5. Question No. 5—Local GovernmentRACHEL BOYACK (Labour—Nelson) to the Minister of Local GovernmentQuestion No. 5—Local Government5. RACHEL BOYACK (Labour—Nelson) to the Minister of Local Government: What recent announcements has she made regarding Three Waters reform?Hon NANAIA MAHUTA (Minister of Local Government): I confirmed that two decades of under-investment in three waters infrastructure will be responded to. The Government will create four publicly owned water entities to ensure that every New Zealander has access to affordable water services. This is an all-in approach that will achieve system-wide health and environmental benefits address ongoing affordability issues for ratepayers and align to Te Mana o te Wai aspirations. It will require legislation so that all communities benefit. The status quo is simply not viable. We have developed this model over four years and we need to take action now. We've also heard the views of the sector and will establish a joint working group to further refine considerations relating to governance representation and accountability arrangements so that we can signal again that we continue to work constructively. I'm pleased this Government is prepared to tackle the long-term serious challenges that will ensure the underpinning of regional growth and opportunity certainty of employment and furthermore investing in our waters infrastructure system.Rachel Boyack: Why is this approach the best way to ensure New Zealanders are guaranteed safe and affordable three waters services?Hon NANAIA MAHUTA: Without action New Zealanders are facing significant additional costs to maintain three waters infrastructure. Under the reforms average household costs per annum by 2051 will be reduced by the following amounts: in Auckland from $1910 to be reduced to $800; in Whangārei it could have been $4060 without reform but that will come down to $800; in Timaru it could have been $5030 without reform but with reform such as that that we're providing $1640; and the list goes on. It would be irresponsible to delay further and allow more communities to experience firsthand the consequences of water services that are simply not fit for purpose. No one council has the ability to fix this themselves and we need to take a collective approach. It would also be irresponsible to pour taxpayers' money into propping up a broken system as those people on the other side of the House would have. Currently 64 percent of councils do not have the revenue to cover their water services' operating expenditures at the moment let alone once infrastructure starts failing. Those New Zealanders who have had to deal with boiled water notices closed beaches burst pipes and tragically in the case of Havelock North serious illness and death arising from our three waters infrastructure know all too well why these changes are justified.Rachel Boyack: What viable alternative proposals did she hear to the model the Government is pursuing?Hon NANAIA MAHUTA: A vast amount of analysis and research has been undertaken since the Government began considering the case for three waters reform in mid-2017. All of that information is publicly available and a part of our regulatory impact statement. There are about 30 various models that were tested against the Government's objectives. No other model would give us the range of benefits that the establishment of four entities does which includes greater long-term financing arrangements; more sustainable increased operational efficiencies; the ability to plan fund and deliver more resilient and reliable water infrastructure across regions and communities; developing and maintaining workforce capability and capacity. This model also ensures water services stay in public ownership. Assets will remain collectively owned by councils. I'll say it again: assets will remain collectively owned—SPEAKER: Order! Order! I think it's fair to say that the Minister answered the question a minute or two ago.David Seymour: Can the Minister explain in practical terms how the same pipes and pumping stations and treatment stations in Whangārei can cost $4000 for the council to operate per household but only $800 under her reforms and can she give the House an example of another public policy reform that has increased productivity five times by simply changing the governance structure?Hon NANAIA MAHUTA: That answer is fairly simple with the aggregated model that we are proposing. Economies of scale will be able to deliver far greater benefits drawing and leveraging on assets across the whole of the entity A area and that will certainly deliver valuable benefits to ratepayers in Whangārei.Hon Eugenie Sage: What opportunity is there for real substantive change to the Government's proposals when the Government has only spent three weeks considering local government comments and when the legislation is proposed for introduction within the next seven weeks?Hon NANAIA MAHUTA: Thank you for that question. This conversation with local government has taken place over four years of work and during that time we have found that much of the information has been variable. We've needed to gather dense information sets from councils to be able to model out in comparison with international exemplars as well as locally thought up models what is the best way forward. This isn't a conversation that's happened over the last three weeks or eight weeks; it is a four-year conversation. Much of the feedback has already been foreshadowed in the joint working group that we have with local government. And in fact the announcement today of establishing a working group to continue to work with local government around the issues of governance representation accountability and local voice only serves to demonstrate and highlight that many of those issues are areas that we can continue to work on.Rachel Boyack: What feedback has the Minister heard about today's announcement?Hon NANAIA MAHUTA: Well it's been pleasing to hear that there is still a very diverse view out there. However let me remind the House that this issue is not simply about local elected representatives; it's about the communities they serve and the benefits back to ratepayers. But if I go into many of the comments that have been provided the Water New Zealand chief executive Gillian Blythe has said It's been clear for a long time that there is an urgent and serious need to address issues of aging and poorly-performing infrastructure as well as poor service delivery in some parts of the country … The establishment of four professional entities to manage three waters will unlock many of the barriers that have led to serious infrastructure deficit across much of the country." But if we look across the local government community: Porirua Mayor Anita Baker said "I am pleased the Government has stepped up and made this decision as we owe residents and ratepayers the truth—and the truth is without reform the Council does not have the resources or borrowing capacity to deliver the 3 Waters to an acceptable standard. The cost of doing so is in the billions. Porirua City [Council] has already put aside $800 million over the next 30 years—and that's not even half of what's needed." If I go down to the South Dr Te Maire Tau co-chair of Te Kura Taka Pini says "The government's reform of three waters will help ensure water services for communities that are safe high quality and equitable while improving outcomes for the environment … It is common ground that the status quo is unsustainable for the health of not only our people but also our environment and waterways"."