Watts Simon; Mahuta NanaiaSIMON WATTS (National—North Shore): Jeez I am absolutely looking forward to the Minister's contribution in terms of some of these questions but in the intervening period while we're waiting for that I've got a few more to add to that list. I'm interested around what is the proposed highly transparent accountability framework" that her proposed four water service entities will need to operate within and if she could provide a little bit of clarity in terms of what that framework is. Ideally some detail would be appreciated.Just going back to my colleague's questions around the intention for the debt and other liabilities in terms of the funding of that from the water services entities balance sheets I'm interested particularly around how ultimately that's going to be funded and whether that is going to flow back in terms of ratepayers in terms of their water rates in order to fund that liability. If that's the case then if ratepayers are going to have to pay for the use of those assets then do they still own them in terms of that model? I'm looking at the Minister to see whether she might be ready to come in. She's given me a head nod so I'll let her do that.Hon NANAIA MAHUTA (Minister of Local Government): Can I thank members for the questions that they've asked in the House in relation to three waters and just remind everybody that the reason for the reform is that we cannot have communities around New Zealand who on a daily basis get boil-water notices—and that's just for drinking water—and where they have no-swim notices at their beaches or local rivers where there are burst pipes and a real systemic kind of damage of their water infrastructure system. What we also know is that people are getting sick and we cannot afford in a country like New Zealand to have a water network where people are getting sick simply from drinking water. That's why we're going down the reform path that we are pursuing.Can I just in response to some of the questions highlight some of the challenges of the status quo in relation to the questions that have been asked. What we know now is that if we do nothing 43 of the 67 councils do not have the revenue to cover their water services' operating expenditure. That is as things stand right now. Do we want that to be the case going forward into the future? No. Can it be better? Yes. What is the solution? Well the Government is putting a solution on the table because for 20 years there has been systemic under-investment of the water infrastructure network. What are some of the alternative models—because I hear the questions that the members have been asking? Sure the New Zealand Transport Authority (NZTA) model was raised but the whole challenge for the NZTA model is that it would require the introduction of a whole new water levy and members on that side of the House don't want any new taxes. We're very sensitive to the challenge of introducing a new water levy on mainly ratepayers around water.On the regional model: now we tested this especially in the Hawke's Bay and the challenge for the regional model is that there will be huge variances in costs to ratepayers throughout the country if you go down the regional pathway. So we had to continue to look to comparative models overseas and say: what is going to deliver the fairest outcome for every community no matter whether they're a city a large city metro provincial or rural community so that everybody gets the fairness of an outcome? What is going to be the model that is going to assure people that they can meet the drinking-water standards—which are much higher—they meet the World Health Organization standard but also the new freshwater standards?The other component of the reform is to be very bespoke towards New Zealand. We value our fresh water. We value the things that make us feel good about caring for our environment. That's why we've pursued a model that looks to get the benefits of aggregation to ensure the fairness to all communities large and small to ensure that ratepayers over the long term aren't paying more they are paying less and to ensure that there is a financially sustainable pathway for investing in water infrastructure. That is the reform programme that we are pursuing.Now the member asked a question around compensation. Well actually what's happening here—and it's the wrong characterisation of the opportunity for local government because the opportunity for local government is to remove debt and liability off councils' books into the water service entities and councils will still retain a level of governance oversight and the ability to direct water service entities in the way in which they operate. That is why aggregation alone is not the full sum benefit but it will ensure that small communities—actually big and small communities will gain the benefits from the reforms that we are pursuing."