Water Services Economic Efficiency and Consumer Protection Bill

Thank you, Mr Speaker. I present a legislative statement on the Water Services Economic Efficiency and Consumer Protection Bill.

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

Hon Dr DUNCAN WEBB: That is excellent. I move, That the Water Services Economic Efficiency and Consumer Protection Bill be now read a second time.

This bill is part of a suite of legislation designed to give effect to the water services reforms. It introduces an economic regulation and consumer protection regime with the Commerce Commission as regulator, which will ensure the new entities promote the long-term interests of consumers by providing services that are efficient, effective, and responsive.

New Zealand’s water infrastructure and services are not meeting the needs of our communities in that the quality of service does not reflect what consumers demand. There has been long-term under-investment in water infrastructure, there are inefficient pricing practices and a lack of transparency around costs, and there are mounting concerns about the capability of the water services sector to deal with Government and community expectations.

The Water Industry Commission for Scotland estimated the investment required to deal with these issues in New Zealand is between $120 billion and $185 billion. This investment needs to be made for the health and wellbeing of our water and our people, now and into the future. The water services reforms will ensure the costs paid by households remain at a reasonable level while these investments are undertaken. The new entities will provide the scale and operational efficiency to provide high-quality water services at a price that is much more affordable for New Zealanders in the years to come.

This bill will subject the new water services entities to an economic regulation and consumer protection regime with the Commerce Commission as the regulator. The commission has experience in implementing economic regulation in other utility sectors such as telecommunications, electricity, and fuel, as well as enforcing consumer protection legislation. A Water Services Commissioner will be appointed to ensure the new economic and consumer protection regulation role is given the focus and prominence it requires. The wider water services reforms will ensure that New Zealanders benefit from upgrades to water infrastructure. The bill complements the wider reform package by providing for economic regulation and consumer protection, including minimum quality standards and dispute resolution.

I would like to thank the members of the Finance and Expenditure Committee for their consideration of the bill. I would particularly like to acknowledge the chair, Ingrid Leary, and the former chair, Rachel Brooking. Thank you both for ensuring the bill undertook a robust and democratic process. Further, given that the committee was considering this bill and the Water Services Legislation Bill, I want to thank the committee for the extensive work—and I do know it’s very hard—that went into considering submissions and providing recommendations on both of these bills at the same time.

The committee considered 136 written and 65 oral submissions on this bill. I thank those submitters for their thoughtful and extensive feedback—hearing from the public is key to our democratic process. Every comment that submitters made was considered fully, and the resulting changes have significantly improved this bill. I would also like to thank members of Waikato-Tainui, Maniapoto, Raukawa, Te Arawa River iwi, Tuwharetoa, and all representatives of iwi that have participated in this process to date for their constructive and thoughtful engagement. It has resulted in improvements to the bill I present today.

On 7 June, the committee reported the bill back to the House, recommending several amendments which I endorse, and I would like to mention a few of those key amendments. The committee recommended an additional qualification for the Water Services Commissioner, who will be responsible for the commission’s functions under the bill. We established this role to recognise the impact that water infrastructure has on water quality and the importance of Te Mana o te Wai. The committee also recommended that knowledge of Te Tiriti and its principles and perspectives of Māori and tikanga Māori should be added to the list of qualifying domains for the position of commissioner.

The committee made several recommendations to strengthen the commission’s oversight of the entity’s obligation to promote urban growth under the Water Services Entities Act 2022, including mandatory disclosure requirement relating to how an entity is fulfilling its obligation in relation to growth; ensuring the Minister and the commission take into account the obligations of the entities in relation to supporting and enabling planning processes, growth, and housing and urban development; providing for the commission to monitor compliance with the development code that entities are required to make under the Water Services Legislation Bill and provide enforcement mechanisms for contraventions; and making it explicit that a developer is a consumer.

In supporting equity and fairness across the reforms, the committee recommended that the consumer dispute resolution service should be aimed at handling small disputes in a more accessible way than the courts. This involves allowing both parties to appeal, and capping compensation at $50,000 to enhance alignment with other schemes. The bill empowers the commission to establish minimum service standards through a service quality code, with the committee suggesting inclusion of a non-exhaustive list of code topics for improved guidance during its development.

Additionally, the committee recommended that the commission prioritise safeguarding vulnerable consumers’ interests in the delivery of water services. Thanks again to the committee’s efforts. I think this bill will provide greater benefits to New Zealanders. Continuing to progress this bill will ensure that water services are meeting the needs of our people and our communities for generations to come. I commend this bill to the House.

The question is that the motion be agreed to.

Thank you, Mr Speaker. Oh, this has been a disastrous process. We’ve had the two water services bills and now we’re into this one, the third one—the treble. I think there’s been a lot talked about the water services bill today. If people are beaming into this wonderful debate this afternoon, we’ve been debating under urgency because the Government’s got its timing all wrong and it’s shoving through all this legislation. We’ve been doing it this morning on the water services bill for, oh, probably at least four hours, I think—I’m just looking at my colleagues here.

So this is the last bill in the triumvirate of water services rationalisation proposed by the Government, and, you know, it’s incredibly contentious. The Minister talked about savings of $120 to $180 billion, dreamt up by someone in Scotland. There’s a lot of dispute, a lot of economic dissension on those estimates. We asked other people to be involved in it. I know there are other economic agencies who have looked at it on behalf of councils. They considerably dispute those figures put forward by the Scottish regulator.

This wonderful thought that you can go ahead and spend millions on creating new offices in Auckland, which one of the entities already has—committed significant amounts of money setting up a new office even though Watercare is just parked up in Newmarket in big new offices. No, that’s not good enough for one of these ones—they’re going to have new ones, brand flash new CEOs, and because they’ll have more employees and all that sort of stuff, they’re going to be paid more; you can guarantee it, if this ever came to light. All this cost, this wonderful cost, and, you know, there’s multimillions of costs being incurred in setting this up, let alone just the regulatory process—multimillions, if not tens of millions, that have been involved in this—and somehow, miraculously, the Minister’s trying to claim in his speech that, you know what, everyone’s going to be better off. Well, we don’t agree with that.

Some of the submitters were very thoughtful, very professional, and actually very experienced in these matters. I think the first issue with the water changes is the impact on councils. Not only is there the transfer of ownership of those water assets out of councils back into a new entity with all this diffused ownership structure—regional committees and all that sort of stuff—it does give rise to who owns these assets. No one, through all this process—and I’ve been involved in it right from the start—not one official, not one Government Minister, has ever been able to explain to me who will own these assets. If you look at the definition of ownership in a share—the legislation talks about a share—you must be able to exert some control over that share. That may be through governance, through management, or by financial support—all that sort of stuff.

Of course, the structure—that diffused and confused structure—that the Government has come up with, someone has dreamt it up on some whiteboard in the bowels of somewhere, is so convoluted that no one can point to me and say who will own those shares. If you cannot exert control or some form of influence, if you can’t do all of those three things, if you look at the definition of a shareholding—that means that you do not have control. Where these assets will park up on someone’s balance sheet, I am totally unclear on, even today, even though I come from the financial services sector and know a little bit about these things. That’s the first thing.

Standard & Poor’s—we started to push back on some of this stuff. Standard & Poor’s directors (S&P)—after we got through a whole lot of mired conversations that we didn’t have any clarity on, suddenly the S&P directors came out and said this will have an impact on the credit ratings of some of our councils. Again, this is a significant thing for New Zealanders, and significant for residents within those boundary areas, because their council’s going to be paying more for debt and it’s going to be more cost, and, of course, we’re going to see the assets transferred off their balance sheet. It is a significant asset transfer from one entity into some other entity with this relationship that’s really bad.

The other thing we’ve heard about was the entrenchment provisions, where the Government tried to very sneakily make sure that these things could never be privatised. Even though we as a party, National, said we weren’t going to privatise it, the Government tried to sneak through a provision around entrenchment, around stopping privatisation, that wasn’t needed. It was totally uncalled for and, actually, it was against the parliamentary rules, where you need to have a supermajority to make those sort of long lasting changes an intention of the House.

But this bill itself is all about economic regulation. Of course, this is one where—guess what!—the Labour Government have gone overboard yet again. This is one heck of a piece of legislation. Normally, when you set up regulatory authorities to look after the water industry, the starting proposition is that you have a whole lot of commercial operators. I know those people over there—I’m looking at the Labour Party members—all hate the commercial sector. But, normally, you’d have a whole lot of private sector organisations out there competing and trying to rip people off—well, that’s what their view is. That’s when you put in place very strong economic regulation.

Hey—guess what!—if we listen to the Labour members, hey, these things are going to be wonderful; they’re going to have all this influence on Aboriginal groups, we’re going to have everyone having a go at it and telling them what they should be doing.

Simon Court: Kumbaya.

ANDREW BAYLY: “Kumbaya”—that’s the right word. And, of course, if that proposition is to be accepted, why do you need such heavy-hitting economic regulation? Because these guys never know when to say “No”. It is not appropriate, Mr Bennett, because no one across the other side sits back and goes, “Do we actually need this? Is there another way of doing economic regulation? Is there a way—do we actually think about the intent of these organisations? Are they being set up to rip people off?” Well, if you take the Labour view, and the Minister’s view just before—no, they’re not. They’re wonderful. They’re going to solve all our issues. But we’ve ended up with regulations that no doubt we’re going to get into. [Holds up bill] That’s the book—that’s the book. And there’s regulations up the wazoo. What we shouldn’t be doing is—actually, all entities need to be regulated to some extent, but the extent of regulations in here is an absolute overkill.

Then—just realising that time is ticking on—I think the other thing is the need to determine who the regulator is. The regulator is someone who is going to be set up under the Commerce Commission—they’re going to be an appointment of the commissioner. The thing I find interesting is the requirements of the commissioner, and I’m just going from memory here. First of all, they must have expertise in the water services industry. Well, I think, if you’re going to be a commissioner, that would be a pretty good start point. In the next point, it then goes on to say, well, you could also be someone with experience in any other industry—not just one but any other industry. Not just the water industry but any other industry. That means you can be a politician like Mr Nash, who’s just joined us. When he leaves here, he can be a commissioner because he’s got experience in other stuff. You’d be a great water commissioner because, at the moment, you’d meet the requirements, Mr Nash. Or you could have experience in commerce—you’ve got that too.

DEPUTY SPEAKER: No, no, no, no, Mr Bayly. I hate to interrupt your flow—“you” is me.

ANDREW BAYLY: Oh, yeah, sorry. But Mr Nash, we were talking about here. Mr Nash—he’s got experience in commerce, he’s got experience in economics. Have you got experience in law?

Hon Stuart Nash: I have!

ANDREW BAYLY: Mr Nash—and accountancy. Mr Nash. I reckon Mr Nash should be the next water commissioner, because he doesn’t have to have experience in the water services industry. Mr Nash has come out of the forestry industry, but that does not matter, because you can have experience in any other industry. That’s how ridiculous this is. This is ridiculous. Put a common-sense lens over this. This is why the Labour Government has got into such problems, because these people don’t sit down and apply a bit of common sense. Anyway, I’m looking forward to the committee of the whole House.

I’m very disappointed that the previous speaker wasn’t as enthusiastic about the Water Services Economic Efficiency and Consumer Protection Bill as he was in the Finance and Expenditure Committee, where he actually contributed quite a bit to some of the substantial changes, including making the dispute resolution more robust and that it proactively take into account the need to identify classes of vulnerable consumers and take their interests into account. Also there is a change to clause 74 where complaints can be taken by consumer groups. We think this also increases the consumer protections in the bill.

The really interesting discussion that I thought the previous member would pick up on is around the presumption in the bill when it came to us that there would be price quality regulation. Now, that presumption is still mainly there and that’s good. It sends the right signals around price and quality to the market, but it also means that there can be baseline data gathered and that the commissioner in its determinations as it gets that data can decide in the case of each of those entities whether price quality regulation is needed or at what point. Now, I think that’s a really useful and flexible change to the legislation, because what it means is it doesn’t assume price quality. There’s a signal to ensure that the providers act appropriately, but in the event that more competition comes into the market just through the other interventions and certainly through the exposure of data that will be provided through information disclosure, there is some flexibility for the Commerce Commission to respond accordingly. That’s good regulation. It’s something that Mr Bayly contributed to robustly in the discussions and it’s a shame not to see that reflected in the House today.

Thank you very much, Mr Speaker. It is lovely to hear Ingrid Leary, the chair of the Finance and Expenditure Committee, complimenting my colleague Andrew Bayly. He is very passionate about these topics and no doubt he actually wanted to improve the bill and I acknowledge the chair and thank her for acknowledging the Opposition’s contribution to make the bill better.

So when I was listening to Andrew Bayly, apart from going half deaf because he’s very loud, very loud—ha, ha! I am just always very in awe of his passion when he speaks on these topics and what he reminded me of—as I’m a person who comes from the visual sort of industry before my time in Parliament—when he was talking about how this bill actually is wasting a lot of time in terms of flash offices or whatever, I just had this picture of an empty office space down in the viaduct when the former Minister of Transport actually decided that he wanted to create a walking and cycling bridge and he actually rented a big office space and paid couple of million dollars for it and it sat empty, and then the policy got cancelled. That’s such a waste.

As Mr Bayly said, on this side of the House we are opposing this bill. On economic regulations, we actually believe in sound economic and commercial regulation, including that economic regulation and consumer protection is actually paramount. We really believe in that, but we believe that it has to be for the right water services entity and the local councils that own the water assets, not the three waters bill. In a cost of living crisis, I think it is paramount that the Government becomes like a parent, in a sense, in a household, that they lead by example. And when the Government is seen as not being very cautious or responsible in the manner that they actually spend taxpayers’ money, I think people, citizens, will be very disappointed and it is not actually a good example.

So the Water Services Entity Bill—not this one, but the Water Services Entity Bill passed its third reading in December of 2020. This particular bill, the Water Services Economic Efficiency and Consumer Protection Bill, is “to provide the independent commercial scrutiny of the entities.”—and I’m reading from the bill notes. It actually establishes a new set of economic regulations on the entities and consumer protection for the water services sector with the Commerce Commission as the regulator, with the appointment of a new Water Commissioner. I think that’s literally what Mr Bayly was actually talking about, that anyone with experience but without necessarily having worked in the water industry can actually become the commissioner. That seems a little odd.

The reason why I say that is recently in this House—not so recently—when we were debating another bill in relation to the RNZ and TVNZ merger, they had consultants who were actually brought in to help the officials and members of Parliament who were debating the issue. Not one of the consultants who were brought in actually was an expert in media, nor public media or broadcasting. That would seem really ridiculous that people who the Government who spends taxpayer money is actually consulting had absolutely no experience in the subject matter that we were actually writing legislation about and debating in the Chamber. This seems like another one where just anybody could potentially be the commissioner, and that is a little bit worrying.

There are actually several regulatory impact statements that I actually would like to quote, if I may. The regulatory impact statement states that there is a huge transitional uncertainty created because of the reform, and I quote, “Over time it may become evident that the scope or form of economic regulation is not in the best interest of water consumers.” is actually one.

The other one is that in the regulatory impact statement officials have actually warned that changes can be put on tenants via higher rents with substantial risks—and some prices increase significantly due to under investment and uncertainty. And when you actually create a mega entity, actually four entities—

Hon Member: Ten.

MELISSA LEE: Sorry, 10—10 entities. Obviously, I wasn’t part of the select committee. I think that when you actually consider that, it’s a humongous cost to the country. And when a lot of the consultations and public consultations through the select committee where people actually feel that their views and their opinions actually didn’t matter, because of the way that the Government seemed to be ramming legislation through this House, it is rather disappointing. Not just disappointing. It is quite shocking that we are here under urgency debating yet another water services bill in the House.

When you actually talk to local government and people who are in the regions, they actually feel that their assets have been stolen by Government. They want to own their own assets and they need the Government to assist them. Some of them have great water services, but there are those that who actually need help. For that, we will make sure that we have the right legislation when we are in Government after 14 October to make sure that the people of New Zealand can rely on decent and good water services legislation rather than this three waters legislation that this Government has produced. On that note, I do not commend this bill; I oppose it.

Thank you, Mr Speaker. It is with great pleasure that, having to see these water bills through to where they are—to know that, now, we can say to ratepayers that not only will their rates go down and cost less from what they would be, we are also making sure that we have the regulator to make sure that the charges that are put on our water consumers are absolutely on point. It has been a long time coming. I know that in my electorate in Hawke’s Bay, the four councils that are part of this are absolutely looking forward to seeing affordable water finally delivered for our region. Thank you, Mr Speaker.

Thank you, Mr Speaker. The ACT Party has a differing view. It’s here in the report back to the House from the Finance and Expenditure Committee. I do want to thank the officials for the efforts they made to respond to the many questions that the ACT Party had about the legislation. I also want to acknowledge the hard work of Ingrid Leary as chair of the Finance and Expenditure Committee, because she had a very difficult job to do—to inquire about all the flaws in the legislation, which was legislation proposed by her own Labour Party, and do it in a way that was even-handed and allowed for the best possible discovery of the issues with this bill. So it’s wonderful to see that in Parliament, through parliamentary process, there can be an even-handed approach to assessing the costs and benefits of legislation.

On balance, ACT will be opposing the legislation but we do agree there’s a need for an economic or infrastructure regulator. What is the problem to solve? The problem to solve is that for decades local government has failed to invest in infrastructure in a way that keeps up with growth and maintains the assets that they own and that the Local Government Act already requires them to maintain and to provide for, to make provisions for, to renew and replace as infrastructure ages.

So the ACT Party engaged constructively throughout the entire three waters reform process and we continue to engage constructively with officials, with submitters who came to the Finance and Expenditure Committee, in an attempt to discover how to make a regulator of infrastructure assets work.

Now, the problem is no action has been taken by this Government or previous Governments to enforce the law. When it comes to the Local Government Act, councils have not been following the law. Some of them might know where the pipes are broken. They might know where the waste-water pump stations are failing and leaking into waterways. But the Government—central government—hasn’t used any carrots or any sticks to get them to follow the Local Government Act provisions, which require them to maintain their assets and make provisions. And yet here we have a whole reform programme designed to solve a problem that the law says should already be solved. Remarkable. Imagine that. So the current system is not up to scratch. This Government’s reforms will not help. In fact, they’re likely to make it worse.

The Government has established the Commerce Commission in the role, an awkward role, of having to be a market regulator that’s not just regulating a market—in fact, they’re not regulating a market at all. There is no market for a monopoly water services provider. There is no market for somebody to come and lay an alternative water pipe in your street and supply water to your house.

This is a monopoly, so the Commerce Commission is required to regulate a public service and regulate infrastructure—infrastructure quality, mind you; not infrastructure investment, not infrastructure pricing, not weighted average cost of capital but the quality of infrastructure provided for the money that water service entities will allocate. But they don’t have the competency of the tools to carry out that role.

We’ve heard that they’re proposing to hire up to 25 people to establish a unit to act in this regulatory role, and yet there other organisations that already do this within Government. The Office of the Auditor-General already audits local government, councils, against their long-term plan and whether they are meeting their objectives, whether they are in fact investing in infrastructure to meet growth, fulfilling their obligations to their communities, and doing what they say they do. The Auditor-General often reveals that they’re not, and yet the Government hasn’t taken any action against local councils, as I’ve pointed out, under the Local Government Act, to rectify that.

But the most awkward thing of all for the Commerce Commission and for the people who work there, is that this piece of legislation requires them to become a regulator of tikanga Māori. How is it possible that if you’re an economic regulator and an infrastructure regulator, you are required to determine whether a water service entity is respecting the Treaty, giving effect to Treaty obligations and Te Mana o te Wai? Well, how on earth are they supposed to do that? Te Mana o te Wai relies on a spiritual belief in mauri, or the life force of the water—water comes from some heaven and ends on Earth, and has a life force. I mean, anyone who’s seen the Star Wars trilogy or the prequels or the sequels would be familiar with the term “life force” but who knew that in 2023 an economic regulator of water infrastructure is going to be required to work out whether water companies are fulfilling their obligations not only to work out whether these entities are meeting their Treaty settlement obligations—potentially as having some function of the Crown—but also whether they’re taking care of the life force of the water. As far as I was aware, as a civil engineer, infrastructure is pipes, manholes, drinking-water treatment plants, waste-water treatment plants, stormwater overflows, culverts, and all of those things. The water that flows in them is only fit to drink, fit to flush, or fit to use for industry. As far as I’m aware, there is no engineering of scientific test for the life force or the mauri of the water.

While it is entirely acceptable that one culture in New Zealand believes that water has a life force, it is completely unacceptable to require infrastructure regulators or economic regulators to have to take account of spiritual matters when they’re working out whether people are paying a fair price for water.

Then we get to the next problem with incorporating Te Mana o te Wai in the way water infrastructure is managed. Te Mana o te Wai, through applying a life-force test, actually means that instead of just fixing up the pipes and the waste-water discharges to meet an ecological test—are the fish in the stream OK; is it safe to swim in, is the water safe to drink?—they will have to platinum-plate, cultural-plate a tikanga cost on to water infrastructure. Nowhere else in the developed world would a society impose this cost on to households, on to business, and on to New Zealanders present and future.

This bill is a recipe for a decline in New Zealand society. ACT supports the three waters reform objectives: to deliver high-quality water infrastructure to enable growth, to enable land to be serviced for more affordable housing. There’s no good in putting through legislation that entrenches excessive costs in providing water infrastructure to new housing, new subdivisions, or to parts of our existing cities where we want to build up, say, around public transport hubs or around town centres. It’s very, very expensive already to build network infrastructure in those locations without adding a spiritual dimension to decision making around water. This will be impossible for the Commerce Commission to regulate. They’re going to spend time and money, they’re going to hire people, and unfortunately for the Commerce Commission and any individuals who take up these roles, should there be a change of Government, this bill, the parts of it that relate to tikanga and Te Mana o te Wai and all of those metaphysical things will be repealed and those roles will be made redundant.

It’s not just ACT saying that this piece of legislation doesn’t work. I can quote from Water Magazine, the July/August issue, where a gentleman by the name of Andrew Stevenson, who’s worked for the Commerce Commission and is a specialist in regulating infrastructure, says that water services providers will have to publish asset management plans which actually don’t meet the commission’s specifications as set out in the bill. They won’t align, these asset management plans required by this legislation; they won’t align with local government or similar financial systems as the regulator is focused on different outcomes and applies different principles. Imagine that—three years of talking about water reform and this legislation, the last bill in a series of four, pushed through by Labour today under urgency, doesn’t even address the most basic issues about how you align the need to invest in infrastructure with the regulator whose job it is to oversee whether that investment lines up with the land use planning and with the need to provide water infrastructure for affordable homes and so businesses can access water for business. We will oppose this bill.

I’m pleased to take a call on the Water Services Economic Efficiency and Consumer Protection Bill. The Green Party is supporting this bill, because one of the fundamental tenets of the whole reform is that if you create larger entities, they will be more efficient, they’ll be able to borrow more. So there will be less burden on councils and a recognition in the supporting documents that councils, because of rates and the community response to rates, have often been reluctant to raise the rates or spend much rates on infrastructure. With these bigger entities, that obstacle and constraint is seen to go. So therefore, with bigger entities you really do need a strong consumer protection and advocacy regime, and mechanisms for resolving disputes between consumers and the entity.

That’s what this bill provides. As others have noted, there was good debate in the Finance and Expenditure Committee. And like others, I acknowledged the chair, Ingrid Leary, and the former chair, Rachel Brooking, for their leadership on this and encouraging that degree of debate.

The previous speaker talked a lot about the Commerce Commission. The Commerce Commission regulates industries like the telcos, like gas, and so it’s entirely appropriate that the economic regulation should come under the Commerce Commission, and with a specific Water Services Commissioner. The committee, in considering the bill, included some additional criteria about the expertise that that commissioner should have. So the Greens are confident that that person will have the specialist knowledge that Melissa Lee talked about.

There are other improvements to the bill that occurred through the select committee process, in terms of—there was some concern that water services entities in the form of Watercare had not always been as responsive to developers’ requests for new infrastructure. So there are specific new provisions in the bill which have a dispute resolution process around developers’ requests for infrastructure. But the Green Party really believes that the commission and the Water Services Commissioner have got to look very closely at things like private plan changes, ad hoc requests for subdivision development and the infrastructure to facilitate that, to ensure that is not imposing big costs on the entities from putting new services in place.

In some of the previous debates, members have referred to a number of boil-water notices as justifying the need for the establishment of the entities. Those boil-water notices in Canterbury are often the result of inappropriate agricultural intensification and a failure to control land use, so the water services entities won’t in themselves have that regulatory power over land use. That’s a key issue for the new regional planning committee, through their new plans, and of course regional councils under the Resource Management Act.

We really do need to protect source waters in order to reduce the costs for entities, and reduce the cost of the provision of services. If they have to substantially treat a lot of water, run osmosis filters and the like, that will increase the charge to consumers and it will then be difficult for the dispute resolution service, for the tribunal that’s being set up there, to actually have those charges reduced, because they go back to a fundamental inappropriate management of land use and an unnecessary contamination of water.

The bill was significantly improved through the select committee, through the service quality code that’s now proposed in terms of consumer complaints, the way in which the dispute resolution service would work, and also the establishment of a separate consumer advocacy agency, recognising that that was not really the normal responsibility of the Commerce Commission. So it is a bill that we really need with this economic regulation, and consumer protection with the establishment of the 10 new entities, and the Green Party supports it.

Hello. It’s really nice to take this call and to be able to actually express my respect for the honourable member that’s just sat down, the Hon Eugenie Sage, who is in her last few weeks in this House and she is still tenaciously contributing in everything, and we are really grateful for what she has done, including on this committee. It was a very constructive discussion over this bill in the Finance and Expenditure Committee and it was quite a creative one. We really thought about the issues, particularly with regard to power imbalance. One of the things that came out of that was a really strong discussion about the role of the Consumer Advocacy Council in making sure that consumers were protected but also the Commerce Commission’s role in doing so. I commend this bill to the House.

The next call is a split call. I call on Joseph Mooney for five minutes.

Thank you very much, Madam Speaker. I rise for a brief call on the Water Services Economic Efficiency and Consumer Protection Bill. It’s not one that I have been on the Finance and Expenditure Committee for, but I will make some comments—

Hon Rachel Brooking: Oh, you’ve missed out.

JOSEPH MOONEY: —in respect of this. I’ve “missed out”, I’ve heard from the other side, from my colleague Rachel Brooking, I think. But, look, the National Party does not support this bill. The National Party will repeal and replace three waters, including this one. We do believe in sound economic and commercial regulation, including economic regulation and consumer protection, but for the right water services entities and local councils that own the waters. It’s an important point: the local councils that own the waters, not three waters, not these mega-entities that are going to be part of this proposal.

It’s interesting, if you’re reading the departmental disclosure statement, which notes that the three waters service delivery reforms will result in significant changes for the water sector, with the creation of four water service entities that will serve as 85 percent of New Zealanders, that it does say, “We anticipate that there will be some uncertainty for the entities about what the new water service entities will inherit. They will inherit various systems and processes and water service assets in varying conditions. We therefore expect that the water service entities will need time to gain comfort with the new structure of the sector, their own internal processes, their assets, and their regulatory requirements. It is also possible that this uncertainty could lead to some water service entities acting too cautiously, focusing on compliance with little regard to efficiency in an effort to avoid any risk contrary to the provisions of the Act.”

I’ll just pause on that point to note that this is one of a trilogy of different bills that are quite significant in and of themselves and have had significant changes over the course of the last year or so as the Labour Government has pushed through this three waters proposal that they are now enacting into law shortly before an election.

Unfortunately, one of the problems with this very significant piece of work is that it has pushed this through the select committee in shortened time frames, which has given little opportunity for many of the affected communities and parties to actually make substantive submissions and to iron out the significant and substantial difficulties that have been identified with these bills. Frankly, it is not good lawmaking to push through such a significant piece of work without getting sufficient feedback from the communities who will be affected by this. The fundamental challenge and problem is that this is shifting the assets from those communities who have built them up over many generations into a completely new model and then expecting that there’s going to be an economic benefit from it.

I note this point which I started with in the departmental disclosure statement that the uncertainty about these new processes may lead or could lead, as was identified here, to some water services acting cautiously, focusing on compliance, with little regard to efficiency. Obviously, one of the main points that has been used to push this through is that it supposedly will be more efficient and, therefore, will be less costly. However, that appears to be unlikely, as this is likely to be more complex and more costly, and that is, unfortunately, the last thing that New Zealanders need right now in a cost of living crisis.

So this is one of a number of actually very complex pieces of legislation that is going to take a huge amount of work for people to try and get their heads around. But I will say that there is an election coming up very shortly and there will be an opportunity for New Zealanders to vote for a new Government, and I can say that if it’s a National-led Government, this will be repealed.

Thank you, Madam Speaker. It’s a pleasure to take a short call on the Water Services Economic Efficiency and Consumer Protection Bill. Can I just begin by pushing back a little on the previous speaker, who claimed there was a truncated process here. This bill was introduced to the House in December 2022. It is now eight months later, and we are considering it for its final stages. So I just want to push back that there hasn’t been considerable analysis and consultation on this bill over the last few months.

This bill is a critical part of our water reform programme. It’s important that with the introduction, obviously, of the affordable waters reform, we have a system to ensure that economic regulation is in place to protect consumers. I note that the economic regulation regime that we’re introducing through this bill is similar to the existing economic regulation regimes that are under Part 4 of the Commerce Act, which regulates electricity line services, gas pipeline services, and specified airport services. The approach is also similar to the regulation of fibre fixed-line access services under the Telecommunications Act.

This bill will complement the drinking-water safety and regulation oversight that’s provided by the water regulator, Taumata Arowai. It will ensure that consumers are protected through our reform. It’s an excellent bill, and I commend this bill to the House.

It’s my pleasure to take a short call on the Water Services Economic Efficiency and Consumer Protection Bill in this second reading. This bill is part of the wider water services reforms launched by the Government in July 2020. It’s absolutely long overdue. It will reduce rates for our households and it will be well received by the people of Waimakariri in particular. So I commend this bill to the House.

Thank you, Madam Speaker. It is a pleasure to take a call on the Water Services Economic Efficiency and Consumer Protection Bill—and I had to read that because I’ve just this minute got it in my hand, essentially.

All this suite of bills around three waters have come about from what occurred in Havelock North a few years ago now. It was a terrible event, and I think we all agree on that, but, essentially, that came about because the Ministry of Health weren’t doing a great job of regulating and inspecting water right across the country, effectively. In fact, there were very few prosecutions at all from them over the years, and, as Havelock North showed us, there was a need for oversight and some rigour in that area. That was a very poorly managed wellhead. Anyone who’s had anything to do with wells will know that you have to keep stock away from those things, and it is not only the management around that wellhead but the way the well has been secured around the ground itself is also very important, and that was clearly lacking.

That was a terrible event, so something had to be done, and there’s no doubt about that. Everybody agrees about that. However, this suite of bills has gone way too far. There’s regulatory overreach and they’ve gone way beyond the safety issue that triggered these bills to come into being. While this one was introduced in December 2022, I believe, we are now rushing it through its last stages in urgency, and you’d have to wonder why, or I certainly wonder why.

Rushed legislation is seldom good legislation. There are often occasions when it has to be done, like with the Christchurch earthquakes or like with the Kaikōura earthquake, when there was a real need that had to be addressed immediately. But often those are very short-term pieces of legislation where we come back later and do a better job. But this legislation is meant to be the first and final, but it’s riddled with holes.

I mean, some of the issues in this around all the committees—I heard my colleagues earlier on in the day talking about all of the problems with them. It’s quite shocking, really, on some of them. For example, the regulatory impact statement states that there is huge transitional uncertainty created because of these water reforms: “Over time, it may become evident that the scope or form of economic regulation is not in the best interests of water consumers.” Well, that’s the whole point of this legislation as being in the best interests of water consumers, and yet, clearly, the regulatory impact statement sees a real risk there that this is not in the best interests of water consumers.

The regulatory impact statement also warned that changes can be put on tenants via higher rents, with substantial risks and it says that some prices could increase significantly due to under-investment and uncertainty. These are mega-monopolies that are going to be set up to manage water. Now, the Commerce Commission will have a role to play in that, and we know that with the lines companies, for example, they come underneath the Commerce Commission’s purview to make sure that they don’t gold-plate investments and, indeed, that they don’t under-invest in their assets, and that whatever they spend, of course, goes back to the consumers in the form of fees. But this does not give us any comfort that these mega-monopolies are actually going to do a very good job.

So it’s really overregulation, but the issue that I think really upsets people, or grinds their gears, if you like, is some of this stuff around the mauri of the water and the Treaty requirement for the Commerce Commission. I want to touch on this. Look, I totally get and respect the Treaty, and I totally get and respect Māori views on things, but the mauri of the water and so on is included in this bill. You can’t measure the mauri, and so if you can’t measure it, I don’t know how you can manage it. So that’s a real problem for us, because we want legislation that works, and I would wager there’ll be different definitions of that.

I mean, this is, essentially, vitalism. Most cultures—almost all cultures—had a form of this in part of their development, and then they’ve moved on from that and embraced science, which we pretty much work on today. So is that better? Well, it is from a regulatory and a legislative point of view. What people’s personal beliefs are is their business, quite frankly, and I accept that and celebrate it. But we have to make laws. We have to make legislation that New Zealanders have to live by and will have to pay bills upon, and, essentially, this legislation puts so much uncertainty into it.

The Commerce Commission will have a huge job trying to control these entities to ensure that New Zealanders are not being charged too much and that these entities are investing the right amount, but it has to have regard to the Treaty. Well, how does that actually affect how they are going to invest, or ensure that they aren’t under-investing? I don’t get that. I’m not aware of the Commerce Commission having any Treaty requirements that I’m aware of, and I’ve certainly looked at it a fair bit around the energy sector, so I imagine—I haven’t seen any reference to it, so I don’t think it’s there.

Look, I get that we want to have a New Zealand flavour on all of our legislation, and that’s good to a point, but we have to be practical about these things. So I do not support this bill.

Thank you, Mr Speaker. I rise to take a call, the last call on this second reading, and I just want to take a moment to thank the select committee. It was obviously a robust process and they made some great changes to this bill that will ensure that we have good, strong regulation and consumer protection.

I am a little confused though, that people are worried about having the inclusion of Te Ao Māori or matauranga Māori or, you know, that you can’t actually make good economic decisions and still consider Te Ao Māori. I challenge the other side of the House to go and have a little look at our Māori economy that’s worth $70 billion; it’s growing, it’s resilient, and it’s global. I don’t think that this is a bad thing for a commissioner to have access to, and because of that, I commend it to the House.

The question is, That the amendments recommended by the Finance and Expenditure Committee by majority be agreed to.

Amendments agreed to.

This bill is set down for committee stage immediately. I declare the House in committee for consideration of the bill.

In Committee

Part 1 Preliminary provisions