Court Simon; McAnulty KieranSIMON COURT (ACT): Thank you Madam Chair. I'm interested in what's happening with three waters. We've heard that instead of four water services entities there are going to be 10 but the bills that are currently before the Finance and Expenditure Committee we've been told are not likely to be amended; there will have to be more legislation.Minister we've heard time and again from this Government—from your predecessor the Hon Nanaia Mahuta—that three waters reform is absolutely vital because people's health depends on it the health of the environment depends on it and yet Minister you've announced a delay of potentially two years at least and a whole lot more cost and a whole lot more wheelspinning before local government's assets will be transferred to one of the entities before those entities will have a good look under the hood and actually get on with the business of programming designing and delivering infrastructure upgrades to their communities.In those additional two years between the initial implementation date of 2024 and 2026 what's going to happen in places like Te Atatū in Auckland where I live where tens of thousands of people have moved into new homes as a result of intensification and the waste-water system is regularly blowing raw sewage into Te Wai o Pareira Henderson Creek right next to the boat ramp where the Waka Ama club the multisport club the rowing club and the sailing club all launch from—a new pontoon new clubrooms and sewage overflowing on a regular basis maybe 20 or 30 times in the last year? So Minister how is delaying the reform programme going to help solve that problem? Or would it be more practical to adopt a much simpler approach to say look put three waters aside? Maybe just park the legislation in the bottom drawer of your desk and actually give councils the mandate a carrot and a stick to get on with meeting their infrastructure requirements.The problem that keeps coming up is the funding. We've heard that in order to get more money for three waters these entities are going to need to achieve balance sheet separation. Is the Minister aware there are other ways to achieve balance sheet separation from councils' books such as standing up a special purpose vehicle under the Infrastructure Funding and Financing Act? That's a proposal to upgrade the Moa Point sewage treatment plant in Wellington which is off the books—doesn't affect the council's balance sheet. Is the Minister aware of the concept called a revenue bond" where for example if stormwater needs to be upgraded like in Auckland a special rate can be applied to properties and the revenue raised from that rate can be used to fund a piece of infrastructure and repay the debt associated with that infrastructure over time? There are many ways to achieve balance sheet separation.So I just want to ask the Minister a specific question: in response to a written question the Minister has replied that there are other factors that would allow councils to achieve balance sheet separation in addition to having 50:50 mana whenua co-governance on the three water services entities' regional representative groups. Minister would you tell the committee what those other factors are that would allow for balance sheet separation?Hon KIERAN McANULTY (Minister of Local Government): Thank you Madam Chair. I disagree with the member Simon Court's assessment as to those two proposals meeting balance sheet separation because there's one critical element to this: in both of those proposals the councils would retain direct control of water services. And at the essence of this is that as long as direct control is maintained balance sheet separation cannot be achieved. We've seen examples of council-controlled organisations we've seen examples of shared services and neither of those has achieved balance sheet separation. The two examples that the member has provided will not achieve balance sheet separation nor will they be able to achieve the scale of borrowing that is required. I recognise that the ACT Party in fairness to them have a policy on this. Their policy is to share the GST with those councils. That's expected to raise $1 billion a year. This is a $185 billion problem. It's going to take a long time to pay the bills.In specific reference to the query around the two-year delay that was as a response to feedback from the sector for some councils that needed more time to be prepared to move into an entity; however what we've made clear is that if entities are ready to go they can do so earlier. There is no barrier to stop them doing so. Entity A which the member referenced is an example of one that may be able to go earlier because despite the changes in the reform their proposed entity remains the same.In regards to the other factors that allow for balance sheet separation it is a case of ensuring that there is no direct control from one particular council within the entity and that's where the make-up of the regional representative group comes in. The feedback that we got from the rating agencies was that in making it clear that it wasn't just local government that were having a say in this we were able to achieve balance sheet separation. This is particularly the case for the smaller entities like the top of the South and Taranaki."