Goldsmith PaulLOCAL GOVERNMENT (WATER SERVICES PRELIMINARY ARRANGEMENTS) BILLFirst ReadingHon PAUL GOLDSMITH (Minister for State Owned Enterprises) on behalf of the Minister of Local Government: I present a legislative statement on the Local Government (Water Services Preliminary Arrangements) Bill.DEPUTY SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon PAUL GOLDSMITH: I move That the Local Government (Water Services Preliminary Arrangement) Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 18 July 2024 and that the committee have authority to meet at any time while the House is sitting (except during oral questions) during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House and outside the Wellington area despite Standing Orders 193 195 and 196 and that the committee's powers be extended under Standing Order 295(1)(b) to consider out-of-scope amendments set out on Amendment Paper 41 in the name of the Hon Simeon Brown.I'm pleased to bring the Local Government (Water Services Preliminary Arrangements) Bill to the House. This bill is a critical piece of legislation that makes up the second step of Local Water Done Well which is our coalition Government's plan for addressing New Zealand's water infrastructure challenges. New Zealand's longstanding water infrastructure challenges require locally led and financially sustainable solutions. Labour attempted to reform water services with their unpopular mega-entity co-governed model which cost taxpayers $1.25 billion and was overwhelmingly rejected by communities. In February this year we completed the first step of Local Water Done Well and delivered on our election promise and the 100-day plan commitment to restore council ownership and control of water services by putting an end to Labour's three waters.The bill that I'm presenting today sets the foundation for future delivery and regulation of water services. It enables councils to self-determine their pathway to financially sustainable delivery models. We are not here to impose a one-size-fits-all approach on councils which know their communities best. Their local decision-making is key to this bill. However I expect councils will work collaboratively to address affordability challenges and achieve sustainable models for water services. Any councils who are wanting to move quickly to adopt a new delivery model can do so. They can establish or amend a water services council-controlled organisation with the help of the streamlined consultation and decision-making processes in this bill. These do not override the existing mechanisms in local government legislation but provide an easier pathway for councils to work together. We want to remove barriers to those who already know how they can move to better models especially if it will ease future cost pressures for consumers.A preliminary arrangement set out in this bill will require councils to prepare water services delivery plans within 12 months of enactment. Through these plans councils will demonstrate that their approach to delivering drinking waste and stormwater services is financially sustainable and will meet regulatory standards for water and infrastructure quality. This will require the ring-fencing of funding so that sufficient revenues are allocated to maintain those assets and operations.We've provided a practical approach for developing these plans. Councils are able to collaborate on water services delivery. If they decide to they can jointly submit a plan. There is flexibility for councils in a joint plan to deliver their stormwater services individually or jointly with the other councils in the joint arrangement. These plans have a dual purpose. Not only will they provide transparency on the current state of council water services infrastructure and delivery; they will also provide assurance to communities as to how their council intends to deliver these future services.I recognise that some councils may face challenges in developing these plans. That is why there will be check-in points on progress and technical assistance available for those who may be struggling. Through this bill we are enabling the appointment of a Crown facilitator and Crown water service specialist who may assist or prepare a plan on the council's behalf. Specific information in the plans including baseline information about council water services operations assets revenue and projected capital expenditure will help the Commerce Commission develop a full economic regulatory regime for water services later this year. To assist with that work the bill also provides for some councils to be subject to further information disclosure. This is intended for councils that have more advanced asset or financial management practices or those that moved quickly to establish new water organisations and are ready for a faster track towards more detailed oversight.Finally this bill features legislative changes that will enable Auckland Council to implement its preferred approach for future water services delivery with significant benefit for Aucklanders. Earlier this year Watercare projected that there would be a 25.8 percent increase in water rates for their customers in July but our Government was not going to let this happen. The 25.8 percent water rate hike would have piled costs onto Aucklanders already struggling with the prolonged cost of living crisis increasing average annual household water rates by $348. The previous Government spent $1.2 billion on three waters and did not deliver a solution for Watercare. This Government spent less than half a million dollars and found a solution in six months. By financially separating Watercare from Auckland Council Watercare can take on additional debt to fund their water infrastructure over a longer period of time. This will allow Watercare to limit this year's water rate increases to a much more palatable 7.2 percent. Based on an evaluation by Standard & Poor's this will be achieved with no new constraints on Auckland Council's borrowing capacity or credit rating. In fact Auckland Council will be able to access even more funds to continue its investment in key projects including improving transport infrastructure.Members on the opposite side of the House including the former Minister himself claimed that three waters would have delivered lower rates rises than Local Water Done Well but what they failed to own up to is the fact that three waters would have meant that Watercare would not be able to afford the infrastructure that Auckland needs as rate rises were capped. Advice I've received shows that Labour's three waters included very dubious quote assumptions. Labour's plan did not add up which is why our New Zealanders reject three waters. The reality is nine of Labour's 10 mega-entities had worse than investment-grade stand-alone credit ratings. They would have failed to access finance without Crown-backed support. Even Entity A" needed a Crown-backed liquidity facility to lift it from BBB to AA in an inconvenient truth for members on the opposite side of the House. While some say that Watercare could have handed over to debtors in an effort to privatise this is simply not true. Watercare is protected against privatisation through existing legislation. Labour's attempt to force a one-size-fits-all approach to water service delivery would have meant Aucklanders could not afford the infrastructure they need.This bill provides a statutory underpinning for Auckland's new Local Water Done Well arrangement. It means Watercare rather than Auckland Council will have the legislative responsibility for delivering drinking and wastewater services to Aucklanders. A Crown monitor will be appointed to Watercare as an interim regulator to make sure Aucklanders pay fair prices for water services delivered to an acceptable quality. They will also ensure that Watercare is investing sufficiently in its infrastructure. This will be a temporary arrangement until the Commerce Commission establishes full economic regulation. I have worked alongside Auckland Council and Mayor Brown to prioritise local decision makers in achieving this outcome. I'm pleased with the swift progress toward a sustainable model for water services in Auckland achieved through the unanimous vote by the council. I thank the mayor and council for working with me to achieve this change. Labour said that our plan wouldn't work but the plan we've delivered for Auckland shows that it is possible for councils to implement their own preferred models for water services delivery.I'm confident that we are giving local government the flexibility and the tools to choose the outcome of their water services delivery and bring benefits to their community—the Watercare model adopted by Auckland Council is evidence of that. However our work is not yet complete. We have a lot of work to do to ensure we give certainty to all councils and communities across New Zealand. Local Water Done Well enhances local government's delivery of water services by emphasizing local government decision-making robust water quality rules and easier access to financing to long-term investment and critical infrastructure. We're working at pace to provide details on the broader range of structural and financing tools which will be available to councils to ensure that they can access the long-term debt required by their water services. I commend this bill to the House."