Water Services Entities Bill

Members, we come now to Part 5. Part 5 is a debate on clauses 169 to 194, “Monitoring”. The question is that Part 5 stand part.

I don’t intend to take a long call on this particular part because the provisions roughly mirror those that are in the Local Government Act (LGA) 2002, and relate to system stewardship. This is overall a beneficial outcome in terms of long-term improvements to the way in which water service delivery occurs. It enables the ability should a problem be identified, and that is in clause 174 of the bill, in terms of problem definition. Should that threshold be met, the Minister can have three avenues to try and explore the extent of the problem. The actions are proportional to the problem that’s been identified. Those three layers are either to appoint a Crown review team, a Crown manager, or a Crown monitor, and that will enable the problem to be investigated or identified, considered, and then relevant actions taken.

So proportionality matters, having a threshold of action matters, and having various mechanisms for which the Minister is responsible for to be able to ensure that the system is working in the way that it is supposed to. I commend this part of the bill to the House primarily, again, because it mirrors clauses that are already in existence with the LGA 2002.

I’m interested to get a little bit more detail from the Minister on what specifically might trigger these ministerial interventions and also just some clarification, because the Minister talked about the appointment of a Crown manager when she commented just before, and I don’t see anything in here that talks about a Crown manager. I can see the monitor—in section 169 is the appointment and role of a monitor, clause 175 is the appointment of a Crown review team, and clause 177 is, as the Minister made a point of, a Crown observer, so—

Hon Nanaia Mahuta: Clause 179.

PENNY SIMMONDS: Clause 179 has the next step of appointing a Crown manager, so—thank you, 179. So as well as the monitor there are the three further steps: the review team, the Crown observer, and then the Crown manager. Although the Minister said it mirrors what is in there for the local authorities themselves, it does seem to be particularly heavy in terms of interventions available to the Minister, particularly when the local authorities own these assets.

So I’m interested to know what power for intervention as owners there are for the local authorities, and, if there are none, why are there none? It would have seemed like that is the logical first step, that, in fact, the local authorities would want to be able to monitor. That would be, I would have thought, the first remedial action, that if the local authorities are still the owners, that there should be some ability for intervention from the owners before working through these steps.

I’m interested to know about the appointment of the monitor, and that’s in clause 169, and how the Minister will appoint a monitor and in fact what relationship that monitor might have with the local authorities, or is the monitor going to be reporting to the Minister or how the relationship will work there. And then what the specific circumstances are that might trigger each of those layers of intervention by the Minister. That is, the intervention of the Crown review team as noted in clause 175, and the intervention of the Crown observer as noted in clause 177, and then, of course, clause 179—which I’m interested that we are able to be discussing because Part 5, sorry, Part 5 does include, of course, 179. So my apologies there, it’s obviously getting late in the day. So those—

Lemauga Lydia Sosene: You’ve got until midnight.

PENNY SIMMONDS: Exactly. And aren’t we looking forward to that? So we are certainly very, very, very keen—

Chris Bishop: Who’s responsible for that?

Hon Members: You are!

Chris Bishop: Oh ho ho—we are? Righty-o—32 bills in the order paper motion!

PENNY SIMMONDS: Mr Speaker—

CHAIRPERSON (Greg O’Connor): Mr Bishop, I can’t hear your fellow member. So just keep your voice down, please. Carry on, Ms Simmonds. I’ll give you an extra 10 seconds.

PENNY SIMMONDS: Thank you, Mr Chair. Because these matters, and I know there’s been a lot of accusations backwards and forwards—but these are matters that the public, and particularly those that are involved in local authorities, will want to be very clear about. They will want to know why they don’t have those powers of interventions themselves, they will want to know what relationship they might have when interventions do occur, and they will want to know what it will be that will trigger those interventions. I think the public deserves to be made very aware of those matters, and while the accusations were flying, this is a very serious and important matter for our ratepayers, for our local authorities. So thank you very much, Mr Chair.

Thank you very much, Mr Chair, and I want to carry on from the points and clauses that have been raised by my friend and colleague Penny Simmonds in regards to Part 5, and in particular, I guess, building on the questions that Penny Simmonds has raised in regards to the concept that we discussed in the prior aspect—around the fact that, actually, these territorial authorities have been told right from the outset that they actually own these assets, right? We’ve heard that right throughout the process: “You own the asset; you’ve got a shareholding in that.” But yet the question I have for the Minister is: why is there not the ability or a clause within Part 5 that allows—and I guess particularly under Subpart 2 could be the mechanism in which you could enter it—for councils who actually still technically own their assets?

If we follow through the narrative that has been set, why do they have no powers for them to intervene in regards to the information-gathering powers around these entities, which is under clauses 170(1) and (2)? Why couldn’t, in effect, those councils provide a role in terms of providing monitoring? Because, actually, you know, don’t forget the assets which are going to form part of these water services entities are assets that are owned and have been funded by these councils. So surely they will have a vested interest, or they definitely will have a vested interest, in regards to making sure that these water entities are delivering the outcomes that they are planning to do, in terms of their intent in that. So my question around that is: why do they not have the powers to intervene in that regard?

The other question that my colleague Penny Simmonds noted was for the Minister to provide some context in terms of what are the exact circumstances on ministerial intervention? Because, while I acknowledge the Minister said these clauses are replication out of the Local Government Act, the water services entities is a very different set of circumstances than in the local government environment. And, in effect, the whole premise of these entities is that they would be independent. We’ve heard the Minister articulate the reasons why that degree of independence from both councils and other parties is so critically important—financial basis, etc.—and whether we believe that or not, that doesn’t matter; the point is that they are independent. So what are going to be the trigger points for that ministerial intervention?

And the third question I have in regards to that is that the Minister also noted before, in regards to context, that the threshold for Government actually getting involved is going to be very, very low, whereas, you know, we’ve got some pretty heavy aspects around monitoring—a three-tier approach, in effect, in regards to this—and I’m sure, for any of the members that are in Tauranga at the moment, I mean, they’re in a council that’s being managed by Crown-appointed officials, and we note that is the situation. But the circumstances which triggered that were what they were. But, in effect, these are different, because these are independent entities with a board structure and a governance structure which is much more wide ranging than what we do have in the normal local government or a council scenario.

So I would like the Minister to provide some—how is she confident that, actually, that trigger point for intervention, what it looks like, is not overreach in regards to what is actually the problem that this part of the clause is trying to mitigate? So those are the questions I’ve got in regards to Part 5, and we’ll come back.

There is a different function in terms of system stewardship and the role of the monitor, in relation to the threshold that needs to be met, which is set out in clause 174, and then the actions that the Minister can take that are proportionate to the problem that’s been identified and needs to be resolved. The other thing I should mention is that the monitoring function is a role of a department, and it has a specific purpose that is separate to the review team that might be appointed, or the Crown manager that might be appointed, or the Crown observer that might be appointed. So that’s the other thing.

I’d also like to just highlight that, from a regulatory point of view, the matters that would be significant to be looked at are set out in clause 174. So let’s just go through these. Clause 174: “(a) a matter or circumstance relating to the management or governance of the entity that detracts from, or is likely to detract from, its ability to give effect to its purpose; and (b) a significant or persistent failure by the entity (i) to perform 1 or more of its functions or duties under the Act; or (ii) to give effect to a Government policy statement issued by the Minister under section 129; and (c) the consequences of a state of emergency … affecting, or recently affecting, the entity’s service area”—so that could be systemic failure of core essential services—“(d) a failure by the entity to demonstrate prudent management of its revenues, expenses, assets, liabilities, investments, or general financial dealings;”—so at that governance level—“and (e) a potential problem that relates to a matter, circumstance…[identified in]…(a), (b), or (d).”—which I’ve read out.

On other fronts, where it would be legitimate to expect that the water services entity should be accountable for the way in which they operate, those matters will be dealt with by the other two regulatory functions—firstly Taumata Arowai, because they are the drinking regulator. So the ability to oversee the performance of the water services entities in relation to meeting the drinking water standards is a matter for Taumata Arowai. In terms of economic regulation and making sure that the strategic documents that help to drive economic and fiscal financial efficiencies—that will be a matter that will be overseen by the economic regulator.

The question is that Part 5—

Brooke van Velden: Mr Chair.

CHAIRPERSON (Greg O’Connor): Oh, I’m sorry. The member needs to call.

Point of order. With respect, Mr Chair, the vote was being taken.

No, I hadn’t completed it, so the member can have the call. But just—please call.

Thank you, Mr Chair. I was hoping that the Minister might be able to just elaborate a little bit about the monitoring function and the powers of the Government in regards to the monitoring function, because we were talking a little bit about where you’ve got the department which has a different role again to the Minister appointing a Crown review team, but at the same time, it seems like there’s an awful lot of bureaucracy here as to at what point different entities start getting involved.

I noted here that in clause 169 it says that “The Minister must appoint a department to be the monitor.”, so we’ve got constant monitoring happening from the departmental level, and then the Crown review team may be appointed by the Minister if the Minister suspects that something has gone wrong—that there’s been a problem. But in clause 174, it starts talking about what does it mean if there could be a problem, and one of the problems it identifies under clause 174(b)(ii) is that there’s a significant failure by the entity to give effect to the Government’s policy statements “issued by the Minister in section 129;”.

So I’ve gone away to look a little bit at how that refers to clause 129, and it says that “The Minister may issue a Government policy statement on water services.” But then, going into detail on that, that says that it refers back to clause 11. Now, in clause 11, it is talking about what the objectives of the water service entities are. So under this Government policy statement, you could be talking about things like mitigating the effects of climate change, protecting and promoting public health, and—importantly—enabling planning processes, growth, and housing and urban development.

But, of course, all of these are from the Government side, rather than from any council side or a local community side, and so it appears to me that we have got a Government getting increasingly involved in local planning and local issues. Is it possible, then, that we could end up in a situation where the local council actually has no control at all over their own water service entity, because not only is there a department that they didn’t ask for overseeing them and monitoring them but you then have the Minister getting involved and putting in place a Crown review team because they are not doing an adequate job of the Government’s policy statement and enacting the Government’s policy statement?

So how is it possible that we can have any local voice about where local town planning wants to take place or where housing and urban growth wants to take place when it’s really then become an issue of the housing Minister and the environment Minister, and all of those things interconnecting and overriding any of the water service entity board? I think there are a lot of people who would be really concerned that that means, in effect, that everyone will be just doing what the Government is wanting to do with a Government policy statement, rather than what the local council and people who are in charge of the water service entity want to see in their local community.

I realise that the member might not have been here when I opened this particular part, but when I said that the functions in Part 5 mirror the existing—well, some of the mechanisms in the Local Government Act 2002, the Department of Internal Affairs oversees councils as it currently stands and the threshold in order for the Minister to intervene is quite high. That threshold in this bill is clause 174. It is a very defined set of actions or considerations that must be taken into account before the Minister can intervene on those three layers, and that level of intervention is proportionate to the problem that is identified and needs to be resolved.

That sits outside of the two other regulatory aspects, which I’ve explained to the committee. This won’t be overreach in terms of the role of Government, but this is a necessary system oversight role that should be taken in relation to ensuring that the water service entity complies with its functions as set out in the legislation, much like councils do in relation to the Local Government Act 2002.

Part 6 Miscellaneous provisions