Lee Melissa; Bayly AndrewMELISSA LEE (National): Thank you Madam Chair. I'd like to go to Part 2 clause 39(3) where it actually talks about the quality path may include—(a) incentives for … regulated water services [providers] to maintain or improve its quality of supply and those incentives may include (without limitation) either of the following:" and it goes on to talk about compensation schemes that set a minimum standard. I think having targets—I would presume quality targets—is actually a good thing. Quality standards are good things. Service performance is actually having a target to make sure that they perform. I'm trying to find out if the Minister could actually elucidate whether that compensation actually goes out to the customers; if the service targets are actually not met whether that compensation is indeed to customers who actually pay a price for their water for example. If the Minister could actually find out in what form that might be in if that is a case.The ranking system I quite like. You know can we rank the Government in terms of the performance? But I think having a ranking and a rating system is actually a good one I think for customers because I think when the water services are actually not performing well—perhaps if they don't reach a particular rating or ranking—that maybe the customers don't actually pay any money for that. Is that how it actually works? I'm trying to actually understand how that all pans out.ANDREW BAYLY (National—Port Waikato): Well I must admit I've got to compliment the Minister for getting very professional at brushing off questions. I am staggered that the Minister does not know the answer about whether these entities are going to pay tax or not. It's a pretty fundamental question. Anyway I am intrigued. I still want to return to clause 38 because I think this is a classic case of over-regulation. So we're talking about quality standards right? About quality or quality regulation. So "For the purpose of monitoring compliance with this section the Commission may in addition to exercising…powers under section 98 of the Commerce Act". This is "in addition". OK all right we're in the light-handed regulation process here really. Yeah right. First thing: the company—or the entity; no it can't be company because it doesn't pay tax—the so-called "whatever it is". Not a Government entity; it can't be a Government entity. It can't be a Crown because the Crown doesn't own it. It can't be a TLA—a territorial local authority. It's something in between there but you know we'll get there. Maybe a Schedule 27 company? I don't know. Anyway we're at that point right? So doing quality first thing—I love this—the first thing it's got to do is provide "a written statement that states whether the [water services entity] has complied with the quality paths applying to that provider:". OK cool cool. So that's a fair sting. Right good got that? Secondly "a report on the written statement referred to [just above] that is signed by an auditor"—an auditor; an auditor! OK so the Minister's sort of implied—well it doesn't need to be financial. There's lots of auditors but it is an auditor. So it's got to be an auditor of something "in accordance with any form [prescribed] by the Commerce Commission:" OK that's the number two thing they've got to do. The number three thing they've got to do around their quality: "sufficient information to enable the Commission to properly determine whether a quality path has been complied with:". So I think all that means is maybe the commission would say "Well I know you've done the written statement and you had it audited but you still might have to give us a bit more." OK all right get that. And then (d)—fourth thing—"a certificate in the form specified by the Commission and signed by at least 1 board member…or if there is no board the person who operates the provider". All right? Now wow that is one hell of a lot of bloody forms reports oversight monitoring. This is what I was trying to say and to ask the Minister at the start. Why are we so heavy handed? Why are there these layers and layers? Why does a board member need to be involved in signing off a quality thing? What is the driver behind this? This is the trouble with—and it just pervades its way through this legislation—these overwritten over-proscribed over-egged regulations and controls when you're talking about basically some entity that is not competing with others; it has no incentive. Even if it charges too much the so-called profits can only be retained and invested in future infrastructure. There's nothing else it can do with it. It can't pay a dividend. So hopefully the Minister can help us with that."