Local Government (Water Services) Bill

We now come to the debate on Part 2. Part 2 is the debate on clauses 7 to 58H, “Structural arrangements for providing water services”, and Schedule 2. The question is that Part 2 stand part.

Before I take a call, just to remind people, it is clauses 7 to 58H, and it would help the committee if you referred to the sections or clauses in your interventions, and the page number in the document that you’re referring to, because it is quite a big document. That would be very helpful.

Kia orana. Meitaki maata. Thank you, Mr Chair. I’m happy to follow your direction in that space. It’s the intention of Labour members, given your comment, sir, that it is a big document, to attempt to tackle this subpart by subpart, which seems to be a more conscious sort of effort to keep tabs on where things are. I’ll restrict my contributions to Subpart 1 first, which I had noted is clauses 8 through to 30F.

This is a really significant part of this bill. Effectively, this does set in train the arrangements for the provision of water services. From the outset—and if you would like a specific reference, I’ll do that—clause 7 in particular is the outline of where things are heading, and so I’ll restrict my comments and contributions to clause 7, which is on page 37 of the document that I’m working off, which includes the report from the Finance and Expenditure Committee.

Fundamentally, the position that we adopt is one of opposition to what is, clearly, a decentralised model, allowing councils to opt out of an opportunity for regional collaboration. Now, the Minister and his Government might take a different view and say that regional collaboration still exists. Well, the evidence that is currently before this House strongly signifies that that is far from the case. We have a number of councils that are going it alone. We have a number of councils that are in models that are going to cause significant hardship to ratepayers further down the track. So my very first question to the Minister, having prefaced that, is how he can continue to suggest that this is a model that does lead to regional collaboration. What incentivisation is there for any aspects of regional collaboration in this particular space? We will hear—as part of this particular subpart, certainly from Labour members—talk about the impact of, potentially, and questions around, the applicability of the proposals for their particular districts and areas around the country—and they do vary, and that’s accepted.

I do hope that the Minister is not going to adopt a view of one where we have to wait and see in terms of when those decisions are taken. The public record does demonstrate that those decisions have already been taken, because they have been forced into, effectively, landing their water services delivery plan by 3 September, and we can talk about the role that the Minister may take, and I know that he is on the public record of indicating that it is his hope that regional collaboration does take place. But, Minister, this is a bill that does not incentivise—where is the incentivisation in this bill that lends itself to councils actually wanting to work together? Where is it? It seems to be absent in the sense of no incentivisation for them to do so.

The difficulty that we have, of course, is that there are a number of different councils that have a different number of rate bases—that, fundamentally, is the way in which they generate revenue to meet costs. When it comes to that early first clause, clause 7, the outline of this, in terms of Subpart 1, how can he justify that there is a prudent approach to this, but also one that meets the various needs of different communities when it comes to water services and water provision?

I think of the opportunities there that do exist around that, but also the regional accountability—where is that? Where does the Minister see the regional accountability? He may very well say, “Well, that’s going to come later when it comes to the annual reports.” We all know that annual reports are exactly that—they’re done on an annual basis. Where is the accountability on day seven, eight, nine, 37—whatever—where water services fail and that accountability doesn’t exist?

That’s the first aspect—how he justifies the complexity of these arrangements where there was more certainty around collaboration in the former model.

Thanks very much, Mr Chair. Well, I’ll be measured in my response to that, but it is ironic when the member Tangi Utikere is seeking clarification from me on where the incentives are. To translate that for those at home, that means “Where is the blank cheque from ratepayers’ back pockets and taxpayers’ pockets to pay for councils that aren’t performing?” That’s just a translation for those at home that are watching. When he says, “Where are the incentives?”, “Where is the magic money tree?” is another way to say it.

The reality is—and we’re not going to go through this—we have a different position. Our key objective here is to ensure that councils are financially sustainable. We haven’t dictated in terms of how they should structure it. It is for them to determine with their local communities, and that is the mechanism.

The evidence, as we stand five weeks away from when the deadline for the plan is, is that the majority of councils will form together in regional groupings. That is the reality of where we’re at, and those numbers are increasing and changing as we work. Guess what! That is without blank cheques being written by this Government in order to incentivise councils to get it. They’ve done it off their own backs. They’ve done it with their communities in conjunction with iwi Māori.

The questions in regard to clause 7 in that context are points of difference between the two parties. I thought most people had moved on from that conversation after the election, because it was pretty clear that New Zealanders did not support the prior reform. We’re in a new space. I think what every Kiwi wants is certainty around water infrastructure and investment, making sure those assets stay in local control, and making sure that those assets are financially sustainable, and that’s what this plan will deliver.

Thank you, Mr Chair. I’m really keen to pick up on the key aspects of Part 2 and particularly those that relate to clauses 7 through to 11, because these all set out really clearly the different methods that councils can use and consider when they’re actually thinking about what structure of service provision arrangements will work for them. It’s talking about regions in which regional councils can actually play a role in these potential multi-council entities and the different methods for establishment and ownership and how that all works together under this Act.

The one thing that I’m unsure about with all of these sections, and I’d really appreciate the Minister providing some answers for councils—because we’re talking about these lack of incentives for them to actually work with their neighbours. I think, as someone who has been on a council previously, you want to know what all your options are. What was unclear, in all of these clauses, is what would actually happen if a council worked together in good faith with its neighbours to establish these multientity structures but then, for whatever reason, it’s not working or they actually want to remove themselves from these entities. Can councils actually exit multi-entity water service providers or do they need the permission of all the shareholders—i.e., all the other councils—who are actually part of that?

It would be really good for the Minister to address this directly, particularly because we know councils are live in their consultation, in their considerations right now. Like the development of this bill, they are also moving at pace to make sure that they are setting up the right structures and have the right information and assessments to actually advise, deliberate, and then decide on what those structures are for their communities, but they need to know the end game, I guess. If, going into these aspects and entities in good faith, they do find that actually, ultimately, they’re not in the best interests of their community, at what point in time they can actually remove themselves? Are there clear guidelines for this?

I think, rather than councils using that as a kind of “get out of jail” card if things go wrong, it might actually encourage them to be bolder and to make better decisions and to go further than they otherwise would if they don’t need to be so cautious and feel like they need to have explored absolutely every avenue. They can be taking steps and exploring things, knowing that, if things actually turn out not so great for their community, they might be able to back out. I’m really interested in the Minister pointing out where in the bill that happens. Thank you.

Thank you. I direct members to clause 15 of Part 2, which outlines the objectives of water services providers. It links to the questions that were asked in the last section in regard to environmental safeguards and things. It’s very clear there in 15(1)(a)(iii), (iv), and (v), those aspects around quality, of consumer expectations, and also regulatory requirements. That includes Resource Management Act regulatory as well as water quality services.

The question is: do councils have options in terms of whether they stay in or out? Well, the short answer is: those are local decisions made by local councils, and, in short, the answer is yes. Likewise, on the flip side, you’ve seen a number of councils announce structures that have the mechanism to allow other councils to be part of that in the future, which is the opposite to what the member was referring to in terms of going alone. The criteria and the incentive is, fundamentally, under this reform, that communities will have water services entities that are financially sustainable. That is the incentive, that is an enduring incentive, and the incentives and the objectives outlined in the objectives under clause 15 here outline the components and, in effect, the meat on the bone around that.

I think in terms of where we are and where we want to be in the future, having water services entities and water services across our communities delivered in a financially sustainable manner that meets water quality, environmental, and health quality standards is a fundamental step change in terms of the status quo, and this model will deliver that.

I want to draw the committee’s attention to some extraordinary statements that the Minister made in response to my colleague Tangi Utikere’s first contribution in this part of the debate, in Part 2, when we were just looking at the outline part of this bill and trying to set up what is going on. Now, we’re concerned here, obviously, about some of the financial matters that are going on. The Minister has used some interesting phrases and words. He said one of the objectives here is to provide good quality water—we all buy into that—but then he said, “Where is the blank cheque?” He followed that up with “Where is the magic money tree?” Where is the magical supply of good water? It doesn’t come out of nowhere. The water that falls out of the sky might be quite good, but it actually needs to be treated. It actually needs to be put through pipes. It needs to arrive in people’s houses. The waste water needs to be taken away safely and processed. The stormwater needs to go where it needs to go. The water has to go through a whole series of processes. Where is the magic water services provision tree?

Now, that is a Government that is, extraordinarily, going around saying, “We want rates caps”. They are complaining about the fact that rates are contributing to inflation. At the same time, we have the Minister in the chair saying we’ve got to somehow provide water for free. There is no blank cheque, he said. “There is no magic money tree.” Who is going to pay?

Now, the previous Government had a good solution in place. The central government was going to help with the cost of water provision. Instead of just putting an unfunded mandate onto local bodies, that this Government is doing, we were actually going to make a substantial financial contribution to ensure that when we turn the tap on, the water that comes out is safe to drink. That’s what the people in Havelock North wanted—water that was safe to drink—and they didn’t get it.

There are people in this country who have been on boil water notices for two and three and four years. All they want is water that is safe to drink, but it does not come for free. The money has to come from somewhere. This Government is pushing that cost on to local bodies, at the same time as advocating for a rates cap. The cognitive dissonance is extraordinary.

The Minister has opened this up by talking about “Where is the blank cheque? Where is the magic money tree?” How is he going to resolve what we could politely call cognitive dissonance between all the things that that Government wants? These are simply contradictory imperatives.

That’s without even starting to think about the problem of orphan councils. There’s a huge problem with orphan councils, councils which have been left out of these regional water bodies that are forming, councils that have been left to go it on their own.

Joseph Mooney: Probably left out because they decided to stay out—ha, ha! They’re voting to stay out, some of them.

Hon Dr DEBORAH RUSSELL: I’d be careful over there, Mr Joseph Mooney, because one of the councils that is sitting there as an orphan council is the Queenstown Lakes District Council. The Queenstown Lakes District Council is in trouble because the rate of growth there is so much that they are having real difficulty providing for it. I would be careful talking about it in Kaipara. Kaipara is an orphan council. It’s been left out of all the arrangements for water services councils off a rating base of just 12,000 rating units. How are they going to pay for water? This Government is just holding a cudgel over their heads, telling them they’ve got to get with the party, telling them that they’re going to have to pay for it somehow, and at the same time advocating for no rates increases. Those things do not add up.

So the challenge for the Minister who said there is no blank cheque, who said there is no magic money tree—Minister, where is the magic water tree?

Yeah, we maybe missed that, but I’m just trying to work—what clause was that?

CHAIRPERSON (Teanau Tuiono): That was in response.

Kia ora. I just wanted to follow up, if the Minister of Local Government would like to elucidate some of his comments—and I will try to keep the temperature a little cooler. I wonder if this inevitable focus is going to push much stronger user-pays at the expense of the public good. I wonder if the Minister would reflect on the fact that 18 councils have had their credit ratings downgraded, which doesn’t just mean that new debt is going to be more expensive but existing debt is going to be more expensive, and it is perfectly reasonable to spread the costs of infrastructure over the years so that current ratepayers do not have all of the costs.

If we look at the parallels with roading infrastructure, central government makes the financial assistance rate available, which is variable by different governments, for different priorities—State highways, of course, 100 percent; but local roads around about 50 percent, higher in some of the rural areas. This Government returns half of the waste levy to local governments—I mean, not this Government; Governments ever since Nándor Tánczos brought in that bill return it. So to dismiss the idea of partnership as some kind of money dream by councils, I find both inaccurate and patronising.

I was quite keen to table—and I’ll ask for leave of the committee in a moment, but I just wanted to draw the Minister’s attention to two graphs from my experience at Wellington City Council. Before I was mayor, I was a councillor there with the three waters portfolio. Can I assure you and people listening that councils took water very seriously. In 2009, we had a water conservation plan to try and avoid having the regional Whakatiki dam, and the per capita litres per year went down 2006-2007, went down 2007-2008, and down 2008-2009. We’d gone from 18 percent water leaks, down to 12 percent. Here’s a lovely graph. That can be found publicly, so maybe I don’t want to table it. But if you also look at the amount of money that Wellington City put in—and this is just the CAPEX for the three waters—when I began, it was about $22 million to $23 million; it went up consistently. Whether it was Mayor Lester for Labour, whether it was Mayor Foster from New Zealand First, and then when it was Mayor Whanau, it increased dramatically. Now, that is not altogether consistent with what was reducing.

My point is that the earthquakes of 2013 and 2016 put up the cost for fixing our pipes extraordinarily. Yes, there are issues, but what I want the Minister to address is how councils can possibly square limiting rate rises and fixing—whether it is past investment, whether it is issues like floods, or whether it is issues like earthquakes—with his view that we should not be increasing rates at all.

I must say, I am finding it difficult to be able to answer specific members’ questions without a specific clause and general statement, but I do encourage—if I do that, I will do my best to do so.

The point was raised in regard to more generic terms around how we’re funding it. I would simply point the member to the fact that a number of councils have already submitted their plans for water services entities, and they have been approved. That is a combination of go alone and also multi-council arrangements. There is a clear precedent for how this will and can work, and it’s already happening in reality.

Just for further guidance for the committee as well, this is a debate and members are able to respond to the Minister of Local Government’s remarks, but that has to be done within reason. Once you’ve made your point, please come back to the bill, because it’ll help this debate to flow more smoothly.

Thank you, Mr Chair. I have a question in terms of the interaction between clause 8(2) and clause 9(4). Now, clause 8 is quite straightforward: territorial authorities are responsible for water services. But in subclause (2) they may discharge their responsibility under subclause (1) to a water organisation through a transfer agreement. I have some questions around transfer agreements a little bit later.

One of the things that is possibly contradictory, so I’m looking for the Minister of Local Government’s clarification—and I see that submitters, particularly from local government, have also expressed similar concern around interpretation—is in 8. Question number one: territorial authorities may discharge responsibility to a water organisation; they may not, despite there being a water organisation—is that a correct interpretation of that?

Question two: if a territorial authority discharges its responsibility to a water organisation, but clause 9(4) says that a territorial authority then continues to be responsible for ensuring provisions, albeit (4)(b) does say, “other party to the contract or arrangement”—I would assume that includes a water organisation. But the responsibility in that sense still lies with the territorial authority, and they are responsible for ensuring other parties exercise all regulatory requirement.

I guess the first question then—just to recap—is: by using “may”, is there a situation where there is a water organisation, but a territorial authority does not need to discharge the responsibility to it? And question two: if a territorial authority does in fact discharge its responsibility to a water organisation, how are they then still responsible and also needing to ensure that the other party to the contract or arrangement—i.e., a water organisation—exercises its regulatory requirement? Those are my two questions now, but just a signal to the Minister that I have some questions around transfer agreements later.

Thank you, Mr Chair. I do want to respond briefly to the Minister of Local Government’s response to the question I asked him around incentivisation, because what he has basically said to this committee is that “incentives” means the magical money tree and the blank cheque. That is the message that he is sending to councils: that, actually, we have no magic money tree, we have no blank cheque—although the decisions of this Government indicate that when it comes to tobacco lobbyists and others, they take a different approach to that. They take a different approach to that. What this Minister is basically confirming is that we are going to basically tie the hands of councils behind their backs and still expect them to do stuff, but we’re not going to give them any funding for that.

Perhaps I can rephrase the question for the Minister, which is still related to clause 7, and that is perhaps not what incentive but what support is the Government going to be giving to councils to deliver on the water reform needs that this council is expecting them to do—not an incentive, but what is the support? I’ll leave that with the Minister.

I move on now to clause 8 in Subpart 1, and my colleague the Hon Dr Deborah Russell has touched on this issue, which is not just colloquially known but is well known as “orphan councils”. Orphan councils—those who are left to fend for themselves even though they may have wanted something different. Actually, when we look at the list of orphan councils that have been forced into becoming orphans, they are councils that have been forced into this particular decision because the neighbouring councils have already made their decision that they don’t want to take on the additional costs and responsibilities that their ratepayers would have to bear as a result of having to upgrade water infrastructure needs in a neighbouring council.

One that I want to specifically ask the Minister about is whether he’s concerned about these orphan councils. Minister, are you concerned about Queenstown Lakes District Council having to be an orphan council? I note that the local member of Parliament—the person who is elected by that community to represent them—is here in the Chamber today. Members, I’m sure, would like to hear from him about what he is going to say about this water reform and what it means for his local community.

Suze Redmayne: Back to the bill! Back to the bill!

TANGI UTIKERE: Don’t you worry, I’m going to talk about Palmerston North in a moment. That’s the community that’s elected me to represent their needs, and I’ll be talking about that. I’m sure that other members around in the committee will want to share with the Minister and ask him directly how that is fair about what this Government is seeking to force on to councils without any support whatsoever.

When it comes to Queenstown, in the absence of hearing from the local member himself, we’ll have to fill that gap for him. It is a high-growth council, but it has a low ratepayer base. That is accepted. When we look at the level of debt that is projected to increase for that community, it is quite a significant increase in less than a decade from now.

Joseph Mooney: They’re growing quickly. Have you paid attention?

TANGI UTIKERE: So, Minister, my question is: what level of support—what was that, Mr Mooney?

Joseph Mooney: They’re growing very quickly. Have you paid attention? There’s a regional deal on the table.

Hon Dr Deborah Russell: Take a call! Take a call!

TANGI UTIKERE: Oh, OK. So—

Tom Rutherford: We tried to take a call.

CHAIRPERSON (Teanau Tuiono): I can offer a call if there’s going to be a substantial call—fair enough. I don’t want conversations across the Chamber. OK?

TANGI UTIKERE: Thank you, Mr Chair.

Hon Matt Doocey: He doesn’t want to talk about his own electorate.

TANGI UTIKERE: It’s interesting that members are saying, “Oh, he’s not interested in talking about his own electorate.” Look at the record, Mr Doocey. I’m very happy to talk about my own electorate, whether it’s about health, whether it’s about transport, whether it’s about all sorts of other things.

Now, the interesting thing is that we’re not hearing from members in this contribution or asking the Minister about what it is that meets their needs. We have Selwyn, for example; we have Waimakariri and others that are making decisions, yet we have members who are chirping away, not prepared to take substantive calls because they don’t want this on the record. They do not want this on the record about what it means for their community.

I’ll get back to my question for the Minister, and that’s about the orphan councils. When it comes to Queenstown, a significant portion of what that debt is going to be in the next 10 years—over half, or nearly two-thirds, I understand—is for water infrastructure needs. So what concern does the Minister have for these self-determined orphans that he and his Government are basically delivering in that space? What concern does he have for orphan councils that would like to have another choice but basically have no choice but to go it alone?

I move, That debate on this question now close.

Thank you, Mr Chair. There is so much in this part that has serious implications for the bill, so it would be fantastic to be able to step through it. I would like to speak directly to—as the Minister for Local Government pointed out—the objectives of the water service providers. This is all about clause 15, which is on page 43 of the bill.

Now, I note that the Minister directed us here when he was talking about, basically, the environmental considerations that exist within the bill, but what has been hugely disappointing about the select committee process and where it’s landed is there are two key parts that were originally placed in this bill by this Government that were about the objectives of a water service provider to provide water services that, one, provide safe drinking water to consumers and, two, do not have adverse effects on the environment. Now, unfortunately, in the process of the Finance and Expenditure Committee, these have now been removed. So what I am putting on the Table today, and what I’d love the Minister and the Government to consider, is actually reinserting both of those things. The whole point of that is that they are literally the objectives that should be at the heart of the entire point of what us and communities and councils are trying to do here.

I really agree, and I’d like the Minister’s thoughts about the proposition that we had from several submitters, but particularly Water New Zealand, to actually strengthen these objectives. Water New Zealand thought that the recasting of them as obligations or requirements instead of objectives would actually be far more directive and far more clear for shareholders that they need to pick up on these when they’re setting their statement of expectations and their water services strategy, so I’m interested if the Minister has considered that.

Then the first part I want to pick up on is the point around the removal of providing safe drinking water to consumers. I’m actually really unclear where in the process this was actually removed, because I noted in an earlier version of the bill—version 18—that it still remains. I actually missed the very last meeting where we deliberated, so perhaps it happened there. Not only should it be put back in, but, if anything, it should be expanded.

Again, Water New Zealand made it really clear why, and they talked about the whole picture of this not being about safe drinking water, but it actually needs to be about safe waste water and safe stormwater. They talked about how they would like to see these clear provisions when it comes to both environmental and public health, and they talked about the failure to do so in terms of treating and disposing of waste water. It can lead to these significant public health risks, which we have seen and do see, particularly when it comes to severe weather events, so they would like to see it expanded from just drinking water rather than removed entirely.

The other aspect that I’m suggesting is reinstating “do not have adverse effects on the environment;”. The reason for this is there were a lot of submitters who picked up on this and also talked about it. The fact is that this whole bill and the uplift in investment needs to be fit for purpose. It needs to be at a level of investment that actually delivers clear outcomes, not only for our communities but particularly for our environment. I know the rationale about there being a regulator and that they can do the environmental regulation and the pick-up of this—Mr Chair, I’d really like to just finish this call.

Simon Watts, and then I’ll come back to you to finish.

I’ll respond to those questions the members are asking. First and foremost, to Lawrence Xu-Nan’s questions in regard to clause 8(2), primarily what you’re seeing play through there is flexibility within the bill. There are instances where a council is not required to have a water organisation, so that’s why the word “may” is included there. Clause 9(4) does not apply if there is a water organisation, as is clarified in clause 9(3), which limits clause 9(4). That’s the interplay between those two aspects.

To the question that was raised by Tangi Utikere, in regard to “What support?”, the Government has a number of mechanisms in play to support councils. First and foremost, the Department of Internal Affairs (DIA) provides, has provided, and continues to provide significant support to individual councils to help them in the preparation of their water services plans. We do have one council observer in play at the moment, which is coming to an end in Wellington, and we have DIA facilitators that are in certain regions working with those councils to bring them together.

In terms of the funding and financing mechanism, which has been referred to, the mechanisms and tools available under the Local Government Funding Agency have been broadened, and they provide mechanisms in order to match the funding and financing for these entities or for individual councils, to match the asset life. One of the major challenges is the cost of infrastructure, and one of the major mechanisms in terms of the pressure on rates is that the funding of that infrastructure is done reasonably short term. The funding of the infrastructure should match its asset life. Water pipes last for maybe up to 100 years. We therefore need to spread that cost, because future generations will benefit alongside those here today. That’s the fundamental complexity and opportunity within how you fund and finance local government. There’s a wide range of points of difference in the current model.

In terms of the questions from Lan Pham, in regard to clause 15(1)(a)(vi) and the challenge in regard to water environmental quality, it is very clear there that clause 15 that I’ve referred to says, “meet all regulatory requirements”. It is fair to say that because of the importance of water quality for health and safety and the importance of the environmental, we have, and prior Governments also have, been supporters of the establishment of a water quality regulator that has powers of enforcement, powers to set consistent standards. This bill simply acknowledges that we have that vehicle. In addition, it’s not us saying it’s not important. Actually, the fact that we have that mechanism amplifies the critical importance of those two factors, which is, primarily, the interaction between this bill and those aspects.

Thank you, Mr Chair. I want to raise an issue—we’re still working on Subpart 1 of this really substantive part. I want to go to Subpart 1, clause 8. We’ve had a little bit of discussion of clause 8, but not the particular subclause that I’m interested in here, and I want to understand its interaction with clause 15.

In clause 8, “Territorial authority responsible for providing water services”, subclause (1) says that a territorial authority has to provide water services “in its district in accordance with this Act”. But then subclause (3) says, “Despite subsection (1), no person may require a territorial authority or water organisation to provide a water service to that person.” That’s got me really worried, and I want the Minister to explain how that fits with the objectives of a water services provider, which is to act in the best interests of current and future consumers, and so on, to support housing growth and urban development.

I can just see a possibility here, and it is going to interact later on in Subpart 2 of this, with clause 58F, “Power to close down or transfer small water service”. What say a water authority just decides it doesn’t want to supply water any more to a particular consumer? Now, I can get that this clause might be in there so that if you’ve got, say, a large commercial entity coming on board which wants to use water, but the local water services authority might perhaps say, “Look, mate, sorry—we can’t actually supply water to you unless you contribute something to the upgrade of services.”, and so on—I can see that kind of thing happening.

But I can also see that a water services entity or a territorial authority might decide it just can’t be bothered supplying water to a particular group of people. Now, that can be catered for, I think, under 58F—we’ll have to have a look at that when we get to that bit. But I can also see that being used in a somewhat punitive fashion. You can imagine a troublesome ratepayer—and we all know who they are—and I know it seems absurd, but a territorial authority might decide that they’re just not going to supply water to that person any more. I can think of people who have been, if you like, troublesome ratepayers in my own area up in Auckland—people who are continually on the side of local government. I’m sure the members in this committee who have previously been on local body councils and entities will have the same people in mind, the people who write to them constantly who raise protests, and so on.

What I want to understand from the Minister—and it seems like an obscure possibility, but it is one—is what protections are there in and around clause 8(3)? You can’t require a territorial authority or water organisation to provide a water service; what protections are there around the territorial authority or water services provider to actually exercise that power reasonably? Now, there’s stuff around small water services that we’re coming to later on, but I can just envisage the capacity for something quite unreasonable to be done in that space.

I’m assuming the Minister has thought of this, and I want to understand what protections are in place, what lengths a person might have to go to if a territorial authority or a water services authority is being unreasonable in its decision not to supply water services. If the Minister could just take us through that and ensure that there are protections in place, particularly for ordinary people who don’t have the resources to go to war with the local council. You always say, you know, don’t fight against city hall—well, you can see something going on here, in that regard. So if the Minister could just turn his attention to that for a moment.

I refer the member to clause 58F(3)(b), which outlines that any of these decisions to exercise the closure would need input from the chief Medical Officer of Health, which obviously has considerations around the community. Clause 58F(3)(c) then outlines that there needs to be due process including evaluation, reviews, and adequate consideration in regard to that. Lastly, clause 58F(3)(d) ensures that the provision of all of that analysis and all of that decision making is in the public domain, which is another mechanism. So there are three examples of, in effect, belts and braces around that decision that a water entity would need to undertake.

Thank you, Mr Chair.

Steve Abel: Mr Chair—

JOSEPH MOONEY: Just a very brief question—

Steve Abel: Mr Chair—

CHAIRPERSON (Teanau Tuiono): I said Joseph Mooney. Sit down. Joseph Mooney has got the call.

JOSEPH MOONEY: —just to respond to some of the, frankly, misinformed comments that we heard earlier about the Queenstown Lakes District Council. Can the Minister just confirm that councils aren’t forced to consider different options, but they have different options, and in that case the Queenstown Lakes District Council has assessed a range of available options and settled on the one they wanted to look at, which was the water services council-control organisation, which they consulted on with their community?

Yes, I can confirm for the member.

Thank you, Mr Chair. It’s a pleasure to take a call and to ask a couple of questions of the Minister of Local Government. Can I also just put on record what an excellent local MP for Palmerston North, Tangi Utikere, we have sitting next to me. I’ve known the member for over 30 years, and I can assure you that all he ever does is talk about Palmerston North ad nauseam—so an excellent local MP, I can assure you.

I have some questions for the Minister, specifically coming back to clause 9 around how services are provided under the legislation. What particularly interests me is there is an issue between the decisions that have been made by the three councils across the top of the South, particularly the Nelson and Tasman councils, that is actually at odds with how some of the water services are provided.

This is going to cause some challenges, in my view, around where the accountability sits, where the investment comes, and it becomes inefficient, actually. The big example we can speak to is the Nelson Regional Sewerage Business Unit, which is a shared service between the Nelson and Tasman councils. It’s the waste-water treatment plant in that area. For many years, our councils have actually worked together very well on water services and sharing those services and sharing decision making. Yet under this legislation, in terms of setting up the provision of water services, they’re staying separated. What concerns me is that that ultimately leads to greater costs to the ratepayer—they don’t get the economies of scale of having just one organisation and entity that’s set up on behalf of the two councils, and it becomes inefficient. So that’s going to essentially lead to greater costs for ratepayers.

The other opportunity is that we’ve had massive investment in a particular project, the Waimea Dam, which is partially owned by Tasman District Council but actually has real benefit to Nelson City Council. There is some concern from the Tasman side that Nelson actually benefits through water provision through the dam but hasn’t contributed very much at all through its contribution. Around a $5 million contribution—that’s the sole contribution for that infrastructure. There could have been an opportunity under this legislation and under the roll-out of it to ensure there’s actually fairness across Nelson and Tasman around contributing to the costs of the dam. The people of Nelson have actually managed to get access to very, very cheap water infrastructure because of the way that has been overseen and governed, and that’s not going to change. Is that actually fair for the people of Tasman?

The other issue I just want to put on record is that Tasman is going to have significant infrastructure costs to recover from the recent damage. That’s transport, but also there is water services infrastructure that’s going to need to be both fixed and improved. Tasman is seriously struggling in terms of its ability to access capital at the moment. Based on the Minister’s earlier comments about there not being a magic money tree, how exactly can Tasman District Council in particular have some certainty and some opportunities to actually fund significant infrastructure going forward? The fact that they are going alone—we have three orphan councils across the top of the South. Tasman is one of the lowest areas in New Zealand in terms of productivity, in terms of incomes—a huge rural area with significant amounts of infrastructure that’s going to need upgrading, replacing, and fixing, but a really small rating base, when you look at it.

Parts of the Tasman district fall in my electorate of Nelson, but the people of Tasman are going to face a significant burden on their rates over coming years. Under this set-up, there’s no requirement, even though Nelson and Tasman are joined at the hip and work together on so many issues. We could have got some real efficiencies and collectively driven down costs for the whole region by actually having a joined-up water services provision. It’s common sense. So where’s the common sense? There isn’t any in this legislation. Where’s the support going to come for the people of Tasman over the coming years?

Before I take another call—I’m not going to take a closure motion just yet. Before we proceed, I did note that the previous Chair alerted members to refer to the part and clause number that is being debated at the time, because the purpose of this is to interrogate the bill. I’m just alerting people to that fact.

Thank you, Madam Chair. I would like to refer to clause 10 in this part, about transport corridors. I’m wanting to follow up on a submission that Water New Zealand made on this bill. In particular, it says here that a council should not transfer the ownership or control of any transport corridor stormwater infrastructure. So my first question to the Minister is: how is this going to work with any kind of integrated catchment planning?

Another question would be—I mean, a lot of transport corridors are the overland water route in the floods. Because of the way that our vehicles, whether it’s the tyres, whether it’s oil leaks, whatever, add contaminants to the stormwater—who is going to be responsible for that? Is it Waka Kotahi? Is it KiwiRail? We’ve talked about transport corridors mainly in terms of roading, but, of course, transport corridors include rail corridors, and, of course, if my colleague Julie Anne Genter has her way, there will be a lot more trains going along those—possibly, the Hon Winston Peters as well. The delineation of assets and ownership is complex, but the responsibilities for stormwater really ought to be clarified, in my view.

I’d like to also ask the Minister to clarify clause 10. If you can’t transfer ownership or control, can you choose to contract with a water organisation—a water organisation could be a trust or it could be a council-controlled organisation—to manage the transport corridor stormwater network? There we’ve got one of the subclauses in clause 9 looking at how they can contract for management across the whole of the catchment network. I look forward to hearing the Minister’s points on that.

Thank you very much, Madam Chair. In regard to the questions on clauses 9 and 10 by the member in regard to transport corridors, basically what the bill recognises and balances is that in many parts of rural and provincial New Zealand in particular, the transport corridor is also the stormwater corridor. However, obviously, having duplicate control and ownership is not an optimal state, so what the bill allows is that councils can allocate management and operational responsibilities of those transport corridors to the water services entity but not the ownership aspect of that, and I think that is reasonable. Its primary purpose is transport, acknowledging a secondary is stormwater, and in rural or provincial the ratios are much higher than in other aspects. So that’s the flexibility that’s implemented as part of those two clauses.

In regards to the questions around clause 9 in regards to the Tasman district, fundamentally the way in which the legislation is set up is that it is for that council and its ratepayers to make a decision in terms of the type of entity structure in which it chooses. They have not at this point submitted their draft plans. I can’t comment in regards to what that looks like, but we understand that that is very well advanced and will be coming.

The point around why they are not forming a regional entity—well, our mechanism is deliberately structured so that that is a decision for local communities between the Nelson community and the Tasman community, potentially. I can’t speak for them, but as the member is a local advocate on that side of it and is obviously very keenly supportive of more regionalisation for the benefits in which she’s outlined—which no doubt, you know, are reasonable—then that’s the level at which it needs to be determined by the communities in order to come up with that entity structure.

Kia ora, Madam Chair. Thank you. I want to continue on this line of questioning around clause 10 and the expectation of transport corridors. I come from the perspective of New Plymouth and New Plymouth District Council. I was listening to the contribution from my Green colleague and from this side of the floor and I was looking up what New Plymouth District Council actually was asking. I’ve talked to them about clarity and the challenge they have when looking at clause 10, which is the transport corridors, and they say—and I quote—“Clarification and clear directive of who is responsible for ownership, operation, maintenance of stormwater networks within the transport corridors is required.”

There’s the thing around ownership—you’ve discussed that; you’ve given us some sort of an answer—but then there’s the operation and maintenance. As I look through clause 10 and look at the preamble on it, it does explain a little bit about what this is, but the challenge for New Plymouth and, I’m sure, for other councils is around when you look—because they’ve got so many levers and so many responsibilities to be playing. There’s integrated transport planning and what that looks like and where that fits in with a piece of legislation like this. The expectation for the transport corridor—is there clarity in the way this clause is written around who the owner is but also around the operation and maintenance of that space?

Then I continue and look at the responsibility when it comes to transport corridors and integrated plans and what other services are provided on many of these roads, and I look at the challenge for another regional council in my area, which is Stratford District Council. Stratford District Council is a mighty small council. I think, off the top of my head, just over 10,000 residents live in the Stratford district. There’s around about, I think, 3,000 dwellings. In terms of their voter base, they have some real challenges. Recently, the council did some serious work around infrastructure, around transport, around a subdivision. They built a new subdivision. It was council supported and funded, but, of course, there’s the infrastructure around the transport corridors into those spaces, then the stormwater, then the drinking water, as well as, of course, the power and the other infrastructure.

If we look at what came back from the select committee, there’s a whole lot that’s been removed. We have clause 10, the expectation on the transport corridor. We have subclauses (1) and (2), but then (3) has been removed. I’m just concerned, as I look at my colleagues from Stratford and I look at what the New Plymouth District Council is saying about clarification and a clear directive—can the Minister assure this committee that what the Minister is doing in this piece of legislation will clarify, will be clear, will be directive around ownership, around operation, and around maintenance of the stormwater networks?

Yeah, so the clause that the member’s referring to does articulate the points that I’ve noted already in my prior response in regards to the ability to allocate operational and management responsibilities in regards to that. The questions raised by the member in regards to arrangements for transport corridors—just for the purpose of helping the member—that is part of the next part, Part 3, clause 176, so I won’t answer it here and I will in the next part.

Point of order, Madam Chair. I seek leave to table two graphs that I referred to in a previous question.

CHAIRPERSON (Maureen Pugh): Are they not publicly available?

Celia Wade-Brown: Not in this form, no. There was quite a lot of research to pull this together.

Leave is sought for that purpose. Is there any objection? There appears to be none.

Documents, by leave, laid on the Table of the House.

I move, That debate on this question now close.

In the short time I’ve been here I’ve heard some repetition, so I’m just encouraging members that we need new material.

Thank you very much, Madam Chair. I have new material I’d like to refer, please.

Hon Matt Doocey: Have you got new graphs, though?

STEVE ABEL: I’m not of that calibre as Celia Wade-Brown. I have graphs in my mind—you’d know about that. [Interruption]

CHAIRPERSON (Maureen Pugh): Back to the bill.

STEVE ABEL: I’d like to talk to clause 16, please—“Financial principles for water service providers”, page 44. This is a very important clause in so far as it may serve to have the effect of imputing an orientation of a water provider around its financial view of its role over its public service view of its role. I specifically have a question regarding clause 16(1)(a). The wording says, “(1) A water service provider must act in accordance with the following financial principles:”, and under (a), it ends with “providing for growth”. My question to the Minister is: in what sense does that clause mean growth? Does it mean economic growth, financial growth, or does it mean population growth?

It’s an important thing to understand, because there’s a colon after clause 16(1)(a), after which comes (b), (c), and (d), and paragraph (c) says, “the provider’s revenue and funding (including from charges), expenses, and dividends (if applicable) must be transparent to the public:”. I think that there is a risk that if the interpretation of that term “growth” there is financial growth—and it’s important to clarify what the sense of growth has meant—then the implication might be that dividends are an important part of the financial principles under which a water service provider should operate.

There was clear feedback in submissions against the reference to dividends. Multiple submissions, including from councils and NGOs, disagreed with allowing water organisations to provide dividend payments to the shareholders. I’d appreciate also, as a second question, that the Minister clarify why there was a decision to include dividends and, furthermore, the extent to which it contradicts the Local Government (Auckland Council) Act 2009, which prohibits the payment of dividends from Watercare to Auckland Council—for good reason, because—I remember this very well—there was an extensive and rightful public debate about the first and essential purpose of a water provider being to provide safe, potable water to its constituents. The idea that it should be trying to make a dividend out of it was very concerning. There were significant concerns at the time around it being a precursor to privatisation of those water providers, which we know has happened all across the world. So I would seek clarification on why the Minister has chosen to include dividends.

Furthermore, I would like to refer to the tabled amendment of my colleague Lan Pham, which would solve the problem of the confusion around the mention of dividends by removing “dividends (if applicable)” out of clause 16(1)(c).

I also want to refer to the core purpose of a water service provider, which is to ensure that everyone has access to safe drinking water as a basic human right. It should not be imputed or implied by this clause that somehow a service provider has a duty to provide a dividend. That is a problematic imputation. I wonder if the people in Gore right now, who in the last two weeks have been told they can’t drink their water because of nitrate contamination, know whether there will be a dividend returned to the council by that water service provider and whether that would be their expectation. What is the Minister’s response to the effect of including dividends in a clause that says “providing for growth” in so far as it distorts the primary purpose and focus of a water provider, which is to provide safe, clean drinking water to the public?

I also refer in that regard to the tabled amendment of my colleague earlier to clause 15, which outlines that that should be clearly stated—that their task is to provide safe drinking water to consumers and that it does not have an adverse effect on the environment.

That’s a reasonable question in the context of entities and the way in which they operate. Under the current status quo, in the model under prior Governments, there are already council-controlled organisation water entities that are operational. I think, in a Christchurch sense, in terms of Citycare, which already has mechanisms in play that have the ability, should they choose to do so, to provide dividends back into their council. Those entities are accountable to the ratepayer, and so they are the controls on mechanism in place, but the current status quo already has that mechanism.

What is being done by this point in the legislation, which is the point the member raised around the distortion effect—if you look at clause 16(3)(b), it actually provides a clear mechanism: “The organisation must not pay a dividend”, etc., etc., and it refers back to clause 16(1)(b), which ensures that the revenue is being spent on providing the core purpose of the entity. So that aspect there deals as a protection mechanism to counteract, you know, potentially, a scenario that the member is saying.

At the end of the day, some entities already provide dividends back to the councils, but the way in which they do so is that they are accountable to the ratepayers. At the end of the day, ratepayers have a decision in regards to that, and they can convey that through to the councils in terms of their preference, but it simply reflects the status quo.

Thank you, Madam Chair. Madam Chair, thank you also for the earlier guidance around repetition. I’m sure you may be aware that the Opposition is being very purposeful in its approach to this part and we’ve stuck strictly to Subpart 1, and we’re very happy to move on to Subpart 2. But it would be helpful to get some guidance if that is the case, although there are a number of other clauses that I’d like to touch on as well.

Before I do that, can I just thank Mr Mooney for taking a call in this debate. The point, though, still remains in that there are councils, such as the one that he has alluded to, that still have little to no choice when they are basically left on their own—not being able to collaborate with other councils because the other councils don’t want them. So I’ll make that particular point.

I want to ask a question for the Minister of Local Government. This relates to clause 11, and it is in a similar vein, albeit a different clause, to the question that my colleague Dr Russell touched on, and that really is around the transfer opportunities and the level of transparency and awareness around that. My question to the Minister for clause 11, which is around the agreements that would be in place for transfers with a water organisation, is how he expects the transparency aspect to play out. How does he expect the public accountability in those agreements to be exactly that—public? Now, the answer to that could be perhaps that, well, that’s a matter for the council. None the less, the Minister does have some intervention rights and opportunities, and so my question is, very simply, around that one—around how he intends to ensure that there is a level of transparency in the transfer or transition agreements that would sort of flow from that.

One thing I have not had a chance to speak to, and it hasn’t been addressed yet, is one of the Amendment Papers that is in my name, and it has been circulated well in advance of today’s session, and it is Amendment Paper 337. Now, this would seek to amend clause 9. It is a very simplistic course of action that this amendment would take, but the implications, I think, would lend itself to encouraging regional collaboration. What it seeks to do is, basically, to delete paragraph (a) within clause 9(1). It basically rules out as an option the ability for an authority to provide the water services itself directly. So in the case of Queenstown, perhaps, it would still be an opportunity to enter into an agreement but would not allow councils to in-house have an opportunity to deliver on this. I’m interested in the Minister’s thoughts around my Amendment Paper.

I do believe that would, in some circumstances, encourage a further level of conversation with other councils and may invite further regional collaboration. I know the Minister has said, well, that’s a matter for councils to think about in terms of which one they choose. But is the Minister open to supporting the Amendment Paper? He might have information based on the plans that have been delivered well in advance of that 3 September deadline around how many of those are actually looking to adopt an approach which is providing the water services themselves in-house directly. So I’ll look forward to the Minister’s response.

Thank you, Madam Chair. I have two short questions for the Minister. Firstly, thank you, Minister, for responding to my earlier question around clause 8(2). It’s very helpful to know that it’s not so much that the territorial authority can discharge responsibility if there is a water organisation, but the “may” implies that a territorial authority has a choice on whether to have a water organisation in the first place. That’s very helpful.

I did mention to the Chair and to the Minister before that I have some questions around transfer agreements. A specific provision I want to focus on is clause 13, “When new transfer agreement required”. Now, the reason I want to focus on this part is, for example, in clause 11(2), the article “a water organisation” has been adjusted to “the water organisation”. The use of the definite article instead of the indefinite article is significant in this case. I think we’re seeing similar potential confusion in clause 13, where in clause 13—can I just check with the Minister. In subclause (1) it mentions “a water organisation” but in paragraph (a) it talks about transfer to “the water organisation”, so they are referring to the same organisation. I want to check with the Minister—in these cases, is there a possibility to have more than one water organisation, and can a territorial authority transfer from one water organisation to another by means of this particular clause?

I do know that later on we’ll see that clause 18 has limitations when it comes to contractual agreements, and the Minister before mentioned, further along, clause 58F, which does cover the closure of small water organisations, but we’re not seeing, as part of clauses 11A, 12, and 13, what happens when a territorial authority wants to wrap up its ability—unless there’s another clause—to have a water organisation or to retract the transfer agreement, if that makes sense. Can they just then move from one water organisation to the other? So those are my two questions around transfer agreements.

My last question relates to clause 15(1)(a)(i) and (ii). I know the Minister has responded about subparagraph (ii), but in the departmental report, there was no recommendation to move subparagraph (i), for providing safe drinking water to consumers, under subparagraph (vi). My question is on the rationale behind moving that. Providing safe drinking water to consumers is a straightforward principle or objective, but by moving it under subparagraph (vi), “… providing drinking water that is safe for consumers;” but prefacing it on having to meet regulatory requirements—is meeting regulatory requirements comparable to being safe for consumers? What happens if the regulatory requirement itself may not be the same thing and we have, I guess, shrunk the scope of “safe drinking water for consumers;” as a stand-alone objective. So those are my three questions. Thank you.

I want to follow on from my colleague Dr Lawrence Xu-Nan’s questions around transfer arrangements and pick up on an aspect that he hasn’t spoken about. If we look at clause 12(1)(b), it’s talking about the purpose and effect of a transfer arrangement. They have to make sure that the effect of the agreement “is transparent”—to the board, obviously, and the territorial authority—but then in paragraph (b), it says “can be readily ascertained by the public.” I just want to understand what the Minister of Local Government has in mind by that, because, frankly, board minutes and records of meetings and the like are not particularly—I mean, they’re available, one can search them out, one can google them. It takes a particular type of local body nerdy wonk to really go chasing after them. I’m sure every member of this House would put themselves in that category.

Nevertheless, to make sure it’s “readily ascertained by the public”—I want to have an understanding from the Minister of how he envisaged that occurring and how the costs of that are to be borne. “Readily ascertained”—it doesn’t mean the local authorities are going to have to put a letter in every ratepayer’s letterbox, but it does imply that ratepayers need to know that it’s happening and then that they can find out the details of it in some pretty transparent way.

There’s that first aspect of it, but relating to that “readily ascertained by the public”, I just want to clarify, because clause 13 goes on to talk about when a new transfer agreement might be required. I want to be sure about something here. It talks about how a water organisation might change what it’s doing—maybe it’s going to take a new entity; maybe Queenstown is going to get lucky after all and find that someone does want to talk to it—so there’d have to be a new arrangement formed. Obviously, that sort of arrangement matters to the ratepayers, to the shareholders, to the territorial authorities, and so on. There are a variety of provisions in clause 13 as to how that process is to go ahead.

I want to be sure, however, that a transfer agreement in clause 12, which can be “readily ascertained by the public”—that a new transfer agreement is not some separate thing that doesn’t have to be “readily ascertained by the public” but actually falls under the clause 12 idea of what a transfer agreement is. Now, that, to me, is the obvious solution there—that a new transfer agreement is not an entirely separate thing from a transfer agreement, which can be “readily ascertained by the public”. If just the Minister could clarify that, in fact, with a new transfer arrangement, that is expected to be “readily ascertained by the public” as well.

Two questions there. How does that “readily ascertainable” work, and how does it apply to new transfer agreements?

I refer the member to clause 14, which stipulates clearly that the requirement there is for transfer agreements to be published, and that obviously provides a context in terms of the transparency that’s required that the member is alluding to.

Hon Members: Madam Chair.

I’m not going to take a closure motion. We are still on Subpart 1 of this particular part, but can I encourage members to move on. We’ve had over an hour on Subpart 1. I think it’s time to move to Subpart 2 and begin the questions there.

Point of order. Thank you for that, Madam Chair. Before I seek another call, can I just clarify that there are still some Amendment Papers that have been tabled and have been up on the New Zealand Legislation website for the last couple of days that have not had an opportunity to be aired yet. Are you saying that I’m not able to refer to those as part of Subpart 1?

CHAIRPERSON (Maureen Pugh): Thank you for that point of order. The opportunity to speak to those is every time a member gets to their feet. Like I say, we have interrogated this Subpart 1 for quite some time. I think it’s time to move on to the next part.

Thank you, Madam Chair. I will, having taken your guidance on that, refer to the Amendment Papers that are in my name that seek to amend clause 17. This is something that has not been referred to by the Minister of Local Government, so this committee stage is unaware as to the Minister’s position on what has been circulated in advance. The Minister has had at least a couple of days to consider his position on this. In light of that, I would welcome a response from him.

To assist other members who might be interested, this is an attempt to provide some certainty in a number of really important areas in clause 17. There is a requirement for a water service provider to continue the provision of water services—that’s good. But what this Amendment Paper 339 seeks to do is to provide some further assurances to the public and the community in four areas.

The first relates to inserting five additional paragraphs after clause 17(2)(c). The first one is to ensure that there is no declination in freshwater quality or ecosystem within a service area. So that’s the first one that would be introduced within this.

The second one is, basically, ensuring that there is a requirement that the provider is able to identify how it is that an ongoing compliance with drinking-water standards would be given effect to. So that’s the second one.

The third one is, really, in that public health realm. My question to the Minister: given that a lot of the reform space has been from the genesis of what was experienced in Havelock North and in other parts of the rohe as well, why does he not believe that there needs to be a compliance factor around public health obligations that would be introduced around proposed paragraph (f) in Amendment Paper 339? I’m interested in the Minister’s response around that.

Then, in proposed paragraph (g) in Amendment Paper 339, there is an opportunity for ensuring that there is a level of community support for any proposed transfer and change that would follow. This talks about introducing a referendum, which has not been mentioned in this committee stage at all, the possibility of a referendum; this is completely new—but whether or not the Minister would be inclined to support that.

The final one, which follows from Dr Russell’s sort of look at previous clauses, is around this accountability frame. What this amendment would do is it would introduce a requirement for a public annual meeting to be held within six months of the end of each financial year, and that that would have an open opportunity for accountability for questions to be posed. My question specifically on this Amendment Paper hasn’t been canvassed, and I’m interested on the Minister’s thoughts around that.

Thank you, Madam Chair, and we hear your concerns about us cracking on with this part. I have a specific reference to clause 26(3) in Part 2, which reads “If any of the options identified under subsection (1) involve a significant decision in relation to land or a body of water, the authority must take into account the relationship of Māori and their culture and traditions with their ancestral land, water, sites, wāhi tapu, valued flora and fauna, and other taonga.”

My question is: why the wording “take into account”, which is sort of a lower bar—i.e., it’s not a strong articulation? We have a tabled amendment from my colleague Lan Pham, which proposes that it could be changed to “seek to protect and provide for” that list. I wonder if the Minister of Local Government could reflect on that, noting that many submitters outlined that this clause and others should be amended to require councils to meaningfully consult with Māori. In terms of the obligation of the Crown to protect taonga and ensure that Māori have the ability to express their tino rangatiratanga over their taonga and resources, it would be appropriate to strengthen the wording in that clause.

Furthermore, I wonder if the Minister could reflect on where councils are obliged to give effect to not only Treaty settlement obligations, for which there is now limited provision, but Te Tiriti o Waitangi itself more broadly when it comes to the rights and interests of unsettled iwi and hapū. Of course, whether settled of not, Māori have the right of tino rangatiratanga, and Te Tiriti o Waitangi is an obligation of the Crown.

In summary, I wonder if the Minister can reflect on whether he would consider strengthening that clause, which references appropriately and clearly the importance of the relationship of Māori and their culture with traditions, ancestral water sites, wāhi tapu, valued flora and fauna, and other taonga. The wording of that is commendable aside from the weakness in the preamble. Would he consider changing “must take into account” for “must protect and provide for”? Thank you.

I have reflected on the Opposition members’ Amendment Papers, and have made a decision that I do not support them because I don’t believe that they are going to be adding more than the amendments that have been made—over 300 or so—through the select committee process which the members were part of.

In regards to the answer to clause 26(3) by the member, the wording in subclause (3), as I outlined last night in response to a similar question, is taken from the Local Government Act, and that has the precedent in terms of the way in which the interaction and responsibilities by councils and the Treaty are required, and those set precedents in the context of this bill that’s on the Table.

Thank you, Madam Chair. I just have one last question I wish to raise in respect of the clauses in Subpart 1 of Part 2, and it’s just to do with the interaction of a couple of clauses: the financial principles, clause 16, but also then the clause around obligations before entering into contracts, clause 22. I want to draw the Minister’s attention—and, in fact, the committee’s attention—to clause 22(3) and the preamble of (3). This is on page 50 of the bill, not the Amendment Paper, and it says, “Before entering into a contract that a provider determines to be a significant contract because it will create a public-private partnership,”. Now, I haven’t had the time to work out where else public-private partnerships are contemplated in this bill, but I do want to link this back to clause 16.

Here’s the problem: public-private partnerships may well be an appropriate model to use—it’s an empirical case every single time—but the thing with a public-private contract is that the private partner in that partnership expects a return. All right, that’s fair enough; that’s why people make investments, and it’s in order to earn a return. We all do this all the time. It’s a straightforward aspect of the way our society operates. We expect a return. Anyone who’s entering into a public-private partnership is going to have to have an eye to revenue streams, to the extent to which those revenue streams generate sufficient additional income that they can then, in turn, pay a dividend. Clause 16, as the Minister has explained to us, has said that we have to pay dividends responsibly, but I guess I see a real concern here that when we allow private entities to enter into our water services provision, that really accelerates the profit motive.

Now, we want these entities to earn sufficient to be able to pay for the infrastructure, to pay for the water flows, to pay for the waste water, the stormwater, the drinking water—that’s the point—but to what extent, then, as soon as we have a public-private partnership in there, are we going to have a profit motive in there over and above the needs of maintaining the network? I wonder if the Minister could just give us a bit of his thinking around the use of public-private partnerships in the context of water supply and, again, to what extent that profit motive is going to somewhat pull against many of the financial principles in clause 16 of this bill.

Thank you. What this clause reflects is, in effect, belts and braces to the aspects that the member has referenced in regards to how these entities may interact with the water service entities. In regards to clause 22(4), it outlines there that a public-private partnership means a long-term contract for the delivery of water services, and it goes on to outline the specifics around that.

The reality is that to have a financially sustainable model, you are going to have long-term contracts in order to deliver that. The current status quo, before this legislation—an example is Veolia, which operates in Papakura in Auckland and has a contract with Watercare to provide long-term services. That’s been in place for a long time. It is an example. The belts and braces of this ensure that there are appropriate controls and mechanisms outlined in clause 22(3), primarily, and 22(4), to make sure that the considerations around those entities and the relationship have the appropriate controls around them to ensure that that meets the requirements of the community.

Thank you, Madam Chair. I want to point out as well how substantial this earlier part of the bill is, and particularly as someone who was on the Finance and Expenditure Committee, or sitting in on that, particularly for this bill, I want to make it really clear that this was an absolutely rushed process and time frame. There are big sections of this bill that have not actually had any scrutiny put on them. So I really appreciate the opportunity to be able to ask the Minister questions, put up our amendments, and actually have a response back.

I want to thank my colleague Deborah Russell for picking up on the public-private partnerships, and I don’t need to go into that, but I wanted to go into one specific aspect that the Minister has just raised as well, which I’d really like some consideration about. That is about specifically the length of the water services contracts, and I have an amendment for these.

We heard actually from a number of submitters during the process that they were all really concerned, particularly about this 50-year maximum limit for contracting out these water services. Now, we can all have different ideas about the role of public-private partnerships and their benefits or not, but our concern that we share with many of submitters that submitted on this bill is about privatisation. When you have, particularly, contracts which may be numerous in size, which may be at scale and for such a long period of time, we’re really concerned about that acting as de facto privatisation. While we accept the need for public-private partnerships, particularly when it comes to major assets, we think the major provider should ideally always be the public entity and that we’re investing in that.

If we are enabling commercial operators to actually hold these concessions, then that must be in line with all the purposes and the objectives like the best interests, like the good employer tests, which are earlier in the objectives. However, we would like to see, and we’d like the Minister to consider, actually shortening the time frame within clause 21(2A), which is the subject of my proposed amendment—to replace 50 years with 20 years. We think that that would be a more valid length of time in terms of, essentially, this once in a generation consideration of the arrangements within a natural contracting cycle. That seems very fit for purpose, particularly when we know that these are decisions that need to be looked at as a community and things really do change over decades.

As part of this amendment as well, I’m suggesting at clause 21(2A) that we actually insert new subclause 2B that says, “For the avoidance of doubt, day-to-day operations must be provided by the public entity.” That’s really to emphasise that we want investment in these public entities and them to hold as much of the contracts and be actually doing the work as possible. I’d really appreciate the Minister’s thoughts on those. Thank you.

Before I take the next call, I think Subpart 2 has been well canvassed. There’s further reference to the organisations in Subpart 3, so can I suggest we move on to Subpart 3.

Point of order. Sorry—thank you, Madam Chair—can I just seek some clarity around that. Subpart 2 is primarily related to the role of regional councils in this, and I don’t believe there have been contributions—

Dr Lawrence Xu-Nan: It’s a short subpart, but we haven’t covered it.

TANGI UTIKERE: A very short subpart, but there haven’t been any contributions related to regional councils as far as I can ascertain.

Well, to me, that’s a signal that there were no questions about regional councils if it hasn’t been raised, and so we’ve moved on to the organisations in the Amendment Paper, so I’m suggesting we move to Subpart 3 for that purpose.

Thank you, Madam Chair. Moving on to Subpart 3, which does relate to the water organisations—I did have an earlier Amendment Paper previous, but I’ll leave that. I think the Minister of Local Government hasn’t addressed it but has given a response none the less.

Subpart 3 in relation to clause 36 is, effectively, establishing the water organisations. One of the issues that I’m interested in hearing from the Minister—and it might be that he has a particular view around this—is that clause 36 basically sets the organisations. My question to the Minister is: how will he ensure—if he intends to ensure at all—that those water organisations that will be established will not be used to privatise or, effectively, corporatise what are essential services?

The water organisations themselves can—are empowered to—undertake any of the water services. Now, there is provision within the bill to separate that out if that’s the decision that territorial authorities take. But it’s not quite clear what is the Minister’s perspective on ensuring that any establishment opportunity for an organisation in this space is not going to be protected or allow for the privatisation, effectively, of water in this country. It might be that the Minister can point us to a different part in the bill or it might be that he wishes to put on record what his particular view around that is, but it is interesting, none the less.

The other aspect is that this change in clause 36(3A) is around the preparation of the foundation documents. Now, this is something that hasn’t been sort of transferred in from any other part of that clause—it is a new, discrete addition—and so my question to the Minister is: what sort of time frames would exist alongside that? There are other time frames in other corresponding parts of the bill that talk to when particular documents need to be lodged, when a strategy needs to be prepared. This is around the foundation documents, and it might be that that’s actually all-encompassing in terms of the strategy document, and the fact that there is a trigger elsewhere in the bill negates the need for it to be specified here, but I’m interested in in the Minister’s response around that.

When it comes to the ownership of the water organisation—and this specifically is outlined in clause 37—there are obviously a number of options depending on what particular track the councils take around this. I’m interested to hear from the Minister around whether there are higher levels of public accountability concerns with the nature and ownership of water organisations that are outlined there. For example, it is specified as to what a company needs—I think it’s accepted that if a company is formed, it needs to comply with what the legislation is. There’s no issue with that. But if there is, for example, an exemption that has been applied and one has been granted, where is the public accountability aspect that sits within this particular domain or this particular area when it relates to not just the nature within which the organisation is established but the way in which it might be owned, particularly if it’s being, effectively, set up outside of the council opportunities?

I guess the interesting thing there is that members—certainly on this side of the Chamber—would be keen to get an understanding from the Minister around what protections exist to ensure that the future ownership of these organisations remain in public ownership or, at the bare minimum, what sort of protections exist to ensure that the dilution of public ownership is not a particular pathway or a journey that that heads down. I’ll leave with those questions for the Minister first.

Thank you. I’m looking at clause 40. It’s around the governance of water organisations. Clause 40 itself concerns itself with the appointment of directors to a board, the boards of water organisations, so it’s fairly straightforward. The first provision is that the director “must be appointed on the basis of their competency to perform the role.”, which is absolutely straightforward, and I’d hope they were all competent.

But what I do find interesting is the people who are not able to be appointed as a director of a water organisation. I’m assuming it’s not because they’re deemed to be incompetent, because the first one refers to elected members of territorial authorities. I do just want to explore that a little bit, and also the provision that employees of territorial authorities and also employees that are shareholders of water organisations cannot be appointed. So, basically, elected officials and employees can’t be appointed to be directors of the water services organisation.

I just want to query that a little bit in respect of the chief executive officer of a water organisation. It’s fairly common for CEOs to be on the board of an organisation. It’s not an unheard of arrangement. I just want to clarify with the Minister—I’m assuming that, perhaps, the CEO might be an ex officio member of the board but not have voting rights, or something like that. But obviously the CEO themselves is going to be highly competent, we would hope, in this space, and will have a great deal of knowledge to bring to the roles. I would be hoping there would be some reasonable arrangement that the CEO of the water organisation could have, even if it were not for them to sit on the board as a director but to actually have board level input into the organisation and what it’s doing.

That’s the first question in respect of the board directors. The second one is around elected members of a territorial authority. Again, that does seem pretty sensible to me, but I just want to clarify—I’m assuming that that particular clause doesn’t bar someone who has been an elected member of a territorial authority from being appointed to the board. Now, again, we’ve got a fair amount of precedent here at central government level where former Ministers and MPs are appointed to boards, and for good reason. They bring a degree of experience of what it is to manage an organisation that is a somewhat political organisation and it has to have an ear to the political currents around the place, to be appointed to boards. Sometimes they’re boards of public entities; sometimes they’re boards of private entities. There is a real value they bring to that.

I just want to check with the member: local body politicians and people who’ve worked in that space, at the provision of local body services, who understand the political currents—that’s actually a valuable voice to be heard on the board. So if the Minister could clarify: currently elected members are obviously not to go on the board, but I’m assuming that former elected members might well be within scope to be appointed to the board, provided they have the required competencies.

Thanks, Madam Chair. In regard to the questions from members around accountability, the public accountability of water organisations is, obviously, through the councils or consumer trusts that are shareholders of these organisations. Councils and trustees are, obviously, elected by the public, and there are various requirements through the legislation and other mechanisms in regard to shareholders’ responsibilities, including through Part 4 of the bill, which I’m eagerly looking forward to progressing to.

Clause 36 relates to the question in regard to privatisation and other protections. The water organisations are water service providers, and there are a range of protections against privatisation—for example, clauses 17 and 18 outline requirements that only councils and trustees of consumer trusts can own a water organisation, and this includes clause 37. Now, I know all the Opposition members have read the bill but, you know, that’s where you see it in black and white.

The question around can a CEO of an organisation sit on the board—I mean, I’m not going to do an Institute of Directors 101 course on corporate governance, but I would go as far to say it’s probably not good practice to have a chief executive be a member of your governance board, because, last time I looked, governance boards set the strategy and actually employ the CEO, so a bit of conflict there. I think what the member’s referring to there is prior members and other people—well, again, it comes down to the competency of individuals. The CEO would be part of and attend board meetings, no doubt, in their executive capacity, alongside other people such as a chief financial officer. Hopefully that clarifies that point.

I am torn about the detail we’re getting down into, but I will take another call from Tangi Utikere.

Thank you, Madam Chair. A lot of this particular subpart, Subpart 3, that you’ve indicated you’d like us to focus on is related to the mechanics of the consumer trust arrangements. I want to refer now to clause 45, which hasn’t been referred to yet. This is the content of a trust deed for a consumer trust. I guess, when we think about what’s in a trust deed, this can be fairly mundane from time to time, but it is still really important, the contents of the trust deed. I’m assuming from this—I mean, there’s lots of legislation around that basically outlines what needs to be contained within a deed or other documents, and the Minister of Local Government hasn’t quite responded to the foundation documents question yet, either. But I’m assuming that this is not a simple sort of lift and shift from another piece of legislation—that this is a list of criteria or inclusions or considerations that is, basically, bespoke, because there has been some changes around the way in which conflicts of interest will be declared and pecuniary interests and the like.

My question for the Minister is: in preparing the list of items that must be in a trust deed—because the bill says that the trust “must” ensure that the deed provides for the following matters—why has the Government not mandated for a stronger level of public engagement requirements in the trust deed? That’s the first question for the Minister. What’s lacking in that list is the ability for the consumer trust to turn their minds in an active way to how they would engage with the public about their activities. I think that’s a very keen sort of inclusion, because we are talking about the provision of water services that have a direct impact on communities. Where is the sort of mandate around a stronger level of public engagement within the trust deed?

Flowing on from that, of course, is the requirement for any trust deed to reflect the diverse nature of communities. I invite the Minister to point out where in that particular clause is the requirement for the deed to have consideration of communities, because if we think about the fact that all of the different councils around New Zealand will be representative of different communities—in some populations, it will be a largely rural community; in others, it will be fairly urban; in others, it will be a provincial sort of mix of both worlds. Where in the trust deed is there a place for that? Maybe the Minister doesn’t believe that that should sit there. If not, then where in the scheme of things should there be a requirement to address those considerations?

The other one that I want to touch on is related to clause 51, and this relates to the financial statements and the audits. Now, there has been some change to this clause within the bill. It originally did have a specific reference to practice related to the Financial Reporting Act 2013. That’s been removed. The point that I want to identify and the question I want to put to the Minister is—in a circumstance where a trustee of the trust wilfully, basically, doesn’t comply with subclause (1), which is around the auditing nature of things, there is a specified consequence, and it is a convictable consequence, which is a fine of not exceeding $200,000. Now, in select committee, we come up against this all the time, right, where there is an offence that’s been generated, and then the penalty provisions are either drawn from another statute or there is some comparative with another statute to ensure that it’s like-for-like and similar. My question for the Minister is: that penalty provision—where has that come from? Is it consistent with other similar offending? It might be that it comes from a similar Act, but I’d be interested in a response to that.

Thank you, Madam Chair. I also just want to say that we really appreciate the Chair’s guidance around when to move to the next subpart, and just want to signal here, Madam Chair, that I have one very small question for Subpart 3, and after this I will be moving on to Subpart 4.

CHAIRPERSON (Barbara Kuriger): Thank you.

Dr LAWRENCE XU-NAN: In terms of Subpart 3, the one question I have is to do with clause 38, “Limited role of water organisation”. I want to check with the Minister that in this case, water organisations “must not do anything”. Those are absolute terms. One of the things that I’m curious about is why there wasn’t a provision at least in place that allows clause 38 to be subjected to clauses 55 to 58 around exemptions, because in clauses 55 to 58 it does allow for exemptions, and there is a suite of process and also criteria that a water organisation, for example, must meet before being eligible for such exemption. So I just want to check with the Minister—was there any consideration to include something like that in clause 38 so that in that way, clause 38 isn’t in absolute terms?

Lan Pham—I just would note, having watched the previous Chairperson and appreciating Mr Xu-Nan’s comments, I do feel like it’s time now to move on to Subpart 4. Thank you. Is there a quick question about Subpart 3?

Lan Pham: I’ve just got a quick question about consideration of my amendment—

CHAIRPERSON (Barbara Kuriger): OK, we’ll make this the last question on Subpart 3 and then we’ll move on to Subpart 4.

Thank you, Madam Chair. My suggested amendment—which I’ll get straight to—is to delete clause 55. It was really great to hear the Minister of Local Government assure us that there is, essentially, an avoidance of doubt clause which actually prohibits against risk of privatisation. I’m suggesting we take that one step further in deleting clause 55(5), and this relates to the exemptions. We had some really clear submissions, particularly from the grouping of Wellington councils and their mana whenua partners. Tauranga City Council also recommended the deletion of this clause, because they saw it as the potential for a water organisation to be a cooperative company and that this could be a possible avenue for privatisation. We also had Ngā Waihua o Paerangi and Ngāti Haua Iwi Trust noting their concerns with this, and also the Institute of Directors, who considered that councils should not be able to seek an exemption to the requirement that trustees have no other roles and responsibilities in relation to the water organisation.

My suggested amendment to further ensure that these water entities are protected from possible avenues of privatisation is to delete clause 55, and I’d like to hear that being considered. Thank you.

I thank the member for the question. Exemptions from clause 38 are provided for in clause 55(3). That’s the reason why clause 55 is in place—there was a prior question in regards to clause 38. In regards to the question on clause 45 around consumer trusts and how they deal with consumer engagement, clause 45 requires that a trustee sets out how trustees will engage with consumers, and the ultimate accountability that is in place for consumer trust is consumer trust elections, and that ensures that the accountability mechanism is in place.

I’m just going to now indicate that we’re moving on to Subpart 4, so that’s clause 58A through to 58H.

Thank you, Madam Chair. This is actually a really interesting part of this bill, because what it does is it provides a capacity—in fact, a requirement—for territorial authorities to actually assess the work that the water provider is doing in terms of testing the quality of the water that’s supplied and making sure that all the systems are working as specified.

I don’t have a great deal to add in terms of the assessment of drinking water—no particular questions around that, because some of that is so self-evident, but also that’s obviously very much a response to the disasters of the past.

What I want to focus on—I’ll leave that drinking water to some other people who do know more about this. I just want to look at clause 58D and, in particular, the assessment of communities’ stormwater and waste-water services. I’m sure we’re all aware of the huge amounts of rain that have been falling across this country in the last few days. It’s been falling again up in my rohe in Auckland, around West Auckland. We’ll all remember—

Steve Abel: Our rohe.

Hon Dr DEBORAH RUSSELL: Our—yep, our rohe. Yes, very much so, ours. The disaster of the—

Steve Abel: We’re not claiming mana whenua status, by the way.

Hon Dr DEBORAH RUSSELL: No, not at all. We all remember the disaster of the Auckland Anniversary floods—all right. Now, around the stormwater, in clause 58D(1) it says, “A territorial authority must assess the provision within its district of (a) stormwater services;” and then in clause 58D(2), “The purpose of an assessment is to assess, from a public health perspective, the [provision] of stormwater services”.

Now, obviously, we want to assess the provision of stormwater services, I would hope, from, obviously, the threat to life—I suppose we can call that a public health perspective, but it’s kind of a little bit of an odd way to put it. I would have thought the threat to life is worthy of thinking about in itself. In terms of a public health perspective—again, we think of assessing stormwater services in relation to the possible damage to property, a really known problem, but I just want to hear what the perspective is around that public health perspective. Does that sort of comprehend a broad understanding of public health? Are we talking about the impact on people’s mental health if the stormwater provisions aren’t adequate? We know up in our area that children out at Pīhā and in Karekare have nightmares when it rains. Is that the sort of thing that is intended within that public health perspective?

I just wonder if the Minister of Local Government could talk a little bit about what is intended from that public health perspective, aside from the obvious dangers to life and limb. Are we talking about things like potential disease but also some of the mental health aspects that go along with, well, inadequate stormwater protection? A little around that would be very helpful.

Thank you, Madam Chair. This is a very important part, Subpart 4—I’m on clause 58A and specifically 58B, actually. Clause 58A speaks to the definitions in relation to water services. We have “significant problem or potential problem”: “(a) a drinking water supplier has persistently failed to comply with the requirements of the Services Act 202; or (b) there is a risk to public health from the supply provided by a drinking water supplier;”. If we cross the page to clause 58B, “Assessment of communities’ access to drinking water”, this is all around the obligation of a territorial authority to inform itself about the access that each community in its district has to drinking water services by undertaking an assessment of drinking water. If we go further down, that includes subclause (2)(d)(ii)—that’s line 19, I guess: “any reasonably foreseeable risks to the community’s access to drinking water services in the future;”. Then, further down, at paragraph (f): “identify and assess any public health risks related to the drinking water services supplied to the community”—there will be a logic to why I’m pointing out all these points in a moment. Then to paragraph (g)(i): “assess the consequences if the community loses access to drinking water services in the future, or is provided with drinking water services that are deficient in any way, including the implications for the community’s public health”.

The risk to the community’s public health is a highly pertinent question. The obligations a water authority is required to meet are set by things such as the maximum acceptable value of certain contaminants. The most pertinent topical one of the day is nitrate right now, because, literally, Gore has just been told—a city of 8,000 people—that it needs to not drink its water about 10 days ago because it exceeded the maximum acceptable value. That is a risk for blue baby syndrome. There’s also other emerging risks for chronic exposure to bowel cancer, and pre-term birth is a risk at 5 milligrams—significantly lower than the maximum acceptable value. But I specifically asked, in the last week, the Gore council what their obligation was to inform their residents of the health risks of nitrate at 7 milligrams per litre, which is what it’s currently sitting at on average. Which is to say it falls below the maximum acceptable value, but it is above emerging evidence of health risks, namely a Californian study from 2021 that shows that at 5 milligrams, there is a 47 percent increase in the risk of pre-term birth for pregnant people who are consuming nitrate at that level.

My question is: does the water provider have any obligation in its responsibility to provide drinking water services—that impact a community’s public health? Does it have any obligation to give advice to that community on the health implications of contaminants such as nitrate, or does it simply have to meet the maximum acceptable value? Would it, for instance, Minister, be acceptable, under these clauses and definitions, for that council to advise the public that the water was perfectly safe to drink, even though there is scientific evidence and peer-reviewed literature that’s showing that it is not perfectly safe to drink, in the instance of Gore at 7 milligrams?

My other point I would like to ask, which is totally related to that, is that where, as in the case of Gore, it’s very obvious the source of the nitrate—the nitrate contamination is an ongoing problem in that city. I know, from having been there and tested the water myself in a previous role, that the nitrate has been steadily rising over the course of—[Time expired]

The member’s points are out of the scope of this bill because they relate to the fact that water service providers’ obligations are to comply with the water quality regulations. So all of that lovely stuff and conversation is very nice but it’s not relevant to this provision because the regulations in terms of water quality are outlined under the requirements for the water services regulator.

Thank you, Madam Chair. I’d like to turn to proposed clause 58F. Some colleagues have touched on the proceeding clauses around what information is to be made available for the assessment of services and the like. This clause is very specific, and it relates to the possible transfer or the closure of small water services. That’s the first question for the Minister of Local Government—the definition of a “small water service”—because when one looks at the interpretation clause, there is no definition that I can see for a “small water service”. What Subpart 4, helpfully, does, actually, is it identifies, for the purposes of this subpart, definitions in there, and likewise there is no definition for a “small water service”. So I’d like to understand what that actually looks like in terms of how many numbers we are talking about there.

When we look at 58F(1)(b), this is the trigger, really—that there is a service that has been operated by a provider but that it is no longer appropriate to maintain. The question for the Minister is: what leads to that inappropriateness? The proceeding clauses are talking about circumstances where a problem has perhaps been identified—I don’t think that’s what is meant by it’s “no longer appropriate to maintain.”, let alone operate. Are we talking about the fact that it has already been decommissioned or the infrastructure is in a state in which it is not able to be operated or is non-functional? I’m just interested in what that actually means.

The rest of that particular clause talks about, basically, leading up to what is a vote or a binding referendum for ratepayers in that particular community. Now, there is a requirement helpfully outlined that talks about the provider—you know, there’s certain things. The number of folk—and it might be that the fewer than 200 is the trigger for a small provider; I don’t know. I can’t see it defined there. But there is a requirement for the provider to consult with the Medical Officer of Health. Now, in the proceeding clauses, the nature of what individuals need to be consulted on for assessment purposes is outlined. Here there is no description or definition around what it is that the Medical Officer of Health is seeking to be consulted on. Now, we know and councils know that when it comes to district licensing committees, they’re provided with an opportunity as a statutory officer to provide a view on that. What is it that the Medical Officer of Health is to be providing, in that particular sense? It’s appropriate that there is a role there, but it would be interesting to understand what that is.

Once that information has been provided, when we go to subclause 3(d)(ii), it talks about—I assume for the purposes of the referendum—making all of this information publicly available. Now, that’s all good and well. However, it talks about it being made publicly available in a balanced and timely manner. Now, timely manner, we can probably understand that, but what is this “balanced” perspective? When it comes to Medical Officer of Health considerations and information, balance from one community to another could be very, very different, so I’m interested in what guides that balanced approach. Timely, we can understand—that is, effectively, a time frame. Is it just the provision of all the information; if so, why is that not stipulated here in the clause?

The other thing—just finally on this, Minister—is the trigger points for change. In clause 58F(3)(f)(i) and (ii), it talks about the 75 percent threshold for, effectively, shutting down the provision of the service, whereas the transfer is 50 percent. Why the different thresholds between the two—75 percent for closing the provision or getting rid of the service, and 50 percent for retaining but transferring it across to another provider?

Clause 58F(3)(a) refers to a number of 200 persons to provide an indication of 200 or fewer, which is the point that the member’s potentially getting to, into the context around what is seen as small. There is no subsequent definition of what is small, but the context around 200 provides some guidance. Paragraph (f) provides the belts and braces around the referendum that needs to apply if this decision is proceeded. As you can see, it’s a pretty comprehensive mechanism in order to provide protections around this. I’ve already answered this question in prior responses in regards to points (b), (c), and (d). Again, I’m now repeating.

I call the Hon Dr Deborah Russell. I want the questions to home in now rather than being speeches, because we’ve spent a bit of time now on subclause (4).

I’ve got a couple of questions to ask here. The first is around this 200 or fewer persons. Now, I’m contemplating a scenario where there are 200 people in an area and then someone has a baby and suddenly makes it to 201. It is curious, because we’re talking about the number of persons, not the number of connections. What I want to understand here is—I guess there must have been a little bit of advice around this, as to what were taken to be small organisations and the number of people, not connections, who are normally part of a small water services organisation. There must be a flex point where you go, “Yeah, there’s too many people here.” Why 200? Why not 150? Why not 300? Did officials do some survey work to have a look at what might be called small water services and do some work and find out that, actually, 200 was a kind of reasonably good demarcation between small and not so small, or was it just a number dragged out of the air? I’d just like to see a little bit of the background around that. I’m hoping that there aren’t too many water services on the margin, because we wouldn’t want that. We’d want them to be clearly small or clearly big. So that’s the first question there.

The other question is around the referendum. It talks about eligible voters, and that’s got me a little bit more worried. Voting eligibility in this country goes on permanent residence and citizenship and age. The citizenship and age is fairly straightforward, but, you know, people who aren’t permanent residents but are nevertheless perhaps paying rent are affected by a water service closure but wouldn’t necessarily then have a say in whether or not the water services were going to continue to the property that they were in—even the people who can own might be able to do that. So there’s a little bit of a worry there, because this is talking about the provision of a service that everyone needs, but some people, because we’re going on eligible voters, might be excluded from a say in whether or not the water service to their home continues.

There’s a little bit of a further point here as well. We’ve done it in terms of persons, but we can contemplate that some large households might only have one vote for the household, or two votes for the household—you can imagine a family with a number of children, whereas some households might have, say, an older couple, maybe in farming—well, maybe not farming but in a small community where they may have a tenant. They might end up with more votes per property. So I just want the Minister to give me a little bit of the thinking around that—around how we could determine the eligibility for voting based on need rather than in the electoral voting, as it’s a slightly different matter. I get it in terms of who gets to vote for elected officials and things like that, but this is a referendum around whether or not a service is provided, and it’s a slightly different matter. Again, there must be some thinking in behind this. I’d be interested to hear it.

Yes, so the member has asked for clarification of where the 200 number comes from. Clause 58F is actually taken from the Local Government Act. The number of 200 is actually used in other aspects of legislation, including health legislation, in the context of quantification around that size. That’s the precedent. A reminder: while this is a long and complex bill, it has been through a full select committee process, and these types of detailed questions have been covered extensively through those conversations. I am repeating a lot of that just because it’s big. There has been a full process on that.

I’m going to allow the opportunity to ask some questions on Subpart 5. Steve Abel—have you got a question on Subpart 5?

May I have one very quick one on Subpart 4?

CHAIRPERSON (Barbara Kuriger): It’ll have to be only, like, that big—only because I saw you have a go before, OK?

STEVE ABEL: Well, it’s on the same question. Because the authority is required to provide safe drinking water, right, in accordance with the water services authority Taumata Arowai, does a regional authority, in its duty of providing safe drinking water as part of its obligation, and consistent with clause 16 in terms of its financial duty, have any recourse to seek compensation from an industry or a party that is diminishing its ability to provide safe drinking water—i.e., through contaminating the drinking water? If the provider knows the source of a contaminant and its duty is to provide for the public, does it have an ability to seek compensation from the entity that is causing the contamination?

There’s a very specific instance of this. I know, in Gore, they’ve, literally, just spent money to drill a bore so they can pump water from the Mataura River into the water supply to dilute it so that the nitrate is below the maximum allowable value. They’re spending public money to fix a contamination problem. Can they seek compensation from the entity that is causing the contamination?

I’m moving, now, on to Subpart 5.

Exactly where I’m going, Madam Chair.

CHAIRPERSON (Barbara Kuriger): Thank you.

Hon Dr DEBORAH RUSSELL: Madam Chair, first of all, I want to thank you for alerting us to Subpart 5. We’ve been working from the bill as it came from the Finance and Expenditure Committee, and, of course, Subpart 5 is in the Minister of Local Government’s Amendment Paper.

CHAIRPERSON (Barbara Kuriger): I’m sure previous speakers have been alerted to the subparts, because I’ve heard that comment already, yeah.

Hon Dr DEBORAH RUSSELL: Well, news to me, Madam Chair, but I’m very grateful to you.

Look, a very simple question for the Minister, because we’ve only just sort of gone “Oh my goodness!”—was this transferred from another part of the bill? I know we discussed these water services delivery plans in select committee. It must have been sitting somewhere else in the bill. If the Minister could just guide us to where this was originally in the bill—if it’s been transferred in. If it’s completely new, obviously we need to examine it, but I don’t think it is. Can someone advise us as to where this came from in the bill?

Thank you, Madam Chair—and, sorry, I thought the body language of the Minister sort of indicated that he was poised to respond to that, which is why—

CHAIRPERSON (Barbara Kuriger): That was my hesitation, yes.

TANGI UTIKERE: Yes—across the Chamber. In the absence of confirmation from the Minister that this is a simple transfer from elsewhere in the bill, I want to turn to what is proposed to be clause 58L, “Water services delivery plans: adoption and consultation”, and this is set out on Amendment Paper 346 in the name of the Minister.

We’re working through a process throughout this country at the moment where the water delivery plan is basically with the Government before 3 September, and that might be why in clause 58J(2) we are seeing this, because it has the date “3 September” but it will be in 2030. I’m interested to hear from the Minister about that.

But I want to just look at clause 58L, which is the adoption and consultation of the water services delivery plan. Now, it talks about the fact that the local territorial authority, basically, needs to adopt this plan by a resolution. The interesting thing, of course, is that we’ve just talked about and asked questions about a binding referendum outcome that has a 50 percent trigger and a 75 percent trigger for certain things. To ensure that there is community-level support by way of elected members around local council decision-making tables, was there any thought around ensuring that there was a particular threshold that would need to be surpassed when the council, basically, passed that resolution?

It’s not unheard of to have a particular higher threshold for certain decisions to be taken. Those that do have local government experience will know that often they are for things like setting aside the standing orders of a committee or thereabouts. So my question to the Minister is: given that this is about the way in which water services in a community are to be delivered, and there will be lots of discussion and perhaps concern around that as communities think about what the financial implication around that is—and we hear that a lot at the moment as rates are going up as a result of the Government’s unfunded mandates and expectations on to councils—was there any thought about having a different threshold around the adoption of a water services delivery plan, even if it was at 75 percent? This is to ensure that there is community buy-in around this. That is the first question for the Minister.

Yeah, in regards to the clause reference—so, as the member will see on page 81, in the little small font under Subpart 4, there’s a little number there which refers to the Local Government Act reference. I know the member’s read the bill, but just helping him again to identify clause 131 as referring to the aspect in regards to the 200 number that I answered before.

I move, That debate on this question now close.

The question is that the Minister’s tabled amendment to Amendment Paper 346, to replace clause 7(5), be agreed to.

The question is that the Minister’s amendments to Part 2, set out on Amendment Paper 346, as amended, be agreed to.

The question is that Tangi Utikere’s amendment to clause 9(1), set out on Amendment Paper 337, be agreed to.

The question is that Tangi Utikere’s amendment to clause 15(1), set out on Amendment Paper 338, be agreed to.

The question is that Lan Pham’s tabled amendment to clause 15(1)(a), to insert new subparagraphs (i) and (ii), be agreed to.

The question is that Tākuta Ferris’ tabled amendment to clause 15(1)(a), to insert new subparagraph (ii) regarding Te Mana o te Wai, be agreed to.

The question is that Tākuta Ferris’ tabled amendment to clause 15(1)(a), to insert new subparagraph (ii) requiring water services to be safe and accessible, be agreed to.

The question is that Tākuta Ferris’ tabled amendment to clause 15(1)(b)(i) be agreed to.

The question is that Tākuta Ferris’ tabled amendment to clause 15(1)(b)(ii) be agreed to.

The question is that Tākuta Ferris’ tabled amendment to clause 15(1)(c)(ii) be agreed to.

The question is that Lan Pham’s tabled amendments to clause 16 be agreed to.

The question is that Tangi Utikere’s amendment to clause 17(2), set out on Amendment Paper 339, be agreed to.

The question is that Tangi Utikere’s amendment to clause 18(1), set out on Amendment Paper 340, be agreed to.

The question is that Tangi Utikere’s amendment to clause 18(1), set out on Amendment Paper 341, be agreed to.

The question is that Lan Pham’s tabled amendments to clause 21 be agreed to.

The question is that Tākuta Ferris’ tabled amendment to clause 24(1A) be agreed to.

The question is that Tākuta Ferris’ tabled amendment to clause 24(2), to insert paragraph (c), be agreed to.

The question is that Lan Pham’s tabled amendment to clause 26 be agreed to.

The question is that Tākuta Ferris’ tabled amendment to clause 36(1) be agreed to.

The question is that Tākuta Ferris’ tabled amendment to clause 36(3) be agreed to.

The question is that Tākuta Ferris’ tabled amendment to clause 36(3A) be agreed to.

The question is that Lan Pham’s tabled amendment to clause 37, to insert new subclause (2A), be agreed to.

The question is that Tākuta Ferris’ tabled amendment to clause 40, to replace subclause (3), be agreed to.

Lan Pham’s tabled amendment to delete clause 55(5) is out of order as being inconsistent with a previous decision of the committee.