Local Government (Rates Capping) Amendment Bill

I think I was desperately trying to avoid being called because I knew that it wasn’t enough time, and I think the Speaker was trying to avoid that as well. So I rise on behalf of New Zealand First to speak on this long-signalled legislation. It’s great that we finally got to this point. I would say that it could have been part of the Local Government (System Improvements) Amendment Bill—put the two of them together because they do actually talk to each other, and it’s rather odd that this one is being sent to a different select committee than considered the Local Government (System Improvements) Amendment Bill. So I just make that point there.

Rates are compulsory. They’re unavoidable for people who own property. With that compulsion should come some responsibility for councils to spend that money wisely. And most councils, or many councils, are very, very good. They’re very careful. They’re very conscious that the money that they acquire, they take compulsorily. But some are not—in fact, too many are not. The overall average rates increase in the last three years, the 2022 to 2025 triennium, it was 34 percent. That is unsustainable. It is unaffordable for ratepayers.

Now, I noted that the Opposition, in speaking to this, already have talked about the potential for user charges to go up. That’s possible. That may well happen, but those things are avoidable. People can choose not to go to the pool. They can choose not to use some of those kind of services. Rates are not. And it is notable that when you think about some of the comments made by the media and some of the political parties, particularly on the Opposition side, they seem to have no idea of the costs of owning property. It’s not just rates and insurance and maintenance, but also the financing costs as well. Those are very, very substantial costs. And some of the Opposition parties’ policies of course, will make that even more eye-wateringly expensive.

Now, councils often say that we need to do these things—we have to invest in these things. But what some of them fail to acknowledge is that also many of their ratepayers need that money. It might be to pay for food, for power, for clothing, for managing and looking after their own properties as well. So they’ve got to be responsible here.

When we discuss rates capping—I discuss rates capping quite often with councils—they often start with saying “Actually, we need more income” from various different sources. I’ve got some sympathy with some of the sources that they suggest. But first and foremost, I will always say to them, councils need to get their own houses in order. They need to demonstrate that they have got optimal value for money, and there is plenty of opportunity to do that. There is quite a lot of fat in the system. They need to expose the overheads of organisations; that’s something I always tried to do that was very frustrating. They need to give councillors more power over the executive. We’ve already had the mention of Saint Stuart of the legislation who’s going to tackle that imbalance between chief executives and councillors. And of course, removing the regional councils will save an increasingly large amount of money, although the timing is that much of that will happen before 2029.

Tangi Utikere, speaking for the Labour Party, said that the savings are going to be a mere $34 a year. There is one slight problem with that. It’s cumulative, $34 each time. And as the regulatory impact statement says, that means that over seven years the savings will be estimated at $938, or an average saving of 134—not $34 but $134. But because it’s cumulative, the power of cumulative, if you go to 10 years, then you would add another $918—almost double in the next three years—the saving then is $186. And it’s going to keep on growing faster and faster and faster. As the ever-helpful New Zealand Taxpayers’ Union have said that calculation is done on the basis of a rates increase of 4.88 percent—4.88 percent being brought back to 4 percent.

Now of course, that is nowhere near the kind of increases that we’ve seen over the last few years. We’ve already heard, as the Minister said in introducing this, 14 percent and 9 percent in the last two years. So the savings will be much, much higher. Certainly, that $34, you can get rid of that. That will not be the kind of savings that will be delivered.

The final thing, though, that I did want to say is that the biggest issue here that councils raised, and I think this is a fair one, is the issue of the way that core services are treated. They need to know that they can get enough money to pay for and to look after those assets, and they’ve been given beans for the way in which assets have been managed. This is a major issue and I question whether in fact we need to separate the core services, the maintenance of those from the other kind of activities that councils pursue. After all, we all stood up here and said glowingly that the New Zealand Infrastructure Commission has done a wonderful infrastructure plan, and a quarter of that was looking after assets—a quarter of that was looking after assets. This legislation potentially undermines that.

I would say also, if I look across at the Opposition benches, incomprehensible position that the Opposition has taken on the funding of our transport system, which again undermines—by giving them no money at all—the ability to maintain our roading system as well.

So this is a good bill, but there are some real issues with it and we will be looking at the submissions very, very carefully. We’re supporting it at the stage, but we do think there might need to be some changes as we go forward. I commend the bill to the House.

E te Māngai o te Whare. The Government wants people to believe that this bill is a solution to the cost of living crisis, but it is not. The Minister himself told RNZ just days ago that the average amount households would save is only about $34 a year—$34 per year. Yeah, that’s really going to solve the cost of living crisis—not.

I urge the Minister and his Government to be straight up with Aotearoa. This bill isn’t what they say it is. In fact, the debate isn’t even about affordability; it’s about authority. Who decides the future of the community? The people who live there or this place or Wellington? Many whānau would agree that rates are rising too fast; housing, kai, petrol, medical, and power already cost too much, but a rates cap doesn’t cap the cost of ageing pipes, road repairs, flood protection, insurance, construction, or even climate adaptation. Apparently, Wellington or this Government has discovered how to cap arithmetic and councils have not.

Tāmaki Makaurau Auckland Mayor Wayne Brown has warned vehemently that Auckland ratepayers could ultimately be worse off as our city carries the cost of storm recovery, damaged home buyouts, the City Rail Link, and ageing infrastructure. Greater Wellington warns that the cap could mean higher public transport fares, fewer services, and delayed flood protection and resilience work. Christchurch City Council made a formal submission warning of potential service cuts, higher debts, and more infrastructure underinvestment. Waikato Regional Council’s formal submission notes that a rates cap requires substantial refinement. It could lead to public transport reductions which would deepen inequity in access to mahi, to school, and to healthcare. That is what Waikato Regional Council has put in its submission. These councils aren’t arguing for a licence to waste money; they are asking the Government to acknowledge reality.

Local government gets around 10 percent of the national tax take, but is responsible for roughly one-third of public infrastructure investments. Yet the Government’s own estimated saving from this policy is just a measly $34 per household per year, but if it accumulates over 10 years, you might get $1,000 bucks. Not good enough in a cost of living crisis—$34 while councils are left choosing which road, which library, which pool, which bus or flood bank can wait.

The Auditor-General found that in 2022-2023 councils renewed only 76 cents of infrastructure for every $1 of assets wearing out. The answer to an infrastructure deficit isn’t another mechanism that encourages delay. Deferred costs don’t disappear, they grow. That matters, especially for Māori communities already carrying the consequences of historical underinvestment, inadequate roads and water systems, climate exposure, and smaller rating basis. Yet, where is the dedicated Māori impact framework? It’s not here. Where is the prediction for Treaty relationships and iwi and hapū partnerships? Where is the guarantee that Māori services will not be treated as discretionary and cut first? A rural district is not Tāmaki Makaurau Auckland. A flood damaged community isn’t a fast-growing city. A single national cap doesn’t create fairness; it ignores reality and overrides mana motuhake.

The Government says exemptions will be available, so councils must first prove to a Crown-appointed regulator that their community’s needs are legitimate—makes no sense. That, though, is local democracy with a permission slip from Wellington.

There is a better answer: withdraw this blunt cap and negotiate a durable local government funding accord. Central government must fund every new responsibility that it imposes, return a fair share of GST on rates to communities, pay rates on Crown land, provide long-term infrastructure and climate resilience—there are a lot of other solutions; a rates cap of 4 percent is not it—and build a specific Te Tiriti framework with iwi and hapū so that Māori priorities and partnerships are protected, not first in line to be cut. Give the ratepayers transparency and give councils discipline, but give communities—our communities—the power and the funding to solve the problems that are in front of them right now.

Te Pāti Māori will support genuine affordability, but we will not support manufactured savings today that become broken infrastructure and bigger bills tomorrow. This bill caps local choice; not local costs. We oppose it.

Thank you, Madam Speaker. I’m really pleased that Oriini Kaipara has said that, if it’s a good plan, she will actually support it. Well, this is, in fact, a good plan.

Local communities around the country have been paying far too much in rates. In the last two years, increases have been 14.2 percent and 9.2 percent. That is an astronomical increase. People are paying thousands and thousands of dollars in rates, and do you know what? When homeowners pay rates, even renters have to pay higher rents.

This bill will cap our rates to between 2 percent and 4 percent. I think it’s a great thing, and I commend the bill to the House.

Thank you, Madam Speaker. Thank you for the opportunity to be able to rise and speak on the Local Government (Rates Capping) Amendment Bill. We’ve heard from speakers beforehand, where we heard the Minister of Local Government and other speakers across the House speak on this bill and on why it’s important in this day and age, particularly with the cost of living being the number one issue across Aotearoa.

Labour will be supporting this bill to the select committee because we recognise the importance of the select committee being able to hear the public submissions of communities across Aotearoa and councils being able to speak and consult their communities to enable what the solutions are and what the legislation is trying to achieve. We’ve heard other speakers say that the most you will pay is probably 4 percent annually. What I want to emphasise is the importance of consultation, because communities across Aotearoa are grappling with the cost of living, and so the rates capping provides a set of tools and the legislation, but it needs to be emphasised that, whatever the changes are that are being proposed in the regulatory impact statement in the legislation in draft, it’s really important that households understand what this means in terms of local services for local government.

The local government councils across Aotearoa have to make really fundamental decisions that are going to affect their communities, and I want to emphasise that they are about local things like libraries, local parks, and local services in communities across Aotearoa. What is the impact that this legislation will have on councils in terms of their trying to achieve the financials of keeping those specific assets and services for local communities? The local communities rely on councils providing those services, and so there will definitely be decisions that are affected where services may be cut or reduced because they’re trying to stay within that financial envelope.

Labour is aware of additional funding streams that are available to local government, and we’re specifically open to rates caps in principle, but we do not accept that central government keeps handing local councils responsibilities but not providing the budget to pay for those extra services, and any workable cap must be matched by sustainable funding for those specific jobs or roles being passed down. The cap that will apply to councils is a wide average on people’s rates bills, but it doesn’t actually guarantee the service until the legislation has been through this House and approved by normal parliamentary processes. That’s really important.

I come back to consultation because any rates cap will have an effect on the local communities, and councils must use the financial instruments and explain clearly to the community what those effects will be, because, currently, there is quite a different approach for councils right across Aotearoa. Communities will be expected to read documentation, and they will be expected to understand what the policies and processes are. In the local South Auckland community, when there are public consultation documents, sometimes the language is not clear and sometimes the effects or the methods that are explained by elected members are not understood clearly, and so it is the hope that, whatever the consultation is that goes through the councils, the councils will then have the ability to put forward their submissions to the select committee.

Just as I finish up my time, I just wanted to pick up on the target range in terms of general rates, a uniform annual charge, and penalties on unpaid rates. Unpaid rates is a big thing in communities like South Auckland—particularly when you haven’t got the ability to pay your rates—and then you’ve got penalties on top of that. The enablement of being a compliant ratepayer will have an effect on the local community, and so it’s important that the examples of instruments in the legislation are explained clearly so that, when councils, through elected members and their officials, make those decisions in their submissions, it is clearly understood by the communities they represent. I commend this bill to the House.

Thank you, Madam Speaker. This bill is relatively simple. The problems we’re trying to solve are to promote local authority fiscal responsibility and, two, the predictability of costs to ratepayers. The main mechanism of action and the core solution is to establish a target range for annual rates increases between a maximum and a minimum. In saying that, I commend this bill to the House.

Kia ora, Madam Speaker, and thanks for the opportunity to contribute on this piece of legislation. As I listen to the debate and I think about our councils and where they sit, it is about localism and it is about them often being—I want to say “the eyes and ears”, but them being the voices of our communities and in speaking up and speaking out and needing good mechanisms to fund themselves to do the work they do of localism and of supporting local voices when it comes to communities.

I also think of local councils in terms of resiliency and emergency management. When a disaster strikes in a community, it is always the councils who have their teams and work alongside civil defence to stand up support, to stand up rescues, and to stand up resilience in terms of local communities. That’s why it is so important that we actually support local councils, and this legislation is a struggle, but it is something where we are going to look at what comes from the select committee process and from hearing submissions and gathering a better understanding of where things are at.

Just recently—just before the break—I was at a tourism summit, and I was on a panel discussing all things tourism, leading into the election. Jamie Arbuckle was also there—my colleague across the House here—and very much in that room was a bunch of RTOs, or regional tourism organisations. There are 31 in the country. Now, the majority of those RTOs are funded by local councils, and it’s a challenge because those RTOs often rise and fall at the whim of a local council when the councils are trying to balance their books or trying to figure out a way to pay for all the things that are required of them or that they want to do.

The problem is that, often, RTOs are seen as nice-to-haves. They’re seen as something that we can kind of cut the funding from if we don’t have quite enough to fulfil the next long-term plan, but, actually, they are part of the engine room of a local economy and a local community, because our tourism industry—particularly in some of our smaller regions—is about the income that tourism brings and it is also around the jobs that tourism brings, and so we need to find ways to better ensure that our councils are equipped and resourced and are able to gather the revenue they need.

So, even though this is a challenge in terms of this legislation, I think it is good for us to go and listen to councils and to go and listen to stakeholders, and to understand in the select committee process what it’s about. These things don’t just happen in isolation, which I often refer to when it comes to legislation.

In our discussion with the tourism sector, the four wellbeings came up, which have been doing a bit of a yo-yo in the last 25 years. They’ve been in, they’ve been out, they’ve been in, and are they out or about to come out again in terms of local government? That is around the economic, that is around the social, that is around the environmental, and that is around the cultural expectations of councils. Often it’s just this economic story, and I understand, because the cost of living is challenging and we don’t want rates to massively go up. More often than not, it’s the stories you hear of elderly pensioners or people who are actually at a stage in their life where they have a fixed income, but, of course, the rates bill comes in—it’s risen—and it’s a real challenge for them. We need to consider the fact of the wellbeings of our council and what their job is in relation to serving their communities.

I come back to resiliency and emergency management and support and that environmental piece around how they manage those situations. I think of the social space, in terms of creating vibrant communities, as my colleague just said, around libraries and museums, art galleries—places that seem like nice-to-haves, but actually they’re part of the fabric and wellbeing of a good community.

I spent a lot of time talking to councils in my previous life. I spent a short amount of time working for a council. I know that the funding isn’t flowing and the cash isn’t just sort of there and they’re being ridiculous with their rates. I understand that they have to find mechanisms and ways of paying for the wellbeing, to pay for resiliency, and to pay for all of the things that central government expects of them. This is a challenging piece of legislation. I support it so it can go to select committee so we can hear the full story when it comes to local council funding.

The ultimate wellbeing for a household is being able to afford to pay their rates, and when rates go up 23 percent for households, what do they have to show for it? I think a rates cap of 4 percent is a very welcome change. With that, I commend the bill to the House.

Motion agreed to.

Bill read a first time.

[The Green Party of Aotearoa subsequently indicated that, had a party vote on the first reading been held, it would have cast 15 votes opposed, Te Pāti Māori would have cast 4 votes opposed, Tākuta Ferris would have cast one vote opposed, and Mariameno Kapa-Kingi would have cast one vote opposed.]

Referral to Select Committee

DEPUTY SPEAKER: The question is, That the Local Government (Rates Capping) Amendment Bill be considered by the Finance and Expenditure Committee.

Motion agreed to.

Bill referred to the Finance and Expenditure Committee.

Disability Support Services Bill

Legislative Statement