Water Services Entities Bill

Members, we come now to Part 6, which is the debate on clauses 195 to 228 and Schedules 3 and 5, the “Miscellaneous provisions”. The question is that Part 6 stand part.

Thank you, Mr Chair. There are two clauses in this particular part that, over the duration of the debate in the Chamber, I should bring the attention of members to. Firstly, there has been a lot of discussion in the Chamber around engagement and what is taken into account and what things are engaged on and how. That is set out in clause 202. And then, in relation to the interests of consumers—so what we have in both clauses 203 and 204 are provisions that relate to consumers, that will over time help to improve and evolve the way in which water service entities engage with consumers.

By way of example, because there were comments in earlier parts of the debate, that this will be a cost burden on water service entities—but if we look to current examples that support efficiency outcomes in service delivery areas, we only need to look to Watercare. They have a customer service engagement strategy that supports the efficiency gains of the whole operation of the organisation, and that has been built into the service delivery approach that Watercare has taken.

There are many other organisations that engage with consumers in order to improve not only how they present or what they do but, actually, to get live feedback around what it is that matters most to consumers when they’re working with an organisation. So that’s partly the intent of ensuring that we don’t leave it to chance and we make it express in legislation.

Thank you very much, Mr Chair, and it’s a pleasure to rise and have a discussion on Part 6 and ask some questions in regards to this. The clauses that are particularly of interest within Part 6 relate to, in effect, the review provisions that are in the Water Services Entities Bill, which, basically, in terms of Subpart 1, enable detailed reviews to be conducted by the Minister on various components of the Act at the fifth anniversary of the commencement date, and in particular that the review will also review Crown commissioners, if appointed, at that point and the general function of the system as a whole. So that’s interesting in itself, but the questions that I have for the Minister, the Hon Nanaia Mahuta, are as follows: the first aspect is in regards to the duration in terms of the anniversary time. Why does the Minister feel that five years is appropriate? Geez, I must say it’s been a long five years, hasn’t it?

💬 Andrew Bayly: Long five years.

I didn’t want to raise it, but I thought—

💬 Dr Duncan Webb: Point of order, Mr Speaker. [Interruption]

CHAIRPERSON (Greg O’Connor): Mr Bayly, could you sit down? Mr Bayly, this is not a public house. Please don’t come in here from the floor and start screaming whatever you’ve been doing at dinnertime. Sit down and be quiet, please, and be quiet for the rest of the evening. Mr Watts, I’ll make up the time.

Thank you very much, Mr Chair. I was so deeply in thought on this clause that I missed that whole—

CHAIRPERSON (Greg O’Connor): We won’t do a rerun!

Ha, ha! We won’t do a rerun—absolutely not. Good to have you here, Mr Bayly. Right, anyway, so where was I? I’m getting a little bit lost. Five long years, I think I was talking about. The question to the Minister is: why the duration of five years? What’s the basis on which you deem that that’s an appropriate point?

The second aspect in regards to this is around what the Minister deems to be a review of the general function of the system as a whole. That sounds pretty generic in the context of—you couldn’t make it much more generic than that. So is the Minister actually expecting a full-scale review in terms of the overall system, around what has been intended? I’m sure part of that review will be listening back to the Hansard of this evening and asking, “Well, what was the expectation of what these entities and these water services entities would deliver? And what have we actually been able to achieve in five years?” What is the scope of that review, and how far does the Minister envisage that will go in reality? I guess, as a result of that, what is going to be done? Because a review is one thing, but I’m interested to see if there is an expectation around any change to follow that.

The third aspect is in regards to the mechanism, in terms of feeding into that review process, and in particular what is the mechanism that will exist that allows for councils to provide feedback back to the reviewers as part of that process—and particularly, I guess, as councils are probably best placed to be able to understand the issues that their community has. What is the mechanism under Part 6, Subpart 1, in regards to clauses 197 and 198, “Reviewer’s power to request information”? What is the mechanism that we envisage for that feedback process to happen across the 67 councils? And how do we ensure that, actually, we do get a genuine assessment, in terms of feedback in regards to the success or not in regards to these waters services entities, and that it’s not just a consultation for consultation’s sake or a review for review’s sake? I think it would be fair to say that, hopefully, in five years’ time from now, Kiwis will be a bit more confident and have a higher degree of trust in the Government of the day, but the reality is that this reform process has left a pretty sour taste in the mouth of many Kiwis, in regards to whether that consultation process has been authentic or not.

The last aspect is in regards to how, in terms of the review process, the public themselves will be able to engage and interface with these mega entities. I know we haven’t necessarily touched on it this evening, around the consumer engagement. Clauses 203 to 205, of Subpart 1 of Part 6, are in regards to that. I’d like the Minister to provide an overview of how she envisages that consumer forum aspect to work in practice. How is it actually going to be effective in the context of making sure that we get widespread representation across our communities around the country, and particularly I think about rural and provincial New Zealand? We have a number of members in the Chamber here representing those communities this evening. How are we going to ensure that that aspect is fed in appropriately? But, more importantly, how are we actually going to make sure that that feedback is, again, not just token feedback—that it’s actually feedback in an authentic process? Actually, Kiwis generally feel that, if I’m going to give feedback, it’s going to get listened to, and if it’s going to get listened to, that there’s actually going to be some change as a result.

So some confidence around that consumer forum—not that it’s just a consumer forum off to the side, and I think of consumer forums in the Pharmac context. I know it’s a different aspect to the bill, but the reality is that those consumer forums are literally tokenistic in terms of the role they genuinely play in terms of their ability to feed back—or, actually, for the entities—and in that regard, while different, an independent entity actually takes on board that feedback and makes policy changes as a result. So I think it would be fair to say that Kiwis would be right to have a low degree of trust that, actually, these consumer forums are actually going to lead to effective change, and so the ability to provide confidence and comfort around the fact that it is going to do what it’s meant to do would be appreciated. Look, I’ll leave it there, in terms of the first round, and then we’ll come back a little bit later on.

I’ll take a brief moment to respond. Firstly, in so far as the review is concerned, there are two reviews. In the first instance, it is to look at the roles, functions, and responsibilities of the water services entities five years after the commencement date of this particular legislation. But the question was: why five years? If you look at the go-live date that’s intended for the water services entities, that’s 1 July, 2024. And, then, if you factor in when economic regulation comes into place, which is July 2027, five years is a good period of time to review how the system is working. That is why it’s 10 years for the whole system and we’re including not only Taumata Arowai, the water services entity, but also economic regulation and the overall system-wide benefit of reviewing the system after 10 years. So that’s the first point on the review period and why that period of time.

On consumer forums, what we do know from existing practice and best practice is that having consumer forums can continue to improve the service delivery operational benefits of an organisation. And in this instance, it’s the water services entity. It’s outlined in clause 203 and clause 204, the way in which consumer engagement can take place and what is covered. The point that the member raises, I think, is how we can be assured that views will be taken account of. And, again, that is set out in clause 204.

The other thing to note is that there are layers of engagement with different types of interest that are represented throughout the reform. For example, there is an opportunity through the annual general meeting of the regional representative group for the water services entity’s functions to be reviewed during that accountability process.

In terms of engaging with different types of consumers—and I’m thinking that members on that side of the Chamber have raised, you know, the rural community. They are a bespoke set of consumers that not only use water for drinking but primarily for production. That could be a consumer forum that is targeted across a particular entity because of the profile of the entity. But so too could industry users and particular sectors. And there is the flexibility within the formation of consumer panels for a water services entity to better engage with consumers. And then there is the opportunity that we anticipate if we look at best practice and comparative examples for the economic regulator to also assess the way in which consumer outcomes have been achieved by the water services entities.

Thank you, Mr Chair—we were having a little internal discussion about who would win that call, and I’m glad I did. I wanted to rise to talk on clause 205, the “principles of engagement”, and in paragraph (a) there it states “the entity’s communication [and] communities should be clear and appropriate and recognise the different communication needs”. I was wondering if the Minister would be able to expand a little bit more on that: are we talking simply mailing out, are we talking about digital stuff, or are we talking about forums where people can engage in that process? I mean, if it is forums—I’m assuming it is, because we’ve had a fair bit of discussion on that already—you know, what is the balance that would be placed on those? Because we’ve seen already in the forum opportunities 88,000-odd submissions and not necessarily a lot of reflection on those and the acts of the community and the acts of the local councils. So if we had a feedback mechanism, as is proposed through this engagement—is there a ratio or percentage of voices that the Minister would look at and consider, and then move to, you know, potentially amend the water services entities, or potentially scrap them altogether, if that was what was being asked for?

I note in paragraph (b), “the entity should be openly available for consumer and community feedback”. I’d just like to ask—and it might seem, you know, a little bit sarcastic in a sense, but it’s not; it’s a genuine question—how open is the Minister to this feedback? Because from what we’ve seen so far, there hasn’t been a lot, and I think my colleague Simon Watts touched upon it earlier. We’re not high on faith on this side of the House that the feedback that will come in—we’ve seen it with councils, we’ve seen it from experts in the field—when it comes back from the community, whether that will actually be taken on board.

If I look at paragraph (d) “the entity should consider the changing needs of consumers and communities over time, and ensure that engagement will be effective in the future.” How confident is the Minister that, as they are established, that they’re meeting the needs of the communities? How do the major stakeholders—what was their feedback to you, Minister? Do they feel that these entities, as they begin, are going to be properly represented? And as you’re going through the principles of engagement; what sort of time frame are we talking about with this engagement? And my colleague touched upon a little bit earlier—but, you know, one should reasonably expect it to be fairly regular. We heard five years termed “earlier”—I mean, it is an extremely long time between drinks. But if we could get a bit of clarity around, you know, when you’re outlining the principles of engagement, how regularly are you intending to engage or send out these communications to communities to allow them to then feed back in on how they feel about everything?

Paragraph (e) there, under clause 205: “the entity should prioritise the importance of consumers and community issues to ensure that the entity is engaging with issues that are important to its consumers and communities.” What is the Minister’s take on, you know, issues such as governance, such as ownership, such as equality? I kind of get the feeling, reading through this, like I’m reading back through Animal Farm and we’re all equal, but just some are a little bit more equal than others. Minister, those are my questions to you, and I’d be very interested to hear your response, in time.

If any students of politics wish to see an attempt to filibuster, they only need to look at that last speech—just simply reading what was in the bill and then asking a question as we go through. But I’ll go through: he summed it up when he said, “I assume it’s forum because we’ve had a lot of discussion on this already”. That’s correct, we have covered this in great detail.

The question about paragraph (b), how open is the Minister to this feedback? Well, it’s not actually feedback to the Minister; it’s feedback to the entities, and they will be incredibly open because they are required to engage in a manner which is suitable for those communities.

In reference to the five years—just a point of clarification, that’s not the time frame for the engagement; that was the time frame for the review that is set down in here. And specifically to Mr Watts’ question: the Government’s Supplementary Order Paper strengthens the role of the forums to ensure that engagement is sound and genuine.

Thank you, Mr Chair. I’m interested in getting a little bit more information from the Minister on clause 203, “Consumer forum”, and I’ve been reading through, trying to decide whether the obligation on the entity is to establish a single forum, or, in fact, whether fora—plural—might be an expectation, because if you look at subclause (3), “A consumer forum may be established under this section—(a) for the whole or part of a service area; and (b) in relation to all, or a particular class of, consumers.”

From that, I am presuming that there may be a number of fora established, so you would hope that it couldn’t be just one that only covered part of the service area. And I suppose that’s where I get concerned, again, about the smaller local authority areas, the rural areas, where unless they are going to be in some kind of particular class of consumers, they might get further disenfranchised from this process if they are not included in it.

So it’s around whether there might be a standing forum that covers the whole service area, whether there might be multiple fora in that, with some covering just parts of the service area and some just covering parts of a particular class of consumer. Again, just really wanting to tease out how this won’t become just a tick-box exercise, because many of us are familiar with the concept of advisory committees or advisory fora, and they can be very, very useful: they can give feedback; they can be really engaged with an entity and adding absolute value.

But we can quickly see in an instance where they might not be meaningfully used—that the engagement would fall off and they might feel that they are wasting their time. I didn’t actually see in here—and it may be my fault—any recompense or any payments for any of these people that might be involved in it, and so if you’re talking about that very large geographic area of the southern region, people from western Southland trying to be engaged in a forum representing rural people, are they going to have to travel to Christchurch if the head office is in Christchurch? Are they going to be expected to do that under their own steam without any recompense for it?

So I can see how advisory consumer fora might be particularly good, but I could also see how through the establishment and application and implementation of these fora, they could be made to feel like they are just ticking the box, just showing that they’ve done what’s required of them but actually not being meaningful at all. And the public is not stupid. They do not want to be used in this way, and they will quickly drop off having any sort of engagement if that is what occurs, and so it would be very useful to get some further feedback from the Minister on this. Are we talking a standing forum, are we talking single-purpose fora, are we talking about where they may gather information if there’s a particular development going on from a particular class of consumer? So just really wanting to tease out what these advisory groups—they look to me like advisory groups—might be like and how they might actually be implemented. Thank you very much, Mr Chair.

Thank you, Mr Chair. I thank the member for her question; I know that it’s genuine and sincere. Let me reassure her that the Government Supplementary Order Paper strengthens the requirements around the forum. There will be a requirement for participation within rural, provincial, and metro areas, so if you were to take entity A, for example, it wouldn’t comply if it was just held in Auckland.

But further to that, the Office of the Auditor-General worked with the Department of Internal Affairs to ensure that there will be an audit requirement over these consumer stocktakes.

I thank the Minister for his comments. I think there are an awful lot of people who are concerned in our communities, who do want their voices heard, not just on this piece of legislation but on a lot of legislation that the Government is putting through. But I still think the Government and the Minister need to elaborate further on what this consumer voice means in this legislation. I’m specifically looking at clauses 203, 204, and 205. I think it’s quite wonderful that we have the idea of having a consumer forum so that people can have meaningful consumer and community engagement, that they can compile consumer views, so that the water service entity can understand the consumer needs, their expectations, and their service requirements. I think that’s really quite wonderful because it’s all about how does this entity interact with the community and what they need so that they can get clean and safe drinking water.

But I still question how this works in effect when Part 5 had the issue of the Minister being able to appoint a Crown review team to look into what’s happening at the water service entity, because, you see, we’ve got in one hand consumer engagement that should be leading how this water service entity is managed and how it will work over time to represent the consumers of the region. But, on the other hand, we have the Minister being able to get involved with the Government policy statements, and I really don’t think that they work together. So, on one hand, you can have the Minister saying “You as an entity have not done what the Government policy statement says, under section 11.”, and, on the other hand, you can have the entity saying “Yeah, but we’re not doing what the Government policy statement says because we’re actually listening to the needs of the community and those are different.” But if we listen, at large, to the needs of the community and if they are different to what the needs of the Government are, the Government will just override them and they will take away their ability to respond to the community.

So how is it possible that we can have proper, true consumer engagement if it means that the water service entity actually follows what the consumers and the community want, but if they do that, the Minister gets involved and overrides them because they say “You’re not taking effect of the Government policy statement.”? So I think everybody in our communities is concerned by this new law. They don’t truly understand what it means. But what does this mean specifically for consumer voice when if the entity actually follows what the community voice is, they could be overridden by the Government’s policy statement?

Thank you, Mr Chair. I’m most grateful—most grateful. I want to talk about clauses 195 and 196, just to make sure that we are very careful about talking to the correct part, Part 6.

I think clause 195 really encapsulates how this Government regards these entities, because clause 195 talks about—opening words: “The Minister must … commission a review” and all clause 195 is what the Minister must do. It finishes off in subclause (4) by saying, “Before commissioning the review required by this section, the Minister must consult … other Ministers of the Crown (for example, any whose portfolio responsibilities are affected by or relevant to the review) that the Minister thinks fit.”

Now, we’ve heard all along that these water companies are owned by councils. We discussed this in the previous part, under clause 166, and we talked about the rights of shareholders and we talked about the rights to a dividend, the rights to participate in capital, both of which are excluded specifically under clause 166. I think clause 195 further reinforces what I was saying earlier—that shareholders are genuinely entitled to be able to have a say in the future direction of their business.

💬 Dr Duncan Webb: Wrong part. What section?

In this case, the shareholders, if we were to understand and trust the comments from people like Dr Webb interjecting from the other side that councils own this, because that’s the proposition that’s being put forward by the Government, then they should be the one doing the review, not a Minister and not Ministers covering a whole lot of portfolios.

So my first question to the Minister in the chair is: why is it that the territorial local authorities as the so-called owners—and I do not believe for a moment, and no Minister or official has yet been able to stand up and have a proper conversation on—why should they not have the right to do this automatically and why shouldn’t they be controlling that, rather than a Minister of the Crown controlling it? I think that strikes to the core of what this is about: this is about centralisation and taking control and ownership away from councils—investing it, actually, in the Government.

The second thing is clause 196, “Comprehensive review of water services legislation”. As the Minister in the chair noted before, there will be a five-yearly review after the establishment of this entity. We all understand when it’s going to take place, in 2024. Clause 196 requires that on the ninth anniversary—it ends on the 10th anniversary of the establishment date; i.e., the same day—there will be a comprehensive review of the water services legislation. Now, I cannot understand the logic of this.

If you do a formal review, even if it is a Minister doing it, rather than the councils—and I’m very keen to understand whether councils can initiate other reviews—even if the Minister does the five-year review, why would it be that you specify in a piece of legislation that you do it five years after that review? What is the logic of that? If you a review and decide that you need to make a change, why wouldn’t you make it flexible in the bill, along with using words such as “soon as practicable thereafter” of clause 195, that you implement legislative change? What is so compelling in the logic that you do a review and then you wait another five years—and I can see members on the other side nodding, going, “Yes, that makes sense.”

This is a piece of legislation that’s poorly drafted. There should be flexibility about when this takes place. It should be flexible—again, like clause 195, the councils should have the right to require that the legislations change, because if they really did have control, then they would be able to require this of the Minister. Rather than Labour thinking that the Minister should be telling everyone what to do, the council, if they really were the owners, would be telling the Minister what they want.

Just before I take the next call, can I just remind members that different members saying the same thing does not constitute new material—just as an observation.

Thank you very much, Mr Chair. I just want to build on what Mr Bayly was saying in his contribution, because it is interesting—there is a proposal for an interim review at five years. So I just want to drill down a bit deeper into that. What is the benchmarking where you come up with a five-year period for an interim review? Because, surely—and some of my Victoria University of Wellington public policy mates might also agree with me—the difficulties will come at the implementation stage. So why would you wait five years; why not have a review at the implementation stage yearly or bi-annually? You have the structures in place with the consumer forum and the regional representation group, then why wait nine years for a comprehensive review?

Well, we all know why it’s a nine-year wait: because we want everyone to swallow the dead rat and, then, maybe after nine years, it’s digested and it’s being excreted and they might have forgotten the foul taste of that dirty rat in their mouth. So I would say “Why wait five years? What is the benchmark for nine years for a comprehensive review?”

And to the Associate Minister, the Hon Kieran McAnulty, who spent a lot of time talking about his trip to every council in New Zealand and how he was going in to listen, and, finally, we get to ask the Associate Minister what did they actually say? Was it true when they said great guy, wrong party? And that’s what every council said when he went round. Because he knows, as much as everyone, this is a dead rat that he needs to swallow.

But let’s put it on the table and let’s ask the Minister if he’ll agree, tonight, to putting a clause in under the interim review or the comprehensive review. How about, in the review, if the ratepayers don’t like it after five years and nine years, we pull the pin? How about that? Because let’s remind ourselves, this Government said people could opt out. Remember that? The good old days. Until they got caught out and realised it was a legislative all-in. So why not have the ability in the review process that, if a council decides, maybe it could be by majority of the ratepayers—I know in Waimakariri they had 95 percent of ratepayers who wanted to opt out—maybe, if there’s a majority—

💬 Dr Duncan Webb: Five regions lodged consents in breach.

—they can opt out. I’d be interested to hear—well, and Duncan Webb makes a contribution. The guy who’s been silent, in his electorate of Christchurch Central, on three waters for the last year has now woken up. And let’s not forget, Garry Moore, the left-leaning former mayor of Christchurch, who was Duncan Webb’s campaign manager, resigned from the Labour Party because of three waters and went and wrote a letter to the editor in the Christchurch Press and said he’ll never be Duncan’s campaign manager again because of three waters. Now, he’s found his voice as the bill’s getting rammed through under urgency. Yeah, that’s right. And you know what they called that? A lion in Wellington and a lamb in the electorate. That’s exactly what they call that. Thank you, Mr Chair.

Just to clear a few matters up that have been raised, both Mr Bayly and Mr Doocey tried to traverse areas that were covered in great detail by the Minister earlier. There wasn’t a new question posed in that. However, Ms van Velden did ask a question regarding the Government policy statement (GPS) and the forums. I just wanted to reassure her that the GPS, the monitoring function, and the consumer forum all serve very different purposes, and she was conflating the purposes of all three.

I move, That the question be now put.

Thank you very much, Mr Chair. I want to have a discussion around clause 204, a clause that we haven’t discussed to date, in regards to the consumer engagement stocktake. I want to link back to a point that I raised earlier in regards to the Office of the Auditor-General. You’ll remember back in terms of quite a scathing report that the Office of the Auditor-General provided on the initial version of the bill in regards to concerns. The point that the Office of the Auditor-General raised in regards to clause 204 around consumer engagement stocktake is as follows, and I quote: “The bill does not currently clearly link the findings from the consumer engagement stocktake”—which is the clause we’re referring to—“with corresponding reporting requirements, such as the statement of intent. There are also some limitations in the accessibility of the mechanisms proposed for public reporting.”

The question that I have for the Minister is in regards to the issues raised by the Office of the Auditor-General—and I think rightfully so—around the linkage of clause 204 in terms of that engagement stocktake with the other provisions of the bill, noting that some of the other provisions don’t sit within the part which we’re discussing, but I thought this would be the appropriate time to raise it.

Does the Minister have confidence that the way in which the clause is now drafted in the bill deals with the issues that were raised by the Office of the Auditor-General in regards to that? That’s because, while the Minister in the chair, the Hon Kieran McAnulty, may not be aware, the Finance and Expenditure Committee did not have a process to get subsequent feedback in detail over and above the initial letter of concern that was raised by the Office of the Auditor-General on the bill. We simply got assurance from officials that that correspondence and dialogue had occurred, but we didn’t have that confirmation from the Minister, and that is the certainty that I’m seeking in that regard.

The other point that I just want to raise, and it’s a point that was raised by Minister Mahuta previously in the chair, was in regards to a comment around the timing of the five-year review process that we referred to there in clauses that were just raised by my friend and colleague Andrew Bayly in regards to the review period. But she noted an interesting comment, which was that the economic regulation is not going to come into force until 2027. That’s quite interesting in the context that while that bill is not a bill that’s currently on the Table or is a bill that I’ve had any oversight of—I’m sure members on the other side in Government will. But the Minister did make their comment in the conversation and the dialogue, so it does bring it within scope in terms of the conversation here.

So I’m seeking confirmation around the fact that, actually, is that the intent? Because that opens up quite an interesting perspective. Why would the economic regulation portion, which will follow in a subsequent bill, come in at a period so late in the piece, three years beyond where we would expect? What is the rationale when you link that back to this bill here? So two questions: one around the Officer of the Auditor-General around clause 204, and the second one is some clarification around the Minister’s comments around when the economic regulation aspect will come into force. Thanks, Minister.

I move, That the question be now put.

The question is that the Minister’s amendments to Part 6 set out on Supplementary Order Paper 306 be agreed to.

Simon Court’s amendments to Part 6 set out on Supplementary Order Paper 305 are ruled out of order as being contrary to a previous decision of the committee. The Hon Eugenie Sage’s amendment to Part 6 set out on Supplementary Order Paper 286 is ruled out of order as being contrary to a previous decision of the committee.

The question is that the Hon Eugenie Sage’s tabled amendment to Supplementary Order Paper 285 be agreed to.

Members, we’re about to vote on an amendment which is a proposal for entrenchment requiring a 60 percent majority for repeal or amendment of the entrenched provision. Under Standing Order 270, this proposal must be carried by that majority. Therefore, this amendment must be agreed by a 60 percent majority, which would be 72 members. The question is that the Hon Eugenie Sage’s amendment to insert new Subpart 4A into Part 6, set out on Supplementary Order Paper 285, be agreed to.