Bayly AndrewANDREW BAYLY (National—Port Waikato): Thank you Madam Speaker. It's a pleasure to be talking on the Water Services Economic Efficiency and Consumer Protection Bill first reading and this is the trilogy of this disaster that we are all just watching unfold before us. We've heard the speeches just before on the previous bill—that 275 changes were made and incorporated in the last bill a mere 131 hours after the first bill was passed last week. So I now calculate that it's 143 hours since we passed the first bill and we're on to the third bit; here we go. This is all about economic regulation—hey but don't worry we've got a new Minister this time! It's not the Hon Nanaia Mahuta; it's the Hon Dr David Clark so I think we're going to be saved.So I suppose it's important first of all to maybe have a quick canter through what this bill does. It's an interesting part but the first major aspect of it is it requires a Water Services Commission to be established under the auspices of the Commerce Commission and of course that gives rise to why that particular structure—because in overseas jurisdictions normally it is outside of the commerce or monopoly's entity; it's normally a stand-alone. But it's probably not an issue—it would be an issue we'll be interested in at the select committee but it is an interesting choice. The second thing is: what this bill does is that it requires extensive information disclosure requirements on the new entities and of course there's not going to be four entities if Mr Simon Watts is going to have his way because we want to make sure that all the water companies—in what form they may be hopefully at the end of next year—meet information disclosure requirements. These include financial statements asset values pricing contracts asset management plans—commonly referred to as AMPs—and quality performance measures and so we don't necessarily have an issue with that.The second thing is that we'll require service quality statements and that is something that again we don't have a problem with: service quality code which will need to be in place by 1 July 2027. Who's going to do that? Not the water entities which is an interesting one but of course the commerce commissioner the Water Services Commissioner—which again seems a slightly odd way of going about it. Normally it would be interactive but in this case it's going to be that the commission does it: talking about outages and faults minimum flow pressures billing practices blah-blah-blah. Again that's nothing out of the ordinary and one would expect that.Then there's the issue of price-quality regulation that may involve setting maximum prices and providing transparency across the capital valuation of the assets and cost allocations. This is an issue I'm going to return to shortly but the interesting thing—it allows the commissioner to set price paths so now we're talking about a very heavy-duty set of regulations under this regime. Four entities under our proposal will be more than that with local ownership. The fifth thing is that the ability of the code-of-conduct reviews to confirm if the entities are complying with regulations—as Matt Doocey talked about before the compliance officers have a great deal of power under the previous bill and I presume under this bill there will be a great deal of powers for the commissioner to request information but certainly as it's noted as a minimum funding and pricing plans are subject to review. The next element is a mandatory dispute resolution scheme and again we would expect that and don't have a problem with that. Then there's the issue of imposition of levies on the water companies to fund the commissioner—hopefully that's going to be reasonable. And then the final one is the commissioner has wider general powers to issue warnings reports and guidelines and undertake monitoring compliance and take appropriate actions in respect of persons. Whew! Let's go. So some of this we don't necessarily have a problem with—particularly around requiring businesses to disclose certain information and the businesses to be subject to consumer protection measures which the code will have to be in place by 1 July 2027 and setting up the formal independent consumer disputes resolution service. Those are all good things but the interesting thing is in terms of the cut-and-paste around the price regulations that involve setting maximum prices providing transparency of cost of capital valuation of assets and cost allocations and allows the commissioner to set price paths. So I think it raises two issues: what are we trying to require of or what's the purpose of the economic regulation we need? And if you look at jurisdictions around the world where you have private entities or publicly-listed companies operating in a particular sector the level of economic regulation in those particular areas is often of a much higher and exacting nature and in those cases gives the commissioner—or whoever it might be: an officer or regulator-general or the Ofwat as they're normally called overseas—the ability to impose and undertake a lot of economic analysis. However if you accept the Government's argument that these water companies are acting for the best interest of their consumers—and I look at the original Water Services Entities Bill clause 10 which then says under clause 11(e) to act in the best interest of present and future consumers and communities". The issue is: are these entities in the game of deriving a profit? And I think one of the issues with this form of regulation is that I don't think for a moment that the Minister ever intended that these entities are there to derive a profit. And what I think we've ended up with is that we've got a form of regulation—and I noted the Minister's reference to the existing economic regime in Part 4 of the Commerce Act and it specifically talks about the Telecommunication Act the electricity lines services gas pipeline services specified airport services and fibre fixed line access services. All of those involve private sector entities and that's why you have a higher level of economic regulation. I'd suggest to you that—we've had officials cut and paste regulation from what would normally require quite heavy regulation and shoved it into this bill without thinking for a moment that actually the nature of these entities is quite different if we are to accept the Government's proposition that these entities are essentially for the public good and not there to derive a profit. So the only issue around—the second bit is the Commerce Commission—the Water Services Commissioner may be able to set a price path. And I'd have to ask the Minister—and certainly we'll be covering it in the select committee—why would the Commerce Commission be required to set a price path? Because I think if we accept again the Government's proposition—and again the Minister quoted it earlier; it's a deficit of infrastructure spending of between $120 billion and $185 billion which is obviously subject to a lot of dispute particularly by councils—are we expecting the Commerce Commission to say that the entities are not spending enough money not investing enough and therefore being over-aggressive in their pricing regime or are we requiring the Water Commissioner to review every asset management plan and funding plan and use of equity and debt to come up with an optimised structure and then reflect that into a price path? This seems an extraordinary level of overcomplication in terms of economic monitoring of these four water companies as proposed in this bill and as I said earlier I think what we've seen is officials cut and paste provisions from other Acts put it into here—of course we haven't had a Minister of inquiring mind to say "Why in the Dickens have you done that why have you put this into this bill?" because it's inappropriate and it's certainly something we'll be looking forward to canvassing in the select committee. But here we go again the third of the trilogy—wow."