Bayly Andrew; Webb DuncanANDREW BAYLY (National—Port Waikato): I'm just hoping the Minister of Commerce and Consumer Affairs is going to respond to my questions on clause 27. But anyway let's carry on—clause 27(1)(c) because they're all relevant. So this is the other part of the input methodologies methodologies for capital expenditure projects". So these entities need to provide the following: "(i) requirements that the regulated water services provider must meet including the scope and specificity of information required the extent of independent verification and audit"—so while it's a lot of words it's not that difficult—"and the extent of consultation and agreement with other parties;". Mm-hmm! OK. And "(ii) the criteria the Commission will use to evaluate capital expenditure proposals;". So that's the Commerce Commission actually doing some work. Again investment in infrastructure projects are pretty standard sort of criteria that are used to do it. And "(iii) time frames and processes for evaluating capital expenditure proposals". So that's another major part of the input methodology. Again that doesn't seem long.What I do find fascinating and I would have thought we might have included in this list is probably the biggest driver in terms of getting value for money for from infrastructure investment: what the procurement model is. What is the model that these entities are going to use to procure? Do you take the approach that Watercare's adopted in the last couple of years to form long-term agreements with a number of large entities and say to them we will commit to doing all our infrastructure with you over the next 10 years? As an example one of those partners is Downer and I think Fletcher Construction are in there as well. Or are they going to go down Auckland Transport piece by piece breaking down motorways into subparts and trying to compete and procure badly as they do it down the southern motorways that we've observed? But each one of them will have a different outcome. They will be measured differently in terms of what the long-term cost has been—not the short term the first-up all-up cost because there will be a maintenance element to it. And so that's why I'm surprised also that the issue around the procurement model wouldn't have been part of these input methodologies.But there we are we got two key sets of import methodologies. I'm really keen to understand what the Minister thinks about them and why it takes so long to get a response.Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): It took quite a long time to get to a question there Mr Bayly. Procurement practices are not part of this bill. That's part of the Water Services—Andrew Bayly: Why not?Hon Dr DUNCAN WEBB: Because it's part of the Water Services Entity Amendment Act 2023. So catch up on that one. In respect of cost of capital given that he's—at least on his web page it says he was a merchant banker I think he'd know better than most that the valuation of cost of capital is a much fought-over question and there are many methodologies and exactly how you look at it is highly sensitive And so that's exactly why we want an effective input methodology to do that. Other than that good reading of clause 27.Mr Cameron yes look water transported by truck—if it's part of the operations of the entity it could become a part of the model. But it's about the regulation of the entity itself and the costs that it has not third parties who might be doing it in a different manner.ANDREW BAYLY (National—Port Waikato): Yeah well thank you. That was a great response from a professor of laws but actually working out the cost of capital is a very simple exercise. It's called capital asset price model. It has about four variables: risk-free rate beta—and it's a pretty easy model to work it out. The issue is just working out what those inputs are. To a large extent they remain steady over time in terms of the risk-free rate and then applying that to the risk factor of the industry—which is again a low-risk industry. It has norms very easy norms—lesson one. So obviously the Minister of Commerce and Consumer Affairs doesn't have much expertise in that area.I just want to return now to the issue of this duration. So I presume because the Minister hasn't actually answered from his answers that he thinks this is all going to take a long period of time. Procurement does actually drive costs of infrastructure and ultimately to the price—I make that difference with the Minister. But just turning now to this issue around clause 23 and how it relates to clause 22(1)(a) and determining the duration of subsequent periods. This is of course from 1 July 2027 which cannot be any longer than six years—well that's what it says in Subpart 2. But in clause 20(2A) it says that this "Commission may set out different periods for different regulated water services providers as the Commission sees fit." It goes on in clause 23 to talk about the Minister making that determination. Let's just start with an easy question: under what circumstances or reasons would the Minister contemplate delaying that or changing the date that's not currently within the three-year periods that are set out in the bill? What would be likely scenarios in which the Minister would contemplate where he might choose to make that change?Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): After receiving and considering a recommendation from the Commission under section 139H; and as satisfied of the matter set out in section 139H(1)(a); and in relation to a regulated water services provider that services the Auckland and Northland area which is set out in the bill of course. Look in terms of what would I need to do as Minister or any future Minister to make a decision I must say Mr Bayly it's really not helpful to set it out in this forum because that is a matter of discretion as bound by the bill for a future Minister. It would be exceedingly unhelpful to constrain that in any way by essentially my reckons on what I think I would do. The basis upon what can be exercised at law is set out in the legislation but it needs to be those rules which determine that rather than my opinion of when that might be appropriate."