O'Connor Greg; Watts Simon; Mahuta NanaiaCHAIRPERSON (Greg O'Connor): Members the committee is resumed on the Water Services Entities Bill. When we suspended for the dinner break we were considering Part 4. Once again the question is that Part 4 stand part.SIMON WATTS (National—North Shore): Thank you very much Mr Chair. It's great to be back after the dinner break. I hope everyone's refreshed and ready to keep rocking in the conversation on Part 4. I want to go to a couple of aspects and clauses that we haven't covered in the conversation with the Minister of Local Government before the dinner break and these relate to clauses 150 151 and 152 in regards to funding and pricing plans.Before the break we were having some dialogue in regards to shareholding and other aspects. The questions I have on these clauses specifically relate to the concept around how we're going to ensure that we've got mechanisms to ensure that the pricing across the four water service entities is appropriate and the degree of confidence we have that those aspects are going to be in play.So the specific question I've got for the Minister in regards to clause 151 is this: what are the safeguards that are in place within this bill that the Minister believes are going to be appropriate in order to provide a safeguard particularly to smaller rural provincial communities across this country in regards to pricing increases they may see as a result of these entities?The second question in regards to that outside of small communities is about the mechanism in which this information will be publicly published and disclosed in order to I guess provide a degree of transparency for communities around both the funding element which is probably less relevant to the average household and the actual pricing component. What is the mechanism around the publication of that data and is the Minister confident that the provisions in the bill in clauses 151 and 152 will provide that degree of confidence? So my question is around safeguards for smaller communities and then the mechanism for publication pricing and funding mechanisms.The second aspect I want to get into is Subpart 4 of Part 4 around reporting and particularly around annual reports. For those that are sitting at home watching the news—and they're probably just about to move on to Parliament TV because that's what every household across the country no doubt will be doing at this point—you know I want to spice up the evening a little bit so let's listen to a little bit of the Water Services Entities Bill committee stage. And I tell you what I'm sure the Minister will join with me in saying there's no better place to be than here at the moment.My point is this: there's been a lot of conversation through the initial phases of the select committee process around the Auditor-General's comments in regards to this legislation and this specific part is where this is very much relevant. You may recall that the Auditor-General raised significant serious concerns about the transparency in the reporting requirements around the initial elements of this bill. Is the Minister confident that these issues have been solved and has the Office of Auditor-General provided any feedback to the Minister in that regard? That is a question we discussed at the Finance and Expenditure Committee—has there been in effect confirmation back from the Office of the Auditor-General that the changes reflected in the bill post the initial raising of the issues with it have mitigated the issues and risks and concerns that the Office of the Auditor-General has raised? And actually the request at that point was to get some confirmation in writing back to the select committee. But the view from officials to us was that actually no there's been some dialogue and conversation around the fact that these changes to clauses 156 through to 164—particularly clause 161 around audit reporting requirements—will suffice. So I'm just looking for some confirmation and consideration from the Minister around the confidence that the issues around serious concerns around transparency and reporting have been addressed as a result of that.The second aspect in regards to the reporting components in Part 4 Subpart 4 relate to the points around—it goes back to that representation conversation around the regional representative groups that we talked about in prior parts. But the reality is that there are going to be a number of smaller councils across the country that won't have a seat as part of that governance structure. So the point that I'm wanting to link this back to is that in this subpart it talks about the preparation of plans and reports. And if you look at Schedule 3 I think it refers to the preparation of plans and reports. How can smaller councils be assured that even though they might not have a seat in terms of their representation on those governance groups particularly in rural and provincial New Zealand they will actually be able to input into the preparation of those plans and reports that are outlined in the schedule I've referred to? I will leave it at that and welcome some response from the Minister.Hon NANAIA MAHUTA (Minister of Local Government): Just in relation to the new questions that have been asked and the preparation of the funding and pricing plan you'll find that in Schedule 3—in clauses 13 and 14 of Part 3 of that schedule—it sets out effectively what is in a draft funding and pricing plan and who should be consulted. But in the interests of brevity territorial authority owners will be consulted and consumers and communities under the engagement provisions in section 202 of the Act. That will ensure as the member has highlighted that notwithstanding the size of the community—big or small—they will be engaged with as well as the range of consumers that exist within the community.On the matter of the Auditor-General my understanding is that the Governance and Administration Committee adopted the recommendations of the Auditor-General which was to ensure that there was greater public accountability in the bill. The changes included additional content in relation to planning documents changing the time frame of the statement of intent improving the scrutiny of all accountability documents produced by the water service entities and additional requirements for considering consumer and community feedback. Then the select committee went a step further I understand which led it to see if the changes adopted at the second reading were acceptable and they were. So I think that overall that's a positive indication of the way in which the select committee process the public process can help to improve the transparency and accountability and workability of complex legislation such as this.Let me come back to the issue of funding and pricing plans. Effectively what this bill does is establish the architecture for funding and pricing plans to exist because we do need them as we need asset management plans and as we need infrastructure strategies which are long-term planning documents that are able to be reviewed periodically in sequence over a particular time frame.But the most important thing in terms of driving issues such as equity let's say—the ability to ensure that vulnerable communities and vulnerable consumers are able to get the full benefit of the type of reform that we're proposing—is the establishment of the economic regulator. And the member will be aware that the next two bills will help support the substance of the role and function of water service entities as well as the transitional provisions and also provide the architecture around economic regulation. Once we have the economic regulatory piece in place then we're able to give greater assurance around the way in which funding and pricing plans determine better outcomes for all citizens.