Local Government (Rating Cap) Amendment Bill

When I first read through the arithmetic set out in the first and second clauses of the Local Government (Rating Cap) Amendment Bill, it was a little bit like déjà vu. I thought to myself that it was an interesting way of tackling legislation in the 21st century. The bill seeks to regulate rates by putting in place a formula, which is the movement in the consumer price index plus 2 percent in the first 12 months, or the consumer price index plus no more than 4 percent over a 3-year period—about 1.3 percent per annum in addition to the consumer price index.

When I read that I thought to myself that it was very reminiscent of the kind of legislation we used to see under Rob Muldoon. That thought was further strengthened when I got down to clause 3, where I read that if a local authority wishes to exceed that cap, it can ask the Minister of Local Government to make a decision about it. So I thought that that was the kind of cap the bill had in mind. It has local authorities, duly elected by the citizens of that territory, going cap in hand to the Minister and saying: “Minister, can we please take our rates up next year by, let’s say, consumer price index plus 2.5 percent? Would that be OK?”. Really, at that stage, I asked myself whose bill it was. I actually thought I would see the name “Robert Muldoon” on the bill, but it turned out to be “Rodney Hide”. I am amazed that a bill like this has actually come from the ACT party, because it is not the kind of approach I associate with the history of ACT. However, it is the kind of approach I associate very strongly with Muldoon, who, in the immortal words of David Lange, ran the country like a Polish shipyard. I think that was a bit of an insult to Polish shipyards, in many ways.

The fundamental problem I have with the bill is that it is contrary to United Future’s political philosophy, which is dependent on subsidiarity—namely, that we devolve political decision-making to the appropriate level and that local authorities, duly elected by their citizens, should be making decisions on behalf of their communities, and that includes decisions about rates.

Having said that, members might be surprised to hear we are going to vote in favour of the bill. It is simply a quirk of fate that the drawing of this bill from the ballot—and I congratulate Rodney Hide on being successful in the ballot—coincided with massive outrage right throughout this country, but particularly in Auckland, about the fact that rates increases have now become unsustainable for many of our citizens. We know, for example, that in Auckland City the cost of water is going up by 9 percent and the cost of rates is also going up by about that percentage or more. For many people, now, that is just too much. There is great concern, particularly amongst those people on fixed incomes and in their retirement years, that that is just not affordable. Therefore, our vote in favour of this bill is to signal United Future’s strong support for an inquiry into local government in New Zealand and the reason why we are seeing these massive rates increases occurring.

I know that the Local Government and Environment Committee has already said it wants to have an inquiry. We think that might be useful, but it will not get the job done. We want there to be an independent commission of inquiry into the whole structure of local government in this country. After all, when one really thinks it through one realises that these massive rates increases are just a symptom of many things; perhaps it might be local and central government duplication of effort, or perhaps the massive forward plans that local bodies now do at great cost—they circulate books of the size of the Wellington phone book to every citizen in their city stating their plan for the next 10 years. I wonder whether we have now reached the stage of paralysis through analysis, which really is like it was under Rob Muldoon, as well. With those reservations we support the first reading of the bill.

I have a real sense of déjà vu standing here talking about rates in Parliament, because 6 years ago I was very much involved in the game of setting rates. Little did I think that 6 years later I would be standing here in Parliament talking about rates. But I can assure members now that a lot has obviously happened in those last 6 years within local government regarding rates. More and more ratepayers are highly dissatisfied and are just bloody angry with the levels of rates that are being set around the country. They want to apportion blame. Members just need to listen to talkback radio and read the newspapers to see that ratepayers want to apportion blame. Local government has lost touch with its ratepayers.

But what is more concerning is that when I have been moving round the country talking to local government leaders I have seen there is real frustration, anger, and helplessness being felt by local government leaders in New Zealand. Why? Because local government leaders are losing local leadership. Compliance and paperwork being thrown at them by this Government are swamping them. There is a real concern within local government that it is losing its local leadership. To quote from a report by a very senior, long-time chief executive officer in local government: “The processes associated with our business have been made more complex as a result of the 2002 legislation. I fear we will see a growth in the relative power and influence of the salaried official. As processes dominate and become more complicated, the role of the official will be enhanced and, as a consequence, the role of the elected member will be diminished.”

This Government is redefining the role of local government by all the compliance work and legislation that it is putting on local government. This Government is being very prescriptive and not allowing local solutions for local problems, for local issues. One size does not fit all. A message is being sent to the Government by ratepayers: they want local solutions; they want local government to be elected to do what they want local government to do, not what this Government wants it to do. This Government’s provisions about compliance and standards put a huge cost on local government. The Prime Minister is wrong. She had her head in the sand when she said on 7 August that the ultimate course of action for people who do not like rate rises is to vote the council out at the next election. I say to Helen Clark, Prime Minister, that it is not all the councils’ fault. A lot of the problems with rates are the Prime Minister’s fault, and she has to front up to that. She should be under no illusion that the compliance costs arising from the audit requirement, the Building Act, and the legislation on gambling, prostitution, dog microchipping—there is a list of 67 Acts in which she has put compliance costs on local government—have impacted on rates.

Then the Prime Minister and the Government members talk standards. They want to bring in a new water standard. Believe it or not, a little council like that in Waimate, which I had the pleasure of visiting, had to spend $500,000 to service 34 households. That is disgraceful. Leadership needs to be shown by local government. Ratepayers need and deserve answers, and they need to be given new tools and new confidence that the current situation will be changed and rectified—hence National’s support for this bill, to allow that opportunity to happen.

There is talk of an inquiry. I have not seen the terms of reference. Also, there is an issue to do with my confidence in how an inquiry would operate and how independent it would be. The previous history of this Government with its inquiries—as with Dr Ingram’s inquiry—does not give me confidence that the correct answer will be delivered. The ratepayers in New Zealand deserve the correct answer, because their rates are too high. The Government has to stand up and take some responsibility for that.

The aim of the Local Government (Rating Cap) Amendment Bill is, as I understand it, to amend the Local Government (Rating) Act 2002 to limit the increase in rates revenue sought by a local authority in any year. The bill provides for a maximum rate increase in any year of the rate of consumer price inflation for the preceding year plus 2 percent. The maximum in any 3-year period is to be the rate of consumer price inflation for the preceding 3 years plus 4 percent.

I find it somewhat surprising that the former Mayor of Wellington, which is a very lovely and great city, in my view—nearly as good as Hamilton—would actually support a bill whereby the central government of the day could—

The ASSISTANT SPEAKER (H V Ross Robertson): I am sorry to interrupt the honourable member, but the time has come for me to leave the Chair for the dinner break.

Sitting suspended from 6 p.m. to 7.30 p.m.

Obviously, I do not support this bill, but I assure the Speaker that I will not be engaging in the kind of personal attack we witnessed in the general debate by Chris Finlayson on the Minister of Revenue, the Hon Peter Dunne. I thought that was the most appalling attack on a member that I have heard for some time. It was quite incredible.

💬 Hon Ruth Dyson: What was that?

That was Chris Finlayson maligning the integrity of the Hon Peter Dunne. It was quite a bizarre attack.

I do not agree with this bill, but I will not attack its author. What I will say is that I believe that this bill would take us to an era of central government control through the Minister of Local Government, irrespective of who that Minister was and what that Minister’s political shade might be. It would effectively destroy local decision-making, local accountability, and, in fact, local government. The Local Government Act has a very, very rigorous form of community accountability. It is called the 10-year plan, and it is reviewed on an annualised basis.

Speaking as a citizen from Hamilton, I say that we have a very, very good council. We have an excellent mayor, Michael Redman, and an excellent council team. I do not want a Minister of Local Government, of whatever political colour, to be dictating to people in the Waikato and in Hamilton as to what projects we can undertake and how we structure our budget. This bill would mean, for example, that if we needed a special rate to build the wonderful Waikato Stadium, which took us above the criteria of this bill, we would have to go cap in hand, literally, and beg the Minister of Local Government of the day for the funds to do that. That is not local democracy; that is not local accountability.

The argument, very clearly and concisely, is simply this: we have two tiers of government in this country. Lest this Parliament should forget, there is another tier of democratic governance in this country. We are not the only game in town, so to speak—there are councils up and down the country, which citizens elect and which also have a democratic mandate in their own right.

Obviously, I agree to differ with the author of this bill about how we address what is the significant issue of how we fund and finance local government. As a former deputy mayor of Hamilton and also as a member of the Local Government and Environment Committee, I acknowledge that the issue of what is a fair and equitable way of funding local government is a very significant one. I commend our very good Minister of Local Government, Mr Mark Burton, who today announced the establishment of an independent inquiry into issues around local government rates funding. In fact, the Minister has stated: “The Government will develop the inquiry’s terms of reference in consultation with other parties. The terms of reference and other details will be released in due course.” The Minister also said, and I think it is a very good quote: “This is an important issue which is concerning central government, local government, and ratepayers. The … Government believes an independent inquiry is the best way to consider these issues. We have been working closely with New Zealand First because, like us, they are concerned to ensure that this issue is dealt with in an independent manner. I look forward to wide parliamentary support for this inquiry process.” Indeed, the Minister stated: “The inquiry will be able to consider the work of the joint Central Government/Local Authority funding project, which will report to the Central Government/Local Government Forum in October.”

Quite frankly, I pay tribute to the work that Local Government New Zealand, mayors, councils, and chairs of regional councils are already doing in this country. This is about local democracy. We in Parliament acknowledge that we have to look at more innovative ways of funding local government. I also acknowledge the huge transfer of taxpayer funds from central government in Wellington to local government projects that is already in effect. Let me acknowledge that it is at an all-time record. I do not agree with this bill. The independent inquiry is the way to go.

Kia ora tātou. I am pleased to stand this evening to contribute to the debate on the premise that the Māori Party supports initiatives where accountability and transparency are important. As others have mentioned, the bill amends the Local Government (Rating) Act 2002 by capping the level of rates increases that local authorities may impose on residents. It stops local authorities setting excessive increases.

For tangata whenua, the history of rating in Aotearoa has been variable and inconsistent. Our research tells us that in 1883 the Property-Tax Department was found to be valuing Māori land at well above the market rate. This was at a time when the Government reimbursed local authorities directly for rates owing on Māori land. In another incident in 1915, we learnt that lands in the King Country were being valued low, in order to make it easier for Europeans to buy them. The argument was that the land was worthless. Indeed, it was worthless, because it was in multiple ownership. So the manipulation of valuation legislation is, unfortunately, a shameful part of our history, and Māori have been rated off our lands. Large tracts of Māori freehold land are unoccupied and unimproved. This land creates a significant rating burden on the Māori owners, who often do not have the means, or in some cases the desire, to make economic use of the land. Often that is due to the nature of the ownership, or perhaps because the land has some special significance that will make it undesirable to develop or reside on, or perhaps because it is isolated and marginal in quality.

I understand that schedule 11 of the Local Government Act 2002 supported the use of Māori land by the owners for traditional purposes. It was also introduced to make it easy for owners to develop the land for economic use, while taking into account the presence of wāhi tapu that may affect the use of the land for other purposes. I understand also that section 91 of the Local Government (Rating) Act requires that Māori freehold land be liable for rates in the same manner as if it were general land. But what has happened in the last few years is that tangata whenua have experienced excessive rates increases of three to four times the inflation rate, which are imposed by some councils. As I say, in essence, Māori are being rated off our lands. That is why the Māori Party voted against lump-sum payments for capital projects in the Local Government Law Reform Bill, which were just another form of rating increase.

Pita Rykers, in his paper “Valuation and Rating of Māori Lands”, stated that it was critical for Māori to get the power relationship right via a clear Treaty statement and the provision of effective mechanisms and structures. Mechanisms must provide real accountability, and the structures must allow for effective rangatiratanga. The Māori Party believes that mana whenua should have an equal say with local and regional authorities on all matters concerned with the rating or non-rating of Māori land. We also believe that Māori and the wider public should have a say as to whether a rating cap is the best way to regulate and monitor rates increases, and whether the current method of assessing rates is the best one. There are real issues there for Māori people’s relationship to the land and the practical circumstances of Māori land held in joint ownership.

We look forward to this bill providing clarity, transparency, and accountability in establishing the critical foundation that our whenua provides in our world view. We cannot underestimate the crucial importance of whenua in our world view. In 1987, in the court case New Zealand Māori Council and Latimer v Attorney-General and Others, the New Zealand Māori Council stated: “[Maori land] provides us with a sense of identity, belonging, and continuity. It is proof of our continued existence not only as a people, but as the tangata whenua of this country. It is proof of our tribal and kin group ties. Maori land represents turangawaewae. It is proof of our link with the ancestors of our past, and with the generations yet to come. It is an assurance that we shall forever exist as a people, for as long as the land shall last.” These are the values that we bring to the discussion of this bill, as we do with every other bill coming before the House.

We will vote to support this bill, based on our belief that controls and consistency need to be in place so that we can stay on our land, care for our land, and be tangata whenua in the truest form. Kia ora tātou.

May I thank the Māori Party members for their support for the bill and indeed for their analysis, and for the realisation that Māori were the first people in New Zealand to feel the effect of outrageous rates forcing them off their land, and the fact that now many New Zealanders, particularly the elderly and those on a fixed income, are feeling what Māori felt 100 years ago. I should also acknowledge National Party members for their contribution and their support, and also, too, United Future.

Indeed, United Future’s contribution was through Gordon Copeland, and he suggested to me that allowing the cap to be broken, with the permission of the Minister of Local Government, was a bit Muldoonist. I put that in there because I thought it was a cheap way of providing some transparency, and I certainly believe that it is a mistake. I suggest that we should have a cap, and if councils want to break that cap for good reason, then let us have a local referendum and get the permission of the people who will be paying the rates—that is, the ratepayers. We heard a lot today about democracy, but true democracy would be to say that if we are going to put up rates, we should get the people’s consent first. I am sure if there is a good reason for putting up rates, they will give their consent.

I have to say that I am not surprised at the Labour Party opposing this bill. I notice Labour members spoke at length about 10-year plans and how they will provide a democracy. I know they do not say 5-year plans, because they have a rather bad connotation, so they have gone one better than Stalin. Labour will have a 10-year plan for New Zealanders, which will see more New Zealanders forced off their property. How sad is that?

We all as MPs know of people who have worked hard, built their houses, paid off their mortgages, and raised their children. Yes, they have had the windfall of their properties going up in value because of rising property values, but to them those properties are their homes. Then their rates go up, but they are pensioners of a fixed value and they cannot afford to pay the rates. The council tells them either to take out a loan—that is, go back to having a mortgage, like a young couple starting out, 40 or 50 years ago—or sell up. It is as if we have New Zealanders living in a home that they own, but they rent it from local government; if they cannot pay the rent they will get kicked out. That is what my bill, with the support of National, United Future, and the Māori Party, was designed to stop.

It is Parliament that gives local government the power to strike rates. It is Parliament that sets the rules. I was saying, through this bill, that we should set a rule for the amount by which local councils can increase rates in any one year, and if they want to go above that amount they should get the permission of the people. That is democracy. Ask the Māori people whether they want to pay more rates for the service they will get as a consequence; let us not just take it.

I have to say that I am disappointed with New Zealand First members—that will not come as a shock to them—and that the people of New Zealand are disappointed with New Zealand First. I was surprised by Doug Woolerton’s attack on Grey Power today—for what? Not being sufficiently in love with New Zealand First; not going along with everything New Zealand First does? But New Zealand First members voted for my bill—an identical bill to this—in 2004. They thought it was a good idea for it to go to the select committee so the people could have their say. It was all right then, but now it is not. What has happened since then? The only thing that has happened since then is that people’s rates have gone up. Oh, and there is one other thing: Winston has got his bauble, and he no longer cares. If he can keep his bauble, then it is to hell with the people and their rates.

I ask members to look at this newspaper I am holding. I am quite proud of this headline, which reads “Finally, action on rates”. That is because of what this bill has done, the people of New Zealand have done, and this Parliament has done. Finally, is it action? Well, we will see. Look at these rates increases, I say to Mr Brown and Mr Peters, Auckland City 13.4 percent, Tauranga 13 percent, Rodney District 10.2 percent, and North Shore City 9.5 percent. The Sheriff of Nottingham would blush at those sorts of increases. He never threw old people out of their houses, but New Zealand First is saying it is OK for local government to throw people out of their houses, particularly if they are old. [Interruption] Brian Donnelly is saying yes, that is what New Zealand First is saying—throw them out of their houses.

What will we have? Mr Peters and his bauble and some inquiry announced by press release, which we have not seen. There have been no terms of reference and no promise. This bill will put an end to rate increases. I say to New Zealand First members that they should vote for it.