SpeechWATER SERVICES ECONOMIC EFFICIENCY AND CONSUMER PROTECTION BILLFirst ReadingHon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I present a legislative statement on the Water Services Economic Efficiency and Consumer Protection Bill.ASSISTANT SPEAKER (Hon Jacqui Dean): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon Dr DAVID CLARK: I move That the Water Services Economic Efficiency and Consumer Protection Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 25 May 2023.By protecting the health and wellbeing of our water we protect the health and wellbeing of our people and our environment. Sixty-seven different councils own and operate most drinking-water waste-water and stormwater services across New Zealand. These councils are facing significant challenges in the form of ageing infrastructure historical under-investment and source water contamination. A report by the Water Industry Commission for Scotland estimated that New Zealand will need to invest between $120 billion and $185 billion in water infrastructure over the next 30 years to catch up on that historic under-investment. Without reform these costs will be shared unevenly between New Zealand households and cost increases could be up to 13 times higher for rural households and seven times higher for many metropolitan households. For this reason from July 2024 New Zealand's three waters services will be provided by four multiregional publicly owned water services entities. These entities will have the scale expertise operational efficiencies and financial flexibility to invest in safe high-quality water services.To ensure that these new entities provide high-quality water services at efficient prices this bill establishes an economic regulator and a consumer protection regime for the water sector. The bill complements Minister Mahuta's Water Services Entities Bill. The bill introduces economic regulation and consumer protection to ensure that services are delivered efficiently effectively and responsibly. This is the same sort of regulation used in other industries in New Zealand including for the international airports in Auckland Wellington and Christchurch; electricity lines businesses; and natural gas pipelines businesses. The Commerce Commission will be the agency responsible for implementing and enforcing economic regulation and consumer protection for the water sector. The commission is a high-performing regulator that does great work in helping markets to function well. It is well equipped to regulate the three waters sector especially given its experience regulating other utility sectors and ensuring that consumers are fairly treated.However to further reflect the unique nature of the water sector and the importance of Te Mana o te Wai the vital importance of water the position of Water Services Commissioner will be established on the commission's board. The Water Services Commissioner will be responsible for leading the roles and functions of the commission. The new entities will be subject to economic regulation from 1 July 2027 in the form of information disclosure and quality-only regulation. There is presumption that price-quality regulation will apply to the entities from 1 July 2030 and there is flexibility to adapt regulation for different entities and services or to bring these dates forward. Information disclosure regulation will promote transparency and accountability by shining a light on the entities' performance and expenditure.As I've mentioned it's a similar regulation that the commission uses for airports and it has proven to be an effective way of using reputational incentives to influence the profit investment pricing and service levels of these businesses and to encourage better performance. Members of this House would be familiar indeed with those examples.Quality-only regulation will ensure the entities meet minimum quality standards especially relating to resilience and reliability and will complement the oversight provided by Taumata Arowai the water services regulator. Price-quality regulation will further influence the behaviour of the entities by limiting what they can charge consumers. The entities will be constrained either by the maximum average prices they can charge or the total revenue they can recover from consumers. This is the same regulation that the commission uses for electricity businesses and is an effective way of encouraging businesses to be efficient.If businesses do not comply with regulation the commission can take a range of enforcement steps including pecuniary penalty orders compensatory orders and injunctions. Economic efficiency is a key piece to these reforms but is not the only factor at play. There is a clear power imbalance between consumers and monopoly businesses in the utility sector and consumers often struggle to have their voices heard and indeed to engage with the technical issues involved. Therefore the bill introduces consumer protection measures that aim to ensure consumers' needs are met and that entities provide the high-quality services we would expect them to provide. These protections will focus on the quality of water services and be distinct from Taumata Arowai's role in regulating the quality of drinking water itself. The bill introduces a service quality code and sets minimum requirements that entities must meet. This complements the standard customer agreements provided for in Minister Mahuta's Water Services Entities Bill and covers standards relating to outages and faults minimum flow pressure rates billing practices consumer rights and customer services.The bill also establishes a comprehensive independent consumer disputes resolution scheme so consumers can easily escalate complaints that they cannot resolve with the entities themselves.So in conclusion New Zealanders expect and deserve safe drinking water sewage infrastructure and stormwater systems. The economic-regulation and consumer protection regime established by this bill will help achieve this and will help safeguard and enhance critical water infrastructure and services for generations to come. I commend this bill to the House.ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to.