Local Government (Water Services Preliminary Arrangements) Bill

Members, we come now to Part 3. This is the debate on clauses 49 to 59, “Establishing water services council-controlled organisations and joint local government arrangements”. The question is that Part 3 stand part.

Thank you, Mr Chair. The purpose of this part is to support councils in terms of setting up water service council-controlled organisations and joint local government arrangements as part of our Local Water Done Well approach. By supporting councils to set up joint organisations between councils, there’s a faster consultation, a streamlined consultation process that’s been put in place. It is about making that process easier and more efficient for local government.

Thank you to the Minister, the Hon Simeon Brown, for that brief but nevertheless useful introduction to this part. It’s an interesting part because what it does, in some of the clauses, is set up alternative requirements for consultation. Now, there’s a whole lot of consultation requirements embedded in the Local Government Act 2002, and they’re designed to be there to make sure that local people do get a say in what’s going on locally. They’ve been around for a long time; they’re pretty tried and tested. I guess local governments spend a lot of time consulting, and for good reason, but what this part does is actually set out alternative consultation and decision-making requirements.

Part of that is obviously because, where you’ve got two or more existing local government entities joining together in order to provide a water services entity, that’s going to have a different decision-making structure, and there are going to be needs to do that. But the interesting bit, to me, is the alternative consultation processes, and it begs the question: what is wrong with the existing consultation processes within local government? Why did there need to be an alternative process instead of just the standard process that local bodies are already well versed in using? What’s the particular need either to shortcut it—because I notice that in clause 52(2) a territorial authority is only required to take consultation once. It means that consultation is being reduced for the setting up of the water services entities. That’s interesting, because that’s a reduction in democratic participation, and we know that a lot of what this Government has talked about has been the need for bottom-up organisation, and it’s been the need for localism—for decisions to be taken at the most local level possible—but this alternative consultation seems to run against that.

I’m taking it that there is good reason for doing it this way, but I think we owe it to the citizens of New Zealand and to the ratepayers of New Zealand, to those who will be having to manage the setting up of these water services entities, as to why democratic participation is being reduced. Not at this level. We’ve had our democratic participation here, through the standard parliamentary processes and the select committee processes, shortish though they were, but they were still there. What also needs to happen—because we are regulating for local government areas. Why is democratic participation being reduced at that level? It will certainly make things easier for local government entities, and it will make things easier as these water services entities are being set up, but is that appropriate?

So I would like to hear from the Minister not just what this part of the bill does—we know that—I want to know why this bill has been set up in this fashion. I want to hear the Minister’s reasons for going down this path of reducing democratic accountability.

Thank you, Mr Chair. The member the Hon Dr Deborah Russell may wish to look at clause 52(3), which says, “Despite subsection (2), a territorial authority may decide to undertake further consultation before making the decision.” There is no limit. We’re not putting any limits on what territorial authorities may wish to do.

Look, that’s a “may”—that’s a “may”—and local government entities may well take that path, and they could engage in more consultation. The fact is that by saying consultation is only done once, it does reduce local participation. In fact, a local government entity could overrule what the people in the area that it administers want. They may want more than one round of consultation, but a local government entity could rely on clause 52(2) and say it’s only required to do it once and just leave it at that. It does create a capacity here for democratic participation to be reduced, and to be reduced by local government entities. Saying that another clause has a “may” doesn’t answer that question as to why reduce the capacity for democratic participation. I would really like the Minister to actually address that issue instead of just brushing it off.

Thank you, Mr Chair. In the previous part, I had a question for the Minister around the use of the Infrastructure Funding and Financing Act 2020 and the arrangement for the application of those funding and financing rules also apply to this part. In Part 3, the purpose, as the Minister has helpfully said, it sets up the decision-making requirements that will apply to territorial authorities when making decisions under this part, but I want to ask him whether it is this part which does not deal specifically with councils who are proposing to use the levy under the Infrastructure Funding and Financing Act 2020 and whether that, in fact, then means that an arrangement where they do propose to use it can be brought into this part.

I’m asking that question because there are specific references right throughout Part 3 of the Minister’s bill before the committee today on the inserted words “a joint local government arrangement under section 137 of the [Local Government Act 2002]”, and section 137 of the original Act specifically sets out a subsection—it’s subsection (4A)—which says that “An arrangement entered into by a local government organisation is not a joint arrangement [if they are] proposing the use of a levy under the Infrastructure Funding and Financing Act 2020 to support the construction of eligible infrastructure:” only for that reason. I want to ask him whether that is intended to also apply to Part 3 in his proposed bill, or whether it only applies to joint local government arrangements and so, therefore, not to water services council-controlled organisations.

Thank you very much, Mr Chair; I appreciate that. My question to the Minister refers to Part 3, clause 58, the “Exemption from cost-effectiveness review”. I found this really interesting, because, of course, what the Minister has said throughout is he claims that the rationale behind these changes is around cost-effectiveness. He has made many claims in justifying this approach, the most recent of which was made just the other day during the announcement around the changes to local government financing, increasing the debt caps. He’s, basically, said that there does not need to be as much work done as was outlined by the Department of Internal Affairs in the previous modelling, which stated that it was up to $185 billion.

I note that in the regulatory impact statement (RIS) for this, it outlines that some alternative modelling has been done, but for the purposes of the RIS, they are working on the basis of at least $120 billion, which, of course, was always the figure—$120 billion up to $185 billion, which is interesting because, during the announcement for the funding of this, where they claimed that it was going to be more cost-effective, they were working on the basis in their claim that it would be significantly less than that. So there’s a discrepancy there between the claims made in the announcement and the figures that the RIS is based on—the figures provided by the department.

Now, when you have serious questions around this, that they are making claims around cost-effectiveness based on an assumption that significantly lower levels of investment will be required, and yet this clause exempts councils from a cost-effectiveness review—now, the Minister may stand up and he may say, “Oh, well, they still can. They don’t have to, but they still might.” But what we’ve already seen under the changes made by this Government is it’s resulting in the potential for a perverse outcome. And if you look at Māori wards, it’s the perfect example. It’s very similar to what I fear may come from what’s proposed in this clause.

Councils all around the country are currently considering whether or not to hold a referendum on whether to keep Māori wards or whether to scrap them. I know from councils that I’ve spoken to that their council actually, obviously, supported the idea of Māori wards, but now they are faced with the reality of voting for a referendum and, therefore, imposing a cost on their ratepayers, and so they’re thinking about scrapping it altogether—a perverse outcome. It’s totally against the wishes of their community and totally against the views of the councillors, but because they simply can’t afford it, they’re thinking about getting rid of it. So why would a council voluntarily do something that will use resources and impose further work on their workers, on their officials, if they don’t have to?

I accept that I am anticipating that that is the Minister’s response, but given it was a response to a pretty reasonable question from Dr Deborah Russell, I’m anticipating that it would likely be that. Let’s just assume that it’s just not going to happen. Why would councils be exempt from a cost-effectiveness review when that is the entire rationale behind this proposal? Perhaps it’s because, in doing so, it might reveal to those councils and the ratepayers that it is actually not all that cost-effective after all. I say that because, subsequent to the announcement that was made last week about financing changes, Standard & Poor’s, the credit rating agency—the agency which has assessed this work and assessed alternative proposals for water reform—have said that this is likely going to lead to significant increases in the cost of borrowing, which is of course what we have been saying all along. And that goes to the claim of it being cost-effective, yet again.

When you have a bill here in front of us that the Government claims is going to be cheaper for ratepayers, have not provided any evidence to back that up—they have claimed that there’s going to be a need for significantly less levels of investment, which in itself is a flawed claim, because what they have based that claim on is that it is on council’s long-term plans. The Minister knows that councils haven’t accounted for the 30 years of upgrading and maintaining that is required and was the scope of the original assessment and rationale for water reform in the first place because long-term plans only go out 10 years.

They also made the claim that their figures are more accurate because it was “bottom up”. I think deliberately washing over the fact that the assessment that came to a figure of up to $185 billion was derived from the council’s own numbers themselves, because they had already provided it. But they were required to do so over a 30-year period to give us an accurate assessment. Now, all of a sudden, they’re only looking at figures that come from long-term plans, knowing full well that those figures are 10 years and will not give a true and accurate reflection moving forward. So, if you look at those two things and the fact that Standard & Poor’s have cast serious doubt over affordability of councils, why on earth would the Minister then exempt councils from a cost-effectiveness review?

Now, if you link that question to that which remains unanswered posed by Dr Deborah Russell around consultation, it’s possible that ratepayers will be asked to consider something without the facts, and at one opportunity. It’s possible, under the way that things are written here, that they consult at the start, they then go and carry on and talk to other councils. Yes, they may consult more—they might not because of the additional costs that that would bring to the council—and then, by not having a cost-effectiveness review, not give the people making the decisions or the people who have voted those people in the information that they need, and I want to know why.

I suspect it’s because the numbers don’t add up. They know they don’t add up. This is, ultimately, a political solution to an issue that they created. They want to wash their hands of it, hand it back to councils, and then when it inevitably turns sour, say, “Well, that’s their fault for not sorting themselves out.” And I wonder if that’s the reason why councils are exempt from a cost-effectiveness review, when you consider that this is a massive change to the way local government works, and for some weird reason they’re exempt.

Thank you, Mr Chair. I actually just want to draw the Minister’s attention around the consultation. We still need to get some clarification from the Minister regarding clause 52(2) around “consultation once” and its relationship with subclause (3) around “may decide to undertake further consultation”.

Now, what I want to talk about, in the context of subclause (4), is when the territorial authority decides to take on the further consultation, I want to check with the Minister what is the rationale that a territorial authority doesn’t need to consider consulting more than once? He says “may”, but then if it does decide to consult more than once, only then they have to consider subclause (4). I would assume it would be a natural and reasonable order for a territorial authority to first take into consideration what is considered in subclause (4) before deciding if the consultation is sufficient.

I particularly want to draw attention to what it says in subclause (4)(a), which is “the requirement in section 78(1) of the [Local Government Act]”, which is around the need and understanding of hearing from the community views. Section 78(1) of the Local Government Act states “A local authority must, in the course of its decision-making process in relation to a matter, give consideration to the views and preferences of persons likely to be affected by, or to have an interest in, the matter.” I would assume that that would have been the logical order first—that they would consult and they would go, “On balance, based on subclause (4), it’s not sufficient. Let’s consult again.” As opposed to, “We’ll consult once. We don’t need to do it again, but if we do want to do it, let’s consider have we thought about all of the views?”

I also want to mention this in the context of the Amendment Paper 65 that has been put forward by the Minister, where the Minister has made changes to subclause (2) and has created two separate sections of that—(2) and (2A). Now, (2A) is particularly interesting, where it says, “A territorial authority that makes a decision described in subsection (1)(a)”—i.e., a water services council-controlled organisation—“is not required to undertake any further consultation before making a decision described in subsection (1)(b).” In terms of the wording, I also want to get clarification from the Minister that it is not to do with a water service council-controlled organisation transitioning into a joint local government arrangement under section 137 of the Local Government Act. Surely, as we see in clause 54(1)(e), “if the proposal involves establishing, joining, or amending … or a joint local government arrangement” that does require consultation because it’s one of the required pieces of information for consultation.

I want to get two clarifications from the Minister. One of them is what is the rationale to decide for a territorial authority to not decide to further consult in the context of clause 52(4), as opposed to consider clause 52(4) first before making a decision whether they need further consultation? Based on the Amendment Paper that the Minister has put forward, and this is Amendment Paper 65, changes to clause 52(2), and also specifically (2A), that it is not implying that a water services council-controlled organisation transitioning into joint control doesn’t require any further consultation which would then contradict clause 54(1)(e)?

Thank you, Mr Chair. The questions in relation to consultation can be answered, as this clarifies that consultation is only required once. Councils are currently unsure about how much consultation is required—the Local Government Act isn’t clear about this. There are no specific requirements in the Local Government Act 2002 about how many times consultation must occur. Councils have discretion about this, and so this is a clarification. I think that answers most of the questions that have been asked in relation to consultation.

In relation to the Hon Kieran McAnulty’s question in regards to the exemption to the cost-effectiveness review, the elements that would be requiring the cost-effectiveness review are being already undertaken as part of the water service delivery plan.

Look, I’d just like to thank the Minister for that answer, because that does really clarify why you only have that requirement to only do it once with the substantive reason behind it. That’s very, very helpful, thank you, Minister, and I’m sure that will help in this process.

There’s an interesting thing about this bill in that two local entities, if you like, kind of have their own separate bits of the bill. Now, we’ll be coming in due course to Part 4, which deals with Watercare up in Auckland, and so, obviously, we’ll discuss that in detail then. But the interesting thing is that in Part 3 of the bill we’ve got clause 49A, which says that a reference to a territorial authority includes Greater Wellington Regional Council, and carrying on through the part there are references to Greater Wellington Regional Council and what looks like the making of special rules for Greater Wellington Regional Council.

Now, again, there’ll be a good reason for that as to why that might not fit under the structure of just the other territorial authorities in the legislation. I think, for the benefit of Wellington ratepayers, for the benefit of the entities that don’t have their own special rules, it would be good to hear from the Minister why there is this separate set of rules for Greater Wellington Regional Council.

I’ve answered this question in a previous part. Greater Wellington Regional Council is the only regional council which is a water supplier and so, therefore, is covered; all other regional councils are not.

Thank you, Mr Chair. A couple of, really, clarification questions. The first one relates to this consultation discussion that we’ve been having, and the Minister of Local Government has told us that the Local Government Act 2002 (LGA) is unclear as to how much balancing councils have to do with consultation, so the purpose of these changes are to make it clear that it only has to be once—the mandatory is once only. I was wondering if the Minister is also thinking, then, of amending the LGA to make it clear for all consultations under that Act.

I also wanted to go to back to clause 49, which is the purpose of the part, Part 3, “Establishing water services council-controlled organisations and joint local government arrangements”. Amendment Paper (AP) 65 in the Minister’s name, which my colleague referred to, amends clause 49. Basically, the main change seems to be that the wording in the bill, as we have it reported back from the Finance and Expenditure Committee, is that on consultation—well, it says, “(a) to set out alternative consultation and decision-making requirements that territorial authorities can use”—so that’s a “can”. Then, in the AP, it changes the wording to specify “may” at clause 49(a)(i), and then “must” at paragraphs (ii) and (iii). So while the wording was less specific, less directive, in the version of the bill we’ve got, it becomes clearer in the Amendment Paper. I’m wondering if the Minister can comment on why that change is made—and if it is, just to be very clear about when things must happen and when things may happen.

Also, another point, the Hon Kieran McAnulty was talking about clause 58 and the exemption from the cost-effectiveness review. The Minister’s, in part, answered that question, but then we have, at clause 59, titled “Repeal of section 58”: “Section 58 and this section are repealed on the date that is five years after the section comes into force.” So my question is, really: is the intent of this that section 17A of the Local Government Act that requires that cost-benefit analysis—does that then come into being, or is the idea that the new arrangements will be so far through by that stage that they won’t need a review anyway? It’s just pointless talking about reviews, because you imagine that all the different bodies will be established by that point. So the question there is around the purpose of clause 59 and why it repeals section 58, in that relationship to section 17A of the Local Government Act.

Thank you, Mr Chair. A simple question following on from my previous question to the Minister of Local Government, which I don’t believe was answered. This question is: do the provisions that currently exist in the Local Government Act, section 137, still apply to the new entity—well, the entities that would be otherwise covered by the Minister’s proposals in Part 4 of this Act?

With specific reference, I want him to answer for the committee whether a water entity that comes under these new provisions would still continue to be legally responsible for providing the water services and retain control over the following matters: (1) the pricing of water services; and (2) the development of policy related to water services. I’m asking that specifically because it is set out in section 137 at subsection (4), and it doesn’t appear that those protections necessarily give an effect in what he is proposing here, even though there is an inclusion right throughout his proposed legislation which creates a reference to that section 137. It does read as an either/or—that either these entities will be subject to section 137 in the Local Government Act 2002 or they will be water services council-controlled organisations (WSCCOs) under this new part that he is proposing.

I want to make sure that it’s not his intention to exclude those WSCCOs, which are now provided for in his legislation, from those protections which were envisioned under the Local Government Act 2002.

Thank you very much. A pretty simple question—I appreciated the Minister of Local Government’s response, I just didn’t hear the end of it. We’ve had some issues with that mike before, and I just wonder if he wouldn’t mind just repeating that answer to my question so that will inform my next responses.

Thank you, Mr Chair. While we wait for the Minister of Local Government’s response, I also have quite a short question. This is to do with this whole section which provides alternative requirements which is stated in clause 50(1). I’m kind of curious: it says it doesn’t need to comply with the Local Government Act, but when we’re looking at clause 54, on information required for consultation, in subclause (3), it talks about what is publicly available.

I just want some clarification from the Minister that, when we’re talking about public availability and the fact that this whole section provides a little carve-out, what is in the Local Government Act that inadvertently is no longer applicable to this section? The one example I can think of here, and the key example, is—considering it isn’t mentioned—what is the requirement around the territorial authorities to give sufficient time to the community, and to the public, when it does use the alternative requirement for consultation? Without looking at anything in the Local Government Act 2002, there’s nothing in clause 54 of this bill, or related clauses in Part 3, that gives any confidence to sufficient time given for the consultation.

If the Minister wouldn’t mind, could he please identify a clause within Part 3 that will give the committee confidence that sufficient time will still need to be given for consultation, particularly as we mentioned that territorial authorities may only need to consult once. Which particular clause talks about duration of consultation? Thank you.

This section is about supporting councils to put in place these entities quickly. It is about ensuring there’s a streamlined process.

In reply to the Hon Rachel Brooking, she asked if the Local Government Act should be amended for all consultation—well, the scope of this bill is on water services, and councils are looking to be able to move quickly. That’s what this does.

In relation to the question about joint local government arrangements under section 137 of the Local Government Act 2002 and Infrastructure Funding and Financing Act, this part of the bill applies to joint local government arrangements relating to water services, and that is the scope, again, here, that we are dealing with.

In answer to the Hon Kieran McAnulty’s question, which was in relation to clause 58, the matters that are covered in the cost-effectiveness review are also covered in the water service delivery plan.

I’m now a little confused by two things the Minister has said. I had to press before I got an answer as to why territorial authorities were only required to take consultation once. Eventually, after pressing for an answer, I got the response that, in actual fact, some of the consultation requirements in the Local Government Act are unclear. All right, so this was intended to provide a bit of clarity. But in the response given just now about why we had some of these consultation arrangements, the Minister said it was in order to streamline the process for local government entities.

Now, that is a somewhat different answer, so I just want the Minister to clarify—streamlining enterprise: we’re sort of paring it down, we’re making it minimal, we’re making it easy to get through, versus clarifying the requirements of the Local Government Act. I would like the Minister—if he could, please—just to reconcile those two explanations that he’s given, because they do actually pull against each other slightly and I think we deserve a little better than that.

Kia orana, Mr Chair, thank you. I have a few questions for the Minister that do relate to clause 52, around consultation, and also clause 53. My colleague the Hon Dr Deborah Russell has indicated some surprise from the Minister’s response around streamlining. I also heard the Minister’s response to indicate that the reason as to why clause 52 was there was to enable things to happen quickly.

Now, that might be so, but it is still important that local government—which is reflective of all of our communities of interest and certainly in the mighty Manawatū in Palmerston North—

CHAIRPERSON (Teanau Tuiono): Great town.

Thank you, sir. I’m concerned about that and how that aligns with subclause (2) and (3). What we’ve been hearing in this committee stage is that the Minister is saying, “Well, there is actually only a requirement that councils would be required to undertake consultation once. However, subclause (3) does provide an option for further consultation.” My question to the Minister is: if he is suggesting that the intent is around streamlining this process and enabling things to happen more quickly, does he foreshadow that, actually, subclause (3) is likely, then, to not be engaged by councils? Or is his desire that subclause (3) is not likely to be engaged because it would undermine either the streamlining aspect or, indeed, trying to move at haste?

I wonder whether the Minister has thought about—when it comes to within clause 52(2)—just actually indicating why it can’t just read then that the territorial authority is required to undertake consultation “at least” once? If that was the case, then, actually, it still leaves the next subclause, (3), open to a territorial authority to engage. What we’re hearing the Minister say to the committee is, “Actually, no, the purposes of these changes in this clause is to streamline and to make things happen quickly.” Well, Minister, I’d be interested to hear your thoughts on whether you’re open to actually amending subclause (2) so that it indicates, actually, that, yes, the effect is still the same in that clause, but, actually, consultation would only happen at least once.

My second question is around subclause (4)(c), and this is with regard to the nature and significance of the decision. Now, those involved in local government will know that, from time to time, there is a special process that is engaged, and that is the special consultative process. That’s really where there are significant decisions that are taken by our community decision makers. Such is the significance that there is, effectively, not an additional layer but an additional opportunity.

I’m interested to hear from the Minister: where in this process does the special consultative process sit? I note that there is reference to subclause (5) that indicates that—it does reference the relevant council’s significance and engagement policy, and councils are required to adopt those. But where does the special consultative process actually sit within this whole area of consultation? It might be that that aspect is, in essence, triggered every single time that there is a decision to be taken around the provision of water services. Certainly, in my experience around a council table for more than a decade, when it comes to the delivery and provision and access to water services and other key bits of infrastructure, that absolutely would meet the criteria for engagement of a special consultative process.

Now, I know that there are aspects that lend itself to where a council may actually consult as part of a long-term plan process—and, in those regards, you don’t need to engage the special consultative process—but my question is to the Minister: firstly, why can he not just amend subclause (2) so that it’s actually just indicating that there needs to be consultation but it just needs to happen on “at least one” occasion—which leaves it open to a council to then turn its mind to any further consultation—rather than actually saying, “Well, you need to consult once.”, but his view as Minister is that we need to streamline and quicken this process? That is not going to incentivise councils to turn their mind to subclause (3), which is the intent. I’d be interested in the Minister’s response to those two questions, please.

Thank you, Mr Chair. The point’s been made a number of times around consultation. The legislation is very clear in relation to clarifying that the territorial authority must consult once, but they may decide to undertake further consultation. That is incredibly clear. That is the clarification that councils requested, and that is what is being provided in this legislation.

Thank you, Mr Chair. Well, here it is. I have asked the Minister twice to address questions, to allay the fears of members on this side of the House that his intention here is to make it easier and simpler for councils to privatise their water assets and sell them out of local body ownership without appropriate consultation.

He has answered the questions put by my colleagues, on consultation, but he has not addressed the second leg of his own part, clause 51, which says “decision-making requirements”. The decision-making requirements that he is proposing to change are set out in section 137 of the Local Government Act 2002, and, on those decision-making requirements, which I have asked him to tell New Zealanders that he is not changing, there are three important points here.

One is that councils cannot create new entities under his legislation so that they are not legally responsible anymore for the provision of water services. Under his clause 51, councils can, if they join up with another council, propose that they are no longer responsible for the provision of water services for people in the area because the provisions in section 137 do not apply to them.

The second one is that they are not required to retain control of water pricing, because, if they join up with a buddy down the road, they do not have to be subject to the provisions in section 137, where they must retain public rights to consult on and then be responsible for the pricing of water. So consumers have no guarantees that their councillors and their elected representatives or those that they appoint to council-controlled organisations (CCOs) will be accountable for the pricing of their water services going forward.

The third most important protection set out in that section 137 of the Local Government Act is that currently councils who enter into these relationships are required to retain the ownership of the infrastructure assets that people in their cities and their regions have built up over generations. People back 100 years ago were paying their local council rates to own these water infrastructure assets and there is no requirement under his legislation that they would be retained in council ownership. If you join up with a buddy down the road, you can sell them off, because the provisions under section 137 will not apply to you.

This is a really important point for the Minister to explain, and I have put it to him that the provisions under section 137 read currently like an either/or scenario, and I’d like that—because he has added in the ability for joint local government arrangements to be read as if, in his new legislation, they were CCOs. But we know in this Chamber that CCOs have an added layer of protection. They must act in accordance with the wishes of the governing body. They are accountable to locally elected councillors. They are accountable to the people who allow them to govern their water assets. Under this kind of arrangement, it is easier, even with a sped-up consultative process that the Minister has been answering on, to make decisions which require local people to accept that their water infrastructure assets that they have built up over generations will be sold off if they join one of these special arrangements between councils. I would like the Minister’s answers on that. He has not answered three questions now on it.

I find it ironic that the Opposition has become the defender of wanting to maintain ownership, and welcome them to the party, because that is exactly where the Government is at. That is what this Government is delivering is actually restoring council ownership. Welcome back into the tent. We thank you that you have finally rejected the position that you’ve taken for the last six years.

In terms of clause 51, the “Alternative requirement … (1) This section applies if a territorial authority is deciding whether or not to establish, join, or amend (a) a water services council-controlled organisation; or (b) a joint local government arrangement under section 137 … (2) In the course of that decision-making process, the territorial authority (a) must identify both of the following 2 options (i) remaining with the existing approach for delivering water services; and (ii) joining, forming, or amending (as the case may be) the [water services council-controlled organisation] or the joint local government arrangement”. This bill doesn’t affect what is provided in section 137 of the Local Government Act—that continues, unaffected and unaltered. This is about the consultation requirements, not in relation to the requirements in section 137.

Thank you, Mr Chair. Can I invite the Minister of Local Government to the earlier question that I did pose around the special consultative process and how that relates to matters. I’d be obliged if he was able to do so.

I did signal that I had a question in relation to clause 53, and that’s around the “Alternative requirement: consultation on amendment to [a] long-term plan”. As I’m sure we all know, when a long-term plan is going through a consultation process, it carries a little bit more weight in terms of what it can and can’t do. However, when I read through the suggested change that’s come through from the Finance and Expenditure Committee in that first subclause, it talks about the amendment to a long-term plan for the purpose of establishing, joining, or amending, or for a joint local government arrangement under section 137 of the Local Government Act (LGA), which the Minister himself has just cited. If that is the case, then “the authority is not required to consult on the amendment if”—and then we move on.

Now, my question is: is it possible for a council or an authority to consult, for example, on the establishment of a council-controlled organisation but, through that process, land somewhere else, such as a preference for a joint local government arrangement under section 137? The way that the clause is currently worded, it could be possible for a council to consult in one area if it chooses not to consult in a broad term but actually land in an area there where it may not have consulted. When I read this clause, that is quite permissive, and it wouldn’t require any further consideration of a further form of consultation under subclause (1)(a).

When you look at paragraph (b), Minister, it says that, actually, a council could do that if it was satisfied that the community has a good understanding of the implications of the proposal. Now, if what was being consulted on as a proposal was different to the outcome that the council actually landed on, is it not that that clause then doesn’t require any further consultation that might follow? And then, following on, that, actually, it’s satisfied that it understands its community’s views on the proposal?

Earlier, there has been reference to section 78(1) of the LGA. Now, that is contained specifically in clause 52(4)(a) of this bill. It is referenced there because the council must be satisfied that section 78(1) of the LGA has been met in terms of deciding whether or not to follow any further consultation. That is not referenced when it comes to clause 53(1)(c); it simply states that the council or the authority needs to be “satisfied that it understands its community’s views on the proposal.” So there is an inconsistency here between the two clauses. One is saying that the council needs to turn its mind to section 78(1) under the LGA; clause 53 is saying, well, it doesn’t need to do that—it simply needs to be satisfied.

So my question to the Minister is: why is there an inconsistency between clauses 52 and 53, where section 78(1) of the LGA is engaged in one but it’s not engaged in the other? I think that alongside the suggestion of the possibility of a council consulting on one particular proposal but landing somewhere else, perhaps if the form of consultation is broad, I can understand how that could be fine, but in a circumstance where the council might consult on establishing or joining or amending a council-controlled organisation, as opposed to joining the joint arrangement, I’d be interested in the Minister’s thoughts—well, an answer on both of those, please.

There have been a number of questions in regards to consultation, many of which I have already answered. In relation to the question around special consultative procedures, the special consultative procedure is not required under provisions in the bill. Under the Local Government Act, there are only a few occasions when the special consultative procedure must be used. It is usually up to councils to decide how to consult, using the principles of consultation in section 82 of the Local Government Act 2002.

I move, That debate on this question now close.

Thank you very much, Mr Chair. I have to say that the Minister’s response to the question from Arena Williams was pretty disappointing. Instead of actually allaying the fears that not just this side of the Chamber has but many New Zealanders have around what protections are in place to prevent the privatisation of water services assets, he decided to make a glib political comment.

Let’s get straight to the point. What protections are there in place here? If a council-controlled organisation or alternative arrangement is established and they get into financial difficulty, what is stopping them from selling them off? It is a legitimate fear and it is a fair question. If there are protections in place and if this Government was serious about preventing that happening, it should be pretty easy for the Minister to stand up and address that. If you look at what was in place before this Government repealed it, that was modelled on what was happening in Scotland, which has protections.

Many of the things that this Government is doing, they’ve signalled that they wish to emulate what is happening in England—like housing, for example, with housing associations. We know that that was a disaster and we know that many of the social houses were sold off in England under that model. We also know that, in England, many of their water services were privatised and it has been an absolute disaster for that country and the communities that it services. Either the work hasn’t been done or the charges have been unaffordable, and, of course, that is the thing that we are trying to avoid.

It should be pretty simple. The Minister should be able to just get up and reassure the committee and the people of New Zealand that there are protections here that would prevent them. What I hope he won’t do is stand up and say, “Well, that’s a matter for the councils.”, because quite often in many of the questions that we have posed to this Minister at various committee stages that revolved around this, that has been the response or he’s just chosen not to answer. He’s just sat down and stayed down and thought, “Oh well, eventually time will run out.” He proved to be correct and he hasn’t had to answer those questions.

I hope that he takes this one seriously and doesn’t try and follow what he did with Arena Williams’ question, because there will be a lot of people that would be concerned if there aren’t protections in place. We’ve heard the finance Minister stand up today and yet again hint that they’re going to sell Kiwibank. Well, is this any different? Of course, it’s not actually good enough when the Minister is in the Chamber talking to the bill that’s in front of us now to say, “Oh, well, that would be a matter for the councils.” when he could address it and sort it out in this bill. So that’s my response to that which he gave to Arena Williams.

My next comment is in regard to the response that he gave to me and my question around clause 58. I appreciate that he answered again. I think it was a mix of the mike and what appears to be my rapidly deteriorating hearing—I’ll have to get that sorted out—but we got there eventually. Now, it was interesting that he indicated that councils will be required to do so as part of their delivery plans, but what I found interesting in here—that’s outlined in clause 58—is that it gives a few options as to what would trigger this exemption: “deciding whether or not to establish, join, or amend”—so just as they are; “whether or not to establish, join, or amend a joint local government arrangement under section 137”; or “has [already] established, joined, or amended”—there are two options there. So deciding whether to or not—they might; they might not. They might stay where they are.

Obviously, that’ll be outlined in the plan, but we can all see how this might work. They originally do an assessment, and with the uncertainties around the finances here, there have been credit rating agencies casting doubt over it. There’s serious doubt over their assumptions around the level of work. If councils are working on that basis and they come to a conclusion and that’s included in the delivery plan, but then further light is shone on the situation and further information comes out, they’ve already done that work. They’ve already satisfied that, but they’re exempt from a cost-effectiveness review, and so I think that needs to be clarified. I know my colleague Rachel Brooking mentioned it, but I don’t think it was addressed.

Then we’ve got clause 59. Clause 59 says that all that stuff that we’ve just talked about, “Don’t worry about it. In five years, it’s all good.” Well, if it’s all good in five years, why not now? I don’t quite get it. Why is there an exemption now because it’s included in the delivery plans, but not later, when new information might come out, when circumstances might change, when the leadership of the council and those that are elected to council to assess things and make decisions on behalf of their communities might actually take a different view? You’ve got two scenarios there. You’ve got one where the situation has changed and it looks like, if it’s after five years—or even under section 58—they’ve complied; they don’t have to do another one. Or the situation hasn’t changed but they’ve got a new council with a differing view. They don’t have to do a cost-effectiveness review there, either. There are a few questions here. It just doesn’t quite add up.

The answer to the member’s question around privatisation is that there are protections in place in several sections of the Local Government Act that will continue to apply unaffected. This part of the bill, though, that we are debating today here is about consultation and decision making.

Thank you, Mr Chair—sorry, it’s quite noisy, so I couldn’t hear, either. I’m just really inviting the Minister to answer the questions that have been asked. I note that he answered my rhetorical question before about changing the Local Government Act.

There are two very simple questions to answer, and that is—as the Hon Kieran McAnulty has just referred to—why is clause 59 there and why is this repeal of section 58 needed? Is it a simple temporal issue that in five years’ time, everything will be done, or not, and what happens? Does that mean that councils can’t amend those agreements after five years? A simple question: why is clause 59 there, repealing what will be section 58?

The other question was about the purpose of this part and the amendments that are made in the Minister’s Amendment Paper 65. There are many other amendments in that Amendment Paper that just change words here and there, and it’s difficult for everybody to go through to determine what they mean. But I was asking and inviting the Minister for a simple explanation of what those amendments are for, and if it is, indeed, a clarification of when and where consultation is mandatory and when it is not.

I move, That debate on this question now close.

The question is the Minister’s tabled amendment to clause 49 in Amendment Paper 65 be agreed to.

The question is that the Minister’s amendments to Part 3 set out on Amendment Paper 65 as amended be agreed to.