Mahuta Nanaia; McKelvie IanWATER SERVICES ENTITIES BILLFirst ReadingHon NANAIA MAHUTA (Minister of Local Government): I present a legislative statement on the Water Services Entities Bill. DEPUTY SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website. Can I just ask members leaving the Chamber that you do so quickly and quietly please. Hon NANAIA MAHUTA: I move That the Water Services Entities 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 11 November 2022.I te tīmatanga: whakataka te hau ki te uru; whakataka te hau ki te tonga. Kia mākinakina ki uta kia mātaratara ki tai. E hī ake ana te ata kura he tio he huka he hauhū. Tihei mauri ora.[As an introduction: the wind swirls in the west and the south; the piercing cold is felt inland and the coast too; the dawn rises indeed it is icy frosty and the wind is cold 'tis the breath of life.]It's with great pride that I read this bill a first time. It follows years of research and analysis using the best of local and international expertise comparative examples and extensive consultation with local government iwi Māori and the water industry. We're taking decisive action to ensure all communities have safe affordable and sustainable drinking-water services along with stormwater and waste-water networks that meet our environmental and cultural expectations. New Zealand spent more than 20 years getting to this point. The tragic Havelock North drinking-water contamination event in 2016 and subsequent inquiry starkly highlighted systemic failures in our water system across service provision regulation and source protection. But these issues have existed long before the Havelock North crisis and if we don't act they will persist long after.Recent estimates show that up to $185 billion worth of investment is required in New Zealand's three waters infrastructure over the next 30 years to address the years of under-investment in maintenance and replacements to ensure the network meets modern standards to provide for our growing communities and to build resilience to the effects of climate change and natural hazards. Simply put this is unaffordable for most communities under current arrangements.It is unsurprising given the scale of these reforms that they have generated much debate. There have been requests to stop the reforms and go back to the drawing board but we have been talking about these problems for the past 20 years. It's time for action.The case for change has been made and now is the time to act. As a Government we've embarked on an ambitious programme to improve both regulation and service delivery in the three waters space. This programme has already seen the establishment of a dedicated drinking-water regulator and the passage of the Water Services Act 2021 which provides a new regulatory regime for drinking-water suppliers. These changes will protect New Zealanders' health and the environment and they received near universal support from the sector. But they are a high bar for water service providers and create an additional affordability challenge which councils cannot meet.The introduction of the Water Services Entities Bill today is a significant milestone marking the start of improving water services delivery in Aotearoa. When passed the bill will create four dedicated water service entities which will deliver drinking-water waste-water and stormwater services. These entities will have the size and scale to deliver water services invest in infrastructure and meet the new regulatory standards. This bill is the first step in a significant change to the way water services are delivered in New Zealand but it alone will not achieve this. A second bill will follow providing for the transfer of assets liabilities powers and functions to the new entities. Once this second bill is in place the entities will be able to deliver water services commencing on 1 July 2024.Last year the Government ran an eight-week consultation period with councils to ensure that they had the chance to be heard. This was a formalised process following significant engagement with councils and iwi around the motu. As a direct result of that process we established a representation governance and accountability working group to take a second look at the proposed governance structure. The working group came back with 47 recommendations and as a Government we accepted 44 of them. These changes have improved the three waters reform and addressed the feedback we heard from councils and iwi Māori and I want to thank the working group members for their involvement.I now want to briefly touch on some of the important components of the bill before us. As a Government we've had four bottom lines when progressing this reform. They are: ensuring water assets remain in public ownership; ensuring balance sheet separation; ensuring that we give effect to Te Tiriti o Waitangi the Treaty of Waitangi; and ensuring good governance in board selection processes.These bottom lines are vital for the success of the reform and will enable the entities to have the independence and borrowing capability required to tackle the challenges ahead. Water service entities remain responsible and accountable to the communities they serve. Councils will collectively own the entities on behalf of their communities within their service area. On the recommendation of the working group councils will be given shares in the new water service entities ensuring continued public ownership. Councils will receive shares on a per capita basis: one per 50000 residents rounded up. Councils and councils alone will own these water entities. Each entity will have two levels of governance: a professional board and a regional representative group made up of council and mana whenua representatives. The entity boards will be made up of people hired for their expertise and skill in water services delivery.At a strategic level the regional representative group will be made up of 50:50 council and iwi representation and their strategic leadership will ensure that decision making can occur by consensus. The regional representative group will reflect the long-term aspirations of their communities. Iwi Māori should be involved at this level. They have never expressed the wish to sell water assets and will bring an inter-generational long-term lens to the governance of the water service entities. Their input at the strategic level gives further assurance water assets will not be sold off.These further protections are in addition to clear legislative protections against the loss of public ownership. These provisions will prevent an entity from using water service assets as security for any purpose divest its ownership in a water service or sell or otherwise lose control of significant infrastructure. Any divestment proposal would require unanimous support from territorial authority owners support from at least 75 percent of an entity's regional representative group and a referendum with at least 75 percent of votes cast by electors. As a Government we have sought cross-party support in order to entrench these provisions. Ensuring a smooth transition to the new system is another key focus of this bill. It creates establishment entities which will make the preparatory arrangements ahead of full operation. These entities will then start delivering water services from 1 July 2024. It also establishes the statutory oversight powers of the national transition unit a business unit which sits in the Department of Internal Affairs and provides transition provisions relating to employment of the water services workforce. This includes employment security by transferring existing employment positions to the relevant water services entity on terms no less favourable than existing terms.The reforms at their heart are about ensuring communities have access to water services and infrastructure befitting of a developed country. Ongoing community voice will therefore be vital to the success of these reforms. As such requirements for entity consultation and engagement are specified in the bill. These provisions include the requirement for the entities to establish one or more consumer forums the requirement to prepare an annual consumer stocktake and the requirement to engage with consumers and communities on their asset management plans funding and pricing plans and infrastructure strategies.The bill contains robust mechanisms to provide for and promote iwi Māori rights and interests. Mana whenua whose rohe or takiwā includes a freshwater body can make a te mana o te wai statement for water services which the board must give effect to. This approach is consistent with other water services legislation including the Water Services Act. The bill enables a Government policy statement to be issued to provide Government's directions and priorities for all water service entities. A Crown monitor can be appointed to provide a stewardship role from a whole-of-Government perspective. If an entity is deemed to be at risk by either failing to perform its functions demonstrate sound financial management or deal with a state of emergency then a Crown monitor may be appointed to intervene and assist change.The introduction of this bill marks a significant milestone in the journey to improve water services in New Zealand. The scale of entities will enable them to finance the much-needed improvements in our drinking-water network. I'd also like to thank parliamentary colleagues who have offered their support during this reform programme. I'm proud to be in a Government that is doing something about a long-overdue issue. I also want to acknowledge the many officials who have worked long and hard in the Department of Internal Affairs and the local government team to ensure that today we are taking action on a serious long-term issue that has been left overdue. Kia ora. ASSISTANT SPEAKER (Ian McKelvie): The question is that the motion be agreed to.