Local Government (Water Services Preliminary Arrangements) Bill

2.1. Are there any publicly available inquiry, review or evaluation reports that have informed, or are relevant to, the policy to be given effect by this Bill?

YES

Reform of the water services sector begun in 2017, triggered by the Government inquiry held for the 2016 water supply contamination incident in Havelock North. A 2017 report of the inquiry findings can be found at: https://www.dia.govt.nz/Government-Inquiry-into-Havelock-North-Drinking-Water#Report-1.

Since then, there has been additional research related to the key challenges behind New Zealand water infrastructure and local government funding which has informed the policy to be given effect by this Bill, including the following reports:

https://tewaihanga.govt.nz/our-work/research-insights/sector-state-of-play-water (February 2021).

https://tewaihanga.govt.nz/our-work/research-insights/is-local-government-debt-constrained (March 2024).

2.2. Does this Bill seek to give effect to New Zealand action in relation to an international treaty?

NO

2.3. Were any regulatory impact statements provided to inform the policy decisions that led to this Bill?

YES

The March 2024 Cabinet policy paper Local Water Done Well stage 2: establishing the framework and transitional arrangements was accompanied by the Regulatory Impact Statement titled “Local Government Water Services (Transitional Provisions) Bill” (note that this was the working title of this Bill). The RIS was prepared by the Department of Internal Affairs. A copy will be available on the Department’s website and on the Treasury website on introduction of the Bill

2.3.1. If so, did the RIA Team in the Treasury provide an independent opinion on the quality of any of these regulatory impact statements?

NO

The Treasury reviewed the outline of the policy proposals and determined that an internal DIA RIS panel would be sufficient for quality assurance of the regulatory impact statement.

An internal quality assurance panel considered the regulatory impact statement and considered that the RIA partially meets the quality assurance criteria.

2.3.2. Are there aspects of the policy to be given effect by this Bill that were not addressed by, or that now vary materially from, the policy options analysed in these regulatory impact statements?

NO

2.4. Has further impact analysis become available for any aspects of the policy to be given effect by this Bill?

NO

2.5. For the policy to be given effect by this Bill, is there analysis available on:

(a)   the size of the potential costs and benefits?

YES

(b)   the potential for any group of persons to suffer a substantial unavoidable loss of income or wealth?

NO

Analysis of the size of the potential costs and benefits of the preliminary arrangements for local government water services is available in the regulatory impact statement. Time constraints and limited information available between the policy development phase and Cabinet decisions meant that the content was limited to qualitative analysis.

The key benefits of the transitional arrangements in the Bill are:

·         Requirements for councils to transparently provide information that demonstrates how they will deliver water services in a sustainable way should provide a roadmap for improvements.

·         The increased expectations of information disclosure and specific planning should flow through to increased accountability. This information will be publicly available to local communities and regulators and will hold councils accountable for performance in their delivery of water services.

·         Enablement of a smoother transition between the current level of service delivery to the full economic regulation model.

·         That streamlined process for joint water CCOs should support easy implementation (both for central government to amend the legislation and for councils to engage with and follow). Utilising joint committee mechanisms supports practicable implementation for councils.

·         The new financially sustainable model for Watercare utilises a delivery model that should lead to lower increases on water charges for consumers.

There is no potential for any group of persons to suffer a substantial unavoidable loss of income or wealth.

2.6. For the policy to be given effect by this Bill, are the potential costs or benefits likely to be impacted by:

(a)   the level of effective compliance or non-compliance with applicable obligations or standards?

YES

(b)   the nature and level of regulator effort put into encouraging or securing compliance?

YES

The Bill requires territorial authorities to submit water services delivery plans within 12 months of the Bill’s enactment date. If authorities struggle or fail to submit acceptable plans, the Minister of Local Government may exercise their powers of assistance or intervention to aid compliance. This will result on increased compliance costs on the territorial authorities to fulfil the requirements and on the government to ensure compliance. As the water services delivery plans depict current water services at a particular moment in time, there is a possibility that the joint arrangements as suggested in the plans may not materialise. The anticipated cost and benefit for joint arrangements will only be realised if they do occur.

The Commerce Commission does not currently have a developed relationship with water services providers. This may inhibit a seamless transition to economic regulation; however the Commission is considered to be the most appropriate agency to be the regulator. This could impact on how efficient the first iteration of the regulatory scheme is. While the Bill contains the preparatory mechanisms for economic regulation, full implementation of economic regulation is likely to take some time, so the benefits will not be seen immediately. .

The benefits mentioned in section 2.5 may only be fully realised once the comprehensive reform legislation is in place, anticipated in mid-2025. This may limit the extent to which those benefits can be realised through the preliminary arrangements in this Bill as territorial authorities’ decisions may be dependent on understanding the options available through the comprehensive reform legislation.

3.1. What steps have been taken to determine whether the policy to be given effect by this Bill is consistent with New Zealand’s international obligations?

No relevant international obligations were identified during the development of the policy proposals in the Bill.

3.2. What steps have been taken to determine whether the policy to be given effect by this Bill is consistent with the principles of the Treaty of Waitangi?

The Local Government Act 2002 requires local authorities to facilitate Māori participation in decision making processes within local government. The relationships, rights and interests that Māori have with water are often geographically or catchment specific and recognised at a local level, in agreements between mana whenua and councils. This Bill does not amend these requirements in the Local Government Act 2002. Existing requirements in Treaty settlement legislation will still apply to local authorities delivering water services, together with other arrangements that councils and Māori/iwi have entered about delivery of water services.

The proposals in this Bill put preliminary arrangements in place that help territorial authorities self-determine their future water services delivery models. The next stage of Local Water Done Well will set up the enduring settings for water services delivery, which will be underpinned by financially resilient and sustainable water services. Those proposals will consider the implications for Treaty of Waitangi and Māori/Crown relations, in particular, Treaty settlement obligations and mana whenua participation in decision making. Cabinet policy proposals in June and July 2024 that will make up the proposals for the Local Government (Water Services) Bill, will outline the relevant implications on the obligations of the Crown under the Treaty of Waitangi.

3.3. Has advice been provided to the Attorney-General on whether any provisions of this Bill appear to limit any of the rights and freedoms affirmed in the New Zealand Bill of Rights Act 1990?

YES

The Bill of Rights Act vetting is in progress with the Ministry of Justice. The Local Government (Water Services Preliminary Arrangements) Bill is expected to comply with the rights and freedoms contained in the Bill of Rights Act 1990. Upon introduction of the Bill, the advice provided to the Attorney-General by the Ministry of Justice will be available at: https://www.justice.govt.nz/justice-sector-policy/constitutional-issues-and-human-rights/the-bill-of-rights-act/compliance-reports/

3.4. Does this Bill create, amend, or remove:

(a)   offences or penalties (including infringement offences or penalties and civil pecuniary penalty regimes)?

YES

(b)   the jurisdiction of a court or tribunal (including rights to judicial review or rights of appeal)?

NO

The Bill makes it an offence to intentionally breach a requirement relating to an obligation to disclose information, or to fail to comply with a High Court order in relation to the disclosure of information. Non-compliance will result in a maximum pecuniary penalty of $200k for an individual or $1m in all other cases.

This offence and penalty are derived from similar information disclosure offences contained in both the Commerce Act 1986 and the Telecommunications Act 2001.

3.5. Does this Bill create, amend or remove any provisions relating to the collection, storage, access to, correction of, use or disclosure of personal information?

NO

3.6. Has there been any external consultation on the policy to be given effect by this Bill, or on a draft of this Bill?

YES

Relevant draft excerpts of the Bill were consulted with the Commerce Commission, Taituara, Office of the Auditor General, Crown Infrastructure Partners and Auckland Council. The Technical Advisory Group[1] received the full draft Bill for consultation. These groups were approved in accordance with the Cabinet Office CO (19) 2: Attorney-General’s Protocol for Release of Draft Government Legislation outside the Crown.

The Technical Advisory Group was involved in the development of the policy proposals that this Bill will give effect to.

3.7. Have the policy details to be given effect by this Bill been otherwise tested or assessed in any way to ensure the Bill’s provisions are workable and complete?

YES

The proposals were tested with the Technical Advisory Group through workshop sessions and the feedback received was incorporated into policy briefings and relevant Cabinet papers.

The Legislation, Design and Advisory Committee advised on the legislative design of the Bill which assisted with the drafting completed by Parliamentary Counsel Office.

4.1. Does this Bill contain any provisions that could result in the compulsory acquisition of private property?

NO

4.2. Does this Bill create or amend a power to impose a fee, levy or charge in the nature of a tax?

NO

4.3. Does this Bill affect rights, freedoms, or impose obligations, retrospectively?

NO

4.4. Does this Bill:

(a)   create or amend a strict or absolute liability offence?

YES

(b)   reverse or modify the usual burden of proof for an offence or a civil pecuniary penalty proceeding?

NO

The Bill creates a strict liability offence relating to the requirement to disclose additional information when ordered by the High Court to do so. This replicates section 86B of the Commerce Act 1986 relating to information disclosure requirements.

4.5. Does this Bill create or amend a civil or criminal immunity for any person?

NO

4.6. Does this Bill create or amend a decision-making power to make a determination about a person’s rights, obligations, or interests protected or recognised by law, and that could have a significant impact on those rights, obligations, or interests?

NO

4.7. Does this Bill create or amend a power to make delegated legislation that could amend an Act, define the meaning of a term in an Act, or grant an exemption from an Act or delegated legislation?

NO

4.8. Does this Bill create or amend any other powers to make delegated legislation?

YES

The Bill contains provisions delegated decision-making powers through secondary legislation.

The secondary legislation will:

·         enable the Secretary for Local Government to make rules for additional matters relating to the water services delivery plans. This rule-making power is available if needed, but we anticipate the required content of the plans will be contained in the primary legislation and additional guidance released by the Department;

·         subject councils to enhanced information disclosure requirements for their water services in addition to the information provided in the water services delivery plans, where considered appropriate. This will be given effect to by an Order in Council (similar to current Commerce Act 1986 provisions); and

·         enable the Commerce Commission to make determinations, setting out additional enhanced water services information that a council subject to those requirements must disclose.

This secondary legislation is necessary because there is likely to be technical requirements in specific detail that are highly subject to change as information develops. Containing them in the primary legislation may be too prescriptive and rigid.

4.9. Does this Bill contain any provisions (other than those noted above) that are unusual or call for special comment?

NO