Watts Simon; Mahuta NanaiaSIMON WATTS (National—North Shore): Thank you very much Mr Chair and I want to carry on from the points and clauses that have been raised by my friend and colleague Penny Simmonds in regards to Part 5 and in particular I guess building on the questions that Penny Simmonds has raised in regards to the concept that we discussed in the prior aspect—around the fact that actually these territorial authorities have been told right from the outset that they actually own these assets right? We've heard that right throughout the process: You own the asset; you've got a shareholding in that." But yet the question I have for the Minister is: why is there not the ability or a clause within Part 5 that allows—and I guess particularly under Subpart 2 could be the mechanism in which you could enter it—for councils who actually still technically own their assets?If we follow through the narrative that has been set why do they have no powers for them to intervene in regards to the information-gathering powers around these entities which is under clauses 170(1) and (2)? Why couldn't in effect those councils provide a role in terms of providing monitoring? Because actually you know don't forget the assets which are going to form part of these water services entities are assets that are owned and have been funded by these councils. So surely they will have a vested interest or they definitely will have a vested interest in regards to making sure that these water entities are delivering the outcomes that they are planning to do in terms of their intent in that. So my question around that is: why do they not have the powers to intervene in that regard?The other question that my colleague Penny Simmonds noted was for the Minister to provide some context in terms of what is the exact circumstances on ministerial intervention? Because while I acknowledge the Minister said these clauses are replication out of the Local Government Act the water services entities is a very different set of circumstances than in the local government environment. And in effect the whole premise of these entities is that they would be independent. We've heard the Minister articulate the reasons why that degree of independence from both councils and other parties is so critically important—financial basis etc.—and whether we believe that or not that doesn't matter; the point is that they are independent. So what are going to be the trigger points for that ministerial intervention?And the third question I have in regards to that is that the Minister also noted before in regards to context that the threshold for Government actually getting involved is going to be very very low whereas you know we've got some pretty heavy aspects around monitoring—a three-tier approach in effect in regards to this—and I'm sure for any of the members that are in Tauranga at the moment I mean they're in a council that's being managed by Crown-appointed officials and we note that is the situation. But the circumstances which triggered that were what they were. But in effect these are different because these are independent entities with a board structure and a governance structure which is much more wide ranging than what we do have in the normal local government or a council scenario.So I would like the Minister to provide some—how is she confident that actually that trigger point for intervention what it looks like is not overreach in regards to what is actually the problem that this part of the clause is trying to mitigate? So those are the questions I've got in regards to Part 5 and we'll come back.Hon NANAIA MAHUTA (Minister of Local Government): There is a different function in terms of system stewardship and the role of the monitor in relation to the threshold that needs to be met which is set out in clause 174 and then the actions that the Minister can take that are proportionate to the problem that's been identified and needs to be resolved. The other thing I should mention is that the monitoring function is a role of a department and it has a specific purpose that is separate to the review team that might be appointed or the Crown manager that might be appointed or the Crown observer that might be appointed. So that's the other thing.I'd also like to just highlight that from a regulatory point of view the matters that would be significant to be looked at are set out in clause 174. So let's just go through these. Clause 174: "(a) a matter or circumstance relating to the management or governance of the entity that detracts from or is likely to detract from its ability to give effect to its purpose; and (b) a significant or persistent failure by the entity (i) to perform 1 or more of its functions or duties under the Act; or (ii) to give effect to a Government policy statement issued by the Minister under section 129; and (c) the consequences of a state of emergency … affecting or recently affecting the entity's service area"—so that could be systemic failure of core essential services—"(d) a failure by the entity to demonstrate prudent management of its revenues expenses assets liabilities investments or general financial dealings;"—so at that governance level—"and (e) a potential problem that relates to a matter circumstance…[identified in]…(a) (b) or (d)."—which I've read out.On other fronts where it would be legitimate to expect that the water services entity should be accountable for the way in which they operate those matters will be dealt with by the other two regulatory functions—firstly Taumata Arowai because they are the drinking regulator. So the ability to oversee the performance of the water services entities in relation to meeting the drinking water standards is a matter for Taumata Arowai. In terms of economic regulation and making sure that the strategic documents that help to drive economic and fiscal financial efficiencies—that will be a matter that will be overseen by the economic regulator."