Watts Simon; McAnulty KieranSIMON WATTS (National—North Shore): What a delightful response in regard to what I think was a reasonably genuine question! But I think that personifies the mannerism in which this Government listens so attentively to feedback and the way in which it responds so eloquently to such feedback. But I'm not going to labour the point—well maybe we could actually because it's such a lovely formula isn't it—looking there on page 44 at the example. Let's go through it eh? Let's play along and let's go through the detail because I'm quite interested in the numbers as well. So we'll go through—no. Actually no I'm not. I'm going to go to clause 38. In the interests of sanity we'll just stay on a few other clauses before we get into that detail. Let's take a look at clause 38(8) which inserts new clause 38 Budget and unapplied rates revenue for water services" into Schedule 1AA of the Local Government Act 2002—the clause that we've all been waiting for this evening because it's a very important clause. The subpart around this in regards to new clause 38(3) is "As soon as is reasonably practicable after the establishment date"—so this is a clause that allows the territorial authorities the mechanism to be able to transfer to these newly created water services entities the unapplied rates revenue that has been collected in that financial year. I guess the point of the question here is: what is the fiscal quantum that the Minister foresees that this new clause 38(3) will actually be dealing with and in particular whether there are any territorial authorities that through the process have been identified that potentially may have a significant amount of unapplied rates revenue? I guess in layman's terms what is the problem that the Minister is trying to achieve or fix as a result of this ability to in effect apportion that rates revenue? Rates are collected obviously by territorial authorities to service costs that are very wide ranging not just in regards to water pipes or stormwater or waste-water pipes but actually a wide-ranging aspect of local government services. So one would consider probably rightly that any unapplied rates revenue would need to be apportioned for the elements that relate to the elements of water services and the other aspects that aren't related to water services would therefore not be applied and would not transfer. So I'm interested to hear from the Minister in regards to how that process will work in terms of first the quantification of what is that value; secondly what if any apportionment is going to be undertaken in regards to splitting up the rates revenue that's relevant to the three-waters infrastructure and the elements that are not; and thirdly what is the overwhelming driver in regards to having this here other than potentially the complexity that I've summarised in my contribution? I think I do feel like I might go and have a look at that other clause in regards to the calculation that the Hon Scott Simpson was referring to because I think his questions were quite reasonable in regards to what that element refers to. We find ourselves on the example that is on page 44 in new clause 5 which is to be inserted in Schedule 1AA by clause 37 just above the clause relating to our good colleagues in the Chatham Islands at new clause 6—which was covered at length. But I want to go to that example that's under subclause (5) there. It talks about "A" "B" "C" "D" and "E" and it's got a lovely formula there which is "(A + B) / E ˂= 30%". So it is quite straightforward isn't it I say to the Hon Scott Simpson when you look at that formula. Hon Scott Simpson: Nicola Grigg knows the answer. SIMON WATTS: Yeah it gives you a rate of "29.6%". So I'm interested in terms of what that is representing in regards to those different subclauses.Hon SCOTT SIMPSON (National—Coromandel): Thank you Madam Chair.Hon Member: Oh the suspense.Hon SCOTT SIMPSON: Yes the suspense. Thank you Madam Chair. I want to raise a matter that relates to the schedules—is that part of Part 2 am I permitted to speak to the schedules or not? Not at this stage. Oh well in that case I'll speak to another clause.CHAIRPERSON (Hon Jacqui Dean): Those matters were dealt with in Part 1.Hon SCOTT SIMPSON: Sorry?CHAIRPERSON (Hon Jacqui Dean): In Part 1—those schedules were dealt with as part of Part 1.Hon SCOTT SIMPSON: In Part 1. OK. Well that's OK. So I do want to come back to this question relating to the Chatham Islands because that seems to be something that is quite separate and new that wasn't a part of the original principle legislation Water Services Entities Act 2022 that was passed—what is it only seven months ago? Something like that—Hon Member: Eight.Hon SCOTT SIMPSON: —seven or eight months ago. And so this question relating to the carve-out for the Chatham Islands—now just this evening we had the valedictory speech of the member of Parliament who has responsibility for the Chatham Islands Paul Eagle and notwithstanding his very staunch advocacy for the Chatham Islands this does seem strange. Now the Minister for Local Government mentioned earlier on that the reason that the Chatham Islands had been carved out is simply because they have their own council. Well there are many other parts of the country that have their own council. I would argue that there are some parts of the country that could equally be separated out because of geographical reasons or distance or matters of simple democracy.I want to point to an area in my own electorate of the very beautiful Coromandel. So the Thames-Coromandel District Council for instance has been lumped in with the Waikato Water Services Entity and yet that is part of the Hamilton City Council the Matamata-Piako District Ōtorohanga South Waikato District and Taupō District. And I'd argue that notwithstanding those very good councils they have almost nothing in common with the issues and the concerns and the matters that are foremost of the thinking at the Thames-Coromandel District Council. The peninsula is largely covered by the Thames-Coromandel District Council. In many respects it is—although not separated by water like the Chatham Islands—literally a different geography a different set of communities and a different set of issues needs and demands not the least of which is the cyclical nature of peak water demand over the normally good summer periods that we have in the Coromandel. Not that we've had that for the last summer. We've got some severe issues that the Minister wearing another hat is of course very aware of.But notwithstanding that I'd argue that there is a good argument for actually excluding an area like the Thames-Coromandel District Council in the same kind of principled way that the Minister has taken in terms of the Chatham Islands. As I say not separated by water but geographically separate having very little in common with Ōtorohanga or the Taupō District Council or indeed Hamilton City. And there are many people—there are many people—in the Thames-Coromandel District area that think already the regional council for instance that operates in the area the Waikato Regional Council is far too Hamilton-centric.So I'm interested to know if the Minister can make one carve-out for a geographic area that just in this particular case happens to be separated by water rather than solid geography but is still a separate community of interest different needs demands desires and peaks in terms of tourism and water demand why can't that necessarily happen in an area for instance such as the very beautiful and desirable part of my electorate in the Thames-Coromandel District Council. I'd be happy if the Minister could give us some insight please.Hon KIERAN McANULTY (Minister of Local Government): Thank you Madam Chair. Mr Simpson's contribution in reference to boundaries—as I said earlier boundaries were dealt with in Part 1. I answered Mr Watts' question around the Chatham Islands as a courtesy to him but actually the bit that deals with the Chatham Islands' bespoke arrangement is also in Part 1. So the entirety of that contribution isn't actually relevant to Part 2.In regards to Mr Watts' question around the wording that's worded appropriately because it adds adequate flexibility to reflect the fact that there are different ways in which rates are collected across the country. So if you were too prescribed in the way in which that was dealt with then you would come a cropper with some councils. It is up to the councils and the relevant water services entity to determine what is reasonably practical and how the transfer will be made depending on their individual circumstances."