly in Ōtautahi Christchurch, the city council has an enormously effective snap, send, solve system where if you see a problem with leaking water pipes, you take a photograph, you email it through, and usually a short time later it gets fixed. So where you’ve got this natural monopoly, no alternative suppliers, the entities would be able to charge unjustifiably high prices or provide a level of service which is below what citizens expect.

And if I can just quote from the regulatory impact statement (RIS), which really summarises the need for the bill, “Without a fit-for-purpose economic regulation and consumer protection regime, the potential consumer outcomes (in terms of factors such as price, service quality, infrastructure resilience and network reliability) could be worse than under the current system. This would undermine the outcomes that the reforms are intended to achieve, particularly given the loss of existing accountability through elected territorial [representatives].”

So if these changes are going to happen, then we really do need this bill because we need to protect citizens when they are operating as water consumers. And there’s an emphasis in the bill in terms of transparency and accountability through using the Commerce Commission, with its experience in regulating other sectors, through having a water commissioner on the board or the commission to actually have a greater focus on water services, and the bill does build on some consultation that was done in 2020.

It’s also important because there is, as the RIS notes, a lack of robust information about the current state of three waters assets, though I think that there’s been more information being provided by councils to the Department of Internal Affairs recently. But just, for citizens, knowing the state of their pipes and knowing the investment that is needed is important—as it is for the equity markets, because the whole premise of the reform is that these entities will be able to borrow quite substantially, and in the absence of economic regulation, the credit rating agencies and the debt markets aren’t going to have clear information about the risk associated with the entities. They will need that information for the entities to be able to obtain finance.

So both elements of this bill—the economic regulation and the consumer protection—are critical. The consumer dispute resolution service is something the Green Party supports, because while you can go to councils at the moment, you won’t be able to under the new regime. And while the Taumata Arowai—when it was established, there was a backstop consumer complaints service there. If people have got concerns about drinking-water quality, the quality of their supply, they can go to Taumata Arowai as the drinking-water regulator, but Taumata Arowai can’t deal with issues like billing and just the continuation of the supply. So that’s why we need this consumer disputes resolution service.

There are a number of issues that the Finance and Expenditure Committee should look at closely. One of the issues, I think, was one that Mr Bayly raised in terms of whether the entities are investing enough, because we’ve had the Office of the Auditor-General, as an Officer of Parliament, warning local authorities over a number of years that they weren’t investing adequately in three waters infrastructure, they weren’t providing adequately for depreciation of that, so whether the economic regulator has a role in that space is an interesting issue for the committee to consider. So I look forward to the bill being improved, as Barbara Edmonds noted, through the select committee process and to submissions.

Thank you. What a mess this Government has got us into on three waters. What a mess has been made by stripping democratic control from our own water system. When the councils were responsible, if they made decisions that people didn’t support, they could simply have been voted out. Instead, the Labour Government has stripped away water and councils. They’ve created a State-established monopoly in these mega-entities.

Soraya Peke-Mason: What’s your plan?

DAMIEN SMITH: I have the plan. ACT cannot be accused of not having a plan—and that’s why we’re the fastest-growing party in the country, because people are hearing what we’re saying—and it is infrastructure-based. We’re allowed to have an alternative opinion, so let me purport it.

Now, they want to create yet another regulatory body to rein them in. They’ve created a monster. Now, they need to keep it under control and leash it up through economic regulation and pricing that I would say that even Mr Clark knows doesn’t make sense, and it’s heading towards another Credit Contracts and Consumer Finance Act moment. It all sounds like a recipe for disaster to me.

There’s a risk that without sufficient independent scrutiny, the entities will act inefficiently, this Government says. The Labour Party’s philosophy is—guess what!—what better way to improve efficiency than another hefty bureaucracy? But I think Kiwis see through this, and I think the time has come for the public to have their say.

Kiwis want the Government to show a bit of sense with their spending and to make sure that money gets to the right places, where it’s needed most. But this Government is determined to spend on middle-managers and top-heavy bureaucracies. The Government has talked at length about the three waters reform keeping prices down. They even said that without the reforms, our rates would rise by $9,000 per year. And then, later, it came out in the wash that these numbers simply didn’t reflect reality. Now, even with the reforms, officials are warning that water bills could increase significantly without regulation.

So do we need yet another regulatory body in the Commerce Commission? How many new regulatory bodies has this Government crammed into the Commerce Commission? We’ve got the Grocery Commissioner, we’ve got the petrol regulator, we’ve got the new Fonterra regulator, and now we’ve got a new water regulator. But wait, there’s more. I feel like I’m getting déjà vu here—hasn’t this Government already set up a water regulator? Taumata Arowai was established as a water regulator last year as part of these reforms. This Government has set up so many regulators and commissioners that I feel like I’m singing The 12 Days of Christmas just listing them: the fuel regulator, the grocery commission, the airports, the lines companies, the gas companies, the Fonterra regulator, the electricity regulator, and two water regulators—two water regulators.

The Commerce Commission has gone from a corrector of market inefficiencies to the strong arm of the Government’s market interference, which I’m sure Mr Clark would appreciate.

Dr James McDowall: It’s all gone wrong.

DAMIEN SMITH: Perhaps this is where it’s gone wrong. Under this Government, it would be more accurate to call it the “Communism Commission”.

But back to the bill at hand. I’m afraid to say that ACT can’t support this bill. ACT rejects the three waters reforms as a whole and is committed to repealing them. The reforms are an exercise in forced centralisation and a Treaty settlement by stealth. These reforms are stripping power away from local communities and putting it in the hands of mega-entities, which are now being sought to be reined in by this bill.

We’ve heard that 31 councils representing 1.2 million people have signed up in opposition to these reforms as proposed. That is incredible and it’s no wonder as to why. Surely it’s a sign of bad relations and bad reforms that before the reforms are even completed, the bodies they’ve set up need to be reined in. If you look at the law and if it’s passed, it will allow the Commerce Commission to regulate the rate of price increases and even impose short-term revenue caps to mitigate the risk of price shocks in entities that are established. The regulator is trying to avoid the sharp and embarrassing price-hike scenario in the first few years of the reform system. So, basically, this isn’t pure regulation or pure pricing management; this is to stop any embarrassing pricing decisions inside the entities which could make the Government look bad. That is not economic and regulatory policy that we should be buying into in New Zealand.

The economic regulation of the new three waters would look into pricing practice for consumers, and officials would have water charges, which would affect new corporations. Water services entities are unaccountable, non-democratic organisations. They have little or no competition, and little or no likelihood of a substantial increase in competition. This is a step backwards. In the Finance and Expenditure Committee, we need to really look at the dynamics of that situation.

It’s a nebulous principle, also, that the commissioner and the Government Minister have to look at the principles of the Treaty and take into account climate change at the same time when setting the price around water.

I said that these Government approaches to regulation and the three-water reforms are like The 12 days of Christmas. We now have four mega-entities, three hefty bills, two new water regulators, one determined Minister, 50 percent iwi appointees in regional representative groups, 31 councils representing 1.2 million people opposed, and a partridge in a pear tree.

ACT opposes this bill, its excessive regulation, its non-democratic leashing of the four water companies, and its nebulous approach to leveraging the principles of the Treaty around economics. That is not suitable. Price fixing is in the hands of those entities. At the moment, I don’t think there’s any experience in setting regulatory opinions.

So ACT has an alternative infrastructure plan which would allow the community control of water assets and to improve the necessary infrastructure to ensure safety and efficiency on water allocation. We would provide for councils to enter voluntary assured-service agreements, gaining the benefits of scale while retaining local ownership and control, and to establish long-term 30-year central government – local government payment systems and partnerships to put water infrastructure upgrades, tailored to specify, in any area and in any local authority. We would also put in plan rateable charges that the community can assess and ensure are commensurate with the infrastructure that they require.

It’s really kind of Barbara Edmonds to say that David Seymour said that the making the bill good is something that is the job of the select committee, but David has always told us as well that sometimes you just walk to the shredder and stick it in there and start again. All ACT wants for next Christmas is a new local government Minister and to repeal these three waters reforms which have the nation offside with the Labour Party—Jamie Strange obviously knows how that feels. Thank you.

Hello. It’s a lovely thing to be able to talk on the second bill today which is going to fill out our response to water. It’s always a pleasure to go after the ACT Party in these debates, because there is quite a stark contrast. There was a list just read of the things that Labour has done to reform what are actually areas that really affect New Zealanders. Things like electricity and water are essential to actually having a good life. Our world is changing, and we actually do need to respond to those things maturely. We can’t just throw stones into the arena; we have to get in there, get stuck in, and fix them in a modern world.

And what we have are these big entities that are actually coming into our world, which can actually control and skew things, and we need to make sure that we are actually controlling that space for people so that we have decent utilities. Minister Clark talked about the power imbalance in those areas of utilities. They are really very serious. If we don’t actually put in consumer protection, if we don’t put in things like a regulator, then we end up with a bloody mess, and it is very much a mess. That’s what we have at the moment: we have rivers we can’t swim in, we have beaches in Auckland we can’t swim in, and we have had people die because they drank the water. That’s not good enough for New Zealand, and we need that response to actually consider all infrastructure. And that’s what it does. So, yes, there is no apology for our actual response to things like our need to regulate in areas of fuel and electricity and, yes, pipes and infrastructure and water, because every New Zealander needs to be safe when they use those facilities. Every New Zealander has that right. That’s the real difference between one side of the House and the other: one throws stones; one fixes problems.

I am very pleased to be on the select committee, the Finance and Expenditure Committee, that will look at this bill. I’d like to finally thank the Minister responsible for this bill, which is Minister Clark. I’ve learnt a lot from Minister Clark because he is looking at the entire picture, and I will be sorry to lose him from our Government, and I wish him well, but I thank him for the work he’s done in this area, which is informed by all those other areas that are important. All those utilities that we rely on in New Zealand need to stay working for the public, not the multinationals, not for interest groups, but for us all. I am satisfied that we will work on this bill and make it absolutely the right response to this situation. Thank you. I commend the bill to the House.

This is a split call. I call Sam Uffindell—five minutes.

Thank you, Mr Speaker. It’s a real privilege to be able to stand here on the last sitting day of the House and talk on this matter. We’re talking a lot about throwing stones and other people fixing it. I think this Government has been throwing a few stones, but they’ve mostly been going straight up in the air and landing on top of New Zealand, and, by the way, it’s looking as though it will be the National Party that will have to come in and fix everything up. But we are ready—we are ready to do that.

This bill is something that we will have to fix as well, and we will do that by repealing and replacing three waters.

Hon Kieran McAnulty: What with?

SAM UFFINDELL: It’s good to have the future local government Minister in the House, so let me talk through what we are looking at in this. We definitely see this bill as something that we will get rid of, because what this does is it builds on the three waters legislation that went through the House unceremoniously a couple of weeks ago. This will look to create an Auckland-style Watercare bill. There is huge transitional uncertainty in the way it will work. We expect this to create more costs and, ultimately, the mega-entities are going to charge those to ratepayers. We know that this is going to result in some of those costs being passed on through higher rents, and that is going exacerbate—

Anna Lorck: It’s going to keep costs down—keep costs down.

SAM UFFINDELL: —what we already have in New Zealand, which is a higher cost of living crisis here, Anna Lorck. This bill is only going to increase it—and you’ll be happy that I’ve got your name into Hansard again today.

Now, we see here that this is just a—and we’ve seen it right through this bill. There’s been a complete lack of transparency from this Labour Government. We’ve seen the bill come in a couple of weeks ago—Kiri Allan is looking at me, quite unamused, at the moment, but that’s all right. We have seen a lack of transparency, and the two bills that have come in in the last week have been really rushed through. Numerous more clauses have been brought in, and we’ve seen it—I’m not sure what’s going on to my right here. I’m glad my colleague has found her notes. But this bill is another slap in the face to democracy from an increasingly, frankly, out-of-touch and arrogant Labour Government.

We had 88,000 submissions on this bill and most of them were disregarded, and I expect that my five minutes of talking away here will be as well. But we are very strong that we are against this. Everyone on that side of the House is talking about a lot of fear—you know: “We have water that is completely unusable.” Well, frankly, in my electorate of Tauranga, we have excellent water because we have invested heavily in it over the years. We don’t have a council at the moment, unfortunately. That hasn’t helped, and we’d like to get them back.

Hon Kieran McAnulty: That’s right!

SAM UFFINDELL: So, Mr McAnulty, perhaps when you’re the new Minister next year, you can help expedite local body elections in Tauranga.

But we have done a really good job with our water, and to have that taken away from us and put into four mega-entities in Wellington is not going to help us. It’s not what we want. I was just on a call before I rushed down to speak on this bill, and it’s certainly not what the people I was talking to in the South Island wanted, either.

I’m really concerned about where we’re heading with this, because you’ve got mega-entities trying to get in touch with what is happening on the ground. We talked earlier a little bit around what the investment would have to be to ensure that our water infrastructure stays up to date, and I do acknowledge that that is, ultimately, what you guys are trying to achieve on that side of the House. I don’t think that what you’re doing through this is really going to get that feedback mechanism from local and regional New Zealand into the mega-entities, and I think there will be opportunities in investment missed there.

But I think that a lot of this has been run on fear, and I think that the Government has run a strong fear campaign, as they did—and they’ve really seen it work for them over the last three years, but I think New Zealanders are slowly waking up. But that’s pretty much the only trick that they’ve got, because it’s certainly not on delivery, it’s certainly not on working for New Zealand, and it’s certainly not on working for lower and middle class New Zealanders, who are getting increasingly hit by a cost of living crisis.

They are going to get further hit when more costs are passed on to them by people who now are being billed by the mega-entities. Are they still going to get billed by their local councils for water services? We don’t know around that one. Are they going to be double-dipping on that? There are going to be significant costs there.

There is a lack of transparency around that and there is significant uncertainty, and I am very happy to be able to stand up here and say that I condemn three waters and that we will repeal it. Mr Speaker, thank you.

Shanan Halbert—five minutes.

Meri Kirihimete ki a koe, and happy holidays to all of my colleagues across the House. It’s my privilege to speak on this Water Services Economic Efficiency and Consumer Protection Bill. Last night, I spoke openly about the contaminated waters across Tāmaki-makau-rau Auckland, and my shared concern for my constituents that they suffer swimming in our local beaches with human waste. That’s not good enough, in my view.

Secondly, today, under this bill, the importance of acknowledging the water rates that Aucklanders have experienced in the last year; a 7 percent increase—7 percent increase—Aucklanders have had to pay for their water. So that’s why it’s important that, under this Government, we’ve got on and taken action on the things that really matter. If we look at the issue and the problem that we’re actually trying to solve with water reform that we actually all agree on, then those are the things that we need to work on and the action that we need to take.

So this particular bill: the Commerce Commission will become the economic regulator of water infrastructure services. That is important, in my view, because we do need to have some eyes across the way that water operates, the costs that are incurred to every constituent in this country. It’s important that collectively we do take action, and I look forward to, after this first reading, being a part of the Finance and Expenditure Committee, that New Zealanders are able to come and have their say once again. I know and feel confident that they will be looking at the cost of living and ensuring that we keep our water prices down. I commend this bill to the House.

Thank you, Mr Speaker. The whole purpose of the water entities bill is to keep rates lower. We are facing a between $125 billion and $185 billion bill to fix our water infrastructure across this country. Of any piece of legislation that is coming through, this is the one—this bill is what ratepayers want to know about. It is about making sure that what we are paying for our water infrastructure is fair—is fair. If we don’t keep it fair, prices are going to go through the roof. We have seen rates going through the roof over and over and over again, up and up and up. Rates are going up across this country. This bill will make sure that the cost of fixing our water infrastructure is fair to all. This is about making sure that we have transparency, regulation, and protection for consumers and for ratepayers so that when they open their rates bill, they can see exactly what they are going to pay for water and what they’re going to have to pay in the future, because without this type of legislation and protection we can’t make sure that it’s fair for all. That is why I commend this bill to the House. Thank you, Mr Speaker.

Thank you, Mr Speaker. Sometimes I wonder why I bother preparing speech notes, particularly when I’m on call 11 in a debate, because I diligently beaver away at what I want to say and then spend most of the 10 minutes refuting the nonsense that comes from the other side of the House. I’ll be doing a little bit of that.

But, before I do, Mr Speaker, I trust you’ll indulge me as this is the first time I have spoken since the announcement by the sponsor of this bill of his intention not to stand in the 2023 election. Dr Clark and I go back a wee way—over 10 years now and it’ll be—well, 11 years now, isn’t it? How has he been here? About eleven years? We certainly don’t see eye to eye on all things, but I want to wish him and his family all the best for his future. He has been a diligent worker for the city that we both love, and I wish him all the best.

Now, that’s probably where the love fest ends, because this bill establishes an economic regulation and, according to the explanatory note, a consumer protection regime. But let me be really, really clear: the protection the water users of this country need most is from this Government.

The irony is extreme: that we are considering a bill at first reading here to control the prices that water users will pay—so to prevent them from being too high—only a week after this Government passed a bill that took away the assets at bargain basement prices because the Government wasn’t prepared to pay for them.

Those assets were taken away at nearly no cost. Where was the protection of the owners of those assets when they needed it? It certainly did not come from the Government. I’ve said it before, I’ll keep saying it: this is the largest State-sponsored theft of assets since Treaty breaches in the 19th century. It is unconscionable and there’s no way to polish that up.

Rachel Brooking: Oh, goodness gracious!

Hon MICHAEL WOODHOUSE: Oh, here they go. Yeah. Oh. See, when they don’t have a good argument, they just attack the arguer. And here’s a remarkable admission: remember that the case for water services entities is that the prices that users will pay are going to be lower than they otherwise would be had the 67 councils continued to rate their ratepayers for water as they have. If that’s the case, why do we need to regulate to control the overcharging by water services entities? I’ve got a reason why. My theory is this and it’s a pretty strong one, I think: there is no way in hell that those four water services entities can deliver the cost reductions in capital and operating costs that were purported by the Water Services Entities Bill. It’s just not possible.

There’s another admission in here, and that is that the consumers need protection—the protection that was taken away from them in the ability to vote out councils they don’t agree with when they’re not doing the right thing on water. So, on the one hand, we take away the very strong powers that consumers have if they don’t like what their councils do, and then provide a legislative protection from the very council that took those protections away. It’s a complete oxymoron.

Now, we’ve heard from both Shanan Halbert and Anna Lorck—ad nauseam, as the Labour members have done—that our water quality is poor. Now, Auckland had extreme weather events over the weekend. I was actually there on Monday and it was beautiful, 27 degrees, hardly a cloud in the sky, not a breath of wind. Aucklanders were breathing a big sigh of relief because they had had significant downpours that had led to the faecal counts in stormwater going into Auckland harbour to be unacceptably high. That’s not good enough.

What they don’t say is that that problem is being fixed by one of the largest infrastructure projects in Auckland’s history—the Central Interceptor, I think it’s called. Andrew Bayly and I visited it, didn’t we, when they put the Tunnel Boring Machine—I’m not sure if it had a fancy name like the City Rail Link, but it was heading underground and going under Manukau Harbour; a massive water tunnel that will more clearly separate our storm and foul water and prevent the sorts of unacceptable discharges into the areas like Simon O’Connor’s electorate—the beautiful area of Tāmaki—and on the North Shore, as Shanan Halbert said.

But the point is: we didn’t need legislation for Watercare Auckland to do what it needed to do. It had sensible rates, and it has gone ahead and fixed it. Even in Anna Lorck’s electorate, which was the so-called genesis of this State centralisation project, they’ve already fixed their water-quality issues, a $35 million project by the Hastings District Council. That has not needed State intervention, it shouldn’t have happened in the first place; it was fixed. It didn’t need a State intervention.

But the most ironic thing is trying to reconcile Ms Lorck’s comments with the Minister’s. Because the very case for a fees regime is that larger metropolitan areas like Auckland are going to subsidise smaller metropolitan areas like, I don’t know, Waipukurau or Havelock. Because, as he said, if this didn’t happen, then the water rate increases on those smaller councils would be disproportionately higher than Auckland’s. So Aucklanders are going to be paying more for their water—or rather, more for water—and it’s going to be going to other parts of the country.

Now, I’m not sure what I think about that. There are many reasons to live in smaller areas, and sometimes that comes at a cost. So the lower house prices, lower land prices, the ease of getting around, the quality of schools, and the opportunities for jobs in the regional sector—all good reasons for living in smaller cities and towns around New Zealand, but one of the costs of living in those areas is sometimes a slightly higher rate on things like water. Now, that is being taken away and the 1.5 million Aucklanders are going to have to pay more than they otherwise would, because of this arrangement. Labour’s own Phil Goff opposed that very, very strongly when this regime came out, and not surprising.

The other very interesting part of this bill is the nexus between price and quality that the regulator is going to be required to enforce. Which begs the question, really: what the water-quality regulator—which was set up with the support of the National Party last year—is actually there to do. It is the principal water-quality regulator. Why is a branch of the Commerce Commission then going to make arbitrary judgments about the nexus between price and quality? Because if it does have to regulate on price, it’s probably going to have to say to a water services entity, “In order to control the prices that you charge to your users, there needs to be some compromise on quality.” Otherwise, I’m not sure why this bill actually even mentions that. So I want the Finance and Expenditure Committee to have a very close look at how this is going to play out and how it reconciles with the water regulator that’s been established by last year’s regulation.

We’ll oppose this because we oppose the State-sponsored theft of assets. We oppose the candy-coating of the benefits, the catastrophising of water quality right now, and the demonising of councils. And we will reverse this legislation at the first opportunity.

Thank you, Mr Speaker, for this opportunity to speak as the last speaker on this fourth bill that’s part of the package of reforming our three waters—being stormwater, waste water, and drinking water.

Now, Simon Watts, in his contribution, said that the case for change for this package of reform has been built on sand. I refute that totally and say that it’s built on under-funded pipes and treatment stations, and the need for more of these things.

We see here that this bill establishes an economic regulator and consumer protections by using the existing Commerce Commission and adding in a new water services commissioner. I recommend it to the House.

The question is, That the

Motion agreed to.

Bill referred to the Finance and Expenditure Committee.

Instruction to Finance and Expenditure Committee