Brown Simeon; O'Connor GregLOCAL GOVERNMENT (WATER SERVICES PRELIMINARY ARRANGEMENTS) BILLThird ReadingHon SIMEON BROWN (Minister of Local Government): I move That the Local Government (Water Services Preliminary Arrangements) Bill be now read a third time.This bill delivers on our Government's commitment to the Local Water Done Well policy. Our goal is straightforward: to ensure high-quality locally managed water services and to improve infrastructure that supports housing growth. We're working closely with local government to make this happen. Local Water Done Well empowers councils to develop financially sustainable solutions to the longstanding water infrastructure challenges affecting many communities.The previous Government's approach—an unpopular mega-bureaucratic co-governed model—was costly and overwhelmingly rejected by voters at the last election. Earlier this year we put an end to those divisive reforms and returned water services to local communities and to council control. That was the first step in the Local Water Done Well policy reform process.This bill lays the foundations for our new approach to managing and regulating water services. Under this bill councils stay in control. They will determine their preferred delivery arrangements starting with the development of water service delivery plans within 12 months of this bill's enactment. These plans will show how councils will deliver drinking-water waste-water and stormwater services in a financially sustainable way to meet regulatory standards.Local decision-making is a key element to this bill. We understand that for some councils the best outcomes will come from collaboration. This bill allows councils to submit joint water service delivery plans detailing how they will work together to provide water services more efficiently and cost-effectively.It also includes provisions for councils that need support. This bill also allows me to appoint a Crown facilitator to help councils prepare their plans or a Crown water services specialist to do it on their behalf. Councils can also request this assistance. Crucial information from these plans will be shared with the Commerce Commission as it develops a full economic regulation regime. This includes asset conditions revenue and expenditure projections and details on capital and borrowing. This bill also provides for some councils to be subject to an early form of information disclosure by the Commerce Commission building on the data collected through these plans. This is particularly important for councils' more advanced practices or those ready for a faster track towards detailed oversight.For councils ready to transform their water services now this bill provides an optional streamlined consultation and decision-making process. This will make it easier for these councils that want to establish join or alter a water services council-controlled organisation or joint local government arrangement as currently provided for under the Local Government Act. This streamlined process allows them to move quickly while still ensuring community input.One of the Government's election promises was to provide a financially sustainable model for Auckland and I'm pleased to say this bill also delivers on this promise. We've worked with Auckland Council to implement a model that gives Watercare financial independence while allowing the council to retain complete ownership. This model also reduces the projected water bills increases for Aucklanders from 25.8 percent this year down to just 7.2 percent and crucially allows for Watercare to continue with their capital programme of investing in capital infrastructure to clean up our harbours through the Central Interceptor project.Finally this bill aims to reduce cost pressures across the sector through changes to the Water Services Act. These changes mean that the water services authority Taumata Arowai will no longer have to consider the hierarchy of obligations under Te Mana o te Wai and the National Policy Statement for Freshwater Management when setting waste-water standards addressing concerns about potential cost implications. While this is an interim measure it provides greater certainty for those involved in infrastructure development helping to reduce the costs of future investment in waste-water infrastructure. We'll continue to work on replacing the National Policy Statement for Freshwater Management to rebalance Te Mana o te Wai and better reflect the interests of all water users.We've heard councils' call for local control and flexibility in their delivery of water infrastructure and with this bill we answer that call providing councils with the options and tools they need to make decisions that benefit their communities. It's clear that spending $1.25 billion on setting up new water service entities wasn't necessary as the last Government was proposing—$1.25 billion that they spent. New Zealanders deserve better water services and Local Water Done Well is our plan to deliver that change. The previous Government's one-size-fits-all approach wasn't the right answer for local councils. Our plan recognises that local leadership and decision-making are critical to enhancing water services supported by central government's role in ensuring robust water quality standards and better access to long-term funding for critical infrastructure. I am confident that we are giving local communities the flexibility and the tools needed to deliver water services effectively.One of the cornerstone achievements of our Local Water Done Well policy is the innovative financing arrangements made possible by the Local Government Funding Agency (LGFA). We recognise that many councils face significant financial constraints in meeting the demands of upgrading and maintaining their water infrastructure. Better access to LGFA financing helps solve this empowering councils with the financial flexibility they need while ensuring ratepayers are not overburdened by unnecessary costs. Through this partnership water council-controlled organisations that are financially supported by their parent council or councils can access financing equivalent to 500 percent of their revenues backed by the LGFA's AAA credit rating. This means improved access to finance for council-controlled water services which would otherwise be constrained by their parent council's level of borrowing. It also secures funding the investment in water infrastructure at much lower interest rates than would have been possible under Labour's model. This financing is available now and I think it's really really important to highlight this.This deal which has been done with the Local Government Funding Agency changes the game when it comes to councils investing in water services. Under the last Government's approach the entities they were putting up would've been able to only borrow up to 350 percent for most of them except for Entity A—up to 350 percent against their revenues. Under this financing they can borrow up to 500 percent against their revenues and because of the arrangement through the LGFA LGFA is able to provide the lowest cost financing to councils through its AAA credit rating—the lowest cost financing to councils.So members opposite will still be hammering on about how their three waters co-governed mega-entity proposal apparently was going to be cheaper. Well that's a figment of their imagination—a complete figment of their imaginations. Firstly those entities would've been lumped with $1 billion of establishment costs over and above the $1.25 billion—Hon Scott Simpson: How much?Hon SIMEON BROWN: One billion dollars of establishment costs. Secondly they wouldn't have been able to—for most of those entities—achieve a 500 percent debt to revenue ratio. That wasn't going to be available to them. And thirdly they would not have received the financing through the LGFA and the AAA credit rating which meant that they would not be getting and would not be accessing the lowest cost financing available to local government.What this Government has done through Local Water Done Well has ensured that councils have the framework the tools and the financing to be able to enable them working with their local communities to be able to invest in the water infrastructure that they need to invest in. This Government has done that in as simple a time as nine months. We didn't spend hundreds of millions on consultants. We didn't need an army of consultants to do this. We just needed to have clear direction look at the innovation that came through the LGFA make decisions and get on with it. That's what this Government has done and because of that we're on the cusp of a new and improved delivery system for local government.My message to local government is: thank you for calling for this change. Thank you for the mayors who stood up and opposed the last Government's divisive reforms. Thank you for supporting us through this process and we look forward to seeing the work that you do collaborating with your communities taking advantage of this new financing so that you can deliver the infrastructure that your community desperately needs the improved water infrastructure the improved quality and investing in the growth that is needed in your community. I commend this bill to the House.ASSISTANT SPEAKER (Greg O'Connor): The question is the motion be agreed.