Watts SimonSIMON WATTS (National—North Shore): Thank you very much Mr Chair. I'm just wanting to ask three questions in regards to Part 2 clause 16(1)(c) which relates to financials in regards to the DHB and then come on to clause 16(1)(d)(i) which is around capacity and capability.Firstly in regards to the fiscal aspect my question for the Minister is in regards to how the centralisation and the forming of Health New Zealand is going to create a significantly bigger entity than the individual district health boards (DHBs) themselves. The challenge potentially—I'm interested in his perspective around that—is: how will the threshold for materiality change in regards to that entity? Why I ask that is that and it's getting into a little bit of detail is that one of the significant drivers of DHB deficits has been holiday pay. The other element there around holiday pay is the other contingent liabilities that relate and the fact that actually there is an element of that holiday pay that hasn't been necessarily quantified and the role in which the Ministry of Business Innovation and Employment play in order to in effect provide opinions and decisions to DHBs around the quantum or how they should respond to an issue around a contingent liability such as holiday pay and therefore the burden of that liability falls on the DHBs. In the current model because the 20 DHBs look at that in terms of their scale which is smaller they pay a lot of attention to it. But the challenge and the concern I've got around a large centralised entity is that those numbers will become while significant less material in the context of a single organisation.Therefore how do we ensure in terms of clause 16(1)(c) around financial sustainability that aspects around contingent liability won't actually get lost? Don't forget that those are the liabilities that aren't actually expensed they're not ones that are included within the deficit; they sit outside of that but sometimes they can be a ticking time bomb in terms of the fiscal impact that will either be inherited by a future Government or a Government will need to make some decisions around how they treat for that. So that's the first part.The second part is around the point that was raised before around novation of assets and I think my colleague Michael Woodhouse referenced this. I'll give you an example it's the Auckland Regional Dental Service—ARDS—which provides dental services to school-based children in Auckland. It is a combination of three DHBs: Auckland DHB Counties Manukau DHB and Waitematā DHB. The ownership of those assets that provide those services is a mixed model some of which are owned by different DHBs; some of it is land leased from different schools in Auckland. There is a very complex arrangement of asset ownership. My question for the Minister is in regards to the transition costs of novation of those assets to the single-entity model and the time it takes to actually unwind that and actually the reality that in most cases the outcomes don't necessarily change but there's a cost burden to transition. How has that been considered in regards to again the financial sustainability around clause 16(1)(c)?The last element is in regards to clause 16(1)(d)(i) which states that the health entity will need to have the capacity and capability" to deliver it. We had a question before around the fact that we couldn't quantify—I think Dr Reti mentioned—around health need. But how are you going to be able to measure the fact that the health entities—and I quote—"has the capacity and capability to perform its functions"—16(1)(d)(i)? That is a huge statement in the context of delivery of healthcare services in this country. Therefore what is the monitoring the measurement around that? We've got significant deficit around service provisions in parts of our country which I'm sure we'll get into soon. But how are we actually going to affect that clause in reality? It's quite aspirational to say that one you'll have the capacity and we know that operating theatres around the country are closed because they've got no staff; but secondly to have the capability which then gets into workforce which again as you've just articulated earlier we've got significant gaps in that space. So can you give us a little bit of clarity around how that clause within Part 2 is actually going to be effective? I'll have a few more questions."