Hon RODNEY HIDE (Minister of Local Government) : I move, That the Local Government Act 2002 Amendment Bill be now read a first time. I intend to move at the appropriate time that this bill be referred to the Local Government and Environment Committee. Local government delivers services vital to the lives of all New Zealanders. For many years, ratepayers have expressed concern about rate increases that have well outstripped inflation. The previous Government responded to those concerns by setting up a ministerial inquiry, the Local Government Rates Inquiry, and then ignoring its recommendations. This Government will not be following up its recommendations, either. That is because the objective of the inquiry was to “provide recommendations to the Government for enhancing rating and other funding mechanisms for local authorities”. The inquiry was not permitted to address the real problem, which is a failure by councils to control their spending.

Unlike in many countries, New Zealand local government enjoys a high degree of autonomy, and locally sourced funding from rates. The main restraint on local government activity in New Zealand is the exercise of local democracy: the control of council activity by ratepayers and electors. That control needs to be strengthened. When I was appointed the Minister of Local Government, I said that I considered myself the “Minister for Ratepayers”. This bill is a major step forward in fulfilling the commitment I made to make councils more accountable to their ratepayers. It requires that each council, first, have particular regard to the contribution that the core services specified in the bill make to their communities; second, develop a financial strategy containing quantified limits on council rates and debt, and quantified targets for returns on council investments; and, third, produce a pre-election report to encourage and inform debate at the time of local elections. The bill also removes unnecessary procedural requirements that delay local authority decisions and add to local government bureaucracy.

Many of those changes have been made specifically at the request of the local government sector. The question of what the core services are that councils should deliver has generated a lot of debate. The bill lists a number of local government core services. They are services that are widely acknowledged to be at the heart of local government’s role in New Zealand. Services such as water supply, sewage disposal, and roading are essential to the quality of life in our communities, as are services like libraries, parks, and community halls. There is also a core local government responsibility to protect the community from natural hazards and disasters, such as flooding.

The Local Government Act 2002 already states that local government has a role to exercise the regulatory duties required by other statutes. That is why regulatory functions such as those contained in the Resource Management Act and the Building Act have not been listed as core services. It remains equally important that councils carry out those functions with proper consideration for the effect they have on their communities. The bill does not prevent councils from engaging in services outside those listed. However, it gives councils a clear indication, first, that they need to do core services well before they engage in other services, and, second, that they need to get a proper mandate from their community for these services, rather than giving away to the demands of small, but often vocal, pressure groups.

It may surprise members that we need to legislate to require councils to produce a financial strategy. Some councils have set themselves clear, long-term limits on rate increases and debt levels, but many—indeed, most—have not. The fact that councils set rates each year provides a looser budget constraint on councils than applies to central government, where increases in tax rates are rare and subject to intense public scrutiny. Requiring councils to consult on a financial strategy with quantified targets for rates and debt levels will encourage councils to debate with their ratepayers more carefully the trade-offs between additional expenditure and the effect on rates and debt. It is important that ratepayers can understand the financial information that is presented to them by councils and can easily compare the financial statements of their council with those of other councils. The bill, therefore, provides for greater standardisation in financial reporting by councils. For example, officials have identified three substantially different ways in which councils report their rates income in annual plans and reports. That means that ratepayers cannot even compare something as basic as rates income amongst councils. The bill provides for regulations to be made to ensure consistency in financial reporting amongst councils.

The bill also requires councils to report separately on the major infrastructure services they provide. They are the most expensive of the core services that councils provide, and concern the major part of councils’ capital expenditure budgets. To allow ratepayers to compare fully councils’ performance on these essential services, the bill also provides for a standard non-financial performance reporting system to be developed for those services. The bill provides for an additional funding statement to be included in council reports. That statement will be more meaningful to ratepayers than present financial reports. This package of measures, plus additional other minor enhancements to financial reporting, fulfil the commitment to implement plain-English financial reporting for ratepayers.

I will expand a little on the issue of council investment in companies. Many councils own companies of one sort or another. For example, much of New Zealand’s port sector is council-owned. I am concerned that in some cases councils are not managing those investments well, and they are not being transparent to their ratepayers about the returns they are getting from those investments. The House has recently had to deal with the governance of Environment Canterbury. Members may not be aware that that council owned a company called Target Pest Enterprises, which is reported to have made a profit only once in its 8 years of existence. The company went into receivership in May 2007, owing creditors—many of them just ordinary small businesses—millions of dollars. That is one example of a council making an unwise business investment, and there are many more. This bill requires councils to set clear targets for returns on investments. Councils will be required periodically to review the expected returns from those investments against the inherent risks of being involved in business ventures.

The third major initiative of this bill is the introduction of the pre-election report. There has been concern about the declining voter turn-out in local elections for some time. Simply exhorting people to vote seems unlikely to change that trend. The pre-election report is intended to draw together some key information about the past performance of the incumbent council and the future plans it has for its community. That will enable voters to scrutinise the performance of existing councillors more closely. It will also provide a factual basis against which candidates can state their position on future council plans, allowing electors to then vote for candidates whose preferences reflect their own. The pre-election report will be prepared by council officials; it will not be a ratepayer-funded platform for promoting incumbent councillors.

There is one area that has been of concern to some local authorities, and that is the cost of auditing long-term plans. I gave careful consideration to that, and the advice I received was that there was limited scope to address it, other than to remove the requirement altogether—and I was not prepared to do that. Ratepayers are entitled to the assurance that the plan put before them is soundly based. The bill does remove a significant amount of descriptive and operational material from long-term plans. That will greatly reduce the number of occasions on which local authorities have to pay audit fees for minor amendments to their previous plans. That will reduce audit costs. The bill also merges the present community outcomes planning process with the long-term planning process. I cannot see the sense of having councils run two planning processes.

Finally, the bill removes a number of impediments to the local government sector using the private sector to deliver local government services. As I said at the beginning of my speech, local government in New Zealand enjoys a high degree of autonomy from central government. That is a quality that I want to see maintained. To maintain that autonomy requires a high degree of transparency and accountability. That is achieved in this bill. I thank members for their time.

Hon GEORGE HAWKINS (Labour—Manurewa) : I must say from the outset that I was a little disappointed that the Local Government Act 2002 Amendment Bill did not deal with some things. The Hon Rodney Hide promised people that they would have lower rates, but he has been a member of the House for quite a while and he has not delivered. I think that really disturbs people, because they were looking forward to change. Of course we have people like Owen Pringle and Peter Goldsmith from the Papakura District Council who are putting rates up by 11 percent or more this year, whereas someone in a nearby council, Daniel Newman of Manukau City Council, tells me that that council’s rates are going up by around 3.8 percent. So people were looking for some consistency, but did not get it in this bill. I think that is really important.

It is very easy for members of an Opposition to go around the countryside and say their party would make rates cheaper, but perhaps this bill deals with one thing that worries very many people. They are worried that the bill provides that water-owned facilities could be leased out for up to 35 years. When I was a mayor I contracted out a lot of things, and we kept the rates down, but I say that 35 years is too far into the future. All those people in Grey Power will be 100 before they get a vote again on water services, if a council adopts that provision in this bill. I say that 35 years is a long time, and young people who are now 30 will be pensioners before they get another say. So 11 or 12 elections could go by before people get another say on this legislation.

That is what is wrong with this bill, and it builds on what has been happening around the country. Environment Canterbury has been skittled. Perhaps it may have deserved to be skittled—but for 3½ years? It should be for the period up to the next election, if it is a problem that is so easy to sort out. Then we had the royal commission come up with its master plan for Auckland. Did that go to the public of Auckland for a referendum, like everyone thought it would? No, it did not. We see that happen again with this bill. People will find out that their water facilities could be set aside from public scrutiny for 35 years.

Some people say that that is privatisation; I say it is the closest thing one gets to privatisation without selling things. I thought Rodney Hide may have been better spending his time working out who owns water, rather than trying to flog off something. They have to make sure that in Auckland, as in the rest of New Zealand, they take the people with them; they do not get in the ACT-National bulldozer and trample over the rights of ordinary New Zealanders—and that is what has happened.

I am a reasonably fair person, and I can go on to say that some things in the bill are reasonably good. When we have a clause that calls for a pre-election report, prepared by the chief executive of a council, to say how the finances are, without lobbying for certain councillors, that is fair. It is well overdue, and it is good, but although we may find something good in a bill we must have a look at the overall picture. This bill cannot be seen in isolation. The House has dealt with three bills concerning Auckland governance—two of them have been passed. One of them was passed entirely under urgency. It did not have a select committee process, and of course lots and lots of amendments were put forward by the Opposition to highlight how democracy was being ridden roughshod over.

This bill has elements of that in it. It also builds on what is happening in Auckland, where 75 to 80 percent of the council business will be put in council-controlled organisations. The Minister, in his speech, talked about a company owned by Environment Canterbury that went bust. When we have council-controlled organisations that are not open to public scrutiny, as a council is, we have a very dangerous position. That is what worries many people in the Opposition. It worries many people in Grey Power. It worries people who are sole income earners on a fixed allowance. These people would like to know where their money goes. I agree that it is great to have this report done before an election. I imagine the report will be only as good as the chief executive. In most cases chief executives are extremely competent people who will do the job well, but one or two probably will not.

I have to say that when we look at the bill, we see that we will have all sorts of core business—that is what it will all be about. Last year Rodney Hide went around talking about core business. He talked about it so much that his mother had to remind him that libraries are a core business. He had not thought of that. This is one of the problems. I think there needs to be a balance between where Labour went, where councils were able to move into areas where they saw need, and what is happening here: core business. People see things such as having water supplied to their house, having their rubbish picked up at the gate, and having roads repaired, as core business.

I think this bill is a wee bit too narrow in that respect. I also think that it is very difficult to write these things into law. When things are written into law we have to take the public with us. I do not think that is happening here. You see, when we have councils that are so different, from the top of the North Island down to Stewart Island and out in the Chathams, there are things that are very, very different. New section 11A states: “a local authority must have particular regard to … (a) network infrastructure: (b) public transport services: (c) solid waste collection and disposal: (d) avoidance or mitigation of natural hazards:”—we would not argue about any of these things—and “(e) libraries, museums, reserves, recreation facilities, and other community infrastructure.” But is that the whole total? I suggest that it is not.

I imagine that many people will make submissions, because there is no real talk in here about the social needs of communities. There has to be far more awareness of the social needs of ordinary families living in ordinary communities. Although those communities may be vastly different in different parts of the country, they need the ability to move into those areas themselves, rather than being dictated to by the National-ACT coalition. I have to say that its record in local government is abysmal. I thought we were going to go somewhere, but we have not been taken to the promised land; we have been taken to the execution chamber. That is what has happened. This Government has forgotten that ordinary New Zealanders value their democracy, and democracy is slowly but surely being snuffed out by John Key and Rodney Hide.

Hon JOHN CARTER (Associate Minister of Local Government) : I quite like George Hawkins, the member who has just resumed his seat—I think he is not a bad guy—but I say to him that that was a very sad, disappointing speech. I expected at least something positive out of it, but, unfortunately, it was not a great contribution. But, of course, we have come to expect that from this Opposition.

I start by saying that I am delighted to stand here to support the Local Government Act 2002 Amendment Bill. When I was appointed as the Associate Minister of Local Government, which I am very proud to be, I thought it would be an interesting experience to work with Rodney Hide as the Minister of Local Government, and I have to say that it has been.

Hone Harawira: That’s not what you said to me last night, John.

Hon JOHN CARTER: I tell the member that I am going to say exactly the same words that I said last night, but, fortunately, I was not talking to him last night. It has been fantastic working with Rodney Hide as the Minister of Local Government. He is a guy who will listen, he is a guy who makes decisions, and he is a guy who is prepared to take things on board. I congratulate the Minister on bringing this bill to the House.

Hone Harawira: That’s enough, John.

Hon JOHN CARTER: No, it needs to be said. It needs to be said, and I want to say it because I am the guy who worked with Rodney Hide. I want to say that I really respect Rodney, and I thank him for the work he has done on this bill. I thank him very much for making this contribution.

I turn to the bill. George Hawkins said that there was anticipation that Rodney Hide and the Government would actually reduce rates. Well, this bill is a start, and it is where we can expect to take cost out of local government. In that regard, it is exactly what local government and the ratepayers in this country have been asking about. I give members an example of one of the things the bill will do—the member who just resumed his seat actually spoke about this and was complimentary about it—and that is the pre-election report that is to be done by the chief executive for the council.

The local body elections are coming up in Northland, of course. A statement was made by one of the mayors that his rate increase would be less than the rate of inflation—about 3 percent.

Hon Rodney Hide: Which mayor?

Hon JOHN CARTER: That was the Mayor of the Far North District Council. It turned out that his statement was not the best of them. The Mayor of Whangarei District Council announced that he would be able to do better, and that his ratepayers could expect an increase of about 2 percent. Not to be outdone, the Mayor of the Kaipara District Council said that he would have a 0 percent increase. This is all well and good, but the problem is, of course, that none of them have told their ratepayers about their infrastructure deficit. None of them have actually disclosed to their ratepayers what challenges are ahead. The likes of Whangarei, particularly, has some serious infrastructure issues to address.

It is not about just the economics of the council; it is about the infrastructure and about what people can expect ahead of them. The pre-election report will contain a declaration about, or an exposure of, the infrastructure, and will actually lay it on the table as to the status and the present position of the council, and then ask candidates, whether they be for mayors or councillors, what they will do to address these issues. I have to say that that will be an amazing step forward for local government and ratepayers in this country.

Hon Rodney Hide: And Labour opposed it.

Hon JOHN CARTER: Well, Labour actually complimented us on putting that in. It is the one thing that it actually got right. It is the only thing, of course.

The bill takes away a whole lot of the issues around consultation, and the Minister has already spoken about some of the areas where we are making some improvements. But I say to the Minister and to the Local Government and Environment Committee that, personally, I do not think the bill goes far enough in that regard. I think we can improve on other areas in regard to the demands that we make of local government, and what we ask them to go and consult their people on. I ask the select committee members that as they go through the submissions they pay particular attention to the issue of the cost of consultation, and whether we can improve the bill further. It already makes some improvements and reduces cost in that regard. I think there is a great opportunity for us to make even more savings, and to put fewer costs and difficulties on to ratepayers, as we move forward through the select committee process. There are some great opportunities in this bill for the select committee to report back to Parliament on ways in which we can make the bill even stronger.

I will finish by saying that the issue of core services was raised in regard to allowing private enterprise to be involved in supplying services to councils for a period of up to 35 years. I think that it was a bit rich of the previous speaker, George Hawkins, to criticise that, because he did that in the local authority in which he was involved. He made huge improvements, to his credit and to the credit of his council, in that regard by introducing the private sector into the delivery of local government. I think, nevertheless, that it is a bit rich for him now to stand up and criticise.

The second thing he complained about, or criticised, was the issue of core services. It seemed to me from the speech the member made that he had not actually read the bill. The bill states that local authorities and their residents are expected to decide what the core services are in their local authority. Those services may be different in the Far North from those in Invercargill, but the local authority has to deliver those services first on behalf of the people. The services may be libraries, they may be a whole host of things down in Invercargill, or they could be something quite different in some other area. But the point that is made—and this is what the bill says—is we expect the leaders of the local authorities to focus first on the core services within their districts, before they do things that may be demanded but that are not considered to be core. Again, that allows democracy to prevail. It allows the local flavour of the ratepayers to be reflected. It also allows people to understand what costs will be imposed on them when those decisions are made. They will have an understanding of what those costs will be. All that will improve local government in this country.

I support this bill entirely. As I say, I think there is still room for us to make further improvements. I hope that, as we go through the process, the select committee will come back and report to the Minister and me, and to Parliament, that there are further opportunities we can take to make local government better in this country. Let it be said that it is a great step forward for local government and for the ratepayers of this country today to have this bill before this House. It means that at last we have a Government that is serious about local government. We have a Minister who is prepared to listen and to represent the views of local government, which is to his credit and to the credit of this Government. Thank you very much.

BRENDON BURNS (Labour—Christchurch Central) : I am very pleased to speak on the Local Government Act 2002 Amendment Bill, and to follow on from the Associate Minister of Local Government, John Carter, who, effectively, is the Minister of Local Government. He is the man who was brought in to rescue the Government from the mess that was created by the Minister in charge of this bill, in terms of the Auckland super-city amendments. I will comment in particular on the parts of this bill that relate to what, effectively, is the privatisation of water services. The provision in this bill is that schemes can be operated for 35 years under the Build, Own, Operate, and Transfer (BOOT) process. It is a Clayton’s privatisation because if we calculate what 35 years is, we know that it is 11½ terms of Parliament. It means that people aged 30 now will be in retirement age before they once again get a say on who should be running their water schemes, or on who should be looking after their interests. What MP in this House has served 11½ terms? The amount of time is 35 years. It is an increase from 15 years, which is the current provision for those who wish to operate BOOT schemes. It is privatisation in drag.

I can recall in a past life in this House that Sir Roger Douglas, in his role in a Labour Government—and I acknowledge that it was a Labour Government—argued the case for State-owned enterprises. I for one supported the argument that we needed to see the efficiencies that State-owned enterprises would bring. But I did not appreciate—and I was not a member of this Parliament at that time—and I suspect that most of the Labour caucus did not appreciate, that there was an agenda behind the agenda, which was to take State-owned enterprises into privatisation. I believe that we are seeing exactly the same with this process. I think that some members of the National caucus will be supporting this bill on the basis that it will deliver some efficiencies in water delivery, but I tell them to look very closely at it. Behind it we are seeing a move towards the privatisation of water services. Three and a half decades is, in many people’s terms, a lifetime. It is certainly a generation, and it is too long a period to entrust water services to private enterprise. I will come to some points about why we cannot trust it for that length of time shortly.

I acknowledge that there are good people in the water industry who are in support of the idea that 35 years under BOOT schemes is a good time frame to allow schemes to be built and operated, and to have returns made. The reason I am mostly suspicious about this provision is that a month ago in this House we saw the disembowelling of Environment Canterbury over issues of water. That was at the core of what happened in this Parliament, when, in 30 hours flat, we saw an elected body, a democratic body, put out of office. There was an agenda behind that in relation to water, because the Prime Minister’s statement to Parliament in February this year said that he wanted to see new water schemes and new irrigation schemes in place in Canterbury next year. There is no way on God’s earth that that can be accompanied by new and much-required environmental tools that will allow water to be delivered in a way that does not add further to the detriment of water quality in Canterbury. It is already in such a state that it is not safe to swim in our lowland streams, let alone to drink the water. That is why I have this suspicion about this bill and the time frames of 35 years for BOOT schemes. Just a month ago in this House we saw what happened to Environment Canterbury and the very clear agenda behind that.

I was very pleased on Friday night to see and speak at a rally in Canterbury about those issues, when 400 people gathered to make their voices heard—

Hone Harawira: What was your rally’s name?

BRENDON BURNS: Four hundred people gathered at very short notice to make their concerns known, but it was galling to see just around the corner the gloating going on at a National Party fundraiser as people celebrated the demolition of democracy in Canterbury. Since the “Environment Canterbury Disembowelling Act”, we have heard the Minister of Agriculture issue a very clear warning to other regional councils to look after farmers with water or else. There was a very explicit warning to other regional councils that they are to deliver what this Government wants in respect of water to farmers. I want to make it very clear that I support irrigation in my province of Canterbury, and I want to see the greening of the plains, but it must be done in a way that does not add further to the—

Jo Goodhew: What’s the evidence of that?

BRENDON BURNS: The member opposite is from an electorate that has no safe lowland streams to swim in. If she wants to take her kids down to a river, she will see the diseases that they are likely to risk getting. She cannot take her dog and let it drink from the rivers of Canterbury, because of the water quality. The member for Rangitata is doing nothing to improve river water quality—nothing. There is no way the Government can put this in place in the time frame it has allocated for new projects in Canterbury.

In the House today we heard the Minister for the Environment’s announcements about water metering. I put this question to him: will it mean that those who have surplus water, once their water meter is calculating their flows, will be able to trade that for windfall profits? He would not answer that question because that is the trade-off for irrigators. They will have to pay $400 a year for the monitoring of the water metering, but the pay-off will be that they can trade the water. They will be able to sell it for an uncapped price, and that, I say, is reprehensible. Water is a common good; it belongs to all New Zealanders. It falls from the skies. It does not belong to any person simply because he or she has a deep pipe down into the earth or can suck it out of a river. Water is a common good that belongs to every New Zealander, and it is at the heart of this legislation that we are debating today. I acknowledge that there is a case for water metering for farmers who are using millions, sometimes billions, of litres of water, but there is no case, whatsoever, for farmers to gain windfall profits. I think that that was the softener for the water meter announcements of last weekend.

I will comment further on the 35-year term. There is no Government responsibility attached to the quality of water delivered, and some members last night might have heard comments on Television One from the Minister of Health and me about the issue of drinking water safety. Currently, one in six New Zealanders drink water that cannot be deemed safe according to World Health Organization minimum standards. Sometimes the water is measured but does not meet the standard. The Minister cannot give any assurance on that. In fact, he is sitting on $80 million of funding that was put aside by the Labour Government to help small communities to improve their water quality. In terms of those issues, the responsibilities still rest with the councils. They are not being transferred to those who operate the BOOT schemes; they are still being held by the councils. They will be responsible, not the operators of the BOOT system and not the Government, as I read the scheme, and that is a failure in terms of water quality. I say that there must be some change, in terms of regulatory regime and of getting water quality right, if we are to have any improvement in water quality.

I note the article in today’s New Zealand Herald from Margaret Devlin, a very distinguished woman. She is the former chair of Water UK and the managing director of South East Water in Britain. She comments that New Zealand lacks overall national water regulation rules. Regulation, as she acknowledges, can play an important and very positive role; it is not simply a negative. When we are dealing with something as important as water, this bill should be accompanied by some sense that water will be regulated, in terms of quality, and there is nothing in this bill that mentions what will happen in respect of pricing. In Britain there is Ofwat, the Office of Water Services, which sets clear performance parameters, there is an environment agency that works on environmental protection, and there are drinking-water inspectors who ensure that drinking water is up to standard. The Ministry of Health has virtually no staff in charge of drinking-water standards. A tender had to be advertised recently for contractors to come in and provide the services that the Ministry of Health once had so that we could see the drinking-water standards of the World Health Organization monitored and put into effect in this country. We had to go out for tender for that.

This bill proposes that there should be a move from 15 to 35 years—35 years—in which a BOOT scheme can be operated, without any reference to the quality of the water, without any requirement that they meet regulations, and without any responsibility, yet the councils and the ratepayers will have no say for 11½ terms of this Parliament, which is 35 years. This represents a generation of passing it across to somebody else who bears no responsibility for the quality of the water being delivered. There is no regulation to accompany this. It is simply a process of effective privatisation. New Zealanders will rue the day that this bill was introduced. It will do nothing to improve water quality, and there are huge question marks about what it will deliver.

SUE KEDGLEY (Green) : This is a terrible bill, a dreadful bill, that the Green Party will not be supporting. I sincerely hope that people in New Zealand will not be fooled by the soothing words of Mr John Carter and Mr Hide that the bill is all about reducing rates, taking the cost out of local government, and focusing on core services. Actually, this bill is all about further implementation of ACT’s agenda to reduce spending in local government by as much as possible, to corporatise and privatise as much of local government as possible, and to shrink democracy.

As Roger Kerr and others have revealed, and I think Mr Hide has also referred to it, the underlying premise of the bill is based on what happened in a grand experiment in Colorado. A tax and expenditure limit was set in Colorado, the aim of which was to reduce spending and of course make us all resent paying rates or taxes. It also has the effect of driving down the resources of local government, to the point where it becomes effectively bankrupt. What happened? This year, as a result of this grand experiment in Colorado, which this bill is trying to implement, the Colorado budget will have a shortfall of US$28 million, or 10 percent of its whole budget, brought about by the strangulating effects of these tax and expenditure limits. One-third of Colorado Springs’ 24,000 street lights were turned off earlier this year, to save around US$1 million of expenditure. Residents can adopt a street light if they pay US$100 a year. The taxi drivers are trying to do the work of the police force, because it is so overstretched by cuts. Park budgets have been slashed by 25 percent. Grass is mown monthly, not weekly. Buses were sold, and services no longer operate on evenings and in the weekends, and the fire and police budgets lost US$5.5 million.

Is this what we want in New Zealand? Do we want millions of street lights around New Zealand turned off? Do we want there to be no buses at the weekends or in the evenings? Do we want our taxi drivers acting as our police force? This, I tell members, is what will happen if we continue to be fooled by Rodney Hide and the ACT agenda. There is no question that local government is the new battleground for the agenda of the Government and Rodney Hide to corporatise and privatise as many assets as possible. There are many other concerns about this bill, such as its definition of core services. I notice that the environment is not considered a core service. So what about issues like using toxic substances, such as methyl bromide? I notice recreational facilities are a core service, but what about parks and reserves? What about the Waitakere Ranges, etc?

The other issue I would like to focus on, and there are many in this bill that I could focus on, is water privatisation. This bill transfers management and decision-making control over water to private corporations, and in so doing it transforms the provision of water services from a public good to a source of private profit. It promotes water as a commodity to be traded, rather than as something that is essential to human life, to health and well-being.

Once a council has entered into one of these public-private partnerships for 35 years, the bottom line, the driving influence, on all decisions will be the return to the shareholder, not the public’s best interests. The water privatisation industry is a trillion-dollar industry, aided and abetted by the World Bank and the IMF. Basically, they are going around the world, seeking new markets for their water privatisation agenda, and of course they are turning their eyes to New Zealand and the Minister of Local Government, and to the National Government, which of course will come to the party. Water privatisation gives multinational corporations control over the necessities of life, and of course they are focused on returning money to their shareholders and running the assets into the ground. Why would they not? They are focused on profits. Many of them, of course, are run by private equity companies.

I will give an example from the United Kingdom, where Margaret Thatcher was one of the first to introduce widespread water privatisation and these kinds of long-term arrangements. The result was excessive pricing. There was a sharp increase in the cost of water, over 50 percent in the first 4 years; soaring profits for the shareholders, the water companies—142 percent in the first 8 years—while the customers were having continual price rises; and huge underinvestment. The companies cut their investment programmes, and used the savings to maintain and increase their dividends, just like what happened to our railways under Michael Fay and Mr Richwhite. Huge salaries, bonuses, and fees were paid to the directors of the water companies. People felt so resentful of the companies, which were perceived as greedy, and they were not prepared to make the sacrifices to conserve water.

Following privatisation, there was a sharp rise in the number of households having their water supply disconnected or cut off, which of course endangered their health. Continuous access to water is an absolute basis of health and well-being. In fact, one of the criticisms was that water companies were failing to notify all these cut-offs to local authorities. There were no incentives under the privatisation to improve efficiency or to reduce leakages. Far from conserving water, the people in England were so resentful of the companies they did not bother to conserve water, nor did the companies.

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

SUE KEDGLEY: I was explaining what an unmitigated disaster water privatisation had been in England, and I was describing the 35-year privatisation contracts, such as the one we will have here in New Zealand. The Daily Mail, a staunch supporter of the Conservative Party, had a commentary with the headline “The Great Water Robbery”. It stated: “In recent weeks the penny has been dropping that something has gone horrendously wrong with the privatisation of Britain’s water industry … the water industry has become the biggest rip-off in Britain. Water bills, both to households and industry, have soared. And the directors and shareholders of Britain’s top ten water companies have been able to use their position as monopoly suppliers to pull off the greatest act of licensed robbery in our history.” That was from the Daily Mail, and that is what we are opening ourselves up to in New Zealand with this Local Government Act 2002 Amendment Bill.

Another point I make is that the 35-year contracts entered into are completely secret. The contracts are commercially sensitive and are in confidence, so people do not know what is in them. Some of the contracts have a guaranteed rate of return. In Latin America, one of the big companies said that it would withdraw from its investments unless the return on capital was 13 percent. It withdrew from most of Latin America because it could not get its guaranteed return. There have been huge revolts against the high prices charged by private operators right throughout Latin America. Domestic water prices went up by 150 percent in Bolivia following privatisation. That led to huge demonstrations, and so on and so forth. What happens when these companies go bankrupt in the course of their 35-year contract? Something that we should all be thinking about is the number of bankruptcies. Who takes over then? Is it the bank? I ask what happens.

In Wellington there is, I think, a 25-year contract with regard to the wastewater sewage. This contract has changed three times in the past decade. It has gone from one company, it has passed to another subsidiary, and then it has passed to another. What are the implications for all this? Over 35 years circumstances can change, but we are locked into these contracts. Everyone knows that water will be the oil of the 21st century. We will have water wars. That is why all these corporate water companies are scouring the world trying to get hold of publicly owned water companies such as those that we have built up over generations in New Zealand.

RAHUI KATENE (Māori Party—Te Tai Tonga) : The Local Government Act 2002 Amendment Bill has only just been introduced, but we got a heads-up on it from Mr Hide. In his intemperate opposition to the Waikato-Tainui Raupatu Claims (Waikato River) Settlement Bill last month, he condemned the notion that the Waikato River could be considered a tupuna with the mana, the spiritual authority and power, and the mauri, the life force, of the Waikato-Tainui. He stated: “I do not happen to believe it. I think it is hocus-pocus. But what we are doing is legislating this hocus-pocus,”. Then he said: “I oppose it as the Minister of Local Government, I oppose it as the leader of the ACT Party, and I oppose it as a New Zealander.” Well, I have to say to Mr Hide that as a member of Parliament for a Māori electorate, as a member of the Māori Party, and as a Māori New Zealander, I say that the statements that he is making have to jeopardise the credibility of a Government that is working with Waikato-Tainui to settle this matter. They suggest that either Mr Hide is skating on thin ice or the Government is being dragged around by the nose by a party that is struggling to achieve more than the margin of error in the polls.

The fact is that the relationship between iwi and the Crown requires decision makers to think about Māori values, practices, and interests in both the Local Government Act 2002 and the Resource Management Act, including the need to recognise and provide for the relationship of Māori and their culture and traditions with their ancestral lands, water, sites, wāhi tapu, and other taonga, having particular regard to kaitiakitanga and taking into account the principles of the Treaty of Waitangi.

I want to establish the status of the Treaty relationship right up front, because the bill we are debating today will be of huge importance to Māori. Although the bill aims to amend the Local Government Act 2002 to improve transparency, accountability, and financial management, in reality it is about the control and provision of water services and water infrastructure. That brings me back to the Waikato-Tainui Raupatu Claims (Waikato River) Settlement Bill. In that bill, we are told: “The Waikato River is a single indivisible living thing that flows from Te Taheke Hukahuka o Te Puuaha o Waikato … and includes its waters, banks and beds (and all minerals under them) and its streams, waterways, tributaries, lakes, aquatic fisheries, vegetation, flood plains, wetlands, islands, springs, water column, airspace, and substratum as well as its metaphysical being.” That is specific, concrete terminology, spelling out in black and white the relationship that Waikato-Tainui have with their river; it is hardly hocus-pocus. So when the Minister of Local Government comes to the question of water services and water infrastructure in the Waikato rohe, he will find himself already offside with at least half of the authority charged with caring for the river, and for the water that flows its length and breadth.

This amendment bill aims to remove unnecessary barriers to water infrastructure development by reducing restrictions on private sector involvement in the delivery of water services. It is the first step towards privatising water in Aotearoa. This bill also aims to remove unnecessary consultation on matters of interest. The effect of this provision is that local bodies will no longer have to consider the views of affected people, Māori or otherwise. Consultation will go out of the window, even though the Local Government Act 2002 requires councils to ensure that Māori are involved in local body decision-making processes.

We know that there are some good councils out there that engage with Māori in positive ways, but we also know of councils that are deliberately lagging behind. Although the Act emphasises the participation and involvement of Māori, it does not direct councils to any particular groups representing Māori interests. We sometimes find that councils deal with their obligations to consult by talking to a Māori staff member rather than to tangata whenua, effectively sidestepping their commitment to mana whenua. This is in direct opposition to Māori Party policy, which states: “Issues around water must include mana whenua, including water rights and privatisation.”

This bill also takes away the process of consultation between local bodies and the community on water issues, reducing those who pay for and use the water to having no say whatsoever over the way in which their most precious resource will be managed. In fact, this bill will put private contractors in charge of water services without any accountability for the supply of those services. It reminds me of a comment I saw in a recent article called “Waiting in the wings: Privatisation of your water”, by Warwick Taylor of the Wellington Residents’ Coalition. He stated: “Water is protected under law, but they are seeking to change that. Why not just do away with democracy altogether if it’s cheaper.” Given the thrust of this bill, I shudder to think what this Government’s answer might be to that question.

This bill is another step down a slippery slope. The memory of democracy is being used as a waterslide to ease the way for the privatisation of critical resources. We oppose the loss of democracy by the Māori community and by the wider community that we saw in the Environment Canterbury legislation last month. We oppose the unaccountability of private contractors. We challenge the right of this Government or any Government to deny Māori their Treaty rights to water, and we will do whatever is necessary to establish a process that is truly Treaty-based, that recognises the value of local government input, and that restores the mana of water all around the country to the status expressed in the Waikato-Tainui Raupatu Claims (Waikato River) Settlement Bill. This bill threatens at a very fundamental level many of the principles that the Māori Party believes in, and we oppose it on those grounds.

CHRIS AUCHINVOLE (National—West Coast - Tasman) : It is my pleasure to speak on the Local Government Act 2002 Amendment Bill. The Local Government Act 2002 is the cornerstone of local government and is fundamental to all decisions made by local authorities. As chair of the Local Government and Environment Committee I have regularly paid significant attention to this Act. [Interruption] Members opposite should listen. As such, it became clear to me that although the Local Government Act 2002, which is the previous Government’s legislation, is good legislation, albeit a little bit untidy in areas, there are aspects that need improving and modernising. This bill does both of those things very well. It will meet the needs and requirements of not only the ratepayers but the general public and all those who interface with councils.

The significant purpose of this bill is to improve transparency, accountability, and financial management in local government. The explanatory note of the bill states: “The underlying policy for the Bill is informed by the following principles: that local authorities should operate within a defined fiscal envelope:”. I am sure that all of us who represent our electorates are very aware of the concern amongst constituents that local authorities should operate within a defined fiscal envelope. The last thing constituents want is profligate local authorities. The public expectation is that local authorities must be rigorous with their finances. This is one of the reasons why we are introducing a financial strategy to the long-term plan, to help local authorities and their communities debate and resolve the key financial and service delivery trade-offs that local authorities are obliged to make in the transaction of their programmes. The second principle is “that local authorities should focus on core activities:”, and the third principle is “that local authority decision-making should be clear, transparent, and accountable.”

This bill will provide ratepayers and residents with better information about council costs, rates, and activities, and enable them to understand and influence planning and decision-making processes. The electorate of West Coast - Tasman has four councils, with relatively small ratepayer bases. This legislation will be particularly significant to those areas and those councils, to enable ratepayers and residents to understand and influence planning and decision-making processes. This will be achieved through introducing pre-election reports to stimulate debate during council elections, and through achieving plain English financial reporting, so that ratepayers can understand what they are paying for and how. I spoke this afternoon to the Buller District Council, one of the councils in the West Coast - Tasman electorate, and the councillors say that they are very conscious of the need for a plain English financial statement.

At an operational level, this bill will simplify decision-making processes. This will be achieved by removing unnecessary auditing, and that will go down very well. This legislation will remove unnecessary consultation. We have heard previous speakers talk about the complex situation that has resulted from the incredibly tough demands on consultation. Levelling the playing field will enable the private sector to better deliver local authority services. This will improve councils’ flexibility to choose effective and efficient delivery methods for water and other services.

I have already heard the concerns about water expressed by a number of speakers in this first reading debate, but I am sure they will be reassured once they give the legislation full consideration. The horror stories that are already emerging will not be sustained. This bill will remove unnecessary barriers to water infrastructure development. I say to those who are not familiar with the area that water is something we are blessed with on the West Coast. The rainfall in the area where I live is 3 metres a year, and further down the valley it is 6 metres a year, but we still need potable water and a reticulated water supply. This bill will enable local authorities to enter into contracts for the supply of services for a period of up to 35 years, and to delegate aspects of water services management to contractors and lease water assets from the private sector. But it will not allow local authorities to walk away from the responsibility associated with all those things. I have heard criticism already—I have taken note of it and I look forward to it being discussed further at the select committee—concerning the length of time for those contracts, but when we consider the amount of capital involved in providing water services, we need a fair amount of time to recoup the expenses of putting it all together.

Good local government is essential for our communities, our economy, and our environment. The National Government values having an honest and open working relationship with the local government sector, and recognises that there cannot be a one-size-fits-all approach to local government. This amendment bill represents significant progress towards better local government, and towards easier and more effective participation by ratepayers and residents in the activities and decisions of local councils. The bill strengthens ratepayers’ control of council activity, making councils more accountable to their constituents, and gives ratepayers clearer and better quality information on the work of local councils. It provides them with the tools required to influence local government decisions. Ratepayers will be pleased that the bill contains measures such as a financial strategy, with limits on rates and debt, to ensure council costs, rates, and activities are better controlled. The changes are coherent and necessary, and are a great improvement to the Local Government Act 2002. They are welcome changes. I am very happy to speak in support of them. Thank you.

• Debate interrupted.