Local Government Act 2002 Amendment Bill (No 2)

Just to recap on Part 1 in this speech, because I think we had a very full and robust contribution from members, so it would be important to just set out some of the key features of Part 1 in order to engage further with members. Firstly, to recall, the bill removes the threat of amalgamation from local authorities by restricting reorganisation requests to local authorities; myself, as the Minister; or those receiving community support, and by requiring a petition of at least 10 percent of local electors to proceed—so, lifting the threshold. This is really important because many of the amalgamation petitions that were embarked on that weren’t successful were done with a lot of negative sentiment at the community level. So lifting the threshold to 10 percent gives more assurance at the front end about whether or not there’s any local support for a decision of that magnitude.

Furthermore, in terms of the new tools that will be provided to help councils govern council-controlled organisations (CCOs) and to provide better accountability and reporting mechanisms, it ingests into the CCO governance space, I think, the types of transparencies that the public would expect as CCOs undertake their particular objectives and become more accountable to their local community. Then, thirdly, in terms of Part 1, what we’re trying to do in the first stage of reframing the role of the Local Government Commission—because it will still have a role for reorganisation and representation reviews—we want to ensure that those functions continue to remain but also that we have time to engage with the sector about the nature of the independent role and function for the Local Government Commission.

These were the issues that came up in the questions previously on Part 1 of the bill, but I did want to take some time to respond with a little bit more detail to two questions that were raised by my colleague Minister Henare. Firstly, in relation to proposed section 17(3A) in clause 7 of the bill, he asked what are the implications of section 17(3A) in terms of Treaty settlements and the way resources are managed. Just for clarity’s sake—and I thank the member for the question—transfers of responsibility under section 17 can only take place when both the transferring and receiving councils agree that the benefits of the transfer outweigh any negative effects. Before deciding on that question, however, both councils must undertake consultation in accordance with the principles in section 82 of the Act. Section 82 requires councils to have processes for effective consultation with Māori.

The Act does not currently set out the criteria to be considered for the purposes of a section 17 transfer of responsibilities. The bill introduces criteria to which a council must have regard when considering a transfer. This includes the linkages between communities, and iwi and hapū, and their relationship with sites and resources of significance.

The bill ensures that all existing co-governance and co-management arrangements between councils, and iwi and hapū are protected. In any transfer of responsibilities, iwi and hapū should have the same access to co-governance and co-management arrangements. The only change would be which local authority is responsible for that arrangement.

Now, can I say that this is a matter that will have to be tested, but I suspect that many councils, in upholding their Treaty settlement obligations, would with some trepidation tread very carefully, were the issue of transfer of responsibilities to be a matter that they would have to contend with. I think, for the member’s assurance, that the way in which councils will have to engage with iwi Māori on questions such as that which he has posed in the committee of the whole House should give a level of assurance that there are some checks and balances around any quick transfer of responsibilities with a full consideration of those particular issues. So I hope that that does clarify to some extent the concern that he demonstrated in the question, and I’m sure many iwi who have their Treaty settlement obligations with particular councils that have been specified will also have assurance around the provision that’s been set out in the bill.

Thank you, Mr Chair. I just wanted to make a simple point around the disestablishment of the Local Government Commission and severely reducing their powers to undertake amalgamations. It seemed to me that there was a theme throughout the Cabinet papers, the discussion papers, and the general advice provided to the Minister throughout the working up of this Supplementary Order Paper (SOP) 323, which sought, really, to reverse the good changes which had been proposed by the former Government. There was a very strong theme around the spectre of large-scale amalgamations, and it did seem to me and to those of us on this side of the House that there was, in effect, almost a witch-hunt against the Local Government Commission and the good work that the commission was doing.

So, while this SOP simply reverses a number of good measures brought by the Government, I have yet to see a proposal for what the roles of the commission might be in the future, and I’d welcome some guidance from the Minister on just that point, because it just seems to me that the Local Government Commission has its genesis—oh, I just don’t recall. But the commission has been established for quite a number of years, and apart from its roles and responsibilities under the Act, it has also, over time, been a well-respected and well-regarded body of commissioners who, in my experience both in local government but also in my role as a parliamentarian, were there as an independent commission, obviously, always in a position to provide guidance and support to councils.

If you think about the local government environment and the local government view that Parliament is forever passing down the unfunded mandate—if I’m not straying too far from the bill, but I’m making a general point about the commission. The commission and commissioners—a number of them over time have been former mayors with a vast array of experience—have provided outside of some of those statutory functions a really valuable service, a lending ear perhaps, to councils at times when they have needed that extra support and advice. I would be interested in the Minister’s view on what shape the Local Government Commission might take in the future.

Thank you, Mr Chair, for the opportunity to speak this evening. This is my first opportunity to speak in relation to this bill, and I can actually do it from a position of experience. In 2013, I was elected to the Far North District Council, and in 2013, Northland was one of the four regions who were being looked at by the Local Government Commission in terms of reorganisation. That process went on for some time. It was quite a drawn-out process. It was initiated by the Far North District Council, then there were alternative applications put in by surrounding councils, and then the Local Government Commission actually rejected all of those applications and proposals and came out with its own draft proposal.

I want to just respond to the comment made earlier that this wasn’t a witch-hunt in Northland regarding the Local Government Commission, but there was strong opposition to the draft proposal for reorganisation in Northland. There was not sufficient, demonstrable community support, which is the requirement under the Local Government Act 2002 in order for a draft proposal to be able to proceed to the next stages.

Now, there was some disappointment actually expressed by the Local Government Commission regarding that decision by Northlanders. Instead of actually just declining that application and putting that draft report aside, they actually left it on hold, which they can do under the Act, and they went and scoped out some other options. They made some suggestions and recommendations around the possibility of shared services, which at the time was received by Northlanders with a bit of caution. It felt like amalgamation by stealth—that now we would look at shared services.

When this legislation came into place under the previous National Government, there was a lot of apprehension at the community level that there was a desire by central government to try and encourage, if not force, amalgamations and actually circumvent the processes within the legislation that the Local Government Commission would have to follow—i.e., the main one being that there needed to be demonstrable community support—and so it was alarming to see that they were trying to remove a threshold which required communities to show that. So I am pleased that this Government is reintroducing a threshold of 10 percent of the voters in a particular area, to show that there is actually sufficient support for an application to be put forward and considered for reorganisation and that it can’t just be done by an individual. This affects tens of thousands of voters and huge areas—in our case, it was going to be from the Far North, from Cape Reinga, right down to Wellsford, including the Kaipara District Council, the Whangarei District Council, the Far North District Council, and the Northland Regional Council—and so I think these are important amendments that we are proposing to make in this section.

The other concern that I have is around increased powers for council-controlled organisations (CCOs). Again, I feel like that was a move to take powers from local government, who are democratically elected through their processes, to CCOs, which do not have the same level of scrutiny by the ratepayers and by their shareholders. So I think that the bill here is trying to introduce amendments that will make CCOs more accountable to local communities through the councils that control them. In particular, it is about introducing some requirements to meet obligations to Māori, and if I can just quickly go to that section—it’s quite a big Supplementary Order Paper (SOP), so I just have to have a quick flick through there. What we have in SOP 323 is clause 21B, which would amend section 57, and it is particularly around the appointment of directors. I can look around some of our CCOs and currently see that this is a gap, and so this proposed amendment would actually, I think, address the gap that we currently see on some CCOs.

So it would require councils: “When identifying the skills, knowledge, and experience required of directors of a council-controlled organisation, the local authority must consider whether knowledge of tikanga Māori may be relevant to the governance of that council-controlled organisation.” Further, in terms of making actual decisions, significant decisions of council-controlled organisations affecting land or water, in particular it says, “Before a council-controlled organisation makes a decision that may significantly affect land or a body of water, it must take into account the relationship of Māori and their culture and traditions with their ancestral land, water, sites, wāhi tapu, valued flora and fauna, and other taonga.”

In my own local area, the Auckland marina was one of these cases where I think that it is important that, on the council-controlled organisation, there are the skills and the expertise, the knowledge, and the mātauranga in the make-up of the directors. Now, this hasn’t been a requirement to date, and I can see there has actually been an issue on the ground where these proposed amendments could alleviate situations like that. Now, through a thorough process of appeals and further engagement, an outcome was reached there, but I believe it could have been improved by having this requirement up front.

The other part was in the statement of expectations of the CCOs. So, actually, replacement section 64B(1) in clause 21D of SOP 323 states, “The shareholders in a council-controlled organisation may prepare a statement of expectations that—(a) specifies how the organisation is to conduct its relationships with— … (iii) iwi, hapū, and other Māori organisations;”—it includes others there, but this is a specific requirement to include iwi, hapū, and other Māori organisations. It “(b) requires the organisation to act consistently with— … (ii) the shareholders’ obligations pursuant to agreements with third parties (including with iwi, hapū, or other Māori organisations).” So the question that I really have for the Minister is: what is the expectation about Māori and CCOs in terms of what is proposed in this legislation? What are the expectations? What difference might we see that these changes could make in terms of Māori and CCOs?

The final point that I wanted to make about the Local Government Commission is it is envisaged that it could have a reduced role, and if it has a reduced role, then there may be not as much need for as many appointed members. Currently, there are three to five, and it is envisaged in this Act that potentially it could be as few as two or even one, but there are some requirements specifically in the Act around this. I think it is important—and if the Minister has anything that she would want to add to why it is important—that if the commission is going to consist of two or three members, one member must have knowledge of tikanga Māori and must be appointed by the Minister after consultation with the Minister for Māori Development, and if the commission consists of only one member, that member must be appointed by the Minister, who must take into consideration whether the member has a knowledge of tikanga Māori or experience as an elected member or of a chief executive of a local authority, and must consult with the Minister for Māori Development and the New Zealand Local Government Association Inc.

Given that the Local Government Commission can make decisions about reorganisation, including Māori participation in local government and in council decision-making, I think it is important that this provision that is here, that if there is a reduced Local Government Commission of two members or three members that it includes one Māori. If it is only one, that there’s a thorough process including consulting the Minister for Māori Development. Thank you, Mr Chair.

Tēnā koe, Mr Chair, and thank you for this opportunity.

First, can I acknowledge the Minister’s response in taking the first call this evening, because I recall, when putting the question forward, some confusion about where I was reading from but certainly her answers dispelled any confusion that I have on the matter and provided significant clarity. She does make a very valid point around testing this as we move into the future. I look forward to allowing breathing space for that to be tested. There will be some significant challenges as we consider the role of local government and council-controlled organisations moving into the future when we consider the obligations that are met, that have been made, under Treaty settlements. I look forward to seeing how that space evolves.

I want to pick up just on a couple of things that my colleague Willow-Jean Prime mentioned in her contribution. I think she raised some good points, and I want to drill down on a couple. This is certainly one of those questions that I ask of every bill where we look to consider tikanga Māori in a bill, because of just the variations of tikanga Māori, the sort of threshold one might put in place to acknowledge whether or not somebody can be considered to have a strong knowledge of tikanga Māori. For example, I consider myself somewhat of an amateur in tikanga Māori but I, according to this bill—and also a humble one too, might I add. But in this bill could I be considered in roles outside of my rohe or my region simply because I have a strong knowledge of tikanga Māori?

I want to always challenge and question those aspects in all bills because I’ve always been an advocate for not putting in—the word in Māori is “whakakōhatungia”; in English that is “cementing”—aspects of tikanga Māori in legislation because there is a significant difference, as has been debated in this House on many occasions, between lo-r-e and l-a-w. I just wanted to just offer my thoughts on that, and if the Minister has any contributions that she might want to make on that, I think that that would be something worth debating.

The other part that my colleague the former councillor from the Far North Willow-Jean Prime talked about was the statement of expectations. It says in there, 64B(1), the organisation may prepare one—“may”. I know Hon Stuart Nash is one who’s always said, “Well, there is a significant difference between ‘may’ and ‘must’.” When I think about placing an expectation on a council, giving an opt-out of a “may” sometimes erodes the confidence of iwi, hapū, and Māori when they have expectations of a local council in working with them, in dealing with them, and considering sites of significance. I wonder if the Minister is of a mind to, perhaps, strengthen that a little bit more or at least explain why it’s in here.

💬 Simeon Brown: Put down an SOP.

If that member wants to make a contribution, he can take the time to read this Supplementary Order Paper 323, because I’m sure he hasn’t. But back to the bill.

It is important because I talk about eroding that confidence. I know it has more specific aspects as you read further down; it talks about iwi, hapū, and Māori organisations. All this does, too—as somebody from Tāmaki-makau-rau, I think about an urban Māori organisation. I know there is a strong representation through the bill for iwi and hapū, and that’s important, but what then might the role be of, say, the Manukau Urban Māori Authority in this case? Or what might the role be of the Waipareira Trust, or any other organisation that represents Māori interests in the city? Does that override local hapū? I’m not too sure. But I’m sure that the Minister in her consideration for this bill with the team of officials—some of those questions will no doubt have cropped up. I want to make sure that we as a committee can flesh those out to make sure that there is absolutely no ambiguity on the matter. I’m reminded of the words of Sir Geoffrey Palmer where he talks about discretion being the mother of all injustice. Where you find those rooms of flexibility in that space sometimes that’s a good thing but often we find, in particular in respect to Māori rights and Māori aspirations moving forward, that we actually fail to meet them.

That’s just one of those questions I want to leave on the floor for everyone to consider. Hopefully the Minister and officials can consider that as we move forward on the bill.

Kia ora, Mr Chair—just to take a quick call on the Local Government Act 2002 Amendment Bill (No 2) at committee stage. As has been canvassed by my colleagues, there are Supplementary Order Papers that are on the Table from the Minister, and as a previous member of the inaugural Rodney Local Board of the first Auckland Council when it was amalgamated—I should actually say that I’m standing on behalf of the Hon Ron Mark, who’s in Timor-Leste this evening. He is the spokesperson generally for local government, so it would normally be he who actually rises to take a call on this bill.

As I said, as one of the inaugural elected members of Auckland, for example, where there was a forced amalgamation on the Rodney area of what is now the super-city of Auckland—I don’t know if people call it “super” any more. It’s been somewhat of a disaster under the previous Government, I would have to say. Just to acknowledge the Minister in the chair, Nanaia Mahuta, who’s doing her very best to try and right the wrongs and the disaster that was put into place by the previous Government—but if we go around to some of the Supplementary Order Papers that are sitting on the Table, I have to say I’m very much looking forward to the contribution from the member from Rodney, because I know that the Northern Action Group, for example, has recently put out an email on some of the Supplementary Order Papers that are on the Table around the 10 percent requirement to change any of the settings around an amalgamation, for example.

I would ask the Minister, at the most suitable time, if she wouldn’t mind speaking to the issues that have been raised by the Northern Action Group. But I’m sure the member from Rodney will also be raising those issues because, of course, he is the elected representative for that area. So I have no doubt that we will hear a contribution from him from the Opposition benches at some stage on this bill.

But, at the very least, what I’d like to do is commend the Minister in the chair, the Hon Nanaia Mahuta, for taking this initiative to try and work through, first of all, making sure that we don’t have further communities, like Rodney was, dragged kicking and screaming into an amalgamation that they were never asked about, that they never wanted, that they weren’t supported in. But I would ask the Minister, if she has an opportunity before the House rises tonight—she may want to wait until the member from Rodney raises any other questions that he has around this issue that affects his electorate and that the Northern Action Group is actually asking for his support on, but if she could at some stage stand and just talk a little bit about the Supplementary Order Paper she has on the Table there, that there is a level of concern around which is requiring a petition of at least 10 percent of local electorates to proceed, then I would be most grateful.

Tēnā koe, Mr Chair. I’m pleased to take a call on the Local Government Act 2002 Amendment Bill (No 2). Can I just acknowledge and thank the Minister Nanaia Mahuta for her opening remarks tonight on this bill.

I want to make a contribution on Part 1, clause 21A, in particular replacement clause 56, which talks about the “Principal objective of council-controlled organisations”. Briefly, clause 56 talks about “(1) The principal objective of [the council] is to—(a) achieve the objectives of its shareholders, both commercial and non-commercial, as specified in the statement of intent; and (b) be a good employer; and (c) exhibit a sense of social and environmental responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate or encourage those interests when able to do so;”.

I am so thankful this bill is coming to the House. I am thankful that the Minister has seen the wisdom to empower our councils, particularly in relation to this clause around council-controlled organisations (CCOs), because it is about empowering councils. We understand we have commercial arms of councils, but where you saw in very recent times—and as the local MP for Ikaroa-Rāwhiti, we too had an issue called the Ruataniwha Dam, which, obviously, one of our CCOs in Hawke’s Bay was doing something that the community had no way of pulling them in and being accountable to the ratepayers. So I draw the committee’s conclusion and commend the Minister for addressing the role of CCOs and returning the power and accountability back to the council, and particularly to the ratepayers.

So, in this particular clause 56, I’m pleased—and maybe at a time that the Minister wants to make a call—around the introduction of clause 56(1)(c) that talks about, like I said, “exhibit a sense of social and environmental responsibility”, not just purely commercial. In my example around the Ruataniwha Dam, we spent $20 million of ratepayers’ money and we never saw anything of it. So this is an example where we had a big local issue, and yet the ratepayers in Hawke’s Bay and their views were encountered in the pursuit of a dam that, environmentally, was challenging the environment, but it was also not delivering the commercial returns.

So I am pleased that we’ve got a part—Part 1, clause 21A, replacement clause 56(1)(c)—that actually reintroduces not just the roles of CCOs but also talks about their responsibility, in addition to commercial returns, both to social and environmental considerations.

So, when the Minister’s able to take a call on specifically the role of CCOs, it would be interesting to hear from her what submitters said on this particular bill or, I guess, the rationale that caused the Minister to drill a lot deeper into the role of CCOs than what we had previously in the Act, because our real-life example, the example I gave, was quite polarising in the community that I come from, which is the Greater Hawke’s Bay region, in that, again, time and time again, communities wanted answers but the CCO adopted a cannot be touched, are not responsible, are not accountable—and I am referencing that as a pure example to back up the Minister’s addressing this in this particular new section 56(1), inserted by clause 21A. So it is about the CCOs. I commend the Minister in trying to make that really tidy around their role, ensuring the accountability rests with the council and, ultimately, the ratepayers, but, more importantly, introduces the social, environmental, and cultural consideration of council-controlled organisations which previously did not exist.

And so I do want to commend the Minister, and when she has the time, to expand on the move in which she’s addressing this. Thank you.

Look, there have been a number of questions raised in the Chamber, and I feel—just before the committee is about to rise—I should respond to a few of them.

But just to step back in order to lean in to the questions that we’ve been asked, when I came into this particular role, the local government sector was very fearful that there was an amalgamation agenda. As many times that I said that is not the agenda of this Government, somehow, some way, they believed that there was an agenda. And it would be easy to understand if you looked at the original bill that was tabled in the House that we inherited that we are now seeking to change, because, in that particular bill, there was a preference for multiply owned council-controlled organisations (CCOs). Again, the sector was reading this as a covert way of trying to drive amalgamation. But here’s the thing: there was a proposed enhanced role in the original bill that was tabled by the previous administration to strengthen the role of the Local Government Commission so that they could initiate amalgamation reviews. So you can understand the anxiety that we inherited from the sector that believed that there was this amalgamation agenda. It certainly isn’t the case in terms of the aspirations of this Government—this coalition, confidence and supply Government—who believe, actually, that local communities have the wherewithal to determine their own future, which is why we have introduced the Supplementary Order Paper of this nature that breathes more transparency into the way in which CCOs operate.

I want to come, firstly, to the questions that were raised by Willow-Jean Prime. The member asked about the provisions in relation to, for example, clause 21C, which inserts new section 60A, which sets out a provision for council-controlled organisations to take into account Māori and cultural views in relation to ancestral land, water, sites, and wāhi tapu. Now, I would probably say, in the Auckland context, both Auckland Tourism, Events and Economic Development, and Watercare are really prime examples of where this would apply in a very practical way but would actually give regard to existing aspirations reflected through Treaty settlements, in relation to the land and the water and the sacred sites of the area. For CCOs to have greater regard of those things, and to make it very clear with the provisions that we’re putting in, it’s actually the reality that those particular CCOs that I’ve mentioned are working with—it’s the context within which they’re working to right now, and it adds and substantiates, I guess, their effort to take greater account of that.

The other thing that I want to mention—and, again, it was raised by Willow-Jean Prime—is in relation to the role and function of the Local Government Commission. As I said in my opening statements to the committee stages, this is stage one of rethinking and revising what the independent role and purpose will be of a local government commission in some form. This is not the place and time to rehearse policy; that will be done on another day. However, this is the time to indicate and signal to the committee that there must be an independent role and it can take a different shape and form. And we’re not just going to do that on the hoof.

Debate interrupted.

House resumed.

The Chairperson reported progress on the Local Government Act 2002 Amendment Bill (No 2).

Report adopted.

The House adjourned at 9.56 p.m.