Water Services Legislation Bill

Members, good morning. The House is resumed in committee. We are considering Part 1 of the Water Services Legislation Bill.

Thank you, Madam Chair. It’s great to be in the Chamber at 9 o’clock in the morning, and to everyone out there who’s watching Parliament TV this morning, good morning—what a fantastic day it is.

💬 Matt Doocey: This is what happens when the Government can’t get their stuff together.

That’s right. I was just reading what we’re speaking about, the Water Services Legislation Bill. I was saying to the Minister in the chair on the way in that I did thank him very much for the answers he gave us yesterday, and I’m looking forward to those sorts of fulsome answers again today.

But I would like to, as the Minister suggested, get local on it and I’m actually going to get personal on it. I’m in a small water scheme, a private water scheme, and I note under clause 5(4)(a) and (b), where it talks about the board and whether it’s one or more people, and that the water scheme would have to have a board. My first question is around those people on that board. Are they considered directors as in a directors under the Companies Act, and are they subject to those sorts of rights and obligations that would be required under the Companies Act? That’s quite an important thing to know.

I think, in many cases, those small schemes would have a variety of different people thrown into those roles who aren’t necessarily experienced in the world of governance and may well not even be au fait with the rights and obligations under the Companies Act for a director, which are quite serious if things aren’t handled correctly.

So I’d be grateful if the Minister could give us a bit of an idea of what those boards would look like, because there’d be quite a difference between one of those entities and one which is running a council’s water assets, particularly with these other governance structures. So that would be really helpful.

The second part I would like to understand about those entities is whether they have to have a corporatised structure underneath them to operate those assets and all the reporting requirements that are outlined in this bill. And are those reporting requirements under this legislation in any way staged for different sizes of entities, if it is one or more individuals who are users of the service? So does that mean that a farm property with a cottage on it, two houses on it, serviced off one bore—or a creek or whatever that’s treated—is considered to be one of these entities under this bill?

Thank you very much for the question. To some degree, we covered this off last night when I was answering the questions from Barbara Kuriger, but I’ll run through it again. So we have, I guess, three scenarios. One, which is an entirely private rural scheme that doesn’t currently have a relationship with a council—they’re not impacted by these reforms and this bill.

Then you’ve got a rural scheme which does currently have a relationship with the council. In most instances, they have a committee that is made up of people on council and the users. What is proposed is that that relationship would remain; it would just be with the entities, not with the council. So any operational decisions and input that users have should be able to be maintained—that was one thing that came out of the process that we went through with the Department of Internal Affairs; went through with talking with the rural users down there.

Keeping in mind that rural users will also have, in those circumstances, the option of pulling out altogether and not being covered by this. In some instances, that may be best for them. But that does come with the risk of them incurring all costs of maintenance and upgrading into the future. What we found from the engagement with water users in the Clutha area was that once that was spelt out—that their level of input would be maintained but the cost and future liability of maintaining an upgrading would be shared across the entity, therefore significantly reducing the cost to those users—the feedback we got was that on the whole, they would be willing to continue with what’s being proposed.

The other aspect of it, which isn’t covered but I think would be of use to the member, is those mixed-use rural schemes—that it might be a situation where one landowner supplies water to surrounding neighbours. That could be used for the purposes of stock or it could be used for the purposes of drinking water. Again, that’s not covered in this, but we want to be as practical as possible in that. So, essentially, what happens is that it comes down to the regulations that are set by Taumata Arowai, because of course we want to make sure that all drinking water is safe—but as practical as possible.

So, in most instances, all that will be required is that at the point of delivery on the side of the house, they have a UV filter rather than full treatment at the source. In doing that, it would allow that that water that’s being used for stock won’t have to be unnecessarily treated. In some instances, though, it might be that the vast majority of the water being delivered is for drinking water, with some for stock. It might be more cost-effective of them to treat at source but that’s up to them—whatever is the most practical.

Certainly where it’s mixed-use and the majority of the water is going to be used for stock purposes and not drinking, it would just make sense to have a UV filter. So there’s a few scenarios there, but in terms of relevancy to the bill and the example that the member gave, nothing should change. It’s just that they’re dealing with the entities rather than the council.

Thank you, Madam Chair, and thank you, Minister, for that answer, although I didn’t quite understand where the committee members, if it’s a relationship with a council—are they directors or not directors under the Companies Act? That’s the first thing.

The second thing is in the case where a water entity has no relationship in itself with the council but those householders have a sewerage service supplied by the council, so there is one of the three waters relationships with the council but not the drinking-water one or the stormwater one. How does that work under this bill? Thank you.

Thank you very much—very good point. That was the first note I wrote down and it was the first one I missed, so I’ll get to that straight away. No, they won’t be considered directors, because, of course, the entities remain publicly owned, but what it will be is exactly the same as they’ve got now. It’s an opportunity for those users to have a significant level of influence in terms of the decisions that are made on that use scheme, but they won’t be considered directors and they won’t therefore have the obligations and responsibilities that fall on directors. That will still sit with the entities because they’re publicly owned.

In the example the member gave where perhaps one of the three waters might be supplied by the council, I’m not aware of an instance where waste water, for example, in a rural area has a committee like they would do with drinking water. If waste water is provided by the council now, I don’t think they would have a committee on that—they might. If they do, it’d be the same answer. If they don’t, then it just carries on as it would do now except it’d be the entities providing that service, not the council.

Thank you, Madam Chair. Minister, can we go back to your previous answer to Stuart Smith, when you were talking about mixed use for rural supply. I’m trying to get some clarity, and maybe you can double down on it and give that clarity, because I’m trying to ascertain what it would look like if you were a farmer, as you alluded to—that mixed supply model when you might actually have a farmer who was predominantly supplying, who stopped the water, but then there were half a dozen homes on that.

In that instance, would there need to be some sort of standard set for the drinking-water element of that mixed supply model, and what was the number, given that the ACT Party had asked for a 30 endpoint user exemption—why wouldn’t you actually look at that? Because, genuinely speaking, there are often many instances where there is more than one source of supply on a private property that feeds into several abodes or several homes. Arguably, that person is a provider and it would be incumbent upon them—it’s my understanding of this legislation—to then make sure that the water was of a safe drinking standard, assuming it was an artesian water source, or something to that effect. What is the potential outcome, if I’m interpreting this piece of legislation correctly, that, in more than one instance, you can potentially see the cessation of that supply, based on the fiscal constraints and obligations of that now deemed provider? Can you give some clarity?

I thank the member for the question. Like I explained to Mr Smith, this actually isn’t in this bill. I just provided that for his understanding in terms of the context of rural supply, but this particular matter was debated in the Water Services Bill in 2021. I’m happy to address it, but I’ll probably leave it there at that point, given it’s not proposed in this bill. It is required of the provider to meet minimum standards, through Taumata Arowai. That has long been in place; everybody agrees that if you’re receiving water it needs to be of a safe standard. However, the changes that I outlined to Mr Smith were that in working with farmers, we clarified to them that it’s likely that all that will be required at the point of receipt is that they have a UV filter to meet the standards, rather than imposing undue requirements on the provider, which will inevitably, likely, lead to people just saying, “Well, I’m not going to supply my neighbours.”, and pull out. We don’t want that. We want it to be as practical as possible, and that’s what was outlined for rural providers.

Thank you, Madam Chair. Minister, I just want to come to clause 9 of this Bill, the Water Services Legislation Bill, which proposes to amend section 18 of the primary legislation: “Other things water services entities can do”. Clause 9(3) says, “A water service entity—may establish, own … or operate a subsidiary only if the subsidiary complies with the requirements specified in Schedule 5”. But more importantly, clause 9(3)(b) says what it may not do: it “may not enter into a partnership with another person or persons.”

Now, assuming that means a natural person or a person in the sense that it could be a corporate, this clause appears to extinguish the opportunity for water service entities to partner with the private sector to deliver services in the form of a public-private partnership, for example, or a special purpose vehicle, for example, Minister, where a local government entity now, or in this case a water services entity of the future, which is seeking private and institutional capital—it could be from the Accident Compensation Corporation, where that capital comes from. It could be from the New Zealand Superannuation Fund, it could be from KiwiSaver, it could be from an iwi investment fund; the private capital component, plus private management experience, capability, whatever that specific expertise is, partnering with water service entities in the form of a public-private partnership, say, to deliver a whole lot of new services for a new subdivision, or, potentially, to upgrade existing networks in existing urban environments to allow for much higher densities to be built. For example, where currently there are one- or two-storey homes—many parts of our major metros are zoned for six storeys or even eight storeys by right, Minister, but they can’t proceed because the water infrastructure is very expensive and, whether it’s a council or a water service entity, it’s not clear where the capital will come from to do that.

So Minister, could you please confirm: does clause 9, which amends section 18 of the primary legislation, extinguish the ability of water service entities to enter into public-private partnerships?

No, it doesn’t, and we covered this to some degree last night when the answer to Ms Grigg’s question around council-owned council-controlled organisations (CCOs)—

💬 Nicola Grigg: Great question.

It was a great question, actually—very topical and a good opportunity to clarify some of those concerns that are out there. What I said in response to that question was that only the CCOs in Wellington and Auckland will be included in that. The others will remain in ownership with the councils. There is nothing in this bill that would stop entities entering into joint ventures with those or with private companies as well.

I move, That the question be now put.

Thank you, Madam Chair. What a relief to have been able to ask another question.

Look, if I could turn the Minister’s mind please to clause 11, just following on from Simon Court’s questions around the obligation to maintain water services. I also want to extrapolate that out to clauses 17, 18, and even—no, just 18. I think it’d be really helpful for the Minister—I think everybody in this House acknowledges there is enormous public discontent and disconcertion around this bill, and I think it would be very helpful if the Minister could outline, particularly around clause 11, the “Obligation to maintain water services” and the “transfer [of] any of its significant infrastructure to a subsidiary that the water services entity owns or operates.”

Is the Minister aware, or has any work been done around the monetary value of each and every entity thus far and the infrastructure assets that these entities will inherit off the territorial authorities? Are territorial authorities in a position to understand the full picture of the removal of those assets from their own balance sheets, and are you able to go through, entity by entity, what the value of each of those entities is going to be worth? I’ll come to 18 and 17 shortly.

So the process for outlining and establishing the value of the assets and what will be transferred from councils to entities was set out in the previous Act, but I’m happy to quickly outline how that process would work.

So the initial transition unit is in that process already with the councils in the Auckland and Northland entity because, of course, the amendment bill that was passed last week doesn’t change that proposed entity. So the go-live date stays as it is and that work is under way. That is by way of agreement, because of course they need to agree to the value of the asset, what’s going to be transferred, the level of debt that will be removed from the council’s books and be taken on by the entity. All those things need to be agreed on before they can progress.

In terms of the clause that was mentioned by the member, the purpose of this is to ensure that the ownership of the asset stays public so that it stays with the entities. It can’t be transferred to a subsidiary or, heaven forbid, to a private company. It must maintain public ownership, and clause 11 helps establish that.

Thank you, Madam Chair, and I apologise to my colleague Nicola Grigg, who obviously had a couple of other questions, but I wasn’t going to lose out on my opportunity to actually ask the Minister in the chair, Kieran McAnulty, a question. I’d like to thank the Minister for being very generous with his time and actually endeavouring to answer often what seems like quite repetitive—I’ll actually go to something quite different. In clause 17, it is in relation to “Obligation to publish asset management plan”, and it says that “As soon as practicable after an asset management plan is provided to the regional representative group, the chief executive of a water services entity must publish the asset management plan”. I’m trying to find out what that actually means. Practicable—as soon as it’s practicable—normally, there is a time line as to when they have to do that, within a certain time period. I’m wanting to know if the Minister actually has it in his mind as to how soon that is, what “practicable” actually means—“As soon as practicable”.

Also, it talks about how it has to be published “on an Internet site maintained by, or on behalf of, the water services entity in a format that is readily accessible.” Does he actually have instructions to the officials that it has to be mobile accessible, because often people use their mobile to access things, and sometimes internet sites are not that friendly to mobile users.

The term “as soon as practicable” is used throughout legislation and is consistent—for example, it’s in the Crown Entities Act. So, when it’s already in place and systems are already under way, we thought it was important to remain consistent. In terms of referencing internet sites, that includes a requirement for mobile accessibility.

Thank you, Madam Chair. Minister, I’d like you to clarify your answer to my question before, which referenced an answer that you’d given to Nicola Grigg about council-controlled organisations. Minister, it’s very clear in replacement section 18(4), inserted by clause 9, that “partnership has the meaning given to it [or set out] under sections 8 and 9 of the Partnership Law Act”. This Water Services Legislation Bill says that entities may not enter into a partnership—they may not, Minister.

So I’m seeking your clarification. Does that mean that they may not enter into public-private partnerships? Because, potentially, the Minister thinks that a council-controlled organisation is a public-private partnership. It’s not—it’s not. A public-private partnership has quite a different definition. That is where the public sector partners with the private sector. The private sector provides the capital, the technical nous, the management experience, and the private sector, in reward for providing capital and as a reward for taking a risk, takes a profit, Minister, from the activity.

If you look at the partnership definition in the nature of partnership in the Partnership Law Act 2019, it says, “Partnership is the relationship that exists between persons carrying on a business in common with a view to profit”. Minister, that appears to be at odds with your previous statement which, as far as I was aware, said that public-private partnerships could continue, although you did refer to council-controlled organisations which are not public-private partnerships.

So would you provide some clarity, Minister? Will water service entities be able to engage with the private sector to stand up public-private partnerships for the purpose of seeking private and institutional capital, to invest in infrastructure and to have access to management and expertise from the private sector and to have that asset funded, financed, delivered, operated, and maintained by the private sector, or do you, Minister, and this Government exclude the private sector from having that role in infrastructure delivery in New Zealand?

I did answer that question. At the end of the answer, I made it really clear that there is nothing in this bill that prevents entities entering into joint ventures with private companies. Then in the follow-up question from Ms Grigg, I clarified that the limit on that joint venture is that there cannot be any transfer of ownership of assets, but there’s nothing in this bill that suggests that they can’t enter into joint ventures, and that was clearly answered when I answered this the first time.

I move, That the question be now put.

There are nine new parts being inserted into Part 1, and the scope of the debate is extremely wide. I’m aware that we have been debating Part 1 for just over an hour—about an hour and 10, maybe. I am hearing new material, but I am listening carefully.

Thank you, Madam Chair. There is obviously still a lot to cover. I did mention previously to the Minister that I’d like to have a quick trot through clauses 18 and 19, which relate to the content and the obligation to publish funding and pricing plans. Now, appreciating that the charging principles are specified in new section 31 in clause 22, again, for listeners—for those at home—can the Minister please outline the philosophy, I suppose, around the setting of the charging principles; again, the philosophy around how affordable or otherwise these principles intend to be; and what guarantees can the Minister give that this is actually an improvement on the existing establishment that is already occurring under the rule of territorial authorities?

Thank you very much, Madam Chair. Just to carry on from my learned colleague Nicola Grigg, around the section where we’re looking at charging, I wanted to drill in to new section 319 in clause 22: “Rating information needed by water services entity”. I think it would be helpful for the committee if the Minister could outline what legislation would enable, I suppose, the passing on of that information that is currently held by councils, what permission each ratepayer would need to give for that information to be passed on to the new water entity for charging, and is there an ability for a ratepayer to refuse permission for that information to be passed on and what would happen if a ratepayer decided to pursue that course of action?

Thank you, Madam Chair. Look, I just wanted to pick up on one of the new parts—new section 200 in clause 22, actually—with regard to the power to carry out work in relation to water services on, over, or under land. This part, I think, warrants further exploration because we are treading new ground here and proposing a significant change for our communities. That, unsurprisingly, leads to an increased level of concern within those communities, and whist relationships with councils can sometimes be fraught or challenging, generally people have a reasonable understanding of what that looks like, how they work with them and how they interact and what sorts of things they can expect when they are carrying out those interactions, if necessary.

Under this new proposal, what I’m interested to know is around that new section 200 in regard to carrying out the work, what power there is for the landowners to be able to negotiate around, first of all, the need for that work and the type of work and the complexity of it, if it’s being imposed on their property, and then what sort of timing may occur around that. I think the timing part is really interesting. I’m interested to understand where the level of agreement would sit and if there is any influence that the landowner can have based on, in my area, the Waikato, for example, which is a strong farming area. There are a lot of seasonal activities undertaken at certain times of the year that could be unduly influenced if work were to be carried out during one of those periods.

I’m interested to understand what ability there is for that landowner to push back and to say that on one hand they don’t want the work, or, secondly, if the work is happening—which may have occurred under new section 204 in clause 22 where, potentially, a court order has been obtained to force the work to be able to be carried out—then what ability they have subsequent to that decision being made to then be able to influence the timing of it so as to minimise the impact on their farming business, or whatever their business may be. But in the instance I’m specifically looking at, it is more around the rural impact from the timing of the seasonality of some of those activities, and maybe it’s planting crops or maybe it’s going through calving or lambing, where there could be particularly disruptive periods if work was undertaken during one of those times.

So I really want to understand what clarity the Minister can give that there will be a level of influence available to these landowners, given that we’re entering into quite a new type of relationship with a new entity. There’s a lot of uncertainty and, unsurprisingly, they’ll be wanting to know where they might sit and if they need to start planning for the risk of any additional work or the timing, and the impositions that may have on their businesses and what considerations they may need to give to that. So I’d appreciate some insight, thank you.

Thank you, Madam Chair. In regard to the question from Nicola Grigg, the charging principles are based on similar regimes in the OECD, and these provisions link through to the Water Services Economic Efficiency and Consumer Protection Bill. They enable the Commerce Commission to issue determinations on the charging principles.

In response to Mr Doocey’s question, rating information needs to be passed on to ensure that entities can charge—for example, stormwater charging. This will also enable charges to be levied on the basis of property values, as they are, currently, by councils.

In response to Mr van de Molen, of course, new section 200 in clause 22 actually enables the landowner to specify reasonable conditions for the entities who want to do works on their private land. An objections process can also occur. These are modernised arrangements that already exist for other utility providers, and so are unlikely to cause disruption or a change in practice.

Just one question for the Minister: what’s the estimated cost of the improvements needed in the Auckland waste water network to enable people to swim on the beaches in the North Shore and eastern suburbs? Minister, I’m just seeking your clarification of that number.

Oh, thank you very much, Madam Chair. Just continuing the discussion around rating information and charging for water, I’d be interested to hear from the Minister whether there was any consideration that maybe councils maintain the function of facilitating the payment for water charging, or is the bill going to come directly from the water entity itself; and whether councils were considered a way of maintaining that relationship with the ratepayer?

The Hon David Bennett’s question isn’t related to the bill, and Mr Doocey’s question is a fair one.

So we’ve been dealing with councils in regards to charging and what provisions they themselves may be able to offer. As we’re all aware, councils often charge on behalf of regional councils in their rates bills and then siphon that off to the regional council so that ratepayers only get the one bill. There is provision for that, but it’s up to each council as to whether they’d be willing to do that.

In essence, though, the charge for water will come from the entities. Whether it goes through each local council will be determined by that entity. There is a provision in there that as a transitional period, the councils will be asked to pass on the bill in the first instance. We’ve had some mixed feedback on that, and where that might cause some difficulty for councils—whether they have the resources to be able to do that—we’re going to work through them on that. Hopefully we’ll be able to get through it without putting any undue burden on councils.

Thank you, Madam Chair. Well, the Minister in the chair, Kieran McAnulty, gave a very terse answer trying to dismiss the issue of stormwater, and I expected that from that Minister. But the question is: either he doesn’t know, he doesn’t want to reveal, or he didn’t—

💬 Shanan Halbert: Or it’s out of scope.

Well, no, it’s not—it’s not out of scope, because if you go to Subpart 2 and you look at stormwater, how can you make these rules if you don’t have an understanding of the amount? That’s the third part. You know, how can the Minister engage in all this legislation without knowing what the costs are going to be, and how can those costs then be attributed to different places?

So, Minister, answer the question: how much are we dealing with in quantum in cost, because you made all these rules—the natural implication, if you won’t give the cost, is that you made the rules without understanding or actually identifying the cost. It’s either one or the other, and we’ll draw our inference from your answer. So what is the cost?

It’s not one or the other; it’s the fact that we are here in a committee stage for this piece of legislation and the member’s question refers to bills that have already passed.

Thank you, Madam Chair. Given that the Minister is also the Minister for Emergency Management, I just want to turn your mind to the clauses in the bill that talk about action in emergencies. And I know I keep banging on about Entity (I) because it is my home patch. If I could just outline to the Minister, some of the water provision in the Selwyn District, for example, is bore or aquifer driven; some is also from service water. I think of the likes of a little town called Springfield and Sheffield and another little town called Hororata. They got very, very badly impacted in the 2021 floods because the rivers that were supplying the town water were blocked with rubble and trees and shingle and so on and so forth, which took a very, very long time to clear, and a very long time for the turbidity to flow on through, and a very long time for residents to be able to use their tap water once again.

So bearing in mind that Entity (I), the Canterbury councils, will also be merged with the West Coast councils—which I would wager are even more flood prone than on our side of the divide—with regard to clause 220, the “Management and maintenance of water services infrastructure”, in the context of emergency management whereby “water services entity must manage and maintain the water services infrastructure in its service area.” Can the Minister outline a time frame, given, you know, the conception of the entities, the urgency of the work, the remedial work, the mitigation work that needs to be carried out in Canterbury and indeed on the West Coast? How soon can residents and ratepayers expect that their water supplies are going to be futureproofed for future natural disasters and emergencies and flood events?

I can’t give a detailed answer on that. That’s up to each entity and the constitution that is established. But the answers actually fall within what has already been passed in previous bills, in that the changes that we made with the amendment bill last week gives each council within the entity a seat on the regional representative group. There’s also a commitment that those workers that are based in each area can maintain a presence in that area. And that’s really important for the entity you’re referring to, because, of course, there’s no point having all the workers in Christchurch when they’re trying to serve the West Coast, and vice versa. It’s vitally important that the regional representative group ensures, through their constitution, that every area is serviced. That’s why I was particularly keen to ensure that every council had a seat, because my concern was that rural areas would miss out, and isolated areas would miss out.

To the specific question around a time line, that falls to the entities in those councils that are on the regional representative groups.

Thank you, Madam Chair. Minister, I’d like to ask some questions about the amendments to the purpose and content of the Government policy statement, which is clause 13 of this bill, which amends section 133 of the primary legislation. Minister, the purpose and content of the Government policy statement for water services states the Government’s overall direction and priorities for water services, and informs and guides agencies involved and the activities necessary or desirable for water services. And, Minister, if we look at section 133(3)(a)(viii), what this does is it inserts a requirement to consider geographical averaging “of residential water supply and residential wastewater service prices across each … entity’s area”; (ix) “redressing historic service inequities”; and (x)—or 10 if you translate it from Roman Latin into English—“overall direction and priorities for charging arrangements for water services”.

Now, Minister, given that there are so many different arrangements now that councils have for charging for water services and infrastructure connections, I’m interested in what direction and priorities this Minister might have for water service entities on the day that this bill is passed. Because, for example, in Auckland we’ve had water meters since the 1990s. So if you are using a hose to wash the car or you are watering your garden at the height of summer, you can hear the whirring clicking sound of the meter outside your property as it spins and records the volume of water that you’re using. And if you are conscientious about using less water because you have to pay for each cubic metre and you want to keep your water bill down, you might check it in the morning and then go back and check it in the afternoon to work out how much water you’ve used. Well, what that means is that Auckland has the lowest consumption per household of water of any region in the country because water is metered.

And then we compare that to Wellington, Minister, Wellington City Council, which meters businesses but not households and has amongst the highest losses of potable water from its water supply network of any city in New Zealand. Estimated up to 30 percent of the drinking water that is treated and supplied to residential customers in Wellington ends up running down the road. I’ve had that experience myself when I first came to Wellington as a new MP in 2020; identifying water running down the road and putting my hands down to sample that water and discovering that it reeked of chlorine. Well, at least the water’s being treated here in Wellington.

But, Minister, what does that tell you? The overall direction and priorities for charging arrangements are all over the place currently. So how would this Government, how would a Minister, how would a Government policy statement—that this Minister might sign off on in his role as local government Minister or Minister responsible for water service entities—give direction and priorities for charging arrangements? Would it do the rational thing and insist that every customer has a meter and that every customer pays a volumetric charge? Or would the Minister be satisfied with the status quo, where most of New Zealand is unmetered? Most New Zealand households and businesses have no idea whether the water they’re using is going to result in increased cost, and, of course, the flow through to that is that cities like Wellington potentially have to build a whole lot more water storage and distribution because a third of it is running down the road.

So, Minister, what would this Government’s priorities be for charging arrangements for water services in terms of this proposed amendment to the primary legislation?

I have some more information for Ms Grigg: section 217 ensures that entities can take the action they need to immediately deal with emergencies. And so I think that’s important, be they in the West Coast, Canterbury, or wherever, that when there is a natural disaster they have the ability to just get on and fix it. But also, clause 220(2A), landowners will not be responsible for impairments caused to a stormwater network that are caused by a natural disaster or emergency, so that falls to the entities. So I think that’s an important point and useful information.

In regards to Mr Court’s comments, the Government policy statement is not a direction to an entity. While the bill enables water entities to charge through meters, it does not mandate that. This is up to entities and the councils that feed into it. We felt that was appropriate, particularly given the points that have been raised by that member and others around ensuring that local voices are heard.

Thank you, Madam Chair—great choice; not that I’m competitive. I’d like to continue exploration around volumetric charging. I’m looking at sections 239, 330, and 331, in clause 22, and my question to the Minister is around the water entities. I see in section 330 that the board may set charges and charge a fixed or variable fee. My question is around the issue—and it did come up, I think, during the select committee stage, I’m led to believe—with the submissions: will it be a fixed charge for the volumetric charging across all the customers for each water entity or will there be a variation within certain areas of the water entity?

I thank Mr Doocey for his question. It’s covered in section 475, in clause 22, and the answer is a point that I’ve made a number of times now. This bill enables the entities to make decisions that are best for them. His question will be answered by each entity in a way that is best for those communities.

Thank you very much, Madam Chair. I’d like to ask the Minister in relation to when the water services entities exercise their power to, perhaps, access owners’ properties to lay infrastructure. Apart from the fact that they actually need to get permission, they may also need to move the utility operator’s infrastructure that is under the ground, for example. This is in Part 1, clause 22, in relation to section 211(2). There is no mention in terms of compensation should that exercise actually go wrong, because often you hear about people who actually dig underground and cut fibre-optic cables because they read the map wrong and accessed the wrong entry way and potentially cut thousands of people off their telecommunications line. Maybe I’ve missed it, but I don’t actually see it.

I am comparing that to section 222, where it talks about where the road owner, the owner of the house who actually has to dig up the land and potentially has to move the water infrastructure because of something that they’re doing—the cost is borne by the property owner. So I’m trying to find out if there is compensation specified—perhaps the Minister could point me to that. I specifically ask that because during Cyclone Gabrielle, there were power cuts which impacted on telecommunications, both landline and mobile infrastructure, as well as fibre that was actually cut, and it took so long for a fix to be brought into the area, because telecommunications companies could not even helicopter the batteries to the area because there was no power to—is it the civil aviation towers?—actually land the planes. And I thought, “How did they land our planes in the past without power?” They had hand signals, I think. I’m sure I look ridiculous, actually, pretending I’m a signal person, but I’m trying to find out—in situations like that, you would actually want to make sure that there is a contingency plan and the Minister has actually stipulated those kinds of instructions.

Compensation provisions are in the Public Works Act, and section 222 is directly based on the Electricity Act 1992, and they’re quite longstanding provisions.

Thank you, Madam Chair—great choice. The Minister, I think, would do well to explain to New Zealanders around section 231, that the “Board may designate controlled drinking water catchment areas”. I was quite fascinated to read through this particular part of the bill which talks about allocating controlled drinking water catchment areas for the purposes of, you know, geographical areas that surround surface water and a groundwater catchment from which drinking water can be abstracted. But the detail goes further to talk about that designations may be made only if “the water services entity owns or has long-term control of the land”, or “the owner of the land to which the designation relates agrees to the designation.” Now, that’s really interesting. Again, when I think about the Canterbury example where a lot of the catchment area falls on private land and farm land, particularly in Selwyn where the district territorial authorities area, like the electorate, goes all the way to the Arthur’s Pass. So there’s obviously a lot of headwaters coming out of the Alps in the foothills. But it’s quite, I think, topical to discuss whether, when the catchment area falls into private land, will this include any form of compensation to that landowner? And I think, from a Crown entity perspective, what is the Crown’s estimate thus far of the total compensation that may have to be meted out to cover all areas within the country that will be captured by this part of the bill?

Thank you very much, Madam Chair. I wanted to continue with the exploration around volumetric charging that the Minister referred to, that there is autonomy for the water services entities to look at the fixed price for their customers. So I suppose the next question with that course of exploration would be: is there a potential for each council within the water service entity to have a different fixed price for volumetric charging?

I move, That the question be now put.

No—no. As we already know, there are a number of new parts being inserted into Part 1. Each of those parts brings substantive measures into the bill. I think that this debate should allow for members to raise questions and issues they find with each and every one of those parts. We are keeping a close eye on the debate. Part of that close eye, also, is having a look at how much of a particular part to be inserted is being debated and has there been enough debate on that. I am listening very carefully.

Thank you, Madam Chair. I’m on clause 330: “Board may set certain charges”, and it says the board may charge “a fixed and variable [rate] … require a deposit”, etc., Clause 331 talks about promoting the efficient use of resources, and under (1)(ii)(A), “[the] groups receive different levels or types of services”, etc., but I’m at a loss to see where there is any cost-benefit analysis and justification for setting the prices. We see the methodology of setting them, but these boards are a monopoly. Obviously, monopolies in the rest of our economy have very strict rules about their pricings; take the electricity lines companies, for example. They are allowed to charge under certain rules, but the Commerce Commission has to approve their planned expenditure to ensure that it’s not overly gold-plated, etc. What assurances are under this Water Services Legislation Bill that the consumers are actually getting value for money for that investment, rather than just being charged a charge at the whim of the governing entity; the board or committee that rules that?

Thank you, Madam Chair. Minister, I wish to ask you about clause 17, which replaces section 153 in the original legislation, and that is the “Obligation to publish an asset management plan”. Now, an asset management plan is absolutely critical to local authorities who currently run their water networks or road networks; to a telecoms company that runs fibre or cellular. Minister, when it comes to community-owned assets, like the three waters infrastructure, councils and their communities are very, very concerned that even with the changes proposed to the way three waters is operated and funded in New Zealand, that they maintain a voice—a say—in how these assets are managed, and Minister, you’ve done your best to convince New Zealanders that councils will continue to have a say. Then I come to clause 17 here, where section 153 is replaced with a new obligation to publish an asset management plan, that appears to remove the requirement to report on how territorial local authority—in other words, a council—had input and feedback on an asset management plan.

Now, Minister, whether you or the Labour Government likes to admit it or not, local councils still have a role in land use planning, in consenting, and all of those other functions that people expect their local council to have, and that has a direct bearing on how water services an water assets are managed and controlled. And yet, Minister, in clause 17, which amends section 153 of the original Act—actually, local councils’ needs are excluded. What this now says, instead of “prepare and publish a report on how the entity considered consumer and community and territorial authority owners input into, and feedback on the plan, and incorporated that feedback into the plan”, Minister, it replaces that with “the chief executive of the water services entity must … publish [an] asset management plan on [the] Internet.” It says nothing about whether a local council and community’s feedback on the asset management plan has been incorporated into it.

And I might give you an example, Minister, that’s very close to home. In fact, the Hon Phil Twyford, the MP for Te Atatū, raised it last night in the House when speaking about this bill. He raised the issue of the constant wastewater overflows from the network in Auckland to Te Wai o Pareira / Henderson Creek. Some of those overflows occur, Minister, from manholes right next to the boat ramp where the Waka Ama club, the Multisports club, the Water Ski club, and the Waitematā rowing club launch their boats; right next to the floating pontoon where school kids come from Rutherford College and Matipo Primary School to swim after school. Now, if the community told a water service entity “We’re very, very unhappy that that wastewater overflow, which occurs regularly, even after a shower of rain—we’re very unhappy that continues, we want you to do something about it”—but if the water service entity doesn’t have to take that into account, they can simply publish an asset management plan, whatever they think it should be, and publish it on the internet. Then how on earth, Minister, are communities, councils around New Zealand supposed to have confidence that these reforms will actually deliver for communities? Because although the Minister’s tried to assure the New Zealand public that they will, I think this change to the primary legislation reveals the truth: that in order to push these water service entities through, in order to deliver and operationalise this reform, the Minister has decided that some stuff is just too hard. That if communities are going to have a say in which assets are managed, how they’re operated, and so on, it’s going to make it too hard for these water service entities—for these chief executives, paid $600,000 to $800,000, three of whom are currently unemployed but still getting paid at the Department of Internal Affairs. What’s happening, Minister?

Thank you, Madam Chair. I am just turning now to changing contract prices—and new section 335—and I wonder if the Minister could explain something for me.

So it says, “The chief executive of a water services entity may enter into negotiations to change [certain provisions in certain contracts]”, and it goes on—through various (1), (2), and (3)—under (1), the “entity may enter into negotiations to change pricing and charging provisions in a contract that—(a) relates to the supply of water services … ; (b) is transferred from a local government organisation”, and it says that, under (3), “If the chief executive and the other parties fail to vary the contract before 1 July 2029, the contract expires.”

Well, that’s six years away. What’s that arbitrary date; why the significance of that arbitrary date? Why not 2028 or why not any other particular time, say, than that particular date? I don’t understand the significance of that. So if the Minister could enlighten us on that, it would be much appreciated.

There’s nothing stopping the entities renegotiating a contract, and there needs to be a date by which it expires. The member’s right, pointing out that this 1 July 2029 if it’s not. But that’s covered by the ability for entities to renegotiate the contract. They will not necessarily be bound by the terms that they inherit all the way through to 2029.

While I’m on the member, I may as well answer his first question in this section. That was actually—there’s a bit of a theme here, but that was covered off in Nicola Grigg’s question, actually. This is in reference to the Water Services Economic Efficiency and Consumer Protection Bill. That’s outlined in that.

But to your other question around the catchments, so there’s no change proposed in what currently already exists. So it’s a direct transfer of what’s already in place now; the entities will be bound by that.

In regards to the question about compensation, it can only happen with permission. So if there’s no permission, that can’t occur and therefore there’s no provision for compensation because they have to get permission in the first instance. If there is damage to the property for other regions, or the catchment for other regions, the responsibility to fix that falls with the entities.

Mr Doocey’s question, new section 332. This will all be publicly available to ensure transparency. An entity is required to engage with territorial authorities, consumers, and communities on a funding plan.

In regards to Mr Court’s question: again, this was all set out in the Water Services Entities Act, Schedule 3 specifically. However, new sections 461 and 465 outline, in this bill, that they’ll still be required to publish feedback.

Oh, thank you very much, Madam Chair, and I’ll thank the Minister for his answers as well. I just wanted to drill down into his response there. Just to clarify, so it seems like he is saying that there will be an ability for each council jurisdiction within the water entities to have a different volumetric fixed charge, and, I suppose, what will be the course of action a council could take if they think that that pricing was too high? I think that then flows through to a further question, which is: what are the principles that those decisions will be made on around the fixed charge?

Where I’m going with that, no doubt he’s gone round the country and spoken to—well, we do know that, because they all came back and said, “Nice guy; wrong party.” But a lot of them think they have done very well, and there might be a parochial aspect there as well, but I do know quite intimately one council where I live that has done exceedingly well, because the ratepayers have invested into their water assets. So it will be interesting when that variation comes out in charging within a water entity and how the decision is made, based on, I suppose, the level of investment that ratepayers perceive they have put in over the years.

I thank the member for the question. It has actually been addressed, but I’ll go and do a wee bit more one last time. So in replacement section 475, inserted by clause 22, there will be the ability to limit, through regulation, the ratio between fixed and volumetric charges for residential customers if it was considered necessary, for example, to protect vulnerable consumers. This is up to the entities. It won’t necessarily be along territorial authority boundaries, but it’s not necessarily a uniform charge across the board. The entity, through the direction of the regional representative group, of which all councils are members, will be able to adjust pricing according to the realities in those communities.

Thank you, Madam Chair. Minister McAnulty, I’m sorry; I found your response to my previous question wholly unsatisfactory. But if we come to section 20 of the Water Services Legislation Bill before us, which amends 159 of the primary legislation, “Obligation to publish [an] infrastructure strategy”, we find the same theme emerging, that the obligation to publish an infrastructure strategy in the legislation this bill amends says quite clearly, 159(b), “prepare and publish a report”—that’s the infrastructure strategy—“on how consumer and community, and territorial authority”—council—“owner[s], input into, and feedback on, the strategy was considered and incorporated into the strategy.”

Minister, this Water Services Legislation Bill replaces the requirement to demonstrate how feedback from the community, from the owner, from consumers was considered and incorporated into the strategy with “the chief executive of a water service entity must publish the … strategy on an Internet site”. Well, publishing something that you’ve developed behind closed doors, having heard everybody’s concerns but not having to explain how you’ve taken them into account, doesn’t sound like communities having a voice. It doesn’t sound like the territorial authority or council owners having a voice, and it certainly doesn’t sound like meaningful consultation and actually changing what these entities might do in response to feedback from communities.

We must only contrast that with the requirement to give effect to Te Mana o te Wai statements provided by iwi and hapū, because, Minister, if a water service entities chief executive—one of those people who will be paid between $600,000 and $800,000 a year; there’ll be at least 10 of them—if one of those chief executives’ only obligation to respond to the council asset owner, the community, and the consumer is to publish a strategy but not explain how they took on those concerns or those issues that a community wanted to be resolved, and yet iwi and hapū have the right to have their Te Mana o te Wai statements given effect to by these water service entities, do you think that might undermine confidence in your assertions and this Government’s assertions, and the previous Minister’s assertions, that the water reforms are actually going to deliver for communities? Does it continue to reinforce the suspicions that many have, Minister, that this is somehow some kind of Treaty settlement in drag, that every reference to Māori rights and interests in water that appeared to be strengthened, enhanced, and given effect to by this bill—even though they’re not proven, even though the Minister Nanaia Mahuta stated categorically in reply to a written question that I put to her when she was previously the Minister responsible for this bill back in 2022 that iwi Māori don’t have any rights or interests in three waters assets beyond that of a member of the community that they live in.

Minister, would you please explain why consumers, communities, territorial authority owners—why a water service entity doesn’t have to consider and incorporate their views into the strategy, why they simply have to publish a strategy on the internet but at the same time give effect to Te Mana o te Wai statements provided by iwi and hapū. Minister, that is one of the reasons why New Zealanders have lost faith in these reforms and have completely lost confidence in this Labour Government, but you could potentially pull a rabbit out of the hat right now and convince us otherwise. Have a go.

I won’t, because, as was covered quite extensively last night, everything the member’s just mentioned has already been passed in previous bills. This bill references obligations under the Treaty of Waitangi, but the member’s point is to give effect to the Treaty of Waitangi and give effect to Te Mana o te Wai statements. As I said last night on a couple of occasions at least, that is in reference to the Water Services Entities Act, which is already passed.

I move, That the question be now put.

The question is that the Minister’s amendments to Part 1 set out on Supplementary Order Paper 418 be agreed to.