Parliament's Finance and Expenditure Committee (Committee) reported back last Thursday (18 July 2024) on the Local Government (Water Services Preliminary Arrangements) Bill (Bill 2). Following Parliament's repeal of the Three Waters / Affordable Water legislation with "Bill 1" earlier this year, Bill 2 delivers preliminary arrangements for Local Water Done Well, in particular how local governments will provide financially sustainable drinking water, stormwater, and wastewater services. For further background, please see our Insight on Bill 2 as first introduced here.
The Committee recommended by majority (National, ACT and NZ First) that Bill 2 be passed with multiple amendments. The Labour and Green parties each delivered differing views from the majority report.
We expect the amended Bill 2 to pass through its remaining Parliamentary stages quickly with enactment in the next few months. The Government will then introduce "Bill 3" on Local Water Done Well to Parliament in December 2024. Bill 3 will cover more detailed water infrastructure policy, such as long-term economic regulation and the powers of water services council-controlled organisations.
The core of Bill 2 and its purpose remains unchanged. It requires councils to develop water services delivery plans (WSDPs), starts economic regulation through information disclosure, allows councils to join together to provide water services, and provides an expedited consultation mechanism for councils to form new water services council-controlled organisations.
The Committee aims to clarify key issues raised in the 182 submissions on Bill 2, including:
Clearing up ambiguity about the status of WSDPs by making clear the one-off nature of WSDPs (these are not regular planning documents), requiring a council to "give effect to" its WSDP and therefore allowing a council to amend its WSDP if circumstances change, and adding the failure to amend a WSDP as required by the Department of Internal Affairs (DIA) by a specified date as a "problem" which can trigger Ministerial intervention under the Local Government Act 2002.
Refining the contents of WSDPs by specifying a time limit of three months after Bill 2 enters force for DIA to make rules for additional WSDP contents, giving councils the choice to include information covering up to a 30-year period in WSDPs (10 years still remains the minimum period covered), requiring a WSDP to include an implementation plan and, where available, requiring details of joint council water services arrangements in a WSDP.
Amending aspects of the foundational information disclosure economic regulation to ensure greater consistency with the Commerce Act 1986, including introducing a purpose statement for economic regulation in Bill 2 that aligns with the Commerce Act, exempting the disclosure of commercially sensitive information, increasing the maximum penalty for failure to provide required information from $300,000 to $5m, and introducing a levy-making power so that the costs of the Commerce Commission's regulation can be recovered from water service providers.
Clarifying numerous aspects of the Auckland-specific solution in Part 4 of Bill 2, for example through a purpose section for Part 4, and moving responsibility for drafting the Watercare Charter away from the Crown Monitor.
The Committee's amendments to Bill 2 do not address requests from groups of submitters to clarify the potential financial support to councils by central government, the status of te Mana o te Wai in the hierarchy of considerations for Taumata Arowai (the Water Services Regulator), or the effect of Bill 2 on obligations under Treaty of Waitangi settlements or other Māori rights and interests.
The Committee's report can be found here. In the meantime, if you have any questions, please get in touch with one of our experts below.