Estimates Debate — Local Government

Thank you, Mr Chair. On the basis that the Labour Party only has 30 minutes remaining of the 2 hours and 29 minutes, I intend to signal to the House that how I’ll approach the hour that we’ve got is that I’ll let some questions build up and then answer them all in one go to try and be a little bit more efficient with time.

Thank you very much, Mr Chair, and I acknowledge the Minister has run out of steam already, but that’s not a problem at all. We will maximise this opportunity just to remind the Minister in regards to potentially some of the areas that he can ponder over answers. But it is clear that a number of these questions won’t have answers because a number of the decisions have been made in circumstances which sort of beggar a little bit of belief.

But I want to firstly question the Minister in regards to the three waters reform and, in particular, ask whether he stands by the degree of consulting and contractor spend that has been undertaken on what has been, without doubt, a woeful example of a Government reform programme. I acknowledge that the Minister has had a hospital pass from the prior Minister of Local Government the Hon Nanaia Mahuta, and there is an element that, potentially, I feel sorry for him in that circumstance.

But the degree of consultancy expenditure is in the region of around $30 million, with $600,000 spent on PR from Senate Communications. If we remember back on those failed ads that had green slime coming out of the taps and that expenditure, nearly $3 million was spent on an advertising company, FCB, in order to put together that advertising campaign that had green slime coming out of water taps—hard-earned taxpayers’ money. The question to the Minister is: does he believe that that was appropriate Government expenditure and not wasteful spending, taking into account that that communication programme—as the prior Minister of Local Government articulated—was a failed campaign in regards to information that did not convey the reality for many communities across this country?

What about the $1.27 million that was spent on the Scottish water authority to provide advisory into the numbers which underpin this Government’s three waters reform programme? Remember that number that the Prime Minister refers to—the $185 billion of capital? Well, those numbers have been debunked by a large number of people across this country, including mayors and councillors, who, with respect, I think would know more about their local government infrastructure than a couple of bureaucrats out of Scotland. Again, $1.27 million of Government expenditure was thrown up against that water agency for consultancy spend as part of that.

My second area of questioning is in regards to the forecasted nearly $3 billion—$3 billion—of establishment costs for this three waters reform. Don’t forget that that’s up $1 billion from what was originally forecast, at nearly $280,000 per day—$280,000 per day—of establishment costs for a reform which none of the local government bodies, from the outset, thought was actually going to really deliver fundamental change and improvements. What an absolute waste of money. I appreciate that the Minister is out of time, but he’s probably lucky that he’s out of time, with respect, because trying to come up with an answer that is all credible for why that is not wasteful spending is beyond us.

We appreciate that a number of bills still proceeding through this House relate to the changing of the number of entities, remembering that this was set out when we went through the first three waters reform programme. We said that absolutely this could not be done with no less than four mega-bureaucratic entities—remember that? Remember that Minister Mahuta came up and said, “No way, we’ve done all the analysis; no way this will ever work without dropping it down to four.” Well, what happened? After the grand reset by this Government—

Hon Scott Simpson: The policy bonfire.

SIMON WATTS: The policy bonfire, and what a bonfire—I think there was a bit too much petrol thrown on the bonfire, and a few people on the other side got their fingers burnt, didn’t they, through throwing a little too much dry kindling on to that fire. But that policy bonfire came up with “Oh no, let’s change four to 10 entities.”, but they didn’t change any of the underlying structural elements around the fact that they were still cogoverned mega-bureaucratic entities that are not based on democratically elected principles.

So I want to give the Minister the opportunity to potentially just say, “Hey, actually, do you know what? With only three sitting weeks left of this Parliament, maybe we made a mistake.” Here’s an opportunity, right? Here’s an opportunity, because the problem with this election is that this topic will be—there’s a very clear difference between the two political parties on this. So, in effect, the outcome of the election will be a mandate from the New Zealand public in regards to this. So my third question to the Minister is in regards to whether the new proposal of 10 entities is still something that the Minister believes is going to be appropriate.

The other area of questioning that we went through as part of the reviews was in regards to the IT expenditure projects. I tell you, for anyone who has looked at Government IT programmes, they generally don’t go too well, do they? But in order to ensure that this Government’s IT programme in regards to three waters is as credible as it could be, it decided to not undertake a proper procurement process, of course—right? So what better way to provide integrity and assurance would you have than if you didn’t undertake a proper procurement process, and that would be OK if the numbers were potentially reasonably immaterial, but guess what? Guess how much the numbers were in regards to the IT programme? I don’t know—throw some numbers out.

Hon Scott Simpson: I bet they’re big.

SIMON WATTS: How much—big numbers, yeah. I mean, a couple of hundred million, maybe—maybe that. Maybe $530 million, or maybe half a billion dollars of expenditure on the ICT programme? It was $530 million for this ICT investment programme.

So I’m asking the Minister clearly: does he stand by the fact that the officials have undertaken a procurement programme for ICT relating to three waters that did not go through a proper procurement programme, for $530 million of taxpayer money? No competitive process, no looking at options internationally, no looking at different systems, and no looking at alternative ways in which we should spend that money. No, just choosing a single supplier, signing a deal, and going ahead. Interestingly, that product that was selected is the same product that is used by one of the largest water companies in the country, and I’m sure that all of the process was appropriate, but the Minister needs to articulate that there was integrity in regards to that.

The other aspect, while we’ve got a little bit of time, is for the Minister to provide a little bit of comment around the chief executive officer roles that were appointed to manage these entities. Remember, we had four entities originally and we hired the CEOs. It’s come out that these CEOs are on salaries in the region of $600,000 to around about $800,000 per annum, per person. Well, let’s talk about a cost of living crisis, right? Let’s talk about a cost of living crisis. But the Minister has obviously been quite comfortable that we’ve got, initially, four CEOs on that, but, of course, with the change from four entities to 10, one doesn’t have to be too au fait on the mathematics to work out that that, potentially, is going to mean that we might have up to 10 of these CEOs across the country on between $600,000 and $800,000 per annum.

So I want the Minister to articulate and provide assurance to this committee—and to Kiwis out there watching this—whether this is value for money. What are going to be the additional outcomes in value that this will create by paying chief executive officers for 10 entities across this country, and all of the peripheral—

Hon Scott Simpson: There’ll be welcoming parties.

SIMON WATTS: There probably will be welcoming parties, I say to the Hon Scott Simpson. I wonder if they will spend around $40,000 on welcoming parties for each of them, because that would be another $400k that would go on top of that as well. Maybe the Minister could give us a little bit of an answer on whether he’s going to rule that out and say that there won’t be any welcoming parties for these 10 CEOs when they assume their positions.

Of course, the legislation doesn’t kick in until mid-2026. Just for the record, we’re in 2023 right now, so that’s a little way into the future. But, interestingly, these CEOs are already on those salaries, and they haven’t even started. They don’t start work for three years, but they’re already getting paid that accrual as money. So, again, can the Minister articulate whether that is value for money?

The last aspect is, in retrospect, in regards to all the challenges that local government faces across this country—the workforce shortages, the critical pressure that our local communities and local government are under—is it still appropriate that the Government is pushing through such wide-scale reform and ripping the heart out of local government by confiscating their assets and putting them into undemocratically elected entities? I ask whether that is still appropriate or, actually, should we just restore local ownership and control of water assets and ensure that our local communities are empowered to do what they should do in regards to three waters?

Thank you, Mr Chair. Questions for the Minister: will the forecast establishment cost for the three waters entities, projected to increase from $2 billion to $3 billion now, deliver any additional waste water, stormwater or drinking water infrastructure? If not, what value, if any, will taxpayers and ratepayers get for the additional billion dollars that this Government now proposes to spend on three waters reforms? Minister, please note that one down in your notebook.

Secondly, has the Minister asked the Department of Internal Affairs (DIA) to identify where any savings might be made to reduce the $3 billion cost that is going to land on taxpayers, ratepayers, or water users just for setting up these entities, and, if so, if you ask the DIA for savings, what savings did they offer? Another question: how is it acceptable that the Department of Internal Affairs continues to pay between $602,500 and $815,500—the salary banding that applies to the three civil servants hired by the DIA as chief executives of the three water entities—even though those water entities are disestablished by the Water Services Entities Amendment Bill, which is on the order paper today, meaning they’ll be disestablished today or tomorrow at the latest. How is it acceptable that the DIA intends to continue paying them?—which was your response to my written question. Are there any other Civil Service chief executives who continue to be paid for a role that no longer exists?

It’s not just the ACT Party that wants to know; every single taxpayer in New Zealand wants to know. How is it acceptable that the Department of Internal Affairs hired recruitment consultants at a cost of $500,000 to recruit these CEOs—four CEOs for four water service entities, three of whom whose roles will soon be redundant. Half a million bucks to recruit them, and will the department ask the recruiters to help find them another job when they’re made redundant by the Water Services Entities Amendment Bill when it passes today or tomorrow? Will these same recruiters be asked to help shuffle these people along?

A final question from the ACT Party on behalf of all of the consumers and taxpayers in New Zealand: has the Department of Internal Affairs ever ended the employment of any staff as a result of their roles becoming redundant and, if so, will the department act to save taxpayers money by terminating the three chief executives who’ve been hired for three water service entities which won’t exist after today or tomorrow when the Water Services Entities Amendment Bill is passed? The Government’s going to disestablish their roles; will the DIA make them redundant, and if not, Minister, why not?

Thank you very much, Mr Chair. I appreciate the opportunity to contribute to the discussion about local government and I’d like to do so in a number of different areas. But perhaps starting with its relationship to the cyclone recovery, I acknowledge that there is a separate Minister for Cyclone Recovery, but the matters that I’d like to raise with the Minister relate to that very important relationship between central and local government.

Noticing that the Government—by which I mean central government—has touted a locally led, centrally supported recovery, and of course noting that the Minister himself also has a particular role as a ministerial lead within a particular region—and I reiterate, for the committee, that National will be supportive of any efforts that the Government makes that we think are positive changes for those who have been displaced by Cyclone Gabrielle—I note that the six-month mark from the time of that disaster has recently passed and I acknowledge all those who have found themselves in difficult circumstances, and indeed those who lost their life in some cases and certainly were endangered and lost much property and personal possessions that are dear to them, and so forth, in the events of 14 February and around that time.

My questions for the Minister will revolve around seeking to understand from him—and I acknowledge he has limited time available to deliver a response, but the question is whether the model of a locally led and centrally supported response or recovery has been effective. It has been effective, it seems to me, in some ways, but in other ways not so much. And while at the theoretical level we in the National Party agree that local input is hugely important, indeed vital, nevertheless it is the case that central support must be provided in order for that to be delivered meaningfully. And I think it’s fair to say that in certain key respects we haven’t had meaningful delivery.

Certainly, visiting Muriwai within my own electorate of Kaipara ki Mahurangi yesterday morning, I was taken to view a number of badly damaged homes. In fact, it’s probably an exaggeration now to call them homes, except that’s where the lives were being made of these people who have been displaced. They are certainly not habitable now. In some cases there were large trees and mudslides through them; the cliff had come down on that fateful night. It’s obvious to anyone with a civil engineering degree, or not—and certainly I’m no expert in these matters from a technical perspective—to see that these houses are not habitable now, in some cases. I’m not referring to all, obviously, but the ones that are not are very obviously not, and those should have been designated for the buy-out regime much sooner than the six-month mark; they still don’t have that. So I put it to the Minister that the locally led, centrally supported notion was a valuable one and a worthwhile one but it’s only been as successful as the extent to which central support has been provided; in too many ways it has not.

One of the problems that we’ve seen in the relationship between Wellington and these respective local governments is that the mayors and the councillors, and indeed even those who live within these regions, appear reticent to criticise or to ask for more, even from the Government, because to do so would be to bite the hand that feeds them. They are crucially dependent on the largesse of the Beehive. Noting the disparity between ratepayer versus taxpayer bases, you know, the large scale of assets at play and differing revenue streams mean that, actually, there’s a power imbalance between local and central government. Now, that’s historic. That’s not something that’s occurred only recently in relation to cyclone recovery. It’s been the case for many years; it’s not a particular thing that’s arisen over the course of the last two terms, for example.

I don’t make any political partisan point in relation to that, but I do point it out because it’s relevant background to understanding that, because local government is so dependent on central government playing a part in a situation such as this, we do need to acknowledge the assistance that local government needs, the support, indeed, that it needs in order to achieve things in relation to cyclone recovery.

The cost-sharing arrangements that the Government announced it would reach with local councils in affected areas is a major topic of contention and, if I’m allowed additional time, Mr Chair, then I’ll point out that it is only in the case of one region, namely Hawke’s Bay area councils, that a cost-sharing arrangement has been agreed. So Wellington is yet to reach equivalent agreements with others. My current understanding—and if there’s an update in this then I’ll thank the Minister; I’ll be grateful to hear from him that others have been concluded—is that while we have heard for some time now that it is close to hearing an agreement between itself and the Tairāwhiti region, nevertheless such an arrangement has not yet been made. Likewise with Auckland Council jurisdiction with large areas of West Auckland and the north-west that remain totally in limbo in the absence of a cost-sharing agreement.

Also lacking, for the benefit of the Minister, is an understanding—whether from local government or central government or between them—as to when buy-outs of irreparably damaged homes, category three homes, as we say, will actually take place. We’ve heard good intentions in this regard from the Minister and we support those intentions, but unless and until those become reality, that’s not much consolation to those who have been displaced. We don’t know when we will know, we don’t know when the buy-outs will take effect. I think it’s a reasonable hope and expectation that these might take place before Christmas. There’s an emotional attachment, I suppose, and an impetus for people to feel as though by Christmas-time—that special time of the year, in many ways—people will know better what life will lie ahead for them in the following year. But, nevertheless, they don’t now and we face the prospect of, regardless of who is in Government following mid-October and regardless of the shape of that, that whoever is responsible for implementing such a buy-out regime will be left with too little time to achieve that before Christmas and that would be a real shame.

To think that the country’s Civil Service, and private sector too, for that matter, will close down for a month or so as is customary over the summer break, and what a fine tradition it is too, nevertheless, that will be bittersweet for those who have more time cooling their heels outside the suburb in which they have lived, outside the communities in which they have connections, and without the emotional and financial certainty of their situation.

And an example of the problem is that there are people who are living away from their homes at the moment, they’ve been displaced, they’ve entered into rental agreements for a certain period of time because at the point that they were displaced they’ve tried to find anywhere that they can to keep a roof over their head. They don’t know how long to enter into those—they don’t know how much of a renewal they should seek. They’re in precarious financial circumstances. Now, I will acknowledge—and I give credit to the Government for this—recently there was an announcement that there would be some accommodation support that would allow those who are in that situation to gain some support from central government. So again, just to emphasise, we welcome that as far as it goes. However, the bigger picture is that people need the certainty of what’s happening with their situation more substantively so that they’re not relying on the Government to prop them up on a temporary basis month by month, or six month by six month, or year by year in the case of tenancy agreements.

While we’re talking about it, it’s also the case that the scheme took some weeks to come into effect. So for people who were left in that limbo, who were really already struggling and didn’t have good circumstances in terms of their living situation, they had to actually wait for quite some time until they could be eligible for that. And even then there were all kinds of complications that have been the result of central government rules as to be applied either through central government departments or in conjunction with local government. And one of them, it seems to be, and we’re trying to unpick this puzzle now, is actually that it appears that if you own your home—your family home—in a trust, that you won’t actually be eligible to gain such accommodation assistance. That seems to be extraordinary because there are many reasons that a person might own a home in a trust. For example, to protect against creditors relevant to a professional situation. It might be some legitimate family reason that’s not for avoiding or, let alone, evading tax, and yet these people are disqualified and that seems to me quite wrong. It’s a theme I might be able to pick up in a future contribution.

Thank you. I’ve been taking notes throughout, so I’ll run through them. To Mr Watts’ first question. There were two parts; neither are relevant to the Estimates. To the second question: it’s an estimate only and isn’t appropriated for within the estimates. To the third question: yes. To the fourth question: yes. To the fifth question: CEO roles will be sized appropriately to the size and scale of the entity. And to the sixth question: yes, and the reason I say that is because the Government can and has always been able to demonstrate that our plan will save ratepayers’ money. The member’s party’s plan, such that it is, cannot.

To Simon Court’s question, the first one: yes. The second one: the increase is offset by the removal of tranche two of the Better Off funding, $1 billion of which was due to be funded by the entities. The third and fourth questions are not actually a matter for the Estimates.

In regards to Mr Penk’s questions, I have a lot of sympathy for those questions and genuinely would like to engage in that discussion. However, I’m in a difficult spot where, in so far as I’m Minister of Local Government, my responsibility doesn’t go that far. I’ve gone through the Estimates documents and looked at it. Definitely there’s funding that’s come through these Estimates around the seven regional recovery organisations across all the affected regions, including those that he’s mentioned, and of course funding for local government around support for flood mitigation etc.

It is true that I am the Minister responsible for the recovery in Hawke’s Bay, the Tararua district, and the Wairarapa, but in so far—and I would love to have that yarn, but I’m limited in this debate. But I would say that I acknowledge the concerns that the member’s raised. They are concerns that I share also as the Minister responsible for Hawke’s Bay, which is the most affected but also the most advanced. It has been an incredibly complex process, but I do want to acknowledge the five councils in Hawke’s Bay for showing the leadership that they have and for getting to the point that they have at this point.

Thank you, Mr Chair, and I hope these questions do relate to the Estimates. There’s a budget of $605 million for the Minister of Local Government, and there’s quite a chunk of money across various appropriations that are for the water services reform. There were a number of questions that the Governance and Administration Committee asked of the department, including some of the risks around key deliverables for the whole reform programme over the next 12 months. The response was that, yes, the costs of transition—such as key personnel and establishment boards—would be covered, and the like. But one of the answers said that there was no intention to undertake a performance assessment prior to the completion of the project, the reform programme; there would be a post-implementation review.

Given the large amount of money in Vote Internal Affairs, and the local government portion of that that is going to the reform, why isn’t there a performance assessment being done prior to the completion? What assurance can the Minister give that there is appropriate scrutiny of expenditure? And are the questions that have been posed by the National member about the cost of the ICT system and the system of record correct or not? Because questions that were asked to the department about providing an update on the systems and record implementation business case and when it was expected to be presented to the Minister weren’t answered with any level of detail. The department is apparently working through a revised work programme, but that ICT system will be expensive. So when does the Minister expect to receive it and how much is it likely to cost out of the Minister’s Vote?

I thank the member for her question. The response she received is obviously directly from the department. I will follow up, personally, and get an answer to her directly.

Thank you very much, Minister, for those responses. Just following on from my colleague, Chris Penk, in regards to the implications of categorisation of some of the homes in my local electorate of the North Shore—and particularly Milford, located on the back of the Milford stream, which was one of the significant outflows following the Auckland floods.

The responsibility for categorisation of the impacted homes is on local government—in particular Auckland Council—and yet some six months on, my community and many communities surrounding that are still waiting for that categorisation process to be completed. That obviously has a significant implication in regards to the pressure that falls upon those families and individuals that continue to live with their properties backing on to that stream, and the continuing concerns around a large number of individuals: I think about the Parklane retirement home that is in Sunnynook and Forrest Hill areas of my community of which nearly 40 homes within that—and this is a retirement village—those homes are completely uninhabitable and the residents are still not able to go into their homes nearly six months later. Yet, the responsibility around categorisation does fall upon local government. The irony here is that when we’ve got a funding model—and acknowledging that the Auckland funding model isn’t public, but if you use the precedent of the agreement of 50:50 funding that has been reached in other jurisdictions outside of Auckland, then when council has responsibility to actually categorise and the categorisation leads to a fiscal consequence on them as a council, surely you can see the logic that there is a conflict of interest in regards to that decision-making process, that adversely will impact residents within the local community.

So as Minister of Local Government, I am seeking clarity and assurance around why this process is taking so long. Christchurch took about 120 days for that categorisation process to be undertaken, on a scale which was significant, and acknowledging this is broad, but the number of homes is known—the number and the location of those—and yet we have not seen any significant tangible progress on that, nor, actually, clarity in regards to a timeline of when that will occur. So acknowledging the current state is people still don’t know the answer, they don’t even have the certainty of when that question will be answered, and that obviously is completely unacceptable, and many of those within my community continue to worry about when the next heavy rain will come, because no tangible feedback has been received from local government in regards to the lessons learnt from that flood.

What did the reviews find as a result of what caused the implications, and as a result of the findings of those reviews by local government? What actions, if any, have been taken to mitigate this from happening again? Those are all questions, six months on, that remain unanswered, and I do see it as the role of the Minister of Local Government to be ensuring that we have got a process of transparency in that regard, and I’ll be interested in the Minister’s comments in regards to that.

I want to go back to the three waters legislation. I note that the Minister said that my question around consultancy expenditure was out of scope; well, I challenge that. I do see that during the period in which we are discussing today there is a large number of consultancy expenditure that has been incurred within the period; to say that that is not relevant is an interesting opinion, but not one that I share. The questions I have in regards to the aspects of the three waters legislation are around the Te Mana o te Wai statements, and this is a principle that has been in place for a long time. The Minister has been on record to say that actually the Te Mana o te Wai statements—which is a new construct under the water services legislation which basically provides requirements for the regional representative groups that must take into account feedback within those statements—still remains. And while the community priority statements have been brought into play in regards to mitigating some of this issue, the community priority statements have been embedded to potentially provide another basis for other stakeholders to input into that process. The consideration around those priority statements is that they “may” be considered versus “must”, and there is obviously a key point of difference there. And I’m interested in the Minister’s comments in regards to the difference between the Mana o te Wai principle, and then the subsequent construct of the Te Mana o te Wai statement, which did not exist prior to this Government’s three waters legislation, and it is the basis of a large amount of question and concern by members of this community.

I’m also interested in the Minister providing comment in regards to when the Hon Nanaia Mahuta, the prior Minister of Local Government, called that the three waters reform was an arrangement that was “co-governance”, and then subsequently, the Prime Minister Chris Hipkins was quoted as saying “co-governance” never existed in any of Labour’s three waters reform. Well, there’s a slight conflict around views there. I’m interested in whether the Minister stands by the Prime Minister in regards to saying “co-governance” never existed in Labour’s three waters reforms, or the Hon Nanaia Mahuta, who was very clear that those labels were “co-governance”. And let’s just remind those considering around that: the regional representative groups still have a dedicated number of seats within those governance entities, or those entities that are dedicated only for iwi Māori, and a number of seats that are only allocated to territorial authorities—and actually, an equal weighting, and that’s why it’s referred to as “50:50 co-governance”, so I’m interested in what the Minister’s comments—

CHAIRPERSON (Greg O’Connor): Mr Watts, you will show us the context of this.

Minister, you made the statement, in response to my question, that the $1 billion in additional costs for the three waters transition won’t be borne by taxpayers or ratepayers or the entities because it’s been offset by the Government cancelling the billion or more in Better Off funding that it offered to councils in recognition of all the additional costs they’re going to face as a result of this transition; in particular, the costs in back office, retaining staff, overheads, Minister—not to mention the fact that many councils like Whangārei District Council, for example, their water assets and revenues are cash-flow positive, Minister, which means that by taking their assets off them and the revenues they’re going to be worse off. So, Minister, the Better Off funding is still needed by councils even though this Government has withdrawn it. So, Minister, is there any opportunity in the provisions made in this year’s Estimates to recompense those councils who are having their assets taken off them without compensation—expropriated—who will suffer these additional costs that the Better Off funding was supposed to compensate them for? Minister, is there anything in these Estimates, in this provision, which will compensate them?

Second question, Minister, in your role, being responsible for local government, for councils such as Wellington City Council—Wellington City Council is going ahead with the Golden Mile improvements project, which is nothing more than a mass demolition of Lambton Quay that’s going to last for two or three years in terms of construction and all of the other impacts that will have on businesses. Now, the project aims to remove Ubers, private cars, taxis from Lambton Quay, spend $140 million of ratepayer and taxpayer money—probably more, because you can’t trust a cost estimate delivered by this Government—and the overwhelming majority of Wellington businesses, retailers, property owners, delivery drivers, taxi drivers, Uber drivers, anyone who has to access the Golden Mile is opposed to this project, Minister. So does the Minister have confidence in Wellington City Council delivering and proceeding with this project with no backing from those affected, and, if so, why? Thank you.

Point of order. Thank you, Mr Chair. It might be useful to the previous two members to point out that this is an Estimates debate. And so when I respond and say that questions were out of scope and not relevant to the Estimates—

CHAIRPERSON (Greg O’Connor): That’s not a point of order. The Minister can answer the question and point that out in his answer. Other than that, it will be for the Chair to decide what is relevant.

Hon KIERAN McANULTY: Fair enough, Mr Chair. However, I do have one point I wish—

CHAIRPERSON (Greg O’Connor): The Minister’s not answering the Chair. The point of order is over. The Minister can now answer the question or sit down.

Hon KIERAN McANULTY: OK, sure enough. So in the limited time that I have, any question that is asked that refers to costs that have gone previously or matters that are outside of the Estimates document are out of scope; similarly, this is not a committee of the whole House stage—so any question around Te Mana o te Wai statements, etc.

The other point that I wish to make is like the comment I said to Mr Penk: I would dearly like to have a discussion around the cyclone recovery. This is a matter that is very important to me. However, whilst the matter might be relevant to the local government sector, it is not relevant to this portfolio nor the Estimates debate.

Thank you very much, Mr Chair. Just going back to the Minister’s previous response of a few minutes ago, I was heartened by his willingness to have a conversation about these matters, in relation to cyclone recovery. I look forward to taking him up on his offer to have a yarn—as he would have it. So we’ll arrange that offline; I don’t need to take the committee’s time to ask him to open his diary and see how 3.30 next Friday might be. But, in principle, I’m very pleased to have that offer and I look forward to doing that.

I think the point in relation to cyclone recovery—and I hear the Minister’s point that that portfolio is not in direct alignment with the local government one, but I do think, nevertheless, in an Estimates hearing, the points I’m about to make, Mr Chair, you will regard as reasonable for this context, which is to talk about what’s set out in the Estimates and in Budget and annual review documents and all those ones that are relevant to the funding of the sector. Because the demands on the sector are as set out, in the first instance, in the Local Government Act and various other items on the statute book, and, for now, at least, the Resource Management Act and soon-to-be, albeit temporarily, Spatial Planning Act and the other one, Natural and Built Environment Act. But also there are miscellaneous and occasional and irregular demands that are put on the sector, and it’s reasonable to ask, in this context, how the Government of the day, and local government more particularly, will respond to these challenges, including by way of resourcing, and so on.

So, if I can use an example, in the Tiniroto community on the East Coast, there’s a Bluff road that has been closed; the bypass one—Parikanapa Road—is, effectively, a bypass. Now, by the way, I’m not asking the Minister to be an expert on these particulars. That wouldn’t be fair, wouldn’t be reasonable, and I’m not about to ask a question particularly on the matter. But just to point out to the committee, more generally, that these demands on local government are a good illustration of the demands that are on councils and territorial authorities, whereby if there is a small ratepayer base but a large geographical area or a large problem in infrastructure terms that needs to be addressed, then that’s an issue that needs to be taken into account by central government in determining what level of support is needed. That’s an issue, incidentally, on which I would be grateful to meet with the Minister, if he has time, and, certainly, that community has reached out, hoping to be able to meet with a Minister—and, in fact, your name specifically was mentioned, Mr McAnulty. So, again, not to put you on the spot in terms of making that particular arrangement now, but just to flag these are the kinds of demands that the local government sector is facing. There’s the business as usual—and there’s the business very much not as usual, in response to events such as Cyclone Gabrielle, of course.

I have some unrelated questions and comments to make, which, perhaps for the sake of neatness, I should seek in a separate call. But I’d be remiss if I didn’t add in to this contribution that we have good people involved in local government. We have elected representatives up and down this country who work hard, who represent their communities. Some of their decisions that I’m aware of, whether it’s my own patch or elsewhere, I’d agree with; others, not so. But these are people who put themselves forward to serve their community and they deserve our commendation for that. They’re part of a democratic process through local government elections—and, as recently as last year, of course, that was their fate to go through, and they were putting up billboards, and we were not; 12 months later, of course, it’s our time—those of us in central government. But in a way we are engaged in the same act of, we hope, representation in public service. So I think it’s worth acknowledging that. And, again, just to use, by way of example, the Cyclone Gabrielle recovery context, there are people who have been very deeply affected in their own households or businesses, nevertheless, trying to deliver the goods and services and the leadership that their local communities need. Where central government can support them to do that, recognising the difficulty of their circumstances, that’s a positive thing.

So, again, I would encourage the Government to do everything in its power to provide that support, noting the circumstances, noting the good intentions but sometimes more limited resources in terms of staffing, expert knowledge, ability to communicate, and so forth. So I’ll conclude my remarks on the local government point, as it relates to Cyclone Gabrielle, there, and if no other—the Minister or other—wish to take a call, I’ll pop up and perhaps make some other local government - related remarks.

I thank the member for those comments. He might remember back when the Auckland floods first hit, that I contacted him directly and invited him to stay in touch with me and work as a conduit between his caucus and me and my office to try and give him the information that he needed. I would extend that again. If he needs to have a yarn specifically around where it’s relevant to my portfolios, I invite him to do that.

I certainly recognise the issues that he’s raised: that councils are constrained financially and that’s having an impact on them to do their day-to-day activities—in particular, roads. I think of the Tararua District Council in my electorate; it has 12,000 ratepayers, the fourth-largest roading network in the country. They simply are struggling to afford to do that, which is why the Government has assisted them with an increased allocation through the emergency works budget.

I would point to the fact that water services reform will remove a significant amount of debt from councils’ balance sheets—a debt that they are, in some instances, struggling to cover now. Some councils are already at their debt cap; other councils simply cannot increase rates, because their communities can’t afford it. They will be assisted greatly by the removal of that debt cap. That is also a major feature of the review into the future of local government. The member may remember or recognise that I have invited Local Government New Zealand to work with the sector and figure out what they want from that; what the solutions are, in their view, to deal with the funding problems, and then come back after the election and we’ll work through it together.

Minister, in response to the question I put to you about whether the Department of Internal Affairs (DIA) will continue to pay three soon-to-be-redundant chief executives hired by the DIA’s national transition unit on three waters—they’ll be redundant today or tomorrow by the very legislation you’re sponsoring, Minister. You said that’s “out of scope” for the Estimates debate. Those salaries are funded out of these Estimates, paid by the DIA through the national transition unit to these three individuals. Minister, it’s clearly in scope. Will you instruct the DIA to make them redundant and stop paying them when the roles are redundant or do you support the DIA keeping those individuals on, paying their salaries out of this year’s Estimates for appropriations so that you can do what with them, Minister?

The member is incorrect. One CEO will continue because one of the entities in which the CEO has been hired has not changed and will continue to go live in July 2024. So that person continues in that role. Outside of that, there is a change process under way. If they wish to continue to assist with the establishment, then they’ll have that opportunity.

Thank you very much. As the Minister outlined in his reply to one of the questions, the reference there to the future of local government review, my question is in regards to that review, which was undertaken during the period in which we are reviewing this afternoon: why has that subsequently been thrown to another, in effect, review committee to work out what needs to be done and, in effect, kicked for touch to April—give or take—of next year when, actually, a large number of the issues within the local government sector are well known and 90 percent of the issues primarily relate to funding, finance, and the financial sustainability of that sector? So why is the Minister choosing to continue to kick that issue down the road and not take some accountability in regards to being clear and concise around how the Government is planning to deal with the financial sustainability issues that the local government sector is facing?

Also in regards to that future of local government review, there were a wide-ranging number of recommendations, many of which, in our view, are not necessarily relevant or make the boat go faster in regards to making the local government sector high quality nor financially sustainable. I’d be interested in the Minister’s view around what aspects of that review he does not support, to save a little bit of time and effort by those individuals from further considering those points and coming up with further recommendations which will not be implemented by any Government in the future.

The member might be happy to pick and choose which ones he and his party support and then go to the sector and say, “This is what we think; what do you think?” We’re not going to take that approach. We’ve said to the sector “Here’s an opportunity.” We don’t want to repeat the mistakes of the past and numerous reviews over successive Governments that have taken the approach that he’s proposing. We’ve said, “Sit down together, try to find a consensus view on the recommendations.”—a view that takes into account rural, metro, provincial, and regional/unitary authorities, and how it worked for them. Then, after the election, I have invited them to sit down and we will work through it together. That has had a really positive response and I stand by that. If we’re going to find a solution that works for the sector, we’ve got to work alongside them, and as long as I’m Minister, that’ll be my commitment to them.

One of the major issues facing the local government sector, in addition to the issues around financial sustainability, funding, and finance, relate to workforce. From the Minister, I’m interested in what plans or actions the Minister has considered, or is the Minister considering, in regards to providing relief to the local government sector in terms of the significant workforce challenges that that sector has been under, under the review in which we are undertaking during that period, and continues to be impacted by. In particular, a number of examples in regards to workforce vacancies which are related to the appropriation and the fact that the local government sector has the inability to fill those vacancies because a number of those technical experts have, in effect, been—and I’m using some language from a number of those within the local government sector—“poached” by central government agencies on salaries sometimes 30 to 40 percent higher for the same or similar role within local government.

So I’m interested in regards to aspects around, particularly, retention of those individuals within the sector and what the Minister is planning to do in order to provide a degree of certainty for those individuals who obviously undertake significantly important roles across our local government sector and, in effect, provide a number of solutions and options and value for our local communities. And I think that was highlighted again by the response of our local government sector during the period of the natural disasters that we faced earlier this year.

It is without doubt that, without the support of, and the role of, and the actions by members of our local government sector, we would not have seen our communities be able to respond nor our communities be able to rebuild from the implications of what has occurred in that regard. But the reality is that a number of people within the local government sector, because of those significant workforce shortages and issues around changing reform policy, means that they are leaving the sector, and yet we don’t seem to have a clear plan in regards to the workforce and the keeping and the building of capability and competence within that sector, which is a critical sector for our community.

So I’m interested in the Minister’s views around that and what specific actions, if any, have been undertaken in regards to mitigate that risk.

In so far as that is relevant to the Estimates, I will give an example that will assist councils considerably and that is water reform, because what the Government is doing will remove a significant amount of debt from council’s books, debts that they are currently having to service; that is a significant financial burden on local communities. The member’s party has put forward a proposal that will not remove debt from their books and they will continue to have to service that individually at rates that will ultimately become unaffordable for ratepayers.

Thank you, Mr Chair. In the dying stages of this excellent discussion on local government with the Minister in the chair—

Simon Court: And this Government.

CHRIS PENK: Oh, the Government—the dying days of the Government too, Simon Court points out. Well, I’m sure he’s not far wrong there. We’ve got nearly three weeks to go—sitting weeks—or two weeks to go, plus a bit as colleagues in my office misleadingly put up every time.

So, I do want to make a bit of a local pitch in relation to the local representation arrangements in my electorate, and, again, not to put the Minister on the spot to be OK with the particular aspects that I’m going to talk about, but it is an opportunity to put on record some concerns of the community that have been expressed to me—

CHAIRPERSON (Greg O’Connor): In so far as they refer to the appropriations, Mr Penk—

CHRIS PENK: Absolutely, and so far as they refer back to—

CHAIRPERSON (Greg O’Connor): Which you will refer back to constantly.

CHRIS PENK: Absolutely, absolutely. I’ll refer constantly back to the appropriations, Mr Chair, and I appreciate your guidance on that point. Although can I just say, and I know I’m straying to dangerous territory, but you’ll indulge me, I hope, these points have been made to me, but also the Labour list MP based in the area, namely Marja Lubeck. I do want to acknowledge, ahead of her valedictory statement which will be made in just over an hour, in fact, that that’s an aspect on which we’ve been working together closely, with local advocates, and I’ve enjoyed doing so—

CHAIRPERSON (Greg O’Connor): That still doesn’t lead it into the appropriations.

CHRIS PENK: No, no, but if I were to say how that relates to the appropriations, I probably wouldn’t have much to say. So I will actually just get on firmer ground and say that, while the appropriations for local government for the relevant year, whichever that may be, relate to various ways of local government operating, of course it’s important that it operates as efficiently as possible and revenue streams are relatively limited, because, of course, we’ve got a particular system that’s enabled under the legislation and the rating thereof. The point that relates very clearly to the appropriations in relation to my electorate is that the more rural areas sometimes feel underrepresented because they’re part of a larger whole, whereby the old Rodney district, for example, which existed in its own terms, is now part of the Auckland Council—the so-called super-city—despite the fact that this area is very much not a city. It’s very rural in character and nature, and the plea from locals who meet with me, they say, “Chris, for goodness’ sakes next time you’re in the House and discussing the appropriations of the local government sector in an Estimates kind of way, can you please raise this?” And I say, “Well that would be very relevant, so I’ll be happy to do so”.

CHAIRPERSON (Greg O’Connor): Well, you could go back to them and say you have local issues time to do that.

CHRIS PENK: We have local issues time as well, that’s right, Mr Chair. I think you’re giving a very good contribution, if I may say; it’s almost as good as my own. But look, I do just want to make that point that that’s part of the bigger conversation about what’s important to local government: the efficiency, the revenue that’s obtained by rates, and the fairness of the representation there on. So with that, I welcome any response that the Minister may have to that in the remaining time.

Thank you very much, Mr Chair. It’s an absolute pleasure. I wanted to go further into a couple of aspects. It’s interesting in regards to this appropriation that the Minister refers to the reforms and the fact that the three waters reform programme will take the debt off council balance sheets. But what the Minister has not clearly articulated is: where does that debt go? Because the reality is that there isn’t any magic money tree that exists. And while the debt may be taken off the council’s balance sheet, that does not mean the debt does not exist in the context of the broader economy. While it may, under the Government’s proposed model, sit within a water services entity, at the end of the day the ratepayer or the taxpayer will still need to contribute in order to fund that debt profile. So I think it’s interesting to sort of make that point, but I don’t think it holds any water, to use the point in regards to the fact that actually there is no magic money tree for this debt.

What is clear, in regards to the estimated $3 billion of establishment costs—these are costs that have been outlined across the period, and a large portion of those costs have already been included within this appropriation—is that those will not actually derive one single metre of additional water pipe going into the ground; actually quite the opposite. The majority of that expenditure, to date, has been spent on what is a Conga line of consultants, a gravy train of consultants, and contractors by this Government to implement a reform programme which was strongly opposed by the majority of local government and the majority of Kiwis.

So I’m interested in the Minister’s comments in regards to: does he stand by the fact that the expenditure within the appropriation is value for money and is actually going to derive benefits? And while the debt will be taken off councils’ balance sheets, who actually is going to be funding that debt? Who is this magic population that isn’t the ratepayer or the taxpayer? Or is it actually the ratepayer or the taxpayer? Because I think most Kiwis are pretty sensible and they can see through that, that no matter how you dress up this issue, the fact is that someone is going to have to pay and, at the end of the day, that person will be members of our community.

So those are the two points, Mr Chair, that I wanted to add and to thank the Minister for his contribution.

Justice