Water Services Entities Bill

Now, members, we come to Part 4. Part 4 is the debate on clauses 128A to 168 and Schedule 3, “Financial and accountability matters”. The question is that Part 4 stand part.

Well, thank you very much, Madam Chair. It is a pleasure to continue on this debate, even though at times it feels like we are talking to ourselves and there isn’t much listening going on in terms of amendments. But irrespective of that—

Hon Gerry Brownlee: Public’s listening.

SIMON WATTS: That’s absolutely right, Hon Gerry Brownlee. The public are listening and the public have listened and are watching the way in which this Government continues to not listen to their feedback in regards to a reform process that is destined to fail.

Part 4 of this bill, comprising clauses 131 through to 168, lays out, as we’ve heard—well, we haven’t actually heard from the Minister of Local Government, which generally would occur, but I’ll do that overlay just so that people understand what’s in this aspect—the financial and accountability matters of this bill, and there continues to be a number of issues in regards to this. It also brings into scope Schedule 3, which is also part of Part 4.

The questions that I have in regards to this aspect are wide and ranging. But I’ll start off with some aspects that I have actually raised in the Chamber today to the Minister in regards to—and I’m referencing here, Madam Chair, for the wee checklist in front of you—clause 140. In particular, my points that I raise are in regards to—140 basically says who the parties are that are able to contribute into the preparation of the Te Mana o te Wai statement.

The challenge that I raised with the Minister, in the Chamber this afternoon, was in regards to comments that she actually made in the Chamber this morning, which was in regards to saying that the establishment of the principles of Te Mana o te Wai “include a number of stakeholder groups, including the rural communities, Federated Farmers, industry groups, horticulturalists”—and I acknowledge Hon David Bennett in the back row there; he will know a little bit about horticulture and may take a call, if that is deemed appropriate—“as well as iwi.”

The challenge, and the basis of my Supplementary Order Paper 299, is that the only group that I’ve just referred to that has the ability to submit a statement around Te Mana o te Wai to the Government’s three waters reforms and to the entities is iwi—the only group.

So why is that? Why is it that only iwi are allowed to contribute into that process? Well, I can tell you what: we don’t believe that the voices of iwi are the only voices that need to be around the table in regards to input in terms of the way in which water services are managed in this country.

And I don’t think that, on this side of the Chamber, we are alone in that fact—that iwi are the only stakeholders that are able to input into that conversation. There is a large number, as the Minister has articulated—Federated Farmers, rural communities, you can go on and on.

Why can these groups not play a role to be able to input into those statements? Those are binding statements as well. So these aren’t just any old statements; they are binding statements on these water service entities, fundamental to the fabric of the structure of this entity. But when the Minister gets up and says that, you know, we’re not necessarily painting the facts—this is a fact.

This legislation, this aspect of the bill, I believe, is divisive. It is divisive in terms of separating out one specific group over all others. Why is that right and why is that fair in a country that would believe that we are all one?

Those individuals or groups or entities should—my amendment to this clause is quite simple, it is that, alongside mana whenua, we’ve also inserted that “or natural persons”, which basically refers to the fact that, actually, no matter who you are or what your role is or what your ethnic background—doesn’t matter; you’re a New Zealander and you have the ability to input into these statements.

So I’m very interested for the Minister to articulate: why is that not fair and just? Why is that not reasonable? Why are iwi the only group that can submit into these statements which are binding on these entities? What is the rationale for that, and why is it just and fair?

Madam Chair, thank you. Just following on from the comments made by Simon Watts and supporting the questions that he has raised, I think it’s worth looking at clauses 143 through to 145.

So, firstly, if you step back from that, there’s, under 142, the “Obligation to publish response to Te Mana o te Wai statement for water services”. Now, what that would tend to say is that it should be done as soon as practicable, and, in any event, within two years after receiving the statement which it relates to. Yet the statement that’s required from these new entities in 143 is an annual statement. So the question would be: how does that then become a document that the Auditor-General can sign off on, as is required under that same clause, to reflect the fact that they have taken into account Te Mana o te Wai anyway? So there is the issue, then, of why Te Mana o te Wai persons who have that iwi responsibility, or hapū responsibility, are able to make that—what would you say?—pleading to these particular bodies, and why is it, then, that the Auditor-General steps in over the top of things? I don’t understand that.

Further, it says that the purpose of the statement of intent is to set out the entities’ strategic intentions and provide a base against which the water services entity can have its actual performance assessed. Well, there’s no real statement beyond that as to who makes that assessment, other than, say—and we return again to the Auditor-General in this sort of circular way that has been constructed in this part of the bill—having a look to see if all of the inputs are properly reflected in the statement. And it says, in 144(3), the “statement of intent must—(a) relate to at least to the following 10 financial years; and (b) be prepared in accordance with Part 1 of Schedule 3.”

Well, that’s fairly procedural, no problem there. But what becomes interesting is that under 145, the statement of intent from the water authorities must—must—take into account “(c)(ii) the direction and priorities in the Government policy statement; and (d) how the statement relates to engagement requirements and will respond to or reflect the results of engagement; and (e) an explanation of how the proposals in the statement are linked to the matters raised in, and the findings from, consumer engagement stocktakes.”

Well, what do we take from that? We take, obviously, that they’re supposed to have some kind of comms unit inside each of these new entities that supposedly reaches out to various communities. But what we know for sure is that overarching all of the inputs that might be coming in—and there are actually not too many of them—is this Government policy statement.

So when we’ve had the Minister of Local Government repeatedly, through this committee process, protesting that this was, essentially, an arm’s length from Government, an arm’s length from local government, with entirely the purpose of protecting water assets, it is totally compromised—unless you’ve got some other answer, Associate Minister McAnulty—by this statement in here, because, ultimately, they can’t do anything that is not prescribed by the Minister. That is abundantly clear—couldn’t be clearer. That, of course, then, is the basis on which the Auditor-General will give effect to their report, saying simply whether the statement gives effect to its purpose—and its purpose, of course, can’t contravene the national policy statement. So stamped all over this is the will of the Minister—the whim of the Minister—and the policies of the Government of the day.

So I think some people are being led up the garden path about how much input they might be going to have here. We don’t agree with Te Mana o te Wai proposals; we think everyone who’s involved in the water situation should have a statement. But, here, it’s clear that even they are being shut out.

Thank you, Madam Chair. Look, I’m so delighted we’ve got to Part 4, “Financial and accountability matters”, because I think I’ve asked four or five questions, and each one of them has been asking about how the efficiencies and the effectiveness and the more sustainable cost of these developments are going to occur, and yet I haven’t had an answer to how that’s going to happen. And that is making me increasingly nervous.

I know I keep harking back to what we’ve seen in the amalgamation, the centralisation, of the polytech sector, but it is the only entity that this Government has done that to so far. So we look to the mistakes and the problems and the mess that is going on there. The same assurances were given: that this would be wonderful in terms of saving money, and more cost-effective and more efficient, when, in fact, it is costing hundreds of millions of dollars more. Now, that’s in a very small sector. This is a huge sector. So are we going to get into a situation where it is going to cost us billions of dollars more when this is amalgamated? Nothing has been given in an answer that shows how these efficiencies can occur.

In fact, there are a couple of things that have made me particularly nervous. A member on the opposite side of the Chamber said what a wonderful economic development opportunity—I’m almost starting to talk like her; that’s a worry!—it is going to be for the head offices of these entities. Well, how is it going to be a wonderful economic development initiative? The money is being spent, now, to look after these water services. So it can only be a wonderful economic development opportunity if more money is going to be spent.

Then, I talked about the regional council—people who are involved in water services—who have already been pinched by these entities, even though the bill hasn’t passed yet, and have been offered in the vicinity of $30,000 more to do the same job. Now, that keeps adding up, to me, like more money. So I’m really, really keen to see—to hear—how these efficiencies and how this more effective and better performance is going to come about, because I don’t see, when you keep spending more money, how that’s going to happen.

I’m really worried for our small councils. I keep talking, again, about Gore, but I’ve got to talk about the areas that I know. So Gore District Council, one of the smaller district councils, and it’s a given that they are unlikely to get a seat on the representation boards—so millions of dollars of their assets being run by an entity that they don’t have a seat on. How are they going to have any input into the preparation of the plans, of the pricing, of the reports, and how are they going to be protected from the cross-subsidisation? And, again, I go back to the polytech one, where we’ve seen what’s happened there, where all we’re seeing with the centralisation is the cross-subsidisation of those that have been prudent in the way they have run their polytechnics with those who have been much less prudent. So I would be sitting in Gore District Council, or any of those other smaller councils, and there is a dozen of them in our southern region, feeling very, very nervous about having my assets snatched away from me.

And let’s remember that those assets have been paid for by ratepayers over many, many years. We have got families that have celebrated being on their farms for 150 years. So they have paid hundreds of thousands of dollars’ worth of rates over those years to own these assets, which are now being stripped away from them, and they are going to have no say in how they are going to be run. So can the Associate Minister of Local Government, please, after about the fifth time of being asked, tell us how wonderfully efficient and more cost-effective these entities will be?

Thank you very much. By the member Penny Simmonds’ own admission, she has asked that question a number of times, and I myself have heard the Minister of Local Government respond quite clearly. Perhaps, if she wished to refer to a clause in this, I may be able to go into more detail. But, for those members that did specifically refer to Part 4 in this, I do have a response.

To Mr Watts’ question about Te Mana o te Wai, now, these statements are for a very specific purpose. These are to provide a mana whenua view on how water service entities should be implementing the responsibilities that they hold. Now, that is deliberately drafted to provide a very specific purpose. Now, the Crown does have Treaty obligations to meet, which is why strengthened oversight at the regional level is part of this reform. However, everyone has the opportunity to contribute into the operations of the entities—some examples, through asset management plans, infrastructure strategies, funding and pricing plans, and, of course, spatial and land-use planning purposes.

In regards to Mr Brownlee’s comments, there is one matter that I’m looking into further, Mr Brownlee, and I’ll get back to you. But, in response to the other part, these changes were made, actually, at the recommendation of the Auditor-General, and the statement of intent would explain how the entity has had regard to consumer engagement, not just how it proposes to approach future engagement.

Thank you very much, Madam Chair. I would like to make a small contribution to this Part 4 of the Water Services Entities Bill because it is of great concern to rural communities, which we’re hearing a lot about from my colleagues. Sadly, we’re not hearing a lot about it from the Government.

One of the concerns that I have has been raised by my colleague Simon Watts, and that is around accountability, and I have concerns around the statements—the ability for these entities and mana whenua, the iwi and hapū of local areas, to be able to make these statements, which become binding. But, then, I wonder about the conflict that that may create with the Government’s own policy statements and the statement of intent, because there is no guidance on those statements that iwi and hapū can make. So what happens if there is a conflict between what those local statements say and the Government policy statements and the statement of intent of each of those entities, and are those entities all going to have the same statement of intent or is there going to be one that is common across all four of those entities?

I wonder if the Associate Minister of Local Government could respond to that, about how we then become accountable to the former owners of those assets in terms of how those statements might impact on them and other water bodies. We’ve heard that it’s now “five waters”, but I actually have to wonder whether it could become “six waters”.

I use my own example at home, because I have a naturally flowing creek that we source our drinking water and our stock water for the farm out of. Now, if there is a local statement made around those waterways, is there an imperative, then, on the users of those waterways to pay some kind of a fee to the water entity in that area—which would be the bulk of the South Island being covered by that one. So how can we have a guarantee that those existing use rights are going to be preserved? I know that the Minister has said many times about water assets and supplies and all of the associated infrastructure with three waters, but if we’re creeping into “five waters” and, I suggest, maybe even “six waters”, then how can we guarantee that the users of those assets which—and I call the water supply that I use a very valuable asset. How can you maintain control of that if the authority for it is given off to an entity?

The analogy clearly is that if your name is on the ownership papers of a vehicle and that vehicle is stolen, you still technically own it, but have you got any control over it? You might get it back in pieces or you might find it burnt out somewhere. That’s the fear that we have with the reputation of this Government: that these water assets across the country are seized and that the outcome is going to be typical of the outcome of every other centralisation project and experiment that this Government has undertaken, which is that locals lose control. Locals lose the services that they used to receive from those entities, like those in our tertiary education sector and like our health services, and then we are left with a burnt-out shell that a National Government is going to have to turn around and try and repair.

So if there are some guarantees that we can get from the Minister that we are not going to creep into “six waters” and that local supplies can be guaranteed existing use rights, that would be great if the Minister could respond.

I’m not even going to address the speculation and scaremongering around six, seven, eight, nine, 10 waters. This matter has been addressed in the committee a number of times, and it’s been very clear that it is three waters. They can scaremonger all they like. I think it’s an attempt to hide the fact that they still don’t have a single policy on this issue.

But on the matters that she has asked her question, I do have an answer here. Those documents that the member referred to serve different purposes. The Government policy statement will state the Government’s overall direction and priorities for water services, and Te Mana o te Wai statements will be a unique expression of kaitiakitanga from mana whenua in relation to specific water bodies.

Thank you, Madam Chair. National has a very clear policy, responding to the Associate Minister of Local Government: we will repeal this legislation.

We are, of course, debating Part 4, “Financial and accountability matters”. So the question here is really for the Associate Minister, whether he understands the notion of what a treaty is, because in defending the right of mana whenua to have a direct, influential, and material say over and above everybody else—over and above everybody else—does the Minister in the chair, Hon Kieran McAnulty, understand that treaties are, by their own definition, about partnership, about equality, about relationships.

The very nature of a treaty is it’s not one-sided, Minister. Why is it only one group of people? That’s not a treaty-natured relationship. So it’s actually a very false argument, a very illogical and inconsistent argument, to say that Te Mana o te Wai, all this way through Part 4, are only the problems of one element of a treaty. That’s not a treaty; that’s a singularity. I would just really like the Minister to see if he could respond to that, or explain why, in a treaty relationship, one group of people have more say than the other.

The second part that I want to draw on very quickly is, if I might—and I raised it earlier to the Minister in Part 3—what are the qualities of mana whenua that other people in the world don’t have? What is this absolute unique view of water that mana whenua have? Because as I—

CHAIRPERSON (Barbara Kuriger): To the member, can we stick to Part 4, please.

SIMON O’CONNOR: Absolutely. It is all of Part 4, because all the reporting on financial matters—and thank you, Madam Chair—is prefixed on a point of difference. I’d just like to understand what that is, because when I think of water, and other people, we all do want it to be ecological, well-guarded for multiple generations, and so forth. So I’m just trying to understand: what is this unique point of difference that the Minister sees exists?

Thank you, Madam Chair. This won’t take long. I like to boil things down to its most simple element. When you have a treaty or a contract, you live up to what you promised, and we’re living up to what we promised in Te Tiriti o Waitangi.

Thank you, Madam Chair. I would like to move to another matter in Part 4, and that’s around major transactions. The Green Party has sought to respond to public concerns expressed through submissions about ensuring that there is good scrutiny of any transactions by the water services entities, and that the entities that hold commitment to public service is really solid.

There was a recommendation through the Finance and Expenditure Committee to replicate in the bill some of the provisions that exist in companies law to ensure that there was scrutiny over any major transactions by the regional representative group. So new clause 164A provides that any major transactions—whether it’s the acquisition or an agreement to acquire more assets, or the disposition or agreement to dispose of assets of the entity, or a transaction that has the effect of the entity incurring obligations or liabilities, including contingent liabilities, which are more than half the value of the entity’s assets before the transaction—would have to go to the regional representative group, and there would have to be a special resolution requiring 75 percent support on the regional representative group for that transaction.

There’s a Supplementary Order Paper (SOP), 296, in my name, which seeks to reduce the definition of major transaction to any transaction involving more than 25 percent of the entity’s assets. Reducing that threshold would then trigger that 75 percent majority required to support that. The intention behind that is to ensure that the regional representative group, representing councils and iwi and the wider public, is really engaged in these major transactions. And, again, it signals the commitment, on this side of the Chamber, to the water services entities acting in the public interest.

I think it is irresponsible of some of the previous speakers to say they’re just going to repeal the bill when they haven’t put up a plan about how they would reform water services, how they would ensure that three waters were well provided. So it’s changes likes the major transactions one which we see as responding to the public recognition of the importance of a strong public service ethos to the delivery of water services and the concerns that the Public Service Association and others expressed in their submissions about progressive contracting out, which can lead to privatisation.

So this SOP 296 increases the scrutiny that the regional representative group would have and ensures that any of these major transactions have a 75 percent majority support in the regional representative group.

Thank you very much, Madam Chair. Look, it’s hard to go past the contribution from the last member, Eugenie Sage, when, in the prior part of the bill, a Supplementary Order Paper was put up to remove stormwater and it was declined by the Government and yet still voted for the bill. So where do we stand? Is it, you know, going from two waters to three waters—are we just going to fold on that? I think that’s part of the challenge we’ve got.

But I want to talk about clause 166, so a clause that we haven’t spoken about today. It is a clause that has been a big issue right from the start. I’ll set a little bit of the context, and then get into the questions. This is the concept that on this side of the Chamber we’ve referred to as token ownership. It is basically the basis of this bill, under clause 166(1)(a), that, in effect, territorial authorities or councils technically own the asset. I say “technically”, like they might own the house but they don’t have the keys to the front door and they don’t decide where the furniture goes in the house; it is token ownership. Clause 166(1)(a) says that these entities have, and I quote, “no right, title, or interest … in the assets, security, debts, or liabilities of a water services entity”.

One doesn’t have to be a forensic accountant or a specialist in any of that aspect to work out that when you use a word such as “ownership”, where you will have a shareholding in these entities—I think it would be common in plain language to expect that that would infer some rights over those assets or liabilities, quite simply. But this clause makes it absolutely categoric that that is not the case.

So my question to the Minister of Local Government is as follows: why is this aspect of the clause within the bill? Why have we got a clause such as this which, in effect, strips all of those rights and interests from debts and liabilities and assets from the territorial authorities—which, don’t forget, have funded those assets over decades and decades by ratepayers—and is, in effect, having them confiscated wholesale by central government into these mega-entities?

The central government are saying, “Well, on paper, yep, you’ve got ownership and rights and shareholdings.”, but this absolutely defeats that statement—and again, more political spin. This rules out that they are going to have any obligation in that. So you technically own the house, but you don’t have the key to the front door. I’m wanting to know why it is that the Government do not trust our territorial authorities to have that degree of ownership of their asset.

One of the fundamental Opposition points around this bill—and also solutions that are included with alternative models that have been tabled and peer reviewed, that the Government have failed to listen to—is that councils and territorial authorities and groupings around that want the ability to retain the assets in local ownership and are willing to work together with other like-minded councils and form council-controlled organisations—heck, some already do it. Watercare in Auckland is already a great example of a council-controlled organisation entity that is working. Could there be improvements around funding and financing? Yes. Do we need to put them into one of these mega-entities and put fifty-fifty co-governance and centralisation to make Watercare better? No; we just need to deal with the problem on the table, which is around how do we get more effective funding and financing. Well, here’s an idea: maybe we should just fix that. But no, the answer is, actually, “We’re going to try and centralise Auckland in with Northland, create a mega-entity, create 350 more bureaucrats in a swanky office in Freemans Bay, and that will be that. We know that’s going to work.”

So I’m interested in the comments around that clause, and, as the Minister will note, I have got a tabled amendment in regards to this clause and I would appreciate if the Minister could consider that, and, if not, which I expect will be the case, provide some pretty robust rationale around why the Minister deems that this is so essential in terms of the underpinning of this bill.

Oh, a very good choice, thank you very much, Madam Chair. I must say, it’s been a long day in the Chamber and what helps pass time is the Greens’ contribution. I do enjoy them, at one stage, being part of the Government and then, when they decide not to be, they’re opposing the Government. I find that absolutely fantastic.

Hey, I want to drill down into 154(2A) now, looking at the planning infrastructure strategy. Look, it reads well, as bills do: (2A) “An infrastructure strategy must outline how the water services entity intends to manage its infrastructure assets, taking into account” what existing assets are going to be renewed or replaced, responding to growth or decline in demand for services, and allowing for planned increases or decreases. Well, imagine what that’s going to be like on a regional representative council.

Look, you can understand the board taking a very rational approach, but, of course, it’d be interesting to hear from the Minister of Local Government about the interface with the regional representative group, because, of course, they’re going to be very parochial. Well, they’re the ones who actually can get on that group as well, because, of course, many territorial authorities won’t actually be able to get on there, depending on their size.

I want to call this clause the “Nigel Farage clause” because I think we are believing that everyone’s going to get on to that representative group with the best intentions. But, as we know, when Nigel Farage tried to bring down the European Union, he did that by being democratically voted into it and brought it down, burning from inside.

So what’s going to happen on that, the regional council, where people are going to be very parochial? And, of course, decisions need to be made of—maybe in these super mega entities where an area down in, let’s say, a fantastic area like Gore is up in competition with Waimakariri. Of course, Gore and Waimakariri are very fast-growing areas, because why wouldn’t they be? A great place to live: the climate, the people and the culture, the outdoors, and the nightlife. That is going to draw demand.

So I’d be interested to hear from the Minister how some of those issues are going to be traversed, because, of course, the whole idea of being on a regional representative group is to represent your area, and, of course, you will be very parochial in your area. And I don’t think anyone’s going to take too kindly to being told that their area is in decline or, in fact, one area is going to get a planned increase over another. So I think it would be very good to hear from the Minister about the interface between the board and the group as well, and how issues like that will be mediated.

In no particular order—because the comments have been quite free ranging—but in an attempt to try and cover off many of the comments in relation to Part 4, I think there’s a few things that can be clarified within the context of the questions that have been asked. Firstly, in terms of financial separation, many members in the Chamber have pointed to clause 166. It’s going to be very important in terms of the role and function of the water services entities and their relationship to the regional representative group, and then the professional governance of the board, that there is separation, partly for the governance elements of what needs to be done in order to deliver a service but primarily so that that separation gives confidence to the credit-rating agency that you can finance the investment in infrastructure through the ability to raise debt. And that separation is not unusual to many members in this Chamber. Take, for example, the superannuation’s Guardian Trust, which is two arms’ lengths away from Government.

I do want to talk about the issue of the Government policy statement (GPS), because there was a perception that was raised in the Chamber that the strong arm of Government can actually tell the water services entities what to do. That is not the case. It’s set out in legislation in terms of how a Government policy statement is intended to operate and provide some direction—and this is strategic direction. This is not hands-on telling; this is the strategic direction. But if we go to clause 130(3) and look at what a GPS involves, it means that the Government could express areas of concern in public health. So take Waikouaiti, for example, and the lead that was found in the water. And the more that we test our waterways, it could become quite a public concern. And I think about members in the south, and nitrates in the water are a very big concern for many members of the south. So from a public health point of view, this may well capture the attention of the Government to say, “We need to do more about that. We need to have cognisance from a public health point of view of this aspect.”

Now, the fix might not solely be in the domain of the water services entity, but for the Government that is looking across the whole system of its ability to ensure that matters are addressed, that’s why a GPS, a Government policy statement, can be quite influential. The GPS can express an interest in terms of public health, the environment, planning processes, and growth, and when we think about housing and urban development, it is critical because what has frustrated the current housing crisis has not only been a former Government that didn’t invest in public housing but actually the planning process. And so we need to make sure that the water services entity aligns to the planning process and addresses areas of priority for a Government in areas such as this—also climate change mitigation and adaptation. And, again, I’ve spoken at length, on many contributions in this House on this bill, that this is a pressing issue for councils to address. And when we look at significant weather events, it is the lack of resilience of our water infrastructure network that sees, when flooding occurs, sewage seeping on to the streets, which is unacceptable, impacting on drinking water, which is unacceptable. And then we understand just how fragile our water network is.

Water security is another element that I think—at a strategic level for a Government—is only a responsible measure to take to address this issue. Now, we have the luxury in New Zealand to enjoy good rainfall, but that should not let us believe that we have an infinite resource in water. We should treat water as a precious resource. And so water security is a really important consideration.

Resilience to natural hazards—we’ve spoken at length about that. And, also, again, this protects the public interest. This protects “New Zealand Inc.” interests. We have included a new provision, and I’ve accepted the views of the Finance and Expenditure Committee in new subclause (3)(a)(vii) that “local procurement, employment, joint arrangements, and joint water services entity arrangements:” preserve the opportunity for the local community to participate in the delivery of water services. Why? Because it matters. Why? Because we know that when we invest in our own people and our own businesses, everybody benefits—everybody benefits.

I want to come to another issue that was raised in the Chamber, and it was one raised by Mr O’Connor in relation to Te Mana o te Wai statements, and he posed the question that Te Mana o te Wai statements aren’t that unique. I guess, in many ways, if you take it from your perspective, Mr O’Connor, they are probably an inclusive way of looking at environmental priorities. And I have said previously in the House that Te Mana o te Wai aspirations are not binary; they are not exclusive. It’s an opportunity to find a way to integrate a whole world view about how we think about water—not one, two, three, four, five, six, but water as a whole system and how we look after it. Our kids want us to have that perspective going forward, and, for far too long, that has not been the case. Case in point: every time the issues relating to this reform programme are referred to, it’s three waters, as if there’s no interconnectedness with other elements of how we look after water—for example, discharging water to rivers, lakes, oceans, and our beaches.

So the point of that is that the unique perspective that iwi mana whenua and Māori bring to the Te Mana o te Wai statements is that, in its application, what this proposes is a catchment-by-catchment approach to thinking about how we find solutions to some of the challenges—not just about water service delivery providing safe drinking water but when we discharge water to the environment, let’s make better use of local knowledge in relation to, perhaps, wetlands. And a lot of that knowledge is very local, and some of the traditional knowledge—you go to Thames and you see where they’ve consented for some housing, and lots of locals will say, “Why did they put housing there? Because that was a natural flood plain.” And the member knows it. So, I think, when we draw on the best of what we have to offer our communities—the opportunity to make good, sound, resilient decision-making for the future in this space—then we could not ignore the fact that having Te Mana o te Wai statements as complementary additions to the decision-making process is a total positive benefit.

I want to come now to clause 140, and it was commented on briefly in this Chamber. The reason that I would like to clarify why that is an addition to the legislation is that as we engaged with several mana whenua interests—and you will recall a primary consideration is upholding existing Treaty settlement obligations. Clause 140(1)(a) and (b) enable, where there is a case that iwi mana whenua interests straddle a particular boundary, that there is an opportunity for those interests to be reflected and taken account of, most certainly if they are clearly expressed within a Treaty settlement. And that clause enables, for example, at a practical level, a service-level agreement across an entity boundary to exist, partly to uphold the mana of a Treaty settlement but partly to ensure that, where it makes sense, the aspirations for a catchment that may be divided by a boundary—you can still achieve the beneficial outcome in terms of decisions around that catchment and ongoing water-service delivery. I felt that it was important to clarify that particular clause.

Lastly, coming to the matter raised by the member for the Greens, Eugenie Sage, on her Supplementary Order Paper (SOP) 296. The argument that she sets out in terms of being able to lower the threshold for a major transaction to enable greater scrutiny of the regional representative group at a level—at a level—that makes sense, but not set at a level—so I know that the member mentioned 10 percent—that could be a threshold that would actually, to some extent, push the role of the regional representative group into more of an operational set of considerations. Well, 25 percent in our determinations—and I took advice around this—is a threshold that I still believe enables the intent of what the member wants to achieve, which is to make it a very real, tangible consideration that goes to the regional representative group and, then, the decision-making process around divestment of assets, for example. So it’s our determination that we should support that SOP, and I thank the member for putting it up.

Thank you, Madam Chair. I want to return to clause 166 in this Part 4 of the Water Services Entities Bill, because, you know—I guess I think of myself as a practical, pragmatic person. I know that this has been a source of concern for a number of people. So I’d like the Minister of Local Government to give us a very clear answer on how this clause makes any sense.

If we can just go through it, clause 166(1): “A territorial authority owner”—and we’ll go straight to (a)—“has no right, title, or interest (legal or equitable) in the assets, security, debts, or liabilities of a water services entity”.

I have to relate it back to things that I know. I own a house, but I’ve got no right to it, I’ve got no title to it, I’ve got no interest in the assets, I’ve got no security, no debts—how do I own it? That’s the simple question that people keep asking me, so here I am again. Gore District Council; it’s not in my electorate, but it’s a neighbouring electorate, and I went to school there so it’s dear to my heart. Gore District Council: a small district council, people have paid rates for years to pay for the services that they’ve got over decades—and those assets can be taken off them without any recompense. So they’re taken off them, but somehow the Gore District Council is still the owner of them, but can’t—probably won’t—have anyone on the representative body to have any say in what happens with them, but they own them.

Look, I just can’t understand how you own something but you don’t have any rights. I’d really, really like the Minister to answer clearly on the opposite of it, of the positive of, “Yes, local authorities, you own it, and this is what you have for being the owner. This is what you are entitled to. This is what being an owner means.”, because it feels like—and I know this was a change in the legislation early on when people got very upset about losing the ownership. There’ll be a few old enough in the Chamber to know what I’m talking about, it feels like a Clayton’s ownership—the ownership you have when you haven’t got the ownership. So what actually does ownership, when you have no rights, title, interest, security, debts—what, on the flipside, is the positive of being the owner in this instance?

I know that there are an awful lot of members of the public, who may be listening to this, that have engaged in dialogue with all of us, as electorate MPs, about how this can be. How can you have an asset, it gets taken from you, you’re still the owner of it, but you’ve got no rights and don’t appear to have any control over it? That, I believe, has made people very, very suspicious and very cynical and very concerned about this piece of legislation.

I guess it then makes people think, “Well, what else in this is bizarre and how could it possibly work if we can’t understand how this very simple notion of owning something but having no rights and no ability to have any say over it?” So, please, Minister, just give us the positive side of what it actually gives the owner. Thank you, Madam Chair.

I thank the member for the question and will try and simplify my answer to the degree that I’m mindful that people are listening to the debate and they’ll be probably asking a similar question.

In its simple form, this is the point at which we: (1) enable the ability to transfer assets, debt, and liability of the 67 councils to the four water service entities to be able to aggregate up those interests, and leverage from that for the benefit of a bigger region. That’s one part of it.

But in terms of having an ownership interest that does not derive a dividend, there’s a couple of things about that. It will mean that we separate balance sheets so that territorial authorities, from transferring their assets, debts, and liabilities to the water service entities—in many ways, that will free up headroom. Many councils have reached the debt-ceiling limits, and that’s a constraint. That’s why there’s been a continual compromise over decades around what they fund and how they fund according to the aspirations of their local community.

You can have an ownership interest and exercise that through the way that we’re proposing in the bill, in terms of ensuring, through the regional representative group, the way in which you develop the statement of intent, the asset management plans, the funding and pricing plans, and the integrated management plans—those are all areas where you exercise your interest to be able to guide the water service entity. That’s as simple as I can put it.

Thank you, Madam Chair. I’m interested in the Minister of Local Government’s last answer there, and the starting answer to clause 166 previously, where she said that governance was the reason why 166 was there. So that was her initial reason for it; and then when my colleague Penny Simmonds asked the question for clarification, the Minister said that that enables, basically, councils to have the ability to increase their rating capacity in other areas and to get more income flows, because they’re basically capitalised out—neither of them make any sense. Basically, this is an asset that councils have, and councils can borrow against that asset. Councils are like Government, which has a fairly unlimited borrowing, to a certain extent, because they can rate, or they can tax, like a Government can. They’re not like a normal business that actually has to make a profit; they’ve always got that rating capacity, and that’s why they actually can borrow more than a normal business would for its balance sheet. The idea of governance being the reason behind this doesn’t make any sense. The idea that we need to amalgamate all these things so that councils can free up their ability to raise capital or income in other ways doesn’t make any sense either.

The real crux of this bill is this clause 166(1), and when it’s called “Financial independence”, it’s not about financial independence, it’s about taking an asset, that’s what it is. The points, (a), (b), (c), (d), and (e)—none of that relates to financial independence. (a), (b), (c), (d), and (e): (a), basically, you’ve got no rights; (b), you can’t receive any dividends; (c), you can’t get any financial support; (d), you can’t lend on it; and (e), you can’t indemnify or use it as security. What is the point?

So if you actually were honest with the New Zealand public, it wouldn’t be called financial independence, this would be the “asset grab” clause, and that’s what it is. And there’s no way you can hide it behind “Oh, we need it for governance purposes”—that’s rubbish. Absolute rubbish. The thing is, the entities could still govern their own assets and be part of a conglomerate if they wanted to; it’s commonplace in most businesses when you have subsidiary companies—and it works. There’s no need to take the assets away and to have some kind of line there that doesn’t actually exist on paper.

Then, the second reason we were given by the Minister was so that it frees up the councils to be able to have more ability to raise money through rates. Well, what are they going to rate for? They’re not providing the assets; they’re not providing the services. They’re going to rate for playgrounds and pools and all those sorts of things, which is just going to hurt New Zealanders.

Minister, please answer the question that my colleagues have both asked around clause 166: what does it actually stand there and mean? Because, to me, if I read this, it’s not financial independence; it is taking an asset off an entity. Now, the Minister talked about the super fund and said “that’s an example, if that applies”. The super fund was not a case where billions of dollars of assets were built up by companies or entities and then taken away from them and then put into a Government organisation; people paid into the super fund over years knowing what they were getting. The financial separation there is completely different from taking assets away from entities that have built them up. So when the Minister talks about the super fund, it doesn’t make any sense.

Now, we have got probably the best Minister in the Government in the Chamber, here, today, and I’ve got a lot of respect for this Minister—she’s a brilliant person in the Waikato—

Hon Member: That’s nice.

Hon DAVID BENNETT: And she is. And she’s done great things for Tainui and the community. But I just don’t get it on this clause—maybe if the Minister could explain what financial independence actually means when you take away every resemblance of having any link to an asset. It can’t be for governance, it can’t be because it’s an analogy to the super fund, and it can’t be because you want them to raise more money into rate. There’s got to be another reason, and I would love to hear it.

It’s in a way disappointing to take the call, because it would be really good if the Minister of Local Government could stand up and answer the questions raised by my colleague the Hon David Bennett. This is an extraordinary title to have on a clause: “Financial independence”. It kind of makes you think that what’s being said here is that councils are being released from something and that they’re being given something or that they’re going to gain something. But it’s all a one-way ticket. The most extraordinary thing is that there’s even a special mention in this clause 166, under subclause (3), of what equity return means: “profits of the entity;”, “distributions from the entity;”, or “any benefit derived, directly or indirectly, from a water services entity that represents, is calculated by reference to, or is determined by,—(i) a share in or proportion of … (ii) the entity’s surplus or residual”—blah, blah, blah; on it goes. Anything—they can’t get it. So the owners of the asset are completely shut out of any benefit financially from that.

Worse than that, where there is the case of councils who have looked after their assets, who have kept them up to date, and, in the case of Christchurch city, spent an enormous amount of money bringing them up to what would effectively be a 65-year standard, they’re just taken—walk away. And, apparently, then, no concern about some of the specifics that have been mentioned by Eugenie Sage today, and they concern me as well—flooding in the southern parts of the city, southern and eastern parts of the city. No direct control over any of that discussion. And it makes it abundantly clear, here, that they can’t even raise funds on behalf of this organisation to do some of these works. So the idea that somehow this is financially freeing is a nonsense, because there is no financial connection in the first place.

The other thing I think is really quite, I think, deceptive in all of this is that the Minister and other Ministers from the Government have gone around saying “No, it’s not a confiscation. No, we’re not taking the assets. The ownership remains with the local authorities.” Well, look, if you own a pair of trousers but you can’t wear them because someone else has got them, you may as well not own them. And that’s exactly what the situation is here—exactly what the situation is here. It’s like a farmer going out in the morning to put on the gumboots to find that, no, someone else has grabbed them. He owns them, but he’s in his stockinged feet in the mud for the rest of the day. Well, that’s the sort of ludicrous situation we’ve got. You know, Mr Doocey owns a flash car. It’s an amazing thing, it’s got his photo on the side of it. But he gets out there in the morning and finds that someone else has taken it. Yeah, someone else has taken it, because while he owns it, it’s not his. And he goes through all these examples. It’s just utterly ridiculous to have this here.

So the questions raised by my colleague the Hon David Bennett are reasonable ones and they should be answered, because if this is so good, if this is the sliced bread answer to three, five, six, or 10 waters—whatever it might be—then there’s got to be a greater benefit than “Trust us. We’re from the Government.”, which is, essentially, what this bill is saying to all of those who are on the end of any particular water reticulation.

The bit that is also just a little bit unanswered—and I asked this question earlier in the day—is, where we’re talking about a territorial authority or an entity or another such representative group that has the interest in water, where does it leave irrigation schemes? Because they all take water that run across the green fields, as it’s called. So the question is: do they still own their assets? What’s the value of their water takes? Are they now subject entirely to the whim of whoever might find themselves firstly on the representative group, which they are not part of and not prescribed to be, or the local authority, or local authorities multiple, that their scheme may run over.

So this clause 166 needs a response from the Minister. We don’t think it’ll be a good one but it should be, at least, given in the Hansard.

Thank you, Madam Chair. I know we’ve spoken on this clause for a long time, but, first of all, I want to respond to what the Minister of Local Government said before, and that is that, in the context of balance sheet separation, she implied that taking the assets and liabilities out was actually going to help the councils.

My first question to the Minister is: which councils will end up with a stronger balance sheet if they remove their assets and liabilities that relate to their waste-water services? A classic is Auckland Council. The asset value of the water assets in Watercare Services is about $12 billion, and I think the debt’s about $7 billion or $8 billion, by memory. So their balance sheet will have a hole in it to the tune of roughly $4 billion. Are there any councils that will have their liabilities exceed the value of their assets? If the Minister can’t answer that question or can’t give us an assurance to that, I would suggest to the Minister, gently, that every council will have a hole in its balance sheet. That’s my first question.

Secondly, I want to come back—and I know that the Hon David Bennett is an excellent accountant. He worked at KPMG, in Hamilton, I think. Anyway, this issue around equity was one that we canvassed at the Finance and Expenditure Committee, and I have to say I’ve never yet had an adequate response from the officials during the select committee stage. This comes back to what a share is. A common definition of a share is one of equal parts into which a company’s capital is divided, entitling the holder to a proportion of the profits. Now, in all definitions of equity capital, which is what we’re talking about here, there are normally rights, first of all, to receive dividends, because that is the return you get on a share. What we find in clause 166(1)(b) is specifically that a territorial authority must not receive any equity return, directly or indirectly, from a water services company. That strikes at the first and main principle of what an equity share is.

The second thing about an equity share is that you are able to participate in capital raising. If the company or entity wants to raise more capital, as an equity shareholder, it is by law a requirement, and, if you go to the Takeovers Code or the New Zealand Stock Exchange code, she—and I’m looking at the Minister—will be locked up in jail if she was to suggest that existing shareholders could not participate equally in any capital raising of a share by a company. Yet what do we find in clause 166? In clause 166(1)(c), the territorial authority owner “must not give a water services entity any financial support or”—wait for it—“capital;”. So now you’ve struck—and I’m saying this to the Minister—this piece of legislation which takes away the two fundamental rights of being a shareholder in whatever business or whatever it is, and we’re talking about water services here.

So the first thing I would say to the Minister is my reading of this—and I raised this at the select committee and I wasn’t able to get a proper answer from the officials—is that there is no way that the councils will be able to deem this as a share. In my view, there is no way they could place a value on these shares because they’re not entitled to any return and not, in fact, specifically in the bill, precluded from acting and participating as an equity shareholder. I would suggest to you—Madam Chair, I would like to carry on if I may—[Time expired]

Thank you, Madam Chair. I think the member very well made his case quite clear on a number of fronts—and clear to the extent that he is correct; the bill does not enable shares to deliver a dividend to shareholders. The reason for that is to provide safeguards around the model that we have, which is a public model of water service delivery, and an interest that preserves—going forward into the future—the nature of interests in relation to public assets and how they can be leveraged and used for a broader benefit.

But let’s just take that member’s point and take it to a natural extension, because, if dividends were ascribed to a shareholding interest, it defeats the purpose of the bill. And what we may end up finding is that, again, if dividends were ascribed to a shareholding interest, we wouldn’t be doing what we said we need to do, which is invest in infrastructure which has been underinvested in for some time. So that’s one element of it.

Let me come to Watercare. The member asked the question that, if this is going to work, Watercare is a really good example to show how it could work. What we know right now is that Watercare is constrained by Auckland Council’s debt limits.

Andrew Bayly: Different points.

Hon NANAIA MAHUTA: No, no, it’s not. In fact, fundamental to clause 166 is to get balance sheet separation to enable water services entities to be able to debt finance into infrastructure, which are long-life assets, and to leverage from the aggregated assets, debt, and liabilities under their purview, and then enable councils to have a shareholding interest and direct the way in which those water services entities operate.

But let me come back to Watercare because, right now, Auckland Council’s long-term plan has the average water bill increasing 7 percent in each of the next two years, followed by 9.5 percent per year for the following six years, and that’s by the disclosure of Watercare’s own numbers. Over 10 years, this would see bills for Aucklanders increase from $1,069 to $2,261. Now, even in a city like Auckland, where aggregation has taken place, where they have seen the advantages of services through Watercare, further efficiencies can be gained through this reform model. A study was done, and it demonstrated that this was the case.

So, despite being our largest city and benefiting from the earlier decisions to amalgamate, what we know is that Auckland has significant challenges still outstanding. So recent work with Watercare showed that there is still scope for further efficiencies, with the potential of 55 percent efficiency gains over the next 10 years. But, in the event that we continue with this reform programme and create Entity A, I am informed that the additional borrowing capacity of Entity A, compared to the collective council borrowing capacity under the status quo, will unlock an additional $1.2 billion for the council to invest in communities across Entity A—and that’s got to be good. Why? Because Watercare, now, in the current situation, has deferred renewals and maintenance initiatives across Auckland for about two to three years because they cannot fund that—and that’s not including growth assets.

If we know anything—if we’ve been observing what’s happened in Auckland over the last at least two or three years—the Government has to step in to support critical investment, to support infrastructure such as the provision of housing. Now, if we want a future that takes the challenge off council balance sheets, puts the responsibility into these water services entities by doing so, and ensures that, also, the Government is released of some of that burden which it is currently picking up—because taxpayers and ratepayers are the same people—then the water reforms that we’re proposing provide a solution to those challenges.

Yeah, thank you, Madam Chair. I appreciate that. Look, I just want to respond to the Minister of Local Government. This issue around dividends—I am not debating whether, in fact, the water services company should be paying a dividend. That’s not the debate. The Minister wanted to introduce that as the reason that it was precluded under clause 166. That’s not my issue. My issue is: if you take a technical definition of what “a share” means—and I’m talking about the 67 councils—then, by definition, if they aren’t entitled to a dividend—and, clearly, the bill doesn’t provide for it—if you’re not entitled to participate in capital, then you do not have a share. You cannot have legal ownership. I would suggest to the Minister that for all 67 councils, they will not place any value, and could not place any value, in their balance sheet for what their interests may mean for the water companies.

I’d put it to the Minister—and I’d ask the officials, as well, whether they’ve ever gone and actually sought a proper legal definition and whether, in fact, my assertion is correct that, for all these councils—67—because they cannot meet the definition of owning a share, they will note this as a thing in their notes for the account, but they will not ascribe any value to it, because they cannot, because it will not meet the definition of “a share”. I would imagine the Auditor-General, who is also required to do this, will come to a view that they cannot place a value on these shares. That’s the first point.

The second point, going back to Watercare—again, the Minister talks about future liabilities: what will happen on the day that the assets and liabilities are transferred? Twelve billion dollars of assets will come into the water services northern region, and there will be, presumably, if they can get agreement, about $7 billion or $8 billion of debt that comes across. That will mean, fine, in the water services company, they will have $4 billion of equity. But what will that mean—what will that mean—in the councils’ books? If you’re going to put a $4 billion increase in a water services company, you’ve got to do the reverse. That will mean the council’s balance sheet will be $4 billion worse off immediately following the transfer of those assets and liabilities.

For the Minister to stand there and say that the council will be better-off is an absurd assertion, because, right now, Watercare manages its business in a way that it takes all the rates it receives from its water activities and applies them to running Watercare and also to the investment in infrastructure. That would be the same for all councils across New Zealand. So those councils will have a hole in their balance sheets—in the case of Auckland Council, $4 billion; Tauranga tell us that their water assets are worth about a billion dollars and there will be some debt, they’ll probably have a hole in their balance sheet by about $400 million to $500 million. These are big chunks of money. To say that the councils will be better-off because they’re not incurring future liabilities is a spurious argument. They will simply have this gaping wound in their balance sheet on the day that it is transferred.

I don’t think any official or the Minister has ever fronted up with a proper financial conversation. Rather than talk about the philosophical stuff, what does it mean when you come to do the hard numbers in the profit and loss statement in a balance sheet? I don’t think any one of the officials or the Minister actually understands this issue. I think it’s a huge sleeping issue and we’re going to hear more about it from the Auditor-General.

I want to go back to clause 151—this context of the funding and pricing plan. I’m very keen to understand a little bit more about this because this funding and pricing plan presumably will be put in place by the new CEO, subject to oversight by the department, and then will go through the process of being approved by the establishment board and then going into the next stage.

My question is: what are the parameters? Councils rate differently—some do it on toilet bowl, they used to do it in North Shore; some do it on value of the property. What is the basis to make sure that everyone gets a fair pricing? Is there going to be differential pricing? How do we know that it’s going to be fair across everyone?

I call Tangi Utikere.

Hon David Bennett: Point of order. Point of order. Point of order.

CHAIRPERSON (Hon Jacqui Dean): No. I will deal with this matter first because I have called the member.

I move, That the question be now put.

Point of order, Madam Chair. Thank you, Madam Chair. I would just like to raise a point of order around the Minister of Local Government. Before, we asked some very genuine questions in my speech—three genuine questions. The Minister actually wrote them down, but never replied to them, and—

Order! Order! Order! Order! That is not a point of order.

Point of order, Madam Chair. Flattery is not a prerequisite to answer a question.

OK.

Thank you, Madam Chair. I am very disappointed the Minister of Local Government didn’t answer those questions when she had that opportunity. She did give an answer to Andrew Bayly—again, Andrew Bayly has recognised a massive problem in her answer.

But there is another problem in her answer. She says that Watercare is going to be $1.2 billion in deficit—it can’t do what it’s supposed to have done. Well, this new entity suddenly has the ability to borrow more than Watercare and all those other councils. That $1.2 billion that Watercare was going to have spent has come out of other entities that have put in assets that are higher than their expenses. So, basically, you’re transferring from some other council the ability to fund councils that haven’t been able to pay for their thing. This is not some magical thing that you put them all together and suddenly we’ve got a bigger pot of money that we can all do more with; it doesn’t work that way in life. If you put a bad business with a good business, the good business is subsidising the bad business, and that is exactly what is going to happen here. To say that Watercare will get $1.2 billion, that’s because Whangārei and some of the other regions that are part of that Auckland region are actually going to be subsidising that. As Gerry Brownlee said, Christchurch has had an exemplary water system and now will be subsidising others—that’s the ultimate effect. It’s not as if there is a very small debt-loading in councils around water. It’s huge, and it’s not going to change when you put them together.

Now, this clause is the heart of the bill. It, effectively, takes away ownership from the councils. Now, every member in this Chamber will think, “What actually happened in this House 140 years ago? How did we actually take assets off people, in this House, and get away with it? How did that actually happen?” You know, you can’t actually fathom how people did that 140 years ago. With the greatest respect to Nanaia and Willie and that, you’ve got a much bigger experience in this than me. But I just can’t understand how that actually got through Parliament of the day, how this building would allow assets to be taken off people that shouldn’t have been taken off them. This is what we are doing here today. We are taking assets off a community. It is taking assets off councils—that is what it is doing. Effectively, you have no ownership. This is what is happening here today, and that’s why councils are aggrieved.

I say to the Labour members, actually, we don’t have to do another wrong in this Chamber. We’ve done it once before and it’s been a tremendous wrong for this country. This is another wrong being made here today in the way that we’re doing this. We’re taking an asset off a community. And fullest respect to the Minister—I wish she had answered those questions. It doesn’t make sense, her explanation, and I think this is a very dangerous and sad day when we pass a clause like clause 166 in this Chamber.

Members, the time has come for me to leave the chair for the dinner break. The committee will resume at 7 p.m.

Sitting suspended from 5.57 p.m. to 7 p.m.

Members, the committee is resumed on the Water Services Entities Bill. When we suspended for the dinner break, we were considering Part 4. Once again, the question is that Part 4 stand part.

Thank you very much, Mr Chair. It’s great to be back after the dinner break. I hope everyone’s refreshed and ready to keep rocking in the conversation on Part 4. I want to go to a couple of aspects and clauses that we haven’t covered in the conversation with the Minister of Local Government before the dinner break, and these relate to clauses 150, 151, and 152 in regards to funding and pricing plans.

Before the break, we were having some dialogue in regards to shareholding and other aspects. The questions I have on these clauses specifically relate to the concept around how we’re going to ensure that we’ve got mechanisms to ensure that the pricing across the four water service entities is appropriate, and the degree of confidence we have that those aspects are going to be in play.

So the specific question I’ve got for the Minister in regards to clause 151 is this: what are the safeguards that are in place, within this bill, that the Minister believes are going to be appropriate in order to provide a safeguard, particularly to smaller rural provincial communities across this country in regards to pricing increases they may see as a result of these entities?

The second question in regards to that, outside of small communities, is about the mechanism in which this information will be publicly published and disclosed in order to, I guess, provide a degree of transparency for communities around both the funding element, which is probably less relevant to the average household, and the actual pricing component. What is the mechanism around the publication of that data, and is the Minister confident that the provisions in the bill, in clauses 151 and 152, will provide that degree of confidence? So my question is around safeguards for smaller communities, and then the mechanism for publication, pricing, and funding mechanisms.

The second aspect I want to get into is Subpart 4 of Part 4, around reporting and particularly around annual reports. For those that are sitting at home watching the news—and they’re probably just about to move on to Parliament TV, because that’s what every household across the country, no doubt, will be doing at this point—you know I want to spice up the evening a little bit, so let’s listen to a little bit of the Water Services Entities Bill, committee stage. And I tell you what, I’m sure the Minister will join with me in saying there’s no better place to be than here at the moment.

My point is this: there’s been a lot of conversation through the initial phases of the select committee process around the Auditor-General’s comments in regards to this legislation, and this specific part is where this is very much relevant. You may recall that the Auditor-General raised significant, serious concerns about the transparency in the reporting requirements around the initial elements of this bill. Is the Minister confident that these issues have been solved, and has the Office of Auditor-General provided any feedback to the Minister in that regard? That is a question we discussed at the Finance and Expenditure Committee—has there been, in effect, confirmation back from the Office of the Auditor-General that the changes reflected in the bill, post the initial raising of the issues with it, have mitigated the issues and risks and concerns that the Office of the Auditor-General has raised? And, actually, the request at that point was to get some confirmation in writing back to the select committee. But the view from officials to us was that, actually, no, there’s been some dialogue and conversation around the fact that these changes to clauses 156 through to 164—particularly clause 161 around audit reporting requirements—will suffice. So I’m just looking for some confirmation and consideration from the Minister around the confidence that the issues around serious concerns around transparency and reporting have been addressed as a result of that.

The second aspect in regards to the reporting components in Part 4, Subpart 4, relate to the points around—it goes back to that representation conversation around the regional representative groups that we talked about in prior parts. But the reality is that there are going to be a number of smaller councils across the country that won’t have a seat as part of that governance structure. So the point that I’m wanting to link this back to is that in this subpart it talks about the preparation of plans and reports. And if you look at Schedule 3, I think, it refers to the preparation of plans and reports. How can smaller councils be assured that even though they might not have a seat in terms of their representation on those governance groups, particularly in rural and provincial New Zealand, they will actually be able to input into the preparation of those plans and reports that are outlined in the schedule I’ve referred to? I will leave it at that and welcome some response from the Minister.

Just in relation to the new questions that have been asked and the preparation of the funding and pricing plan, you’ll find that in Schedule 3—in clauses 13 and 14 of Part 3 of that schedule—it sets out, effectively, what is in a draft funding and pricing plan and who should be consulted. But, in the interests of brevity, territorial authority owners will be consulted and consumers and communities under the engagement provisions in section 202 of the Act. That will ensure, as the member has highlighted, that notwithstanding the size of the community—big or small—they will be engaged with, as well as the range of consumers that exist within the community.

On the matter of the Auditor-General, my understanding is that the Governance and Administration Committee adopted the recommendations of the Auditor-General, which was to ensure that there was greater public accountability in the bill. The changes included additional content in relation to planning documents, changing the time frame of the statement of intent, improving the scrutiny of all accountability documents produced by the water service entities, and additional requirements for considering consumer and community feedback. Then, the select committee went a step further, I understand, which led it to see if the changes adopted at the second reading were acceptable, and they were. So I think that, overall, that’s a positive indication of the way in which the select committee process, the public process, can help to improve the transparency and accountability and workability of complex legislation such as this.

Let me come back to the issue of funding and pricing plans. Effectively, what this bill does is establish the architecture for funding and pricing plans to exist, because we do need them, as we need asset management plans and as we need infrastructure strategies, which are long-term planning documents that are able to be reviewed periodically in sequence over a particular time frame.

But the most important thing in terms of driving issues such as equity, let’s say—the ability to ensure that vulnerable communities and vulnerable consumers are able to get the full benefit of the type of reform that we’re proposing—is the establishment of the economic regulator. And the member will be aware that the next two bills will help support the substance of the role and function of water service entities as well as the transitional provisions, and also provide the architecture around economic regulation. Once we have the economic regulatory piece in place, then we’re able to give greater assurance around the way in which funding and pricing plans determine better outcomes for all citizens.

I move, That the question be now put.

Thank you very much, Mr Chair. I want to move to three more clauses that we haven’t discussed so far in this debate, and they relate to clause 133—that’s the first one that we’ll go through, which is around the amendment of the Government policy statement. These questions are generally short, so I appreciate the ability to engage in some responses in regards to this. But I’m wanting clarity from the Minister in the chair, Nanaia Mahuta, in regards to clause 133, which is around what will be the role of Government in terms of the Government policy statements included within this subpart. How much input does the Minister expect that central government will need to have or will have in regards to the preparation of those policy statements?

The second question I’ve got is in regards to clause 141. The Minister will be aware that I’ve got a tabled amendment in regards to clause 140, but my point around clause 141 is in regards to—this is the mechanism in which, post the Te Mana o te Wai statements being prepared by mana whenua, the water services entities must respond to those statements. So the question that I’ve got in regards to that is actually how much influence or how much change, if any, does the Minister envision will result in regards to that response or feedback process back from the water services entity to mana whenua in regards to the Te Mana o te Wai statements? The Minister, in her feedback back to the committee before, used words such as “the Te Mana o te Wai statements are not binary”, I think was the quote that I had, but the reality is these statements are binding. So I think there’s quite a subtle difference in terms of—while they might be non-binary, they are binding in terms of, actually, the need to comply.

So I’m wanting some clarity from the Minister in terms of how she foresees that engagement process between the water services entity and mana whenua and how much impact these statements will actually have on the core business of the water services entity. You know, there was a description and some dialogue we had previously in terms of the role which we envisage these statements to play, and I acknowledge that and we’re not going to get into that, but how much influence, in reality, does the Minister foresee that these statements are actually going to have in regards to the core business of the water services entity?

The last point I want to cover, if I may, is in regards to my Supplementary Order Paper 299 in regards to clause 140. The Minister will be familiar with this question—we discussed this in the committee today—but I’m still not satisfied in regards to why groups outside of mana whenua are excluded from having the ability to input into these Te Mana o te Wai statements, on the basis that these statements are binding on the water services entities. The Minister has said in her own words that there are other groups that have been, you know, engaged with in regards to setting the principles around these statements. So why is it that these groups are excluded?

I’d appreciate a little bit of context in terms of that, because I think it’s really important that—you know, I use the example of someone in rural New Zealand who’s got a farm, and I’m looking at Barbara Kuriger, who knows a little bit about farming; you know, just a little. But, you know, many of us have a river or a stream or drainage going through the farm—very, very common, in the Waikato particularly. So, therefore, if you’ve got a river or a stream going through your farm, why is it appropriate, in terms of the Te Mana o te Wai statements that are prepared by mana whenua, that, for example, that rural community or that farmer that owns that land doesn’t have the ability to input into those statements? I’m sure that in terms of the concepts of those statements and the concept in terms of the environmental role that they play, and I think the Minister articulated earlier—why is it so that those groups are excluded?

Surely, it would add more power and more value and be better for future outcomes, both in terms of environment but also in terms of the community aspect, if more than just mana whenua had the ability to input into that statement.

I move, That the question be now put.

The question is that the Minister’s amendments to Part 4 set out on Supplementary Order Paper 306 be agreed to.

The question is that Simon Court’s amendments to Part 4 set out on Supplementary Order Paper 295 be agreed to.

Simon Court’s amendments to Part 4 set out on Supplementary Order Paper 305 are ruled out of order as being contrary to a previous decision of the committee.

The question is that Simon Watts’ amendments to clause 140 set out on Supplementary Order Paper 299 be agreed to.

Hon Eugenie Sage’s amendment to Part 4 set out in Supplementary Order Paper 286 are ruled out of order as being contrary to a previous decision of the committee.

The question is that Hon Eugenie Sage’s amendment to clause 164A set out on Supplementary Order Paper 296 be agreed to.

The question is that Simon Watts’ amendment to clause 166 set out on Supplementary Order Paper 300 be agreed to.