10. Question No. 10—Local GovernmentTANGI UTIKERE (Labour—Palmerston North) to the Minister of Local GovernmentQuestion No. 10—Local Government10. TANGI UTIKERE (Labour—Palmerston North) to the Minister of Local Government: What recent announcement has she made in relation to the Three Waters Reform Programme?Hon NANAIA MAHUTA (Minister of Local Government): On behalf of the Government alongside the Minister for Infrastructure we've responded to the governance working group recommendations on three waters reform. I'd like to thank the members of the working group for their sensible and well-thought-out recommendations to improve the governance representation and local voice aspects of the changes we're proposing. We've accepted in full partially or in principle the majority of the recommendations and in doing so we've listened and are modifying the exposure draft of the bill and these improvements go a long way towards addressing the local government sector's most significant concerns. Fundamentally these reforms are about delivering clean and safe drinking water at an affordable price for New Zealanders. With the key issues now addressed we cannot afford to wait any longer. The costs to communities and ratepayers are just too big to ignore and we need to get on with fixing the problem that is waters infrastructure.Tangi Utikere: What assurance can she give that local council assets aren't being taken away from them?Hon NANAIA MAHUTA: Councils collectively will continue to own their assets under the three waters reform. The working group have helpfully recommended that this assurance be strengthened through a new public shareholding structure. The shareholding structure will allocate to councils reflective of the size of their community one share per 50000 people in their area—so for example Auckland Council will hold 35 of the 40 shares in entity A and smaller councils with a population base of 50000 or less will secure one share. This share structure is a tangible expression of an ongoing connection for local communities and councils to their waters infrastructure. The shares will not deliver a dividend and cannot be sold or transferred. This provides an additional layer of protection against privatisation of water infrastructure alongside co-governance provisions.Simon Court: Is the Minister aware of Treasury advice that $2.5 billion has been distributed to councils to increase goodwill and reduce political barriers for her three waters policy and if so does she agree with reports that it is a bribe?Hon NANAIA MAHUTA: I don't agree with reports that this is a bribe at all and the member might not be aware that Local Government New Zealand through its memorandum of agreement agreed to the approach that we were taking which is basically to ensure that there are incentives in the reform programme to acknowledge that no council will be worse off; in fact they will be better off as we progress the reform programme.Tangi Utikere: What benefits does she anticipate from co-governance for communities?Hon NANAIA MAHUTA: Let me be clear. Co-governance arrangements exist at the regional representative group level where 50/50 governance oversight between councils and mana whenua is exercised for the broader wellbeing and benefit of the whole community by setting the strategic performance expectations of the newly created water service entities. As the working group has pointed out the benefits of joint oversight mutually reinforce the sustainability of water management and keeping public ownership of water entities as a top priority while prioritising the benefits to all communities big and small. I'd like to also emphasise that the regional representative group make appointments to the water service entity boards that will be based on professional skill and competency. Co-governance is not required at this level and never was.Tangi Utikere: Which recommendations were not accepted?Hon NANAIA MAHUTA: Three recommendations from the working group have been noted but not taken forward at this stage. The working group recommended that the first piece of three waters legislation establish a water services ombudsman to protect consumer interest. We acknowledge the need to protect consumer interest; however this is a matter we anticipate will be addressed with regards to the establishment of economic regulations. Also recommendations 44 and 45 relate to funding as an ongoing role for the Crown. The Government will continue to review any need for Crown support for water services infrastructure reforms as we continue to progress our programme. The recommendations we have adopted do not change the fact that the appointments to the water service entity boards will be based on professional skills and competency. We've consistently ruled out co-governance at that level. In its totality I want to acknowledge that the governance working group identified that all recommendations would need to be subject to a Standard & Poor's test to assure that balance sheet separation can be achieved and that would best enable the advantages of scale and aggregation to finance three waters infrastructure and investment.Simon Watts: Other than the ability to vote on privatisation can she give one example of how her proposed shareholding schemes for local councils allow them to make decisions about their water assets?Hon NANAIA MAHUTA: The decision-making process that ensures that community priorities are reflected will be at the regional representative group level and also through the establishment of sub-regional groups. It will enable communities to prioritise what is important to them what needs to be invested in. It will be reflected on in the strategic documents that will guide the water service entities. This is a recommendation from the governance working group that will improve the current legislation that was put in the early exposure draft.