Water Services Acts Repeal Bill

Members, the House is in committee on the Water Services Acts Repeal Bill. We come first to Part 1, “Preliminary provisions”. Part 1 is the debate on clauses 3 to 7, and Schedule 1. The question is that Part 1 stand part.

Thank you, Madam Chair. This part, as you outlined, is the preliminary provisions of this bill. Clause 3 sets out the purposes of this bill, which are “(a) to repeal the Water Services Entities Act 2022, the Water Services Legislation Act 2023, … the Water Services Economic Efficiency and Consumer Protection Act 2023; [to] (b) to disestablish the Northland and Auckland Water Services Entity … (c) make transitional arrangements for local authorities’ long-term plans”; defines terms used in the bill; provides transitional and savings provisions; provides that the bill, when enacted, is repealed one year after it comes into force; and provides that the enacted bill binds the Crown.

Thank you, Madam Chair. I would like to hear from the Minister of Local Government about his plans for engaging with Ngāi Tahu meaningfully on the significant repeal of Te Mana o te Wai. He may recall that I mentioned a river that I could swim in when I was a child before intensive dairy drained that river and did much worse to it. In the Manuherikia, old mining offtakes have now been used for intensive dairy—constant irrigation of what was dry land resulting in a trickle that’s hardly called a river—and it has seriously degraded biodiversity. So Te Mana o te Wai gave a hierarchy ensuring the health of the water came first. Water is life.

I understand that there was a letter sent on 31 January to stakeholders advising them that there would be repeal and change and that stakeholders had until today to respond. My understanding of Ngāi Tahu expectations for Crown engagement, in accordance with the recognition of the rangatiratanga and the principle of good-faith engagement, are that, firstly, that there will be direct engagement with Ngāi Tahu as a Te Tiriti partner. The Ngāi Tahu takiwā extends right across most of Te Wai Pounamu—that’s half of the country. Ngāi Tahu interests across this extensive takiwā shouldn’t be represented through engagement with pan-Māori or other advisory groups.

Secondly, my understanding is that engagement with Ngāi Tahu must begin early and continue through all stages with significant notice and good information so that Ngāi Tahu can meaningfully engage, and, thirdly, that significant engagement must be resourced.

So what is the Minister’s plan for correcting this oversight and ensuring meaningful engagement with Ngāi Tahu? I want to hear what the Minister’s plans are for engaging with Ngāi Tahu on this significant repeal of Te Mana o te Wai.

I’d like to ask the Minister of Local Government whether the purpose of the bill as described in clause 3 is to make small communities that belong to a body corporate pay for their own water infrastructure.

I can contextualise that for the Minister in terms of Waipori Falls, which is in the Taieri electorate. This was a small community that was formed when the Dunedin electricity company changed its legal status in the 1990s—sections were available, it formed a body corporate. They’ve had a lot of water woes, and I would point out to the Minister that only last week in the Otago Daily Times, one of the residents was complaining about vomiting blood, being taken to hospital, because of the bad water infrastructure.

Now, in my role as MP, I had got Mayor Bryan Cadogan from the Clutha District Council to come to a number of meetings with the residents of Waipori Falls to look at what could be done under the previous regime from the Labour side, which was affordable water, where perhaps the Clutha council, even though they weren’t required to look after those residents, would have been able to kind of sweep them in—it’s only 35 households—in order to be able to give them safe drinking water and water for cleaning and so on. Now, since the affordable water reforms have been swept out, that is no longer the case from the Clutha council. They’ve made it quite clear publicly that they will not be in a position to support Waipori Falls because of the projected rate increases. They just would not be able to sell that to their ratepayers.

Meanwhile, the residents of the 35 households have had 130 days straight of boil-water notices. On most days, they’ve had a maximum of around seven hours of water a day. There are people who are really fearing for their health and safety in terms of the contamination of the water that is available to them. In fact, during the previous term of Parliament, I was able to get a ministerial intervention to allow residents to go on to a Department of Conservation bridge and access water from the river, which they could then boil because that was another issue. If that hadn’t been available to them, they would have had absolutely no water—

CHAIRPERSON (Maureen Pugh): Come back to the bill.

INGRID LEARY: Yes, but just for context, Madam Chair, and for the Minister, this community is some distance; it lies between both Dunedin council and Clutha council. It is a body corporate. They do have a ratepayer base and I’d just really like to hear from the Minister what his plans are for small communities like that, where now councils are saying publicly they will not step in to support them and yet we have people from those communities vomiting blood on the way to hospital after having accessed the water.

Thank you, Madam Chair. I would like to ask the Minister of Local Government something from really the opposite perspective, one of a big city, because this proposal in Part 1 is to disestablish the Auckland and Northland water entity. In a place like Mt Albert, we’ve had real issues with flooding and we’ve had real issues with the kind of infrastructure just being antiquated. It’s stopping us being able to build up instead of out, but it’s also stopping us building out. So even if that’s the preference, it’s making it really difficult.

Now, the last Government put a lot of money into infrastructure, which wasn’t being done because the councils just couldn’t afford to do it. So when we were building thousands of houses, we were producing money out of the bank balance of the whole country to make sure that we could build there. It wasn’t being done within the current status quo because Auckland just simply couldn’t afford it. I’ve got a memory of the flooding. Where I live, there’s a park, and in the park the whole area flooded, and it flooded right down and through what was there in the sewage system and into the park so there was a lot of sewage flooding into the park. People were swimming in that water. I was really worried about typhoid. That water then goes on right down into the zoo area and it goes underground and then it was actually flooding the zoo, so it was a real issue for the zoo. Then it goes through Meola Reef. So all those areas were particularly affected.

We have a real issue when we combine this with climate change. One of the concerns I have here—and I’d like an answer to this question—is the proposal that we had and the law we had was supposed to create balance sheet separation. So it was supposed to put the entity at arm’s length enough that it could finance infrastructure builds for the long term. It was going to be cheaper in terms of financing it, but it was also going to be done by an entity that was really solely focused on the Auckland and Northland region.

Have you had an assurance that any proposal that you have to go back to the old structure is going to give you balance sheet separation? Because it certainly hasn’t been the case until now. It hasn’t had that magic effect. Have you had that assurance from your officials—and I’d love your guarantee on this—that under whatever you plan to do here, you absolutely will have the kind of balance sheet separation that means that this infrastructure can actually be provided at lower cost by the entity? I can’t see for the life of me how you could, but I’d like to know whether you have. My understanding of the test in these situations is, really, whether the council is backing the entity. So if it fell over, the council would come in and have to support it, because it’s actually not at arm’s length; it’s really part of it.

My own understanding of that situation is that can’t be assured in this case. So can I know from you, in a place like Auckland—that desperately needs to grow up and needs more housing and we desperately have old infrastructure that needs to be replaced—am I getting your guarantee that when I come back here in a year, you’re going to say things are better, that actually there is going to be balance sheet separation and there will be a way that the old entity can actually finance this, or is it in fact going to be a situation where the only option that the council have with the regulator breathing down their neck is to actually put up the rates? I know that Mayor Brown said he doesn’t want to, but it just seems to me, for the life of me, that’s the only thing you could do; you could only put up the rates and you’d have to put them up a lot. It wouldn’t be a little bit.

So are the voters and the constituents of Mt Albert looking at rate increases that are exponential as a result of what you’re doing today? And can you give me an assurance that’s not going to happen, because you’ve already taken away the petrol tax, you’ve taken away all sorts of other props that the council has—

The member’s time has expired.

Thank you very much indeed. The Minister of Local Government is quite right; we are talking about clause 3 which outlines, amongst other clauses, the purpose of the bill, so I will contain my questions to the purpose of the bill.

The purpose is to, obviously, repeal the three Acts that are outlined. The question I therefore have is: what advice did he seek, and what advice did he receive that repealing was the best way to achieve this Government’s objectives? Did he explore the possibility of amending the existing legislation to achieve those objectives?

The reason I ask that question is because the Minister himself, since making this announcement yesterday, has made a number of assurances, and one of those is that balance sheet separation could be maintained. Now, we all know—those of us that have looked into this in some detail and have followed it throughout its progression—that maintaining balance sheet separation is utterly essential in order to be able to obtain the economies of scale and, more importantly, the separation from councils’ books. The reason that is important is because we know that many councils, potentially most councils, are under financial strain at the moment. Some councils are at their debt cap, so can’t borrow more; other councils represent communities that simply cannot afford higher rates. Those communities might include city councils like Porirua that have a large proportion of people on low incomes; lower socio-economic areas. It could also include other councils that are completely different, like the Tararua District, which have a relatively small number of ratepayers, a massive area, a large number of towns, each with their own treatment systems, and the fourth-largest roading network in the country.

The reason I raise this is because all the advice that I have seen from the department and from those agencies—including credit agencies but also agencies that have reviewed the Government’s proposals, the Government’s preliminary work, the alternative model that was put forward by Communities 4 Local Democracy, which is remarkably similar to what this Government has signalled they are going to do—says that unless balance sheet separation is maintained, none of the things that the Government is claiming they will prioritise will be able to be achieved.

Now, it could be that the advice that the Minister received in order to outline the purpose of this bill is that the only way to do that is to repeal, but I am interested to hear if he received advice that he could have obtained the Government’s objectives by amending what is currently in place. On that note, I would also be interested to hear the advice that he has received from the department, which says that balance sheet separation can be maintained without an entity model, given that council-controlled organisations currently exist and haven’t worked.

Thank you. Tēnā rā tātou katoa. E rere kau mai te awa nui mai i te Kā’ui Maunga ki Tangaroa; ko au te awa, ko te awa ko au.

[Greetings to us all. The great river flows from the council of mountains to the sea; I am the river and the river is me.] 

That’s a whakataukī from Whanganui, and I thought it was appropriate for me to start there because, in 2017, this House passed a piece of legislation—the Te Awa Tupua (Whanganui River Claims Settlement) Act. I want to address some of the things in the bill from that perspective, and as an uri of Whanganui. The question that I have is: what discussions has the Minister of Local Government had with the people of Whanganui about the impact of this bill on that settlement? I know that through reading it, there is a change to—because it was considered under the legislation that is being repealed and I know that they were consulted on that. It seems to me only fair that one would consult them if you were now removing that.

My second question is: what advice has he had regarding the impact on the Te Awa Tupua (Whanganui River Claims Settlement) Act that this legislation has?

My third question to the Minister is: will he undertake to have the same level of discussion with the people of Whanganui on behalf of Te Awa Tupua? And as stated within that settlement legislation, will he uphold Tupua Te Kawa as part of his responsibilities within this bill?

Kia ora, auntie. Ngā mihi. Questions to the Minister of Local Government and reflecting and building on what Matua Adrian has already shared in terms of the experience, or the lack of experience, that Ngā Iwi o Te Awa Tupua have felt or not felt in the repeal process.

I want to go to the question or the statements around Te Tiriti o Waitangi in the repeal bill. The repeal bill will repeal the water service entities and restore the provision of water services to local government and their obligations to iwi and hapū under the Local Government Act 2002 (LGA), which are consistent with the principles of Te Tiriti o Waitangi.

May I draw the attention of the Minister to the fact that the way with which the Local Government Act is applied in terms of the relationship with hapū and iwi is inconsistent. In fact, if we’re going back to the future, many hapū and iwi—and I’m glad to see the MP for Northland in the House; we don’t have Whangārei here—don’t even have input in terms of asset management planning. We don’t know where the infrastructure sits, and we make requests, as hapū and iwi, for information share. We are constantly chasing councils, as they exist today, in terms of three waters, asset management, and even the flood responses and Cyclone Gabrielle. And considering the fact that we’re going back to the Local Government Act 2002, I do want to understand on behalf of te Iwi Māori: what does the plan look like for us? And what security do we have that local government will give effect to Te Tiriti o Waitangi in their application of the LGA in this space moving forward?

Building again on what was shared from Matua Adrian, I’d like to ask about hapū and iwi engagement in the development of this legislation, as there have already been questions made. Have the people of Te Awa Tupua o Whanganui been consulted? I would like to know, beyond councils and the engagement that the coalition Government is having with local government right now, what is the hapū and iwi relationship that the Government has with this proposal, and how are hapū and iwi responding to you as you engage with them? You know, maybe I’ve missed the memo, maybe there’ve been hui. Who are you talking to in te Iwi Māori, and how are they responding to the proposed repeals?

In closing, question to the Minister in terms of—thank you, you say that you are honouring existing Treaty settlements. OK, choice. But for those of us in hapū and iwi land who don’t have Treaty settlements to protect our waterways, what guarantee or protections are there for hapū and iwi that our Te Tiriti rights will not be undermined and that, in fact, our waterways will be protected so wai tūtae doesn’t flow out into Whangārei Harbour any more? Or, you know, that we will have the opportunity for safe drinking water in rural communities?

We have been put on notice; it’s the week of remembering Cyclone Gabrielle. Auckland, Wellington, the big cities—we saw the breakages. These are not new things. But also for rural New Zealand, like those of us from Tai Tokerau, we saw the devastation of what Cyclone Gabrielle did to us and our kainga.

As a young woman from the Pipiwai Valley—Te Orewai hapū Ngāti Hine Te Iwi—our families have had 10 months of no fresh drinking water from Te Awa o Hikurangi. Councils have been grappling as to how they can provide fresh drinking water to families apart from trucking in water tankers to the community for 10 months. So I am worried for our people at home in rural communities, that councils will be geared up and powered up to be able to provide local drinking water solutions for those communities in the back blocks of Tai Tokerau, Tairāwhiti, wherever we might be.

So, in closing, Madam Chair, I’d like to share a waiata to remember the waterways that are sometimes forgotten in planning.

Rere ana, rere ana te awa o Hikurangi.  

Huri atu, huri mai te awa o Hikurangi.  

E toru waku maunga: Hikurangi, Mōtatau,  

Huri raro, Manukōrihi, tū i te pō, tū i te ao e.  

[The river of Hikurangi flows, it flows.  

The river of Hikurangi turns away, and turns back.  

I have three mountains: Hikurangi, Mōtatau,  

Turn to the north, Manukōrihi that stands by night and by day.] 

The member’s time has expired. Can I please ask the member to take her seat.

Hūhana Lyndon: I will sit. Thank you very much. Kia ora.

CHAIRPERSON (Maureen Pugh): Also, I understand that the member is new to the House. It is not appropriate to mention the absence of a member in the House—someone who is not here. Can I just make a general comment, too, that this part is quite narrow; it is the purpose of the legislation or of the bill. So we have strayed a little bit away from the tight preliminary provisions in Part 1. So I’ll just remind the members to come back to Part 1.

Point of order, Madam Chair. Thank you for that, Madam Chair. I’m concerned that there has been a warning about relevancy before the Minister of Local Government has even responded to a single question. It’s very difficult for members to continue to provide relevant contributions when our subsequent contributions rely on the response from the Minister. Now, if the Minister had answered our questions and members stood up and provided irrelevant contributions, you would be absolutely right. But I think, in that instance, it was premature.

Thank you. Regardless, the speeches need to be relevant to the part that we’re debating at the moment.

Well, thank you, Madam Chair; I was just about to take a call. I just want to thank members for their questions that they have been raising.

There’s been a question in regards to Te Mana o te Wai. This bill doesn’t repeal Te Mana o te Wai. I think the letter that was being referred to may have been in regards to a different issue.

In terms of Auckland and the issue with Watercare, we’re working closely with Auckland Council around the options they have in front of them to achieve financial sustainability for Watercare, and that work is happening at pace.

The question from Rachel Boyack, I think, in regards to private and mixed-ownership schemes—they are out of scope of this bill. The schemes charge the users as they see fit, and repeal doesn’t impact this.

A question from the Hon Kieran McAnulty: does repealing this bill achieve the Government’s objectives? Well, the Government’s objective is to repeal the legislation and replace it with Local Water Done Well. We campaigned on that, we were elected to do that, and we are now delivering that, as we promised.

There were questions in regards to the amendments in regards to Treaty settlements. I believe those are best dealt with in Part 2, but just to recognise that this legislation doesn’t actually change those; it just simply changes the references in those things, but we can get to those conversations shortly.

Madam Chair, thank you. I’d just like to ask the Minister of Local Government some further questions about the purpose of the bill in relation to balance sheet separation. We have had some questions about balance sheet separation, but it’s my argument that they haven’t been directly or adequately addressed by the Minister in his response.

So given that much of the design of the legislation that this bill will repeal was put in place with the intent of achieving balance sheet separation in order to unshackle the water entities from the constraints that the rating agencies place on them in terms of the cost of borrowing and their debt limits, I really invite the Minister to directly address the purpose of this bill in relation to balance sheet separation. Is it the purpose of the bill to eliminate balance sheet separation? Or is it the purpose of this bill to facilitate balance sheet separation continuing? There’s plenty of public commentary from members of this Government acknowledging the importance of balance sheet separation.

I was curious that the Minister, in what seemed like a response to the questions about balance sheet separation, talked about discussions with Auckland Council around financial sustainability. Well, they’re two different things. You could argue that balance sheet separation is a means to financial sustainability, but there’s plenty of evidence and plenty of literature out there to show that, actually, balance sheet separation is a very powerful tool in significantly increasing the amount of borrowing against existing revenue or assets.

I’d like the Minister to tell the committee whether he’s had advice from Standard & Poor’s or any of the other rating agencies on the question of, post repeal of this legislation, whether or not the entities will be able to achieve balance sheet separation.

And I’d like also to know whether the Minister’s had advice about whether or not council-controlled organisations, under the existing legislation, can achieve that separation, given that they’re, in fact, subsidiaries that are controlled by the parent entity. I would have thought that’s in contradiction of the necessity of entities that have balance sheet separation and will not be bailed out by the parent entity in the event of some kind of financial crisis. So I’ll leave it there. Thank you.

Thank you, Madam Chair. Thank you for the opportunity to take what will be a very brief call in this debate because I’m hoping that the Minister of Local Government will engage with me in a back and forth over five questions that I have relating to his previous answer about Auckland. But I’d also like to first say that I have seven amendments to this part which I seek to debate, because I’m sure that the Minister will be interested in some of those which improve the purpose of the legislation.

Can I just draw your attention, Madam Chair, to Speaker’s ruling 124/5. This helps the House to understand our responsibility in this committee stage: “Consideration by the committee of the whole House is the nuts and bolts stage in which a bill is considered as drafted, to decide in effect whether the detailed clauses do properly incorporate the principle of the bill already agreed to by the House.”

So, as we are debating the purposes of the bill, what I’m seeking to do here is to set the committee up for a proper debate in Part 2 about whether my proposed amendments to Part 2—which there are four of—are incorporated into the principles here. So that is why I think we need a substantive debate on the principles, and that’s why I’m going to ask five questions to the Minister now about whether those principles quite capture his intent.

So my first question of five to the Minister is: under paragraph (b) of clause 3, if a purpose of the bill is “to disestablish the Northland and Auckland Water Services Entity and make related transitional arrangements;”, is it implied in that purpose that Aucklanders will be better off because of the disestablishment of that entity, Minister?

My second question related to that—unfortunately, I would be happy to change this approach, but I can’t. So my second question is: if we take it that the Minister’s intention is to improve the conditions for Aucklanders in the service delivery and in the amount that they pay for their water services, is it also the purpose of the bill to improve the situation for South Aucklanders, and particularly those in Papakura whose water is delivered by Veolia? The Minister will be familiar with this particular local quirk where a private provider provides the water services in some areas in South Auckland. It is something that the local councillors who represent this area have spoken a lot about—that the local member for Papakura, the Hon Judith Collins, has also spoken about—and it has a particular effect on South Aucklanders. I’d like to understand how that relates to the purpose described in paragraph (b).

Thank you, Madam Chair. I have a number of questions for the Minister of Local Government. Many people have spoken about people’s health and the water, and I would like to know if in any of this process of repeal he has considered any care for the other species that depend on the clean water of our awa, or the shellfish that depend on the lack of sedimentation—sedimentation from dealing with stormwater improperly, including that famous road of national significance Transmission Gully and the subsequent degradation of the Porirua Harbour.

Secondly, given the plans to repeal the urban development legislation and move that to the Resource Management Act, does the Minister consider that mandating some kind of water sensitive urban design and helping nature clean up our water would be a cheaper and more effective way than always putting in more expensive infrastructure?

I would also like you to look at your colleagues smearing local mayors—whether it’s Councillor Foster, myself, previous Mayor Prendergast, previous Mayor Wilde—when there were huge millions, whether it was moving from $11 million in 2009 just on the capital expenditure of the water network, through to more than $30 million in the current forecast; whether the attitude that we were not aware of underground damage for earthquakes—we were working on cross-contamination, we were working on a number of things—from some of the members of this House is helpful to a future partnership that will last longer than the next three years.

Thank you, Madam Chair, for the questions that were received. In regards to the issues in terms of Auckland Council, I note that the member’s put a number of amendments on the Table in regards to the Northland and Auckland entity. The Government has stated that we will be repealing Labour’s 10-entity model, which was a co-governed, 10 entity, mandated model. And the Northland and Auckland Water Services Entity, which was the only entity which was actually under way—we are repealing the model, and therefore we are repealing that entity as well. So we don’t support it continuing. So we don’t support the amendments that the member has put in place in relation to that.

But what I would say is that officials are working very closely with Auckland Council and the mayor to ensure that we have a financially sustainable model for Watercare. The mayor has—including putting out a tweet yesterday, saying that it’s great to see the Government repealing this legislation. So I just want to put that on the table.

In regards to the issue—sorry, it wasn’t a tweet, it was an X. I should clarify that for the committee. The issue in regards to the Veolia contract is an issue for Watercare. In regards to the questions around the roads of national significance and the storm water, I understand those issues aren’t relevant to this part. And smearing local mayors, again, I don’t think is relevant to this part, either.

Thank you, Madam Chair. As a list MP based in Wellington and given the Wellington issues portfolio, I’m aware of the significance of these reforms for our city. For those who haven’t had the summer that Wellingtonians have, to update you on the situation that Wellington is in with respect to water, we have extensive damage to drinking-water pipes that has meant that perhaps 45 percent of our water supply leaks onto the roads and gutters around the city. As a jogger around all parts of Wellington City—some places every hundred metres, I might encounter a leak on some of my runs around the town. It is extremely important to Wellingtonians that we have the ability to address this in the long term. We are already under water restrictions and threatened with increasing restrictions in one of New Zealand’s biggest cities.

In addition, the future impact of further diminished water supply is not only that the restrictions become more harsh but that the diminished amount of water moves so slowly through the pipes that it increases the likelihood of bacterial contamination and us being unable to drink the water at all. That has terrible consequences for a town. I know, because, in the last Government, we had the experience of having to support Queenstown through the cryptosporidium contamination of their water supply, which was a terrible incident for such an important city for New Zealand; not only the number of people who were desperately ill with diarrhoea and abdominal cramps and unable to go to work and prepare food in a tourist town but also the fact that visitors to this important city saw that rather than being able to put out a picture of a modern city to our international visitors, they found we were in the Victorian era with respect to the water infrastructure we had.

So my question, with respect to the purpose of this bill is: will this bill enable continued use of balance sheet separation for the water entities that are proposed in the future? Of course, the issue there for Wellington is that our city council is near to its debt limit. Additional debt will need to be taken on in order for the level of widespread repairs that need to be made in Wellington. It is absolutely essential that we get past some of the petty politics that were raised by other members in this Chamber earlier, and actually get on to the issue of how these reforms will support balance sheet separation and the ability for us to be able to get on and pay for the work that needs to be done.

Thank you to the member the Hon Dr Ayesha Verrall for the comments and the explanation of the issues in relation to Wellington and Queenstown. We’re not repealing the Taumata Arowai legislation. Taumata Arowai plays an important role in terms of regulating safe drinking water in New Zealand. That’s not part of the purpose; it’s not what this legislation does. Our Local Water Done Well policy will ensure that councils are able to have financially sustainable models for water infrastructure in New Zealand, accessing long-term funding and financing so they can make the investments that they need in this important infrastructure.

Thank you, Madam Chair. My third question to the Minister of Local Government—of five—is: did the Minister consider transitional and savings arrangements while the new entity is created? That is directly in relation to clause 3(b) about the Northland and Auckland Water Services Entity. I ask that, and I hope for an answer from the Minister, because I’ve also proposed an amendment to clause 5, which is a deletion of the words there—because the answer from the Minister will determine whether that’s needed. Because, as you’ll see, if you go to clause 5 and track through to Schedule 1, there are no savings provisions or transitional arrangements proposed under Schedule 1. So either this should be deleted because there are no provisions, or there might be something the Minister can share with us about his intentions around savings provisions.

And I ask it in relation to the purposes, Madam Chair, because it’s helpful for the committee if the Minister could explain why he then hasn’t considered transitional arrangements around the Northland and Auckland Water Services Entity, particularly when there is work under way here that could be saved. There are, say, contractual arrangements, governance arrangements—there are people involved here who are undertaking work who will be affected by this, and this is the kind of thing that we would use the savings provision to protect. So it would be useful if the Minister could help me before I propose that amendment to clause 5.

The next question I will ask the Minister now is: are there no transitional and savings arrangements because the Minister’s intention is to disestablish the Northland and Auckland Water Services Entity and then simply replace it with something quite similar soon?

My question there also relates to the next question, which is: under the status quo, which the Minister is returning to now, is it true that Auckland could not partner with Northland, in the way that it would have been partnered with Auckland, because of provisions in the Local Government Act which would prevent it from doing so?

So what I’d like with this series of questions is for the Minister to explain to the committee what his intentions are around the role of the Northland and Auckland Water Services Entity in the future. Is there an intention there that something similar will be created legislatively, or is the intention for another partnership model to be introduced? Or is it simply that the status quo will return and there will be no support for Northland—in which case it’s very useful for the committee to be clear on that point—and also, could he give me an intention of whether, then, if there are no transitional provisions, he’s quite happy for the committee to make that deletion to clause 5?

Thank you, Madam Chair. It is concerning that there have been three questions asked specifically about balance sheet separation relevant to the purpose of the bill and the proposal to repeal. I asked that question, the Hon Phil Twyford asked that question, and the Hon Dr Ayesha Verrall asked that question—and the Minister of Local Government has not said the words “balance sheet separation” once. Given how crucial this is to the rationale and the purpose of the bill, I think it is important that the Minister addresses that.

So having said that, there is another thing that I think is important for the committee to understand in considering the purpose of the bill. When presenting this repeal yesterday, the Minister said that he had been working with councils to develop this bill, and I think it’s important for the committee to understand what councils he’s not only been working with but consulting. But let’s just focus on “working with”, given those were his words. I would like to know from the Minister what councils he has been working with in the development of this bill.

Thank you, Madam Chair, for allowing me to take the call, possibly the last call before dinner. What I needed to ask the Minister of Local Government about was actually a bit more of a technical drafting question. It is very much predicated on what the member for Manurewa, Arena Williams, spoke about around transitional, savings, and related provisions. For those who are not aware, transitional, savings, and related provisions basically allow for the smoothness between the repealing or changing of one law into a new law. What we see in this bill is that Part 1 provides the transitional, savings, and related provisions, and if you look into Schedule 1 it says that there is none. I would agree with the member that, well, if there is none, then you don’t need it.

But my second question then turns to, actually, there are some particular rights which are covered under Part 2 of this particular bill, and I question whether they’re actually in the right spot—whether, really, they should be in Part 1 given that the purpose of this particular bill is to remove those water service entities for Northland and for Auckland. But there are particular rights that pertain to employees of those entities, and that’s covered under Part 2 of this bill—I think it’s clause 17. So my question, really, for the Minister is around just—it’s a technical drafting provision. We have no transitional, savings, and related provisions in Part 1, even though Part 1 has the purposes to disestablish those water entities. Why is it that the rights of those employees who will now be made redundant are under clause 17, not within the Part 1 transitional, savings, and related provisions? It is a genuine question around—they will be having their rights removed, their employment rights removed, because they have contract law, they’ve signed into an employment arrangement. Obviously, this is an event for them and therefore that’s why they have to be—they will be disestablished, their roles will be disestablished, therefore subject to normal employment rules. But it is a genuinely technical question as to why that particular rule for those people, because their rights are really important, which are enshrined in employment law—why they are not in the transitional, savings, and related provisions.

Part of the reason why I do ask this, as to why I’m confused as to why they’re in Schedule 2 of Part 2, is that if you’re going to, in the preliminary clauses, disestablish the water entity—so you’re basically saying the purpose of this bill is to disestablish them, get rid of them; OK, that’s the Government’s discretion. However, then they say in clause 5 there are no transitional, savings, or related provision clauses—there’s none. So it goes back to the first point, which is what the member for Manurewa raised very prudently, which is basically: what’s the point of having that transitional savings? Does this mean, by not having transitional, savings, and related provisions, that those which are in later, in Schedule 2 of Part 2, are no longer valid for their rights?

I mean, I understand it could be a drafting technique as to why the Parliamentary Counsel Office may have thought—perhaps the instructions from the Department of Internal Affairs were that they should be in Schedule 2 because Part 2 and Schedule 2 go through the actual different parts of how they disestablish it, and then the consequential amendments. But my question is: why would you not have them in the transitional, savings, and related provisions, given they are important rights? They are rights and employment rights of these workers, who will now lose their roles because of the disestablishment, which is covered within the preliminary clauses in Part 1. So I would genuinely like to just understand a bit of that drafting mechanism as to why it’s not in Part 1 under the transitional, savings, and related provisions in clause 5 and instead in clause 17 as part of Schedule 2 of Part 2.

Members, the time has come for us to suspend for the dinner break. We will resume again at 7.30 p.m.

Sitting suspended from 6 p.m. to 7.30 p.m.

Members, the committee is resumed. We are in committee on the Waters Services Acts Repeal Bill.

Thank you, Madam Chair, and before the dinner break, there were a number of questions posed by members in relation to a number of issues. Arena Williams asked some questions and she has an amendment in relation to transitional, savings, and related provisions. This is the normal part of any piece of legislation to have this in as default, that as the water entities legislation hadn’t actually come into force, there was no actual transitional provisions or savings, hence why the schedule is there.

In terms of the question around changing the date at which the Act is repealed; again, this is a drafting convention to reduce the number of spent Acts. So I hope that answers the member’s questions.

The Hon Barbara Edmonds asked about the employment issues; that is dealt with in Part 2. I look forward to those issues being discussed and debated in that part of this bill.

There have been a number of questions around balance sheet separation. Of course, our policy Local Water Done Well, which we’re developing, will ensure councils are able to have the revenue sufficiency and the ability to have long-term funding and financing for water services and infrastructure in their communities.

Thank you very much, Madam Chair.

Hon Kieran McAnulty: Very good choice!

Hon DAMIEN O’CONNOR: It’s a wonderful choice. Thank you. Part 1 of the bill, obviously, covers the purposes and gives a basic outline of what they might be. One of the areas I’d like to question the Minister of Local Government about is “to make transitional arrangements for local authorities’ long-term plans”. I’m wanting to get some clarity on what those transitional provisions are. It’s all very well to leave the door open but if the purpose actually says “to make transitional arrangements”, then I’m guessing that that is proactive assistance to the councils. But what I have heard from councils and from many is that it’s still a bit unclear.

If we go back to the purpose, which the Minister said is to make things more affordable and to ease the pressure on ratepayers—which is an opinion rather than a fact, I would suggest—then I think we and the wider public of New Zealand, and ratepayers in particular, need to know, firstly, what the transitional arrangements are that will actually assist the councils, not just leaving the door open but actually proactively helping them. And can he guarantee that the purpose, which we are told is to reduce the cost—which, you know, apparently was going to be huge under the Labour proposal; we’d already spent over a billion dollars and it was going to carry on! So we presume it’s going to be cheaper under this coalition Government’s proposals. How can the Minister guarantee that? Just a couple of questions I put to the Minister.

Thank you, Madam Chair. My question to the Minister of Local Government is really about the Water Services Economic Efficiency and Consumer Protection Act. That Act is not very old; it was passed last year. My question is: why is it the purpose of this bill to repeal it? That piece of legislation stands quite apart from the three waters affordable water reform itself. In fact, it is a critical part of the competition and consumer protection framework in respect of water generally. The whole idea there is to make sure that any provider of water has both incentives to innovate and to be efficient and to deliver water at an appropriate level of service.

I’m interested to know in particular whether the Minister proposes to have no replacement for this legislation under the proposed new scheme, or whether he’s going to have fundamentally the same framework, with the competition and consumer aspects of water delivery managed by the Commerce Commission. If it’s the former, I would say that that is a yet another gaping hole in our water system. But I suspect that the Minister and the Government appreciate the need for regulation of service delivery in what’s, effectively, a situational monopoly framework.

So, with the Water Services Economic Efficiency and Consumer Protection Act 2023, my question is: why is it that he’s getting rid of it when we know that it will need to be replaced and, essentially, there’ll be something very similar put in its place? I was fortunate enough to be the Minister who saw that through its final stages, and I can accept that there will be some aspects of the Act which this Government will have a different view of from the last Government. It has made very clear, for example, its views on provisions dealing with Te Tiriti. Now, we may not like it on this side of the House, but we accept that the Government has a mandate to change provisions like that.

But that does seem to me to be a huge waste of resources, to have the framework for effective economic regulation and consumer protection there—that, I must say, was very usefully considered by the Economic Development, Science and Innovation Committee, and the National members on that committee had some very useful input, particularly around dispute resolution. There’s a dispute resolution scheme in there as well, which we absolutely need for consumers of water services. The National Party, true to form, was a good advocate for bringing developers into that dispute resolution scheme, and it was tweaked accordingly so that developers could actually arbitrate or mediate where local bodies or water providers weren’t able, essentially, to do connections to unlock development land.

Now, that’s all really critical, and it’s going to be critical whatever framework—in terms of the entities, the ownership model, the financing model, or whatever you have. And this particular piece of legislation is not embedded in it. It is not inextricably linked. So it just strikes me as really disappointing and a little confusing that the Minister has chosen to repeal this piece of legislation, fundamentally a piece of legislation which increases effectiveness, increases innovation, and increases efficiency and increases quality—all things that I think both you and I, Minister, would agree are good things in respect of water. So why is it that this bill is headed for the trash can when, in fact, it’s got to be a really important foundation for any water system going forward?

And I do want to mention, before I close, that the consumer aspect is also really important—that one of the problems we have is that ratepayers pay for their water one way or another, but they have almost no ability to take issue with the quality of the service they get, whether it be the brown water that comes into the bathtub in Geraldine or the water that doesn’t come at all in some parts of Gore, or the water that spills all over the street in Wellington. There’s no ability to complain about it.

I thank the members for their questions. In relation to Duncan Webb’s question around why we’re repealing the Water Services Economic Efficiency and Consumer Protection Act 2023, we’re repealing that because that legislation was designed based on the 10-entity model. The Government is going to be developing an economic regulation regime that works for councils, and we’re progressing this later in the year.

Thank you, Madam Chair. Thank you very much for the opportunity. I am absolutely delighted to hear what the Minister of Local Government has said around my proposal to delete clause 5. He’s taken the committee through the transitional and savings provisions and shown us why it is not necessary for it to be there, and so I do hope that the National Party will support my amendment to delete it in the name of good, strong lawmaking. I love a Minister who is focused on making our law readable and easy to navigate.

I just wish to touch on my amendment to clause 3, which is similar but slightly different to the one proposed by Dr Duncan Webb. It is along those same lines, but I would add that there is more for us to consider here. That amendment is to delete the words after “Water Services Legislation Act 2023” in clause 3(a), and the effect of that is for some amendments which I think would be good to discuss in Part 2. So that doesn’t stand alone; that stands with some suggestions that will come later in this debate.

But why it’s important is that in question time today, the Minister said that he would establish a new form of economic regulation, and he has just told the committee that he is pursuing a new model of economic regulation to make sure that consumers of water services are protected in some way and that there is economic efficiency overall within the water provision market. But the good news here—and it’s something for the committee to consider—is that some of these powers that have been granted to the Commerce Commission would be absolutely transferable under whatever kind of new economic reform the Minister is proposing. On this side, we would say that it’s worth keeping those provisions in place now so that we can continue under a model where the Commerce Commission has these new powers to regulate water, and it is drafted in such a way that it has nothing to do with the 10 entities but gives the Commerce Commission a special set of oversight provisions so that we can be sure, as New Zealanders, that there is a recourse for consumers who feel that in the current model—in the status quo model—they have rights that they can pursue if things go wrong.

It’s not just the Commerce Commission’s powers, though—the Water Services Commissioner—but there’s also an extended remit for the Consumer Advocacy Council and the independent consumers’ dispute resolution that that Act provides for. So what I’m proposing here for the committee to consider is that that amendment, which would then come with other amendments to Part 2, would let us keep some of those very useful provisions.

I fully appreciate that it is the Minister’s prerogative to repeal that Act. However, there are a number of things there that have absolutely nothing to do with the 10 entities model. This is economic regulation which the Government is likely to bring in some form of, and so it’s important that during this transitional phase, we have something for consumers to rely upon, when, in fact, going back to the status quo is actually not like going back to the status quo a few years ago. A number of these councils are in a situation now whereas they will be in quite a different financial situation and will have quite a different kind of outlook over the next 30 years because of pressures on their infrastructure. So it is very useful for consumers to be able to raise those issues independently—not with their councils but with a regulator who is set up to do so, and with consumer advocates who are provisioned within the law to do so.

We will not be able to protect consumers in this way if we take this legislation off the books today. It is really important for the House to consider that in moving back to the status quo, these provisions could still exist. It absolutely would not interfere with the Government’s work programme to design something that they say will be better for councils, because to protect consumers within the system, we need to have something that gives the Commerce Commission these extra powers and provides an independent voice for consumers within it.

So that is why I am confident that the Minister will consider this in Part 2. But I’d like to propose the deletion in Part 1 that is necessary so that we don’t have a law that is a bit gobbledegook and doesn’t read very well. Thank you.

As I said earlier, that legislation was designed for the 10 entities, which were, of course, never set up, and so that legislation is no longer required. We’ll be developing, under Local Water Done Well, economic regulation as part of that policy.

Thank you very much, Madam Chair, and thanks for the opportunity to make my first contribution in this debate. I’ve been following the debate closely in my office, and I wanted to come down and make a contribution around the “Purposes” clause—clause 3(a), (b), and (c), in fact—because I had heard colleagues, and, Madam Chair, I know the importance of ensuring that we keep new material coming into the debate. However, if a Minister does not answer questions that are raised, that puts Opposition members in a very difficult position.

I want to offer the Minister of Local Government the opportunity to answer the questions around balance sheet separation because by repealing the Acts in clause 3(a), by disestablishing the entity in clause 3(b), and, particularly, the transitional arrangements for the long-term plans, that is placing councils in a position where they will be responsible in one form or another for what happens next in terms of water service entities.

I had the privilege of being in a role where I worked on the Acts that are being repealed under clause 3, and one of the most important conversations that we had during that time were conversations with ratings agencies, and, to be specific, with Standard & Poor’s. Standard & Poor’s were extremely clear that balance sheet separation was critical to enabling the reforms that we were proposing. My question, the first of two or three questions depending on how we go on time, that I have for the Minister is: what conversations has he had with Standard & Poor’s about whether—and he just mentioned it in his answer just now; the new model that he proposes to replace the Acts being repealed in clause 3(a)—or not Standard & Poor’s are satisfied that there will be sufficient balance sheet separation from councils for the entities that will manage their water?

Now, for colleagues in the committee, the reason that this matters is that if there is not sufficient balance sheet separation, then it will be incumbent upon the councils—and, certainly, Standard & Poor’s will believe that the councils are responsible, and the councils, in the event of something going wrong, will have to bail the entities out. As most people in this House will know, most local authorities in New Zealand are up against their debt ceilings. So this is a very important question for the Minister to answer, because the repeal puts those councils front and centre again if it is a council-controlled organisation (CCO) model or some other model in which an agency like Standard & Poor’s would look at that and say, “Prima facie, the councils are responsible.” Therefore, when we’re deciding how this will work, two things will happen: one, they will decide the councils are responsible, and two, it will then be looked at in the context of the councils’ broader debt position. That will be very dangerous for some councils whose debt position is not good at the moment, and also fails the test, as I say, that Standard & Poor’s have set.

So that is my first question for the Minister. He has been asked it, Madam Chair, I do acknowledge that, but he has not answered that question.

My second question for the member in terms of his disestablishment of this, is to ask him to clarify for us whether or not he has spoken to councils about the way they view CCOs in this context and whether or not the CCO-type model that he is proposing actually will be able to deliver this across different jurisdictions. Because there are, in fact, quite different rules around CCOs between different councils; while they are mandated under law, they operate in very different ways. So I would like the Minister to tell us what conversations he has had with Standard & Poor’s about balance sheet separation, and what conversations he’s had about CCOs, and, indeed, with councils in that context of balance sheet separation, because we are here under urgency, without having had a select committee process, without having had an opportunity to actually explore whether or not the repeal of these Acts, under clause 3, is actually not only going to make it more expensive for ratepayers but actually imperil councils in terms of their debt levels. Balance sheet separation is vital to making any new system work. The Minister needs to answer that question.

Thank you very much, Madam Chair. I echo the comments from the Hon Grant Robertson, because one of those questions that is yet to be answered is the one that I’ve posed, and it was right at the start of this debate, roughly an hour or so ago. It was asking the Minister of Local Government for the advice that he has received that doing this would ensure balance sheet separation.

Now, what we heard from the Minister was a repetition of the information that was readily available in the policy document. In answering the questions about balance sheet separation, he didn’t actually say “balance sheet separation”, so a good opportunity there for the Minister to answer that.

But the question that I’m actually wanting to ask again, because it hasn’t been answered, was that that I posed before the dinner break, and it was a question about the councils that the Minister has been “working with” in the development of this Government policy. We are, of course, talking about the purpose, and the purpose is to repeal, and in the process of coming to that decision, the Minister himself, in justification of the position that the Government has taken, has said that he worked with councils to develop this policy. It was presented in a way that made it look like the majority of councils support this, and so I think it’s important for the committee’s understanding of the purpose of this, the rationale behind the proposal to repeal, to know what councils the Minister has been working with, as he claimed, in the development of this policy.

It’s a pretty straightforward question. I was expecting it to be addressed immediately after the dinner break when the Minister stood up. I have a list of 68 councils here. I’m happy to go through them one by one, but it would save the committee’s time if the Minister just answered the question.

I move, That debate on this question now close.

The question is that Arena Williams’ first tabled amendment to clause 3 be agreed to.

The question is that Arena Williams’ second tabled amendment to clause 3 be agreed to.

Amendment not agreed to.

The question is that Arena Williams’ third tabled amendment to clause 3 be agreed to.

Amendment not agreed to.

Arena Williams’ fourth and fifth tabled amendments to clause 3 are out of order as being merely an attempt to criticise the bill.

The question is Arena Williams’ tabled amendment to delete clause 5 be agreed to.

Amendment not agreed to.

The question is that Arena Williams’ first tabled amendment to clause 6 be agreed to.

Amendment not agreed to.

The question is that Arena Williams’ second tabled amendment to clause 6 be agreed to.

Amendment not agreed to.

Part 2 Repeals and disestablishment of Northland and Auckland Water Services Entity

Repeals and disestablishment of Northland and Auckland Water Services Entity”, and Schedules 2 and 3. The question is that Part 2 stand part.