Local Government Act 2002 Amendment Bill (No 3)

on behalf of the Minister of Local Government: I move, That the Local Government Act 2002 Amendment Bill (No 3) be now read a first time. At the appropriate time I intend to move that the bill be referred to the Local Government and Environment Committee with an instruction that the committee report to the House on or before 12 May 2014. It is my privilege to introduce this bill. In doing so I must acknowledge the work of the Hon Nick Smith. My colleague was the original architect of the Better Local Government reforms, significant parts of which this bill implements, and he has continued to provide valuable support and ideas. I also acknowledge the work of the Rt Hon David Carter, under whose direction the bill to implement the first phase of the Better Local Government reforms was passed.

Local authorities provide important services and infrastructure that households and businesses use every day. It is therefore vital to the New Zealand economy, society in general, and even the environment that councils are efficient, effective, and well run. We need to be confident that our local authorities are capable of facing the challenges of the 21st century. This bill enables better and more efficient local authority operations. It is about providing councils with the tools and options with which they can up their game. It includes provisions designed to provide greater transparency to communities about how councils are planning to manage and are managing the infrastructure those communities so heavily rely on.

These changes are complemented by other good-practice initiatives such as Local Government New Zealand’s plan to soon introduce a centre of excellence to assist the sector in financial effectiveness and value. Although the bill is not specifically aimed at the worst-case scenarios, the Kaipara District Council situation is worthy of mention. The Auditor-General has just completed her investigation into the council’s involvement in a waste-water scheme. I do not propose to discuss the details of that case, but they provide salutary lessons to us all. This bill and legislation passed last year address many of those lessons. Changes enacted last year allow Ministers to identify potential problems with councils, obtain information on their nature and extent, and provide an appropriately tailored response. This bill introduces requirements for greater transparency in the management of infrastructure and greater discipline in the documentation of agreements for infrastructure that is to be provided by third parties. Councils will be required to consult their communities using more tightly focused documents that highlight key issues rather than having these hidden in lengthy, often opaque, draft plans.

This bill also complements the changes made to the Local Government Act in 2012 in other ways. It increases the range of options through which local authorities can achieve efficiencies and the scale at which services and facilities are delivered. For some councils and communities, the best option may be to follow the reorganisation path to amalgamation or to other major restructuring. Others may find perfectly worthwhile solutions to issues by working together and increasing their use of shared services.

The bill expands the options available for local authority reorganisations. The Local Government Commission will be able to consider establishing local boards as part of the governance arrangements for new unitary authorities as well as in existing unitary authorities. The boards will have features similar to those in Auckland but can be tailored to local circumstances. In the circumstances where reorganisation is not justified or not possible, the bill contains measures to make it easier for councils to cooperate and collaborate to improve efficiency and effectiveness.

The bill also includes measures to enable councils to achieve efficiencies in other ways. For example, the Government has decided to provide councils with more flexibility about how they consult their communities. This is not about removing requirements to consult but about improving the processes that are used. The aim is to enable councils to design engagement processes that are appropriate to a range of different circumstances and community interests. The new significance and engagement policies will provide a clearer guide about how and when communities can expect to be engaged.

This bill reduces the number of occasions where the costly and time-consuming special consultation procedure has to be used. It enables the use of a wider range of technology with which councils can communicate with their communities. The bill also improves consultation on council long-term plans and annual plans. It provides for consultation documents with a greater focus on the issues that are important to ratepayers, rather than containing voluminous, detailed information that is understood by very few.

Local authorities own more than $96 billion in fixed assets, mostly infrastructure. The majority of councils are managing their assets well on a day-to-day basis, but communities require greater assurance that these assets are being managed strategically and sustainably over the long term. This bill therefore reinforces the importance of asset management planning as part of a council’s prudent stewardship of resources. It requires local authorities to prepare an infrastructure strategy for at least a 30-year period. The strategy will identify the significant infrastructure issues faced by the local authority, the options for addressing the issues, and the implications of those options. Officials at the Department of Internal Affairs have prepared an example infrastructure strategy to help illustrate what it is intended to do and how it might look. I encourage submitters on the bill to view the example infrastructure strategy, which is available on the department’s Better Local Government website. I am advised that it has been downloaded around 560 times already.

One means by which local authorities raise money to pay for infrastructure to meet growth is through development contributions. Development contributions are one of many costs that make up the price of new houses. Therefore, it is important that development contributions are fair and no higher than they should be. This Government does not want future generations priced out of homeownership. This bill introduces a measure to ensure that development contributions are better focused and more transparent. The range of infrastructure for which development contributions can be charged will be narrowed. This narrowing reflects the principle that developers should pay only for the infrastructure that is required by the development, whereas communities pay for the infrastructure that will benefit the whole community.

This bill also introduces a new objections process through which people can challenge inappropriate development contributions charges. New principles are included to guide how development contributions should be applied, and there is greater encouragement for developers to provide more local infrastructure in return for paying lower development contributions. Commencement provisions in the bill mean that councils will need to review and update their development contributions policies within 1 month of the bill’s enactment. This reflects the need for urgency. I appreciate, however, that many councils may find this time frame ambitious. The select committee process provides an opportunity for those councils and other interested parties to express their views on this matter. I will be interested in the committee’s assessment of whether the time frame in the bill is, indeed, appropriate.

In 2002 local government legislation was updated for the start of the 21st century. This bill ensures that local authorities are equipped to meet the challenges of the decade ahead. I commend this bill to the House.

I stand to speak to the Local Government Act 2002 Amendment Bill (No 3), the next local government bill introduced by this Government, and to say that the Labour Party will support this bill in its first reading and going to the Local Government and Environment Committee. That is not to say, Minister Williamson, that we do not have some concerns about the bill itself, but we would like the public to have a say on the bill in the democratic way that they should. We will be looking first of all to make sure that a bill that is introduced in December, just before Christmas, has a considerable length of time for people to make submissions on it, because we all know that there have been times when select committees have required submissions on bills that come in this late in the year to be made over the Christmas - new year period. That is incredibly difficult for New Zealanders, who save their holidays for this time of year. They do not actually want to sit at the beach writing out a submission on a local government bill. So I—

💬 Hon Maurice Williamson: Oh, you’re kidding me.

Although I am sure Mr Williamson did that in his spare time, I think most New Zealanders would want to have a barbie and a beer rather than to be writing out submissions. So I say to the Minister that I hope there is going to be considerable time given for submissions to be made on this bill.

The next point I would make is to ask whether the Government is going to listen to the submissions, because the Minister made a rather bad start in his presentation today when he complimented the Hon Nick Smith on his Better Local Government legislation and his approach to local government. Well, Minister, you may well have been asleep when Nick Smith made his speeches and when he introduced his Better Local Government legislation. His handling of it was disastrous. It was the first part of the major changes. Part one of Better Local Government was disastrously handled. In fact, the regulatory impact statement that went with the first part of these changes was one of the worst I have ever seen. In fact, it said that there was no justification for most of the changes that the Government wanted to make. Then the New Zealand Institute of Economic Research did a very good piece, as well. It said that it could see no justification for change. We were then told by Minister Nick Smith that you did not have to believe everything that the institute said. Of course, it put out a report last week saying how well the economy was going, and the Government said: “Of course you must believe the New Zealand Institute of Economic Research.” So it—

💬 Hon Simon Bridges: They got that one right.

Oh, according to the junior Minister, it got that wrong. Yes, it did get that wrong about everything being better in economic terms in New Zealand. So I have to say that we have some doubts about the consultation that will take place on this bill. If it is going to be like the first bill we had, absolutely no notice was taken of the many, many submissions that were made on the bill. They came from all around New Zealand, from Southland to the far north. They came from local government, they came from NGOs, they came from the community, and they came from community boards. They said: “Do not take away the four well-beings that exist in the Act. Do not take them away.” And did the Government listen? No, it did not. It bowled on ahead. It brushed aside all the submissions. It said: “Too bad. We don’t care what you think. We’re doing what we want, anyway. Take that or leave it.” So we have concerns that even if submissions are made on this bill, they will not, in fact, be listened to, although it will not make any changes. Maybe the Minister would like to assure us that there is going to be some real consideration given to what local government says about this bill.

There are some things in this bill that I think could potentially be very positive. Looking at the consultation that local government has to undertake and making that more transparent, more open, and streamlined—some of it is very onerous—I think that could be a good change, but I would like to hear from local government as to exactly how it would work. I note that the Government had several options it could have chosen when it came to local government consulting with its community. It has taken quite a flexible approach, but let us see whether local government thinks that that is going to work. At the end of the day, these bills are all about control of local government. We have always seen local government as being very, very important and making its own decisions within a framework within a community. We have seen the tightening of its ability to make those decisions under a Government that says that it believes in open government and that it likes businesses and communities to get on with things. We have not seen that in local government. So I will be interested in what local government has to say about consultation.

Development levies is another area. We need some more information as to what the details are going to be about what development levies can be applied to. The Minister did not outline that in great detail. I assume, Minister, that that is because decisions are still to be made about what development levies can be applied to by local government. I think we need to know the detail. As they say, the real issue will be the detail of what is being proposed.

There are also in the bill some changes to the Local Government Commission. These are ones that do worry me because the Local Government Commission is not an elected organisation. Its members are Government appointments. There have been some very good people on the Local Government Commission. I have great faith in Basil Morrison, in fact, as the chair of that Local Government Commission. He is a very experienced man. He is not going to always be there. But under these changes the Local Government Commission is going to be able to create council-controlled organisations and joint committees as part of the reorganisation scheme. That means that the Local Government Commission can decide that there will be council-controlled organisations set up in local government. I do not agree with that. I think that is a decision that needs to be made by local government itself. I think the proliferation of council-controlled organisations in many councils has been to the detriment of local councils and local communities. There is a lack of accountability by council-controlled organisations. Often, there is no elected representative at all. In fact, there are only people appointed by councils, and they do not have to account back to the public of New Zealand and the ratepayers as to how they spend their money. They do not have the accountability and the connection with the community that you would expect at a local government level. So I am concerned about allowing the Local Government Commission to decide that it can create council-controlled organisations. I am also concerned about the commission deciding on joint committees. Surely we want local government to look at how it is working and what joint committees it thinks it ought to have, rather than having an unelected commission making these decisions.

So there are some positive things in here, but there are also some things in here that need to be looked at more carefully. I like the idea of long-term infrastructure plans. We know that local government controls a large amount of infrastructure—more than $79 billion of infrastructure assets—and also it has got an additional $12 billion in land and buildings. So it does need to have long-term plans. But can I say to Minister Williamson that perhaps it would be good if the Government had a similar approach to long-term infrastructure strategies in planning, because that is something we do not have. In fact, I think it was a National Government that got rid of the planning commission we used to have when we looked at long-term planning for infrastructure in New Zealand. In Government we very much go from one electoral cycle to the next. So although it is a good idea to impose long-term plans on councils, perhaps the Government might like to look at itself to undertake something similar.

In conclusion, I think the Government also ought to look at allowing local government to make some of these decisions about how it can lift the bar in improving its own performance. After all, it is the one that is going to carry out the work.

I rise to support the Local Government Act 2002 Amendment Bill (No 3). I support it because it amends the Local Government Act 2002 and it gives effect to the second phase of National’s Better Local Government changes. New Zealand’s 78 councils make up about 4 percent of New Zealand’s economy. They spend $7.5 billion of public money every year and they manage over $100 billion worth of assets, so we really do need to make sure that they are operating as efficiently as possible.

This second phase of the Better Local Government changes and reforms will empower local authorities. It will empower them by giving them the tools to provide better services for their local communities. We all have the same aim. We want to deliver better services to New Zealanders under very tight fiscal constraints and to build a more productive and generally more competitive economy all round.

I just want to have a look at three or four of the main provisions of this bill. The first one is about extending the local boards model. This is the model that is used in Auckland and has proved to be very successful, and other councils have asked for a similar model to be used. Under our first lot of reforms, we allowed that model to be used in an urban unitary authority if it had a population of more than 400,000 as it was reorganised. This bill will allow local boards to be an option in a proposed reorganisation to any new unitary authority, and even as part of existing authorities. That introduction will be determined on a case by case basis—looking at the community, seeing what they require—and it will be led in consultation with the Local Government Commission.

The bill also focuses on more efficient delivery and governance of local authority services. The idea behind that is that the bill can encourage greater collaboration and more shared services between local authorities. It will do this by providing a range of practical ways to achieve those efficiencies of scale without necessarily amalgamating or creating bigger units. It just gives more flexibility to collaborate and to deliver better, cheaper services.

The bill also encourages better consultation, decision making, and planning. It basically gives more flexibility to councils and more clarity about how and when they must consult. The current law allows very little flexibility. Under this bill, councils will have the flexibility to use new techniques and more modern technology when they consult with the public. It does not remove any requirements to consult or affect any provisions about Māori engagement with council decision-making.

After an in-depth study about development contributions, this bill improves the development contributions regime. It will clarify and show the range of infrastructure that can be financed by development contributions. It also provides new principles and a new purpose for development contributions that will be inserted into the legislation to guide their use and to provide greater transparency.

I was interested to hear the Hon Annette King supporting better infrastructure delivery and asset management. This is a very important role of local government, and this bill will improve decision making about infrastructure. What will happen is that councils will be required to prepare an infrastructure strategy for at least a 30-year period. We know that the vast majority of council spending is around large infrastructure programmes, so they will need to have a plan for 30 years, and they will have to incorporate this into their long-term plans after 2015.

The bill also adds the principle that asset management planning is part of a council’s prudent stewardship of resources, so there will be a greater oversight of that spending. I think it is time for that. I think it was mentioned earlier that we had the report from the Auditor-General about Kaipara District Council, and that certainly was an example of where spending was not monitored closely enough. We want to see that all councils have the tools to make sure they spend their ratepayers’ money well.

These reforms are a really important part of our programme to build a more productive and competitive economy and to deliver better public services for all communities. We do want to work with local government in these really challenging financial times and make sure that they can deliver in the most efficient and affordable way to their ratepayers and for all Kiwi families. Thank you.

Tēnā koe. Tēnā tātou katoa. I am happy to take a call on the Local Government Act 2002 Amendment Bill (No 3), particularly in light of the Auditor-General’s report Inquiry into the Mangawhai community wastewater scheme, which was tabled in the House today. I say “particularly” because in the Auditor-General’s own words it was a “woeful saga”. Kaipara District Council “failed to attend to its fundamental legal and accountability obligations.” It was woeful because Kaipara District Council “effectively lost control of a major infrastructure project.”, and, in terms of the work undertaken by the Auditor-General’s own office, her comments were that her office “[fell] short of the standards I expect.”

I stand, along with my colleague the Hon Annette King from this side of the House, in support of this bill at its first reading. We particularly look forward to it going to the Local Government and Environment Committee, where there will be further scrutiny undertaken. But, like my colleague the Hon Annette King, I too have some reservations about this bill that has come before the House. Labour’s position is clearly one that upholds the democratic rights of all citizens in all communities throughout Aotearoa New Zealand, so it makes sense to us that local issues and local concerns are addressed at a local level. In looking at this particular amendment bill, we are seeing the opportunity for us to look at practices that govern local government to ensure that open and transparent practices are not only said to take place but actually taking place.

I also share the concerns about bills being introduced so close to Christmas. I do hope that the Government ensures that there are adequate time lines—real time lines—for people to have their say on what is a considerable piece of legislation being brought before this House. I also encourage the Minister of Local Government, the Hon Chris Tremain—and again it will be supported by the work undertaken by the select committee—to ensure that the submissions that will come before it are fairly received, fairly considered, fairly analysed, and go towards informing how the bill will be presented in its final state. Having been a member in this House for less than 6 months, there are many bills that have come to this House that have given me some concern. But I am here to support this particular bill. I am here to support its first reading.

I want to draw the House’s attention to the comments of the President of Local Government New Zealand, Lawrence Yule, who welcomed the Auditor-General’s report. But I also note his comments around the issues about governance and management capability at the local government level. As much as this side of the House endorses local decisions at a local level, there are also some realities that we face around the capacity and capability to do that, particularly when it involves major infrastructure projects that commit ratepayers’ money to better the areas for which local government is responsible. I applaud the response by the president in putting up his hand as the president of that organisation to ensure that there is intensive training given to new councillors, who may be elected for the first time, and also, as most communities do, for taking responsibility for improving local government at that level.

Regarding the parts of the bill that we are being asked to comment on, can I first talk about how the bill amends the Local Government Act to change what development contributions can be used for and to allow for objections to development contributions charges. I too look forward to more detail about exactly what those contributions will look like and what they will be used for. The other change in the bill is the encouragement of more collaboration and shared services between local authorities. It is absolutely a no-brainer that if we are moving to a shared service model, the efficiency gains that can be achieved through that approach will speak for themselves if it is fully implemented. For me it means saving ratepayers’ money so that it can be put into areas that may be under pressure, and we mentioned earlier about the four well-beings. I support that as a proposed amendment.

The other area that this bill touches on is making consultation requirements more flexible. The member from the Government who stood and spoke before me, Nicky Wagner, mentioned iwi and Māori consultation. My experience is that we have some very good models out there in Aotearoa New Zealand, but we definitely have some that need to do a lot better. I have recently been sitting on the board of inquiry hearings into the Tukituki Catchment Proposal, and issues of consultation with iwi Māori up and down the riverway definitely need to be understood a bit more, not only by people in this House but also by people in local government. This will ensure that when we are consulting iwi Māori as per the Resource Management Act we are actually speaking to the right iwi. We go on further to talk about an engagement policy. Of course, nothing more needs to be said around that. Again, it will be a test of how and whom we engage with and ensuring that those views are considered and taken into consideration.

I too stand in support of the long-terms plans that are being proposed in this amendment bill. Again, the bill is an encouragement to the Government to take the widest view on planning, particularly in terms of key stakeholders, not just business and community groups. As that side of the House as well as this side of the House will acknowledge, New Zealand’s society is changing, it is getting more diverse, and therefore more views need to be considered when we are coming up with long-term plans.

One of the key points that I want to end this call on is again referencing the President of Local Government New Zealand, Lawrence Yule, when he talked about capacity building and a commitment to training councillors. I want to commend this side of the House for doing its share of growing mayors and councillors, particularly with the recent loss—our loss; their gain—of Canterbury mayor Lianne Dalziel. I also want to acknowledge Stevie Chadwick, the Mayor of Rotorua and a former member of this side of the House, and, of course, we cannot go past the Hon Rick Barker, who now sits on the Hawke’s Bay Regional Council. So I would just like to stand and commend those three particularly and the work of this side of the House in building capacity at the local level. Nō reira, thank you very much.

Tēnā koe. I am pleased to take a call on behalf of the Green Party on the Local Government Act 2002 Amendment Bill (No 3). For anyone listening to Minister Williamson’s speech—

💬 David Bennett: Why don’t you stand up for democracy in your party?

I will start again. Anyone listening to the Minister for Building and Construction’s speech would assume that the bill was about making local government more productive, more consultative, and more efficient, and certainly there are in this bill some changes to the principal Act that could do that by broadening the scope of the triennial agreement. That could encourage more collaboration between councils and more shared services. Things like infrastructure strategies are also a sensible idea.

But there are four major reasons why the Green Party is opposing this bill. Firstly, the bill represents another attack by National on local democracy and competent councils. Secondly, by changing the consultation requirements around significance and around long-term plans, the bill potentially reduces the community’s ability to participate in important council decisions. By making consultation more flexible, potentially there is less consultation. Thirdly, just as the Government is privatising our energy companies and Air New Zealand—public assets that have been built up over generations—this bill encourages councils to consider privatising council services and community infrastructure. Finally, the changes to development contributions will benefit property developers and subdividers at the expense of ratepayers.

I will deal with each of these issues in turn. The National Government is promoting major ad hoc change to the structure and organisation of local government throughout New Zealand without any clear purpose except its mistaken view that somehow bigger local government is better. This bill, together with the changes last year to the Local Government Act, will allow the Auckland unitary council model, with its big super-council and weak local boards, to be rolled out elsewhere in New Zealand. That is another example of this Government centralising power. More power is being concentrated in the executive and more power is being given to Ministers to intervene and interfere.

This bill potentially extinguishes many of our competent city and district councils, centralises power at the regional level in unitary councils, and replaces those competent councils with local boards. That is because the bill allows the Local Government Commission, in any proposed reorganisation, to axe city and district councils, which represent their communities, and replace them with local boards. That is part of the brave new world of super-councils and big new unitary councils.

At the moment, the principal Act allows these local boards to be established only when unitary councils are established in metropolitan areas with a population of over 400,000. The bill removes that provision. In Hawke’s Bay, where the Local Government Commission has come out with its proposal for major reorganisation, we would see a major loss of democracy, with, I think, 53 elected councillors and four mayors replaced by just nine councillors, one mayor, and a clutch of boards. Of course, we have seen the mayors of Central Hawke’s Bay, Wairoa, and Napier opposing this proposal because of the attack on democracy it represents by substituting competent councils with local boards.

There is a very fundamental difference between the role of boards and that of councils. A board’s role is to identify and communicate the interests and preferences of people in the board’s area to the unitary authority. Boards have no power to set rates and no power to make by-laws. They have the power to recommend but they lack the decision-making power that councils have to make decisions on behalf of their communities. So that is why we see this bill—in combination with the changes to the Local Government Act, which requires 10 percent of the community to sign a petition in order to get a poll on a reorganisation proposal—as an attack on democracy.

National wants fewer democratic council structures. It wants to make it more difficult for the community to take part in decisions by their councils and in these reorganisation proposals. This provision around boards is about encouraging two tiers of local government in New Zealand, axing regional councils and axing the district and city councils. The axing of regional councils, which have a specific responsibility for natural resource management, the management of coast, air, and water, will mean that there is less attention given to environmental management in local government.

We are concerned by the attack on public participation by the simplification of consultation requirements for a lot of local government activities. Yes, that may make consultation more flexible, but making it more flexible may mean that councils have to be less thorough in ensuring that their communities get a say on their major decisions. For example, there is a proposal in the bill to change the purpose of long-term plans. It will no longer be to provide an opportunity for participation by the public in decision-making processes on activities to be undertaken by the local authority. Certainly, those long-term plans can be complex, but actually putting them out for public submissions is a key part of the community saying what the council should be doing over the next 10 years.

Thirdly, there is our concern about the privatisation thrust in the bill. In clause 11 it becomes mandatory for local authorities, after each election, to review the cost-effectiveness of the council continuing to provide infrastructure, services, and regulatory functions, and the clause requires the council to consider having a council-controlled organisation, or some other person or agency, such as a private company, providing these services. This whole push towards having more council-controlled organisations will make the management of our three waters—stormwater, waste water, and drinking water—much less transparent and much less accountable. This requirement to review will potentially force councils to consider privatising those services.

The other issue we have a problem with is development contributions. That is where we see this bill as being a charter for property developers because of the way in which it restricts councils’ use of development contributions by limiting the purposes for which they may be levied. Under the current Act, councils can levy development contributions to help fund reserves, network infrastructure, or community infrastructure. Community infrastructure is defined very broadly, yet the bill replaces that definition with a much more restrictive one so that councils can levy development contributions to fund only community centres, community halls, play equipment, and toilets. So National’s definition of community infrastructure does not include libraries, cultural centres, swimming pools, or skateboard parks—any of those things that help provide community amenity.

These changes are quite consistent with this mean-spirited Government. It is not interested in fairness, and it has economic policies that are increasing the divide between rich and poor, creating a much more unequal society, with all the social harm that goes with that—educational underachievement, crime, and social alienation. With changes such as this one to community infrastructure, it fails to recognise that local government has a critical role in building social cohesion and building resilient communities.

The only thing we are pleased about is that, we understand, the Minister of Local Government is prepared to look at this definition of community infrastructure. It needs to go back to what it is in the principal Act. We see developers as having a responsibility to help fund community infrastructure because it is their development that helps create the need for it.

💬 Nicky Wagner: You want housing and you want them to pay for everything else.

Not that that makes it too expensive, as the member for Christchurch Central is claiming. Last year National showed that it did not care about community well-being by stripping out the promotion of well-being from the Local Government Act. These changes around development contributions are done with the same intention. We also have a concern about this whole notion of an objection process for development contributions. Again, it is the Minister who will appoint the commissioner or the panel that hears the objection, not the council. That will be a way of developers tying up councils and objecting to development contributions and to paying their share of the costs of service provision.

Finally, the other issue we have with the bill is the promotion of more use of council-controlled organisations. The 2002 Act was very clear about safeguarding the provision of water supply and the three waters in council ownership, in public ownership, and setting in place a number of checks and balances that this bill will seek to undermine.

I rise to speak to the Local Government Act 2002 Amendment Bill (No 3) in its first reading. As has been noted by other speakers, this bill gives effect to the second phase of National’s Better Local Government reforms, and although the Opposition does not like it, local government, as with central government, as with every household in this country, needs to deliver better services within budget. We are under tight fiscal constraints—that is true. We have seen with the Kaipara District Council the worst example of its kind—profligate spending and improper scrutiny of what was going on there—and it was a problem that became worse and worse. This kind of legislation will put paid to that sort of thing.

This is a bill that includes provisions for extending the local boards governance model outside Auckland. Where I live, and I represent the people of the North Shore, the local boards work very well. I do not share the Opposition’s contempt for them or their condescension around their ability to make key decisions that are community-led and community-based. I think that democracy works very well, and when people are elected, they represent people, and at a local board level the model works very well. In Devonport and Takapuna, where I live, I think that a lot of the people who are on that local board would take great exception to the utterances of the speaker Eugenie Sage, who has just sat down.

As with the first phase of the local government reforms—

💬 Hon Anne Tolley: If they’ve listened.

Yes, indeed, if they have listened, which of course they will not have because they are the Greens and they never listen to anyone who thinks differently from the way they do. But as with the first phase of local government reforms, any reorganisation of local government has to be community-led. This is a bill that is going to encourage greater collaboration and shared services between local authorities. It is a bill that will also provide councils with more flexibility and clarity about how and when to consult. There is not, in my view, a downside to that. This Government wants to work with local government to deliver efficient and affordable local government services for New Zealand families, and I commend this bill to the House.

I take a call on behalf of New Zealand First on the Local Government Act 2002 Amendment Bill (No 3). New Zealand First will support this bill in its first reading and through to the Local Government and Environment Committee, for the fact that we believe that some areas of it have merit. But there are other areas that raise some alarm bells. In supporting this important bill we believe that the correct process will be to take it to the select committee to allow submissions, and to allow the people of New Zealand and organisations throughout New Zealand to have input.

New Zealand has only two tiers of government—central government and local government. We are one of the most under-governed countries in the world, in our Westminster system. Compared with Australia, we have a very limited amount of government. Australia has state, local, and federal government, and federal government is then split into the Senate and that sort of thing. Here in New Zealand we are very reliant on local government working very closely with central government, and vice versa.

Having grown up in a family involved in local government—my father was a borough councillor in Waipukurau back in the 1960s and 1970s—I have seen how local government evolved in those days of the small boroughs. Many people in this room perhaps do not give sufficient recognition to the fact that communities have grown around New Zealand as a result of the hard work of local representatives, local community representatives, who have helped to develop their communities, develop their villages and their towns, and develop their districts into what they are today. New Zealand would not be the proud nation it is today with the quality of life we have today if it were not for those local representatives and community boards working with the people in their communities to develop their particular place of living. In that respect, it is disappointing that this Government often seems to put down local government and make out that it is just not functioning and is not playing its part in the important fabric of New Zealand society. It is.

When I look at some of the recommendations in this bill, I almost think it is like the Government trying to tell local government how to suck eggs. Basically, the Government is trying to give a lecture to local government, when in most cases not one of the members sitting on the other side of the House has had any experience whatsoever—

💬 Nicky Wagner: That’s not true.

I said most of them. I did not say all of them; I said most of them. Most of them have had little or no experience in local government. In that respect, when they say this bill will encourage and facilitate shared services and joint delivery, I can inform them that this has been going on for many, many years. I can tell you that before the amalgamation of the Auckland councils there were shared services over many areas of Auckland and across many of the councils in terms of the recycling of rubbish, libraries, control of animals and pets, environmental issues across our beaches, environmental discharges, all sorts of water supply arrangements, sewerage outlets, and various other things. There were shared arrangements going on all the time. The same can be said for other authorities around New Zealand.

We heard submissions earlier in the year on the earlier local government bill in terms of what was happening in the likes of the Bay of Plenty amongst the many councils there, which are already working collaboratively to share services; in the Waikato; and in other areas around New Zealand, which are already working together to share services. In a sense, this provision is coming in and putting it in black and white, but it is already happening. I know that Local Government New Zealand is already doing a good job in working together across the regions and providing supportive services from Local Government New Zealand to assist local authorities throughout New Zealand to work more collaboratively.

The bill also talks about long-term council plans being easier to read and less voluminous. The Minister for Building and Construction said they are voluminous. Well, Minister, they are voluminous because that is what was required by law. It was required by the likes of Audit New Zealand, and it was required under the Local Government Act in order for the plans to be fully transparent to the people. All the facts and figures had to be laid down in those 10-year long-term community council plans. It was simply a fact of life.

Most councils did put out a good summary. Certainly, the North Shore City Council, which I was with, like many other of the more responsible local entities in New Zealand, put out very good summaries to assist people and put on extensive roadshows and all sorts of public information happenings to ensure that people were fully aware of what was going on. So, again, as I said, the bill is telling councils how to suck eggs, because the sharing of services was going on. Sure, you had the complicated documents, but you also had the summarised documents to assist. In this day and age, with the improvements in electronics and website-based information sources, this can happen far more readily. A lot of the technical background detail can be loaded on to the various council websites and accessed by the public, where in the past perhaps a lot more was printed. It no longer needs to be done that way.

In terms of the proposed 30-year infrastructure strategies, again this bill makes out that this was not occurring. I can confirm that we had a 25-year forward blueprint of where our city of North Shore was going and what the 25-year projected requirements were across all the various infrastructure, across the demographics, across the population, and across the roading and other infrastructure. When I was mayor we were the first council in New Zealand to bring out a 15-year long-term council community plan. We went from a 10-year fixed plan to a 15-year plan—the first council in the country to do so—because we recognised that a longer-term plan was beneficial to the community. At that time, we also adopted the Shand report, which came out in 2007 and recommended more intergenerational debt. It should not have been that one generation took on the debt, with 15, 20, or 25-year loans when something was being put in for a much longer purpose. In that respect, for instance, we built a 100-year pipeline from the North Shore out to the Auckland channel, costing $116 million. That was taken with a much longer loan—50 years, intergenerational—because in 100 years’ time that pipe will still be there and it should not be just this generation paying for that pipe; it should be paid for through the generations.

It is somewhat disappointing that this Government continues to put the boot into development contributions. Certainly, there have been some questions over some aspects of development contributions and the levels that they have risen to in some respects, but, again, the North Shore City Council was one of the very first councils in this country to bring in development contributions and it did so in relation to the North Shore busway. That was a very, very expensive project. It cost $100 million-plus, but it recognised the fact that with the growth of the population—the fastest growth north of the harbour bridge, of any area virtually in the country—it was necessary to provide the public transport infrastructure and the busway infrastructure to cope with the growing population. Therefore, the increasing numbers of subdivisions and sections that were going in were basically there to feed off a growing population, and a busway was required to service that. We certainly would not have needed the busway with the existing population. It was for the growth in the population that that was determined. Over a number of years, through the court process, the level of development contributions was identified, and as part of that, with a growing population, they have other requirements for things such as swimming pools, libraries, and other community provisions—and that is required. Cities like Dunedin that have a flattening or even declining population do not have the same requirements. Other provincial areas around New Zealand do not have the same difficulties because they are not developing at the same rate. But areas like the North Shore and other parts of Auckland require development contributions. Otherwise, how could the existing ratepayers afford to provide for a very rapidly growing population?

It is almost like when you join a golf club or a sports club and you pay your upfront entry fee to become a member. It is the same with the development contribution. You are paying your fee to buy into the club, to buy your bit of land to start your development or to subdivide your property—cutting off the back section or whatever it is. You are paying that fee to buy into that infrastructure. So I am sure the Local Government Act Amendment Bill (No 3) will receive a lot of submissions.

In closing, can I just say that it was very disappointing, for instance, on the Environment Canterbury submissions earlier in the year, and others revolving around local government, that this Government basically paid lip-service to the submissions. Many, many learned people—QCs and authoritative people with extensive local government experience—came along to the Local Government and Environment Committee but basically were not listened to and were not recognised, and their submissions went wanting. I hope that this bill will receive the full light of day with this Government. I hope that the Government will take on board the submissions from all the various parties and not just pay lip-service again to what is intended.

New Zealand First does see merits in areas of this bill. We will be supporting it through to the Local Government and Environment Committee, and we hope it will be robustly debated and that the Government will take on board positive and proactive contributions that come from the public.

It is my pleasure to speak briefly on the Local Government Act 2002 Amendment Bill (No 3) because we do want to advance the programme. It builds on the first phase of National’s Better Local Government reform programme. The first phase is focused on local government’s core roles, streamlining local authority reorganisation procedures, and making councils more fiscally responsible. New Zealand’s 78 councils make up 4 percent of the economy but they also spend $7.5 billion of public money each year and manage $100 billion worth of assets. It is crucial that we do this as efficiently as possible and have good governance arrangements.

Since 2002, when councils’ roles were expanded, councils’ debt has quadrupled. In Auckland, where I live, the Auckland Council’s debt projections are truly terrifying. Councils must be able to play their part in economic growth, but we do need to maintain a system that reduces red tape, not grows it, that minimises the rate burdens on households and businesses, and that limits debt while providing high quality infrastructure. This second tranche of reforms is aimed at doing that, and on that basis I commend the bill to the House. Thank you.

It is a pleasure to take a call on the Local Government Act 2002 Amendment Bill (No 3), which Labour does support. We have some reservations about this bill but we do support it going to the Local Government and Environment Committee, and we look forward to plenty of public consultation on this matter. I am sure that most councils will want to come to the select committee and have their say. I am sure that Local Government New Zealand will be preparing its submission as we speak. I should imagine that there will be representatives of developers and representatives of communities who will also want to have their say on this legislation. We look forward to the debate and to considering all the different provisions.

The stated aim of this bill is to amend the Local Government Act 2002 to enable councils to be able to “play their part in creating an environment conducive to sustained economic growth … [by providing] effective processes and governance arrangements, fair and efficient decision-making and charging practices, and sound asset management planning.” That all sounds very positive. It is almost impossible, I should think, to disagree with a statement like that. Of course, it does not really tell us very much about what the bill actually does. But so often these motherhood and apple pie statements are designed to do exactly that. They are often, in fact, designed to hide things that might be a little bit more controversial and that might have some ulterior motives behind words that everybody agrees with and everybody can support.

So what are some of the provisions of this legislation? The bill provides the option of the creation of the local boards as part of any reorganisation of local government by the Local Government Commission. Labour does believe in local democracy. We actually do believe that communities should get to participate in their local democracy. We do believe that local government should be free to make as many decisions as possible without central government clamping down on it and usurping its local authority in the manner that this Government has done time and time again. So the idea of local boards, where they are appropriate, is a good one, but what is behind this is the Government’s desire to see a “reorganisation” of local government—i.e., more amalgamations of local councils. There may be communities that do want to have amalgamations, and assuming that they are done appropriately, assuming that there is good reason, and assuming that it will create efficiencies that the local communities support, that is something that central government should not get in the way of.

But what we are opposed to on this side of the House are the kinds of forced amalgamations that we are starting to see—the system being set up where one community can essentially force an amalgamation on another. We are seeing in Hawke’s Bay that central government is trying to strong arm local government into an amalgamation, and there certainly is not universal local support for that type of amalgamation. The provisions in this legislation are designed, I think, to enable more and more of those amalgamations to happen. What we do not support, or certainly what we are wary of on this side of the House, is central government dictating to local government what its territorial area should be and where it should amalgamate with other councils. We go into the select committee wary of that being behind some of those local board provisions.

Development contributions have been a vexed issue for some time. I know there was a while when a previous Minister of Local Government seemed quite enthusiastic about getting rid of development contributions altogether. The effect of getting rid of development contributions would have been that costs that are currently borne quite rightly by developers for infrastructure that councils provide in order for a new development to be able to fully function are moved to ratepayers. Whether it be the provision of water, waste water, or roads—all the fundamental infrastructure that any development requires—the responsibility for that would have been taken from those developers who are developing those sites not out of any altruistic value but because they want to make money out of that development, and moved on to the ratepayers. So widows paying their rates on a house that may be of some value but where they have very low income and are struggling to pay the rates would have ended up having to pay more rates in order to subsidise the profit-making developers.

I am glad to see in what I have read of the Cabinet paper that the current Minister of Local Government, Chris Tremain, took to Cabinet that he has diverted the Government away from this idea of eradicating development contributions altogether. That is a sensible decision by Chris Tremain. I am glad that Cabinet appears to have supported that. But what the Minister does plan to do is to try to somehow restrict development contributions. It would be very interesting to work out through the select committee process what the real practical impact of that is actually going to be on councils and on ratepayers, because any restriction on development levies does not mean that councils do not need to find the money from somewhere for those capital developments. That money still has to come from somewhere. So if it does not come from the developers through the development contributions, where will it come from? What we are concerned about on this side of the House is that that will be yet another cost that the ratepayer has to bear So it will take from the—

💬 Hon Anne Tolley: Think of what it will do for house prices.

Well, the Minister opposite, Anne Tolley, is saying: “What about house prices?”. Well, I would love to see something in this legislation—a cast-iron, signed-in-blood guarantee—that states that any reduction in cost for the developers will be passed on to the purchasers of those houses. If there was that guarantee built in to the legislation, then I might believe what the Minister is saying when she interjects from the other side of the House. But that guarantee does not, of course, exist in the legislation, and there is a real risk that any reduction to development contributions will end up going in the pockets of the developers—possibly ending up in the coffers of the National Party through the contributions made by the developers to say thank you for the additional profit that they make out of those developments. It is possible. It is quite possible. We on this side of the House are wary of low-income and middle-income taxpayers and ratepayers ending up bearing more costs so that the National Party’s mates can make more profit.

There is another underlying issue here that I think we need to be wary of, and that is the privatisation agenda from the Government. It states quite overtly in the supporting material that it finds it desirable for greater use of private investment for building infrastructure. Alongside that is a desire for greater use of council-controlled organisations and for those council-controlled organisations to control infrastructure across a number of councils. If you pull all this together, what you get is independent organisations in control of a significant amount of capital investment. That makes those entities ripe for privatisation. It creates something with enough critical mass that the private sector would become interested in purchasing those council-controlled organisations and taking private control of that infrastructure. The problem with that, of course, is that this is monopoly infrastructure, which is, at the moment, owned by the users of that infrastructure. Therefore, the owners, being the users, will make sure that the costs to the users are kept to a minimum. If you take that monopoly infrastructure and hand it over to the private sector, you then have owners who are interested in making a profit and who are not interested in giving the best result for the users of that infrastructure. That ultimately drives up costs for the taxpayer and the ratepayer as well, and creates quite a nice little earner for the National Party’s mates.

So we need to be wary about what this legislation actually does. We do support it. We will support it going through to the Local Government and Environment Committee. We will listen to what people say when they come to the select committee—

The ASSISTANT SPEAKER (Lindsay Tisch): Sorry, but the member’s time has expired.

I intend to take a very short call on this bill, the Local Government Act 2002 Amendment Bill (No 3), but I think my colleague Iain Lees-Galloway has summed up our approach. Although we are supporting the bill we are wary—very, very wary. There is a lot of language in this bill that causes us concern, particularly around the issue of consultation. It seems to us that this bill will erode the consultation that councils have with ratepayers, by repealing most requirements to use the prescribed formal process when consulting under the Local Government Act 2002. The question we ask ourselves is why the Government wishes to scrap that provision. Local government plays an incredibly important role. The fact is that most New Zealanders probably do not understand just how significant its role is. Local authorities make up 4 percent of our gross domestic product and manage nearly $100 billion worth of public assets. Those assets are essential services like water and waste water, important regulatory functions for households and businesses, as well as a range of community facilities and community development provisions. It is very significant, yet our local government elections showed recently a lack of understanding of that importance. We are concerned that reducing consultation provisions can only make that worse.

I suppose I would also just reinforce the concerns that Iain Lees-Galloway has mentioned about development charges and what the implications of those are. To conclude, we are wary because we see this bill in the context of so many other actions by this Government in relation to local government, where it has an attitude of being patronising and an attitude of undermining local government democracy. So we will be scrutinising and listening to submissions very, very carefully. Thank you.

I have some concerns whenever this Government and its members mention the words “flexibility” and “simplifying”, because it seems to me that it is frequently a way of eroding democracy. This bill, the Local Government Act 2002 Amendment Bill (No 3), is the third local government bill that this House has seen. It is the third opportunity this Government has had to run roughshod over local government. But there have been other opportunities as well—the Government has also introduced the Housing Accords and Special Housing Areas Bill, which undermines planning in Auckland, and it has made amendments to the Land Transport Management Act, which means that councils have to have transport strategies that are consistent with the Government’s own priorities, which, again, run roughshod over councils. We have seen the removal of the four well-beings from the Local Government Act in the last tranche of reforms. We have seen restrictions on councils and their involvement with the Biosecurity Act recently.

I remind the House that local government is where local representatives make local decisions for their local communities. This bill endangers that. Although the Greens do support the aims of this bill—the more efficient use of resources—we are concerned about the potential for forced amalgamations, much like the Auckland forced amalgamation. That was a forced amalgamation and we are not particularly happy to see that happening elsewhere in the country. Yes, councils have been working together—and they should be encouraged to work together more—for the provision of services. But councils should not be forced to amalgamate, and they certainly should not be replaced with local boards.

The provisions in this bill to enable local boards to occur in other local government amalgamations or in existing councils do worry us because we do not see local boards as the magic bullet. Local boards have the ability to advocate, and they do that very strongly, and they represent their communities well in Auckland. They definitely do that. However, they have not got the ability to set rates, they have not got the ability to determine how those rates are spent, and they can advocate only to their governing bodies. This Government seems to have the idea that super-councils are the way to go and that bigger is better. I can assure this House that that is not always true. Certainly, what we have seen in Auckland is a reduction in democracy, specifically with the creation of council-controlled organisations. It is incredibly worrying that this bill sets up a similar system where the Local Government Commission can actually be advocating for more council-controlled organisations, which wrests control of decision making away from democratically elected representatives.

We are also concerned about the changes in this bill to the Local Government Act 2002 around consultation processes, particularly on long-term plans. We understand that consultation can be difficult and that sometimes it does take time. But it is a democratic process and we do need to ensure that people have the ability to hold their democratically elected councillors to account about the decisions they are making for them over the long term. We are concerned that the simplifying aspects in this part of the bill will mean that people are shut out, or that information about those decisions will be withheld or ignored.

It is also obvious to us throughout this bill that the privatisation agenda this Government has for State assets continues with what it is attempting to put into this bill for council-controlled assets—in particular, the requirement in the bill to review the cost-effectiveness of service delivery arrangements and for councils to consider alternative options. When we have asked officials what that means, it means that councils should be considering the private provision of services that councils have run, or council-controlled organisations.

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

I would just like to say that we oppose this bill.

I support the Local Government Act 2002 Amendment Bill (No 3).

💬 Mr DEPUTY SPEAKER: Sorry?

I support this bill.

on behalf of the Minister of Local Government: I move, That the Local Government Act 2002 Amendment Bill (No 3) be reported back to the House by 12 May 2014.

Motion agreed to.