Water Services Entities Amendment Bill

I present a legislative statement on the Water Services Entities Amendment Bill.

💬 DEPUTY SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.

I move, That the Water Services Entities Amendment Bill be now read a first time. I nominate the Governance and Administration Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 27 July 2023 and that the committee have authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, on a Friday in a week in which there has been a sitting of the House, and outside the Wellington area, despite Standing Orders 193, 195, and 196.

I’m pleased to bring the Water Services Entities Amendment Bill to the House. The bill addresses and incorporates this Government’s decisions to refocus the water services reforms. It makes important changes to the Water Services Entities Act 2022 that reflect the feedback and concerns I have heard from communities and throughout my engagement with the local government sector.

New Zealand is facing a bill of up to $185 billion that councils themselves have said they can’t deal with alone. Water is a fundamental resource that sustains life, supports economic growth, and contributes to the overall quality of life for all New Zealanders. However, we cannot continue to overlook the significant issues our water services are faced with, including ageing infrastructure and the need for greater investment. The damage we have seen from severe weather events is a stark reminder that the resilience of our water system will continue to be tested. It is our responsibility to address these challenges head on and provide a robust framework that will ensure safe, affordable, and reliable drinking-water services for generations to come.

The Water Services Entities Amendment Bill aims to achieve these outcomes. Firstly, it will strengthen local voice in the delivery of water services by establishing 10 entities based on regional boundaries, allowing each entity to be able to address and respond to localised issues. This ensures guaranteed territorial authority representation from each council in the entity’s regional representative group. This will continue to be met with an equal number of mana whenua representatives. The bill also introduces a new mechanism for communities to express their views on the priorities for water services in the area. Local persons who have an interest in a water body in their entity will be able to present unique community priority statements to the entity’s regional representative group. Priority statements will be a valuable source of income for entities when setting their strategic direction, in addition to making decisions about infrastructure investment.

Secondly, the bill provides flexibility for the entities to take advantage of economies of scale by setting out a process for entities to merge voluntarily, and proposes shared services arrangements. The 10-entity model of reform does see a reduction in scale efficiencies, compared with a four-entity model. However, the cost per household will still remain lower than under the status quo system. A voluntary, locally led process will enable entities to merge if the regional representative group determines it is the right decision for the communities within the service area. This recognises that, in time, councils and communities in higher-cost regions may wish to see the benefits of further amalgamation in terms of greater investment, increased efficiencies and service standards, and lower charges. Similarly, enabling shared service arrangements between water services entities allows for a reduction in duplications of core services, provides for consistency of service provision, and brings down the overall cost of the arrangements. Efficiency gains are needed to keep water services affordable to consumers as entities take on more debt to upgrade and better provide these services. If scale efficiencies cannot be realised, the geographic communities most at risk of cost increases will be those in rural and provincial areas with relatively small and geographically dispersed populations.

Thirdly, the bill has entity-financing backstop arrangements and enables the establishment of a dedicated Water Services Entities Funding Agency, which, if required, would operate on a similar basis to the Local Government Funding Agency by pooling risk and achieving scale and market access benefits for entities. We want to ensure that all water services entities, large and small, have a range of funding opportunities and mechanisms needed to support the upgrade and maintenance of our water systems.

To action all these changes, the bill provides for a longer window for establishment of the entities, staggered between 1 July 2024 and 1 July 2026. The Northland and Auckland Water Services Entity, entity A, will be established first on 1 July 2024. The configuration of entity A’s boundaries do not change as a result of this bill, and it’s readiness to go live next year reflects that there is a significant amount of preparatory work, to support establishment, already completed and under way. Entity A will provide a useful model for the rest of the entities, as well as learning opportunities for continuous improvement as other entities are established. Councils will continue to have responsibility for water service delivery in their service areas until the establishment of the entity.

I also want to acknowledge the recent period of uncertainty for many councils, who are in the process of preparing their 2024-34 long-term plans. I understand the process for local government planning cycles is extensive and requires a long lead-in time. The decision to provide flexibility for establishment dates will mean that councils will have to include the provision of water services for up to a further two years in their long-term plans. This bill provides certainty for councils for the process of doing this.

In the process of considering changes to the water reforms, we considered many options, including alternatives put forward by Opposition parties. We considered those in good faith, but they did not stack up. There is a clear case for reform when we compare the financial aspects with the status quo. Councils will struggle to meet the costs required under the current 60:40 arrangement for Crown financial support following a disaster, and many will require ongoing support. This highlights the importance of having water service entities with the balance sheet capacity to better absorb these sorts of shocks, as well as entities that diversify natural risk hazards across multiple territorial authorities.

The Water Services Legislation Bill and Water Services Economic Efficiency and Consumer Protection Bill have been reported back to the House with constructive amendments to improve the legislation. Together with this final amendment bill, the legislative framework for the reforms will be complete. I’m proud to be part of a Government that is committed to ensuring the provision of safe and reliable drinking water at a price ratepayers can afford. I believe the reforms will improve our communities by tackling the ongoing threats to housing, health, and climate change. Every community should have access to safe, clean, and affordable water. I commend this bill to the House.

The question is that motion be agreed to.

Thank you very much, Mr Speaker. I rise to speak on the Water Services Entities Amendment Bill at its first reading. A reminder for those watching this conversation: this bill reflects the fourth bill in a long line of reforms undertaken by this Government in regards to three waters—a reform programme that has been broken from the start—and following the announcement of National’s “Local Water Done Well” policy on 25 February, the Government subsequently made an announcement of their reset on 13 April, which forms the basis for these significant changes. This Government has been working on this three waters reform programme for a very long time. Isn’t it ironic that, following the release of the Opposition’s policy on how to deal with water in this country, the Government reflects on their model and makes such significant changes!

The concept that we heard from the first three bills from this Government reflected the fact that only a four-entity model would be the model that would deliver the outcomes required under Labour’s three waters reform. However, subsequently to that, they have now decided to throw that up in the air and move to 10 entities—a model which is significantly different to the reform programme which they said was the only option in order to achieve the benefits that they were desiring. This goes to the heart of a Government that is continually backpedalling on a piece of reform that has significant implications for all New Zealanders, not only for today but going forward for decades to come. The Minister, the Hon Kieran McAnulty, has introduced huge changes, including the establishment, also, of a new funding body, on the fly, and is expecting to pass them in a shortened report-back process, reinforcing the sloppy nature in which this law, and these laws that have been passed already, has become quite accustomed to under this Government.

Yet, despite all of this process and all of the opposition across this country, Labour simply does not get it, because they never bothered to listen to the feedback that was provided by the majority of New Zealanders across this country. The changes that this bill will bring into account are not only in regards to increasing the number of entities from four to 10 but also look to kick for touch the implementation date of this Government’s reform by two years. This in itself is an indication that the Government are not confident in their own legislation and their own reform. Two more years of chaotic uncertainty will result, and the ones that will pay the price of this extension and kicking for touch of reform that is required in order to improve infrastructure of water in this country will fall on our local communities. The pressure will also fall on our local government entities, which are already under significant pressure and strain because of the chaotic nature of this three waters reform. Staff turnover is considerable. Staff are looking for other opportunities. They are not confident that this Government’s reform programme will deliver the improvements needed for this country. There have been multiple opportunities, as we traverse this journey, where the Government could have taken on board feedback, listened to our local communities, and made the changes necessary that could have avoided where we are today.

The Government has also included, in regards to this amendment bill, changes in relation to Te Mana o te Wai statements. One will remember the conversations that were had in regards to these statements, which, of course, are only able to be prepared and input into by members of mana whenua, in regards to three waters infrastructure that crosses over land and, in particular, private land. The feedback on other legislation that has been tabled, in regards to this bill on the Table, has said that that is not right, that is not fair, and that is not appropriate—that only one group has the ability to input into those statements. So, as a result of that feedback, the Minister has decided, in his wisdom, instead of modifying the Te Mana o te Wai statement process and allowing all stakeholders to have a voice, to be able to input into those statements—all New Zealanders—he has instead added a new statement, called a community priority statement. And, as is often the case, what it says on the tin is not what is inside the tin. When you have to add the words “priority statement” to the title, it gives you a little bit of a sign of what will follow!

When you dig into the legislation and you look at the wording in regards to these new community priority statements for water services, you see, under new section 145C, inserted by clause 16 of the bill, where it articulates what regional representatives groups must or may do in response to these statements, subsection (3) says “The group may consider”—may consider—“the statement in preparing, issuing, or reviewing the group’s statement of strategic and performance expectations”. Subsection (4): “The group may consider the statement as part of any comments [in regards to these entities]”. The key point of difference in regards to this is that, when you look at the wording in the legislation under section 131, which refers to Te Mana o te Wai statements, regional representative groups must take into account the feedback within those statements.

There is a significant difference between the words “must” and “may”, and when you try and prioritise in a hierarchy those two words, it is very clear that the community priority statements are second class in regards to the hierarchy that they sit in in relation to Te Mana o te Wai statements. What does that say in regards to all members of our communities’ being able to input into the process to ensure that water infrastructure is appropriate for our communities? Well, I will leave that for New Zealanders to assess for themselves, but the Minister has had ample opportunity to reflect and improve these statements, and the opportunity has not been taken. Actually, some will assess that the situation has been made worse—more complex than what the current state of play is at the moment. The select committee process, which, it has already been articulated, will have a shortened report-back date, will not allow and provide adequate review time or public consultation in regards to that.

I, lastly, want to refer to a new aspect in this bill, which is in regards to establishing a water services funding agency. One would expect, after the many years of planning and review of this legislation, that we wouldn’t at this late stage, on 22 June, be introducing a new funding mechanism in regards to enabling this reform programme. This has been made up on the hoof and reinforces legislation which continues to be destined for failure. National opposes this bill.

Debate interrupted.