Hon DAVID CARTER (Minister of Local Government) : I move, That the Local Government Act 2002 Amendment Bill be now read a first time. I nominate the Local Government and Environment Committee to consider the bill. At the appropriate time I intend to move that the Local Government Act 2002 Amendment Bill be reported to the House by 15 October 2012.

Can I start by acknowledging the excellent work of my colleague Nick Smith and his work in developing the Better Local Government reforms.

New Zealand’s 78 local authorities are a significant component of the New Zealand economy. They make up 4 percent of GDP, spend $7.5 billion per year of public money, and manage $100 billion worth of public assets. They deliver a wide range of critical regulatory functions and local public services that directly impact the lives of New Zealanders every day. Central government has a part to play in creating an environment in which local government is better able to contribute to building a more productive and competitive economy and to deliver better local public services. Local government can then be better positioned to create the environment for local businesses and industry to emerge and grow, and for communities to flourish. This Government’s programme for reform of the local government sector aims to improve the operation of local government here in New Zealand. It will focus local authorities on operating more efficiently and effectively by doing things that only they can do. It will deliver settings that will encourage local authorities to reduce red tape and compliance, minimise rates for households and businesses, lower their debt, and provide high-quality infrastructure at the least possible cost.

The Government’s programme for reform of the local government sector comprises two distinct phases. The first phase will refocus the purpose of local government, introduce financial prudence requirements for local authorities, strengthen local authority governance provisions, and streamline local authority reorganisation procedures. The second phase of the reform programme will consider the report of the Local Government Efficiency Taskforce, which I announced last week. It will also develop a framework for the interface between central and local government regulatory roles, investigate the efficiency of local government infrastructure provision, and review the use of development contributions.

This bill, the Local Government Act 2002 Amendment Bill, amends the Local Government Act 2002 to give effect to the first phase of the Government’s reform programme. Firstly, the bill refocuses the purpose of local government. The purpose in the bill provides for local authorities to meet the current and future needs in their communities for good quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses. Having a clear and focused purpose statement is necessary for the efficient running of local government in New Zealand.

The second area of reform is the establishment of financial prudence requirements for local authorities. In line with central government, and households and businesses, councils must restrain spending, keep costs down, and run as efficiently and effectively as possible. In building a more competitive and productive economy it is critical that both local and central government take a prudent financial approach to public money. This bill provides for regulations to set benchmarks for the prudent overall management by councils of revenue, expenses, assets, liabilities, investments, and general financial dealings.

The bill contains three mechanisms to strengthen local authority governance provisions. There will be provision for a simpler, more graduated mechanism than is currently available for central government to assist struggling local authorities and intervene before situations become critical. In particular, the new mechanisms can be used where local authorities are failing, or are close to failing, the new financial prudence requirements. The leadership roles of mayors will be strengthened in line with that of the Auckland mayor under the Local Government (Auckland Council) Act of 2009. Mayors will be given governance powers that will align with the level of public responsibility they have for council decisions, and that will support clear, strong leadership by mayors. Elected councils will be specifically enabled to determine policies on staff numbers and remuneration, and they will be required to report annually on staff employed by salary bands.

The fourth area of reform in the bill is the streamlining of local government reorganisation procedures for the union, abolition, and constitution of districts and regions, and the creation of unitary authorities. Currently, such reorganisations can proceed only if they are supported by more than 50 percent of the votes cast in each affected district or region, and reorganisation involves a long and complex process. This bill will make it easier for communities and local authorities to apply for a local government reorganisation, and it will give the Local Government Commission more flexibility in considering applications. Reorganisation applications will need significant community support before the commission can progress them.

The Local Government Act 2002 Amendment Bill is an important milestone in progressing the first phase of the Government’s programme for reform of the local government sector. These reforms are important for New Zealand communities, for business and industry, and for individual households. I believe that these changes will improve the efficiency and effectiveness of local government and provide the right settings for the local government sector to play its part in growing the New Zealand economy. I commend this bill to the House.

PHIL TWYFORD (Labour—Te Atatū) : I am standing in for my colleague the Hon Annette King, and I rise to express Labour’s opposition to the Local Government Act 2002 Amendment Bill. Labour would support a bill that promotes efficient, effective, and accountable local government, but this bill is not that. This is a politicised attack on local government. It will undermine democratic processes and it takes away the democratic rights of local communities.

The reforms in this bill are based on a manufactured set of statistics, a selective use of data by the Hon Nick Smith in a way that has become that former Minister’s trademark. We saw it earlier in the last parliamentary term with his stewardship of ACC. He whips up a few shonky figures, puts them out into the media, scaremongers up a good crisis, and then pretends to bring a solution. That is exactly what happened here, although it is interesting to note that after the data that these reforms were based on were posted on the Department of Internal Affairs website in a Better Local Government document, a few days after that document’s release the data was replaced by the department with a comment saying, and I quote directly from the website: “there are issues with the data both in terms of accuracy and in terms of the picture that was being given to some councils.” That is not a very promising start to this Government’s local government reform agenda, in its second term.

The main issue that I want to speak to in this contribution is about the change to the rules around the reorganisation and amalgamation of local councils. Currently, the law guarantees to all citizens in this country the right to a say in a binding ballot over any proposed reorganisation or amalgamation of their local council. This bill takes away that right. It is the confiscation of the democratic rights of New Zealanders, and it opens the door to forced amalgamations in which the citizens of the affected areas will risk having no say at all. Let me repeat—at the moment, citizens are guaranteed the right to have a say. They can vote up or down any amalgamation proposal. What did we see from this Government in 2009? It circumvented that right, with the forced amalgamation in Auckland. What is the Government doing? It is incorporating that approach into this piece of law.

If citizens want to have a say, then they have 40 working days from the time the organisational change proposal is tabled. They have got 40 working days to get 10 percent of the local voting population to sign a petition seeking the right to have a say in a binding ballot. That is simply not good enough. This is an assault on the democratic rights of communities all around New Zealand. It opens the door to forced amalgamations, and that is a broken promise by this Government.

Last term we heard John Key saying, and we heard other National Ministers saying, there would be no forced amalgamations. John Key said in March this year, and I quote from his post-Cabinet press conference: “We think it’s very difficult for communities to amalgamate, again there’ll be some discussions about that with the councils to amalgamate but I wouldn’t look for a forced situation as you saw in Auckland.” Well, that is exactly what this bill opens the door to. It takes away the democratic right of New Zealanders to choose the shape and the scale of their local authorities. It takes away their right to a binding ballot. That opens the door to forced amalgamations. It is exactly what John Key promised would not happen.

That has become this Government’s modus operandi. We saw it in Auckland, and we saw it in Christchurch with the sacking of Environment Canterbury, the removal of the elected councillors of the Canterbury region. We see that same contempt for democratic values, the same contempt for our democratic institutions. It is coming through loud and clear in the Hon Nick Smith’s reform agenda, brought to the House today by the Minister of Local Government, David Carter.

There is lots more that is wrong with this bill, and I want to focus on a couple of other elements. What we see in this bill is the reincarnation of Rodney Hide’s ludicrous core services agenda. It survives here in a diluted form. What it does is it gets rid of the purpose statement in the current local government legislation, which is often referred to as the four well-beings. It replaces that with a narrower focus of providing good quality infrastructure, plus local public services and regulatory functions, at the least possible cost to households and businesses. Well, as many commentators have already pointed out, this is a nonsense. The regulatory impact statement says this change is likely to have a symbolic effect and should not affect council business as usual.

The absurdity of this provision is illustrated by the interview that the Minister gave on Q+A a few weeks ago. He was asked what sort of council activity he did not approve of. His example that he gave was the Hamilton V8 Supercars race. Apparently councils running V8 races is bad, but the Christchurch flower show—

Grant Robertson: That’s fine.

PHIL TWYFORD: That is really good. This illustrates the absolute intellectual bankruptcy that underpins this bill. V8 races are out; flower shows are in. So this is the kind of intellectual rigour, this is the intellectual rigour, that we have come to expect from this National Government. If Nick Smith, who is often touted as having the biggest brain in the National Cabinet, when he was in Cabinet, is responsible for this reform agenda and he is the brightest guy in the National Cabinet, then this country has got something very serious to worry about.

The Department of Internal Affairs, in the regulatory impact statement, takes a much more sober assessment of this issue. It says: “There is no clear quantitative evidence to suggest that the [Local Government Act 2002] has resulted in a proliferation of new activities, or that local government is undertaking a wider group of functions.” The regulatory impact statement by the Minister’s own officials contradicts the very premise that this reform agenda is based on. Nick Smith went around the country saying that the sky is going to fall, councils are out of control, they are spending here and there, they are profligate, and the four well-beings have led to an explosion of council activity doing all these outrageous things, and that is contradicted by the Minister’s own officials and the regulatory impact statement.

The other main idea that underpins this bill and this reform agenda is the notion that council debt is out of control, and that councils are racking up more and more debt and this is a terrible liability. Well, we have seen from Local Government New Zealand clear evidence that local authority expenditure as a percentage of GDP is more or less static at around 3 percent and has been for the last 5 years. We see that local authority expenditure as a percentage of total Crown expenditure is more or less static. In fact, it has gone down by several points in the last 5 years. The figures show that council expenditure on interest repayments as a percentage of operating income was 4.53 percent in 2010, up from 4.19 percent in 2009. It is a hardly a crisis. The irony is that at a time when councils are being diddled out of a fair share of funding for local roads, which for many councils is up to half their operating expenditure, this Government is beating them with a stick about overexpenditure when it is cutting back on the funds that councils rely on just to repair and maintain local roads.

The sinister thing about this Budget is that it is designed to put the fiscal squeeze on local authorities at the very time that this Government is trying to pressure councils in Auckland, Christchurch, and goodness knows where else to sell assets that their ratepayers have paid for and built up over generations. This Government is trying to do to local government what it is doing to central government, and that is to sell off the family silver and sell off lucrative assets that are owned by the people of those communities. This is an illogical, poorly thought-through bill. It takes away the democratic rights of communities, it undermines local government, and Labour will not support it.

NICKY WAGNER (National—Christchurch Central) : It is very interesting to listen to the member Phil Twyford and think that there is absolutely no correlation between what he says and what is happening in the real world out there. He has no knowledge at all of what is happening globally or in the economy. As the world changes socially and economically, as new technologies develop, and as new issues arise, how we organise our lives, our cities, and our institutions needs to change as well. This Government is introducing these local government reforms as part of our focus on developing a more competitive and more productive economy, because that is what is going to give us a better future in the long term. We want to use our resources more wisely. We want to get more for less out of our institutions and our organisations. We want to manage our finances better. We want to reduce waste and get better value for money in everything we do.

The Local Government Act 2002 was supposed to improve local government management, and we were assured—if you can remember back to 2002—that it would not add any significant costs, but it did. Over the last decade rates have become more and more unaffordable for many more people. In the last decade, rates increased by an average of 6.8 percent every year. That is double the rate of inflation. Operational costs have ballooned out. Local government salary costs are significantly higher than central government or private enterprise costs. Local government debt has quadrupled from $2 billion to $8 billion. Whatever you say, more debt is bad. It increases uncertainty and increases liability. While households and businesses are being prudent and responsible—they have been belt tightening, they have been managing their costs, and they have been paying down debt—local government costs continue to rise. In the face of global financial pressure and monetary uncertainty, ratepayers are becoming increasingly anxious and concerned about paying their rates and ongoing rate increases. Ordinary households and businesses have absolutely no control over rates. They have no choice but to pay those rates, and they want to see councils tighten their belts too, as they have done themselves.

While working on the Local Government Act 2002 Amendment Bill, local government Ministers have met with Local Government New Zealand, mayors right across the country, regional council chairs, regional chief executive officers, and numerous ratepayer groups in order to understand the issues and to formulate these amendments. This bill is the first phase of local government reform, but it really focuses on four main initiatives. The first is to refocus the purpose. It is all very well for Mr Twyford to say that that will not make a difference, but ratepayers tell us that what they want from their councils is reliable and effective infrastructure, and they want efficient public service at an affordable cost. That is what they want, so we are going to reword the purpose to cover that. We are going to say “to meet the current and future needs of communities”—so current and future, thinking into the future—“for good-quality,” not rubbish, but good quality, “local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.” We believe that this will focus councils on the roles and the duties that are of most value to ratepayers, but it will still allow for individual differences for those communities.

Ratepayers also tell us that they want the best possible financial management by their councils, and that makes good sense. We want to introduce consistent financial prudence requirements across local governments, and that means introducing regulations that will allow for financially prudent parameters and benchmarks. Under present legislation—the famous 2002 Act by Labour—councils already have to exercise prudent financial management, and they have to exercise prudent stewardship of their resources. But if we can develop benchmarks for this process—and they will be developed with the consultation of Local Government New Zealand—that will allow a greater understanding for everybody, and greater transparencies in finance for everyone. Because financial management will be consistently measured across the country, it will be far easier to see when a council is out of step or a council is performing poorly, and it will be far easier to identify when a council is struggling, and might need Crown assistance or even require intervention.

Ratepayers also tell us that they want councils, councillors, and mayors to be more responsible to the people who elect them. We want to strengthen council governance by giving mayors a stronger leadership role so that they can have that role over developing plans, policies, and budgets, and we want to give them the power to appoint deputy mayors and also the chairs of committees so that when they go and take charge of a council, they can make sure that what they have promised can be delivered. We also want to give more powers to councillors. When you think about it, staffing and salaries are the major drivers of increased costs in councils. Presently, councils have absolutely no control over these matters. We want to make sure that councils are able to set employee numbers and salary scales, and we want them to report on that salary information in their annual reports. We believe that these measures will make councils more conscious of the cost and more accountable to the public.

The ratepayers also tell us that they are open to change in the structures of local government if it gives them better efficiency. We want communities and councils to have more flexibility in developing reorganisation proposals. The current process that is being used is lengthy, it is complex, it is expensive, and it is actually rarely successful—very rarely. We want to empower communities and councils to make changes that have the potential to achieve efficiencies and better decision-making. The new legislation will make it easier for the community-led local government reorganisation to succeed, and it will also give greater flexibility to the Local Government Commission to develop reorganisation proposals. There is absolutely no doubt that effective and affordable local government is essential for the running of every New Zealand household and business. I think that this amendment bill is designed to provide a better understanding of councils’ roles. It should give us stronger and more effective governance, improved efficiency, and more prudent financial management. I commend this bill to the House.

GRANT ROBERTSON (Deputy Leader—Labour) : Listening to that member, Nicky Wagner, I wonder why the Government does not just fold all of local government up and get Paula Rebstock to run it, because that is basically the Government’s approach to everything at the moment: “Let’s just corporatise the whole thing, have a board, and have Paula Rebstock run the whole thing.”

It is important to see this bill, the Local Government Act 2002 Amendment Bill, in the context of what this Government has done with local government since it got into office in 2008. It inherited the Royal Commission on Auckland Governance. Everybody in the Auckland region wanted something to happen, wanted a more efficient process, and wanted better decision-making. The royal commission came through, and this Government came along and ripped out sections of the report. It just said “No, we don’t like that bit of it, we don’t like that layer of governance, so we’re going to take that out. We don’t like the idea that social issues might be dealt with, so we’re going to take that out, as well.” That was the first step when it came to local government, from this Government opposite.

Then it moved on to Environment Canterbury. The then Minister responsible for these things said the Government was not going to have an election on that issue. It would just cancel that, because the Minister was worried about the outcome. That was the quote. It was in the Timaru Herald. I remember it well. The former Minister is nodding. He was worried about the outcome. Well, I tell you what, I was quite worried about the outcome of the 2008 general election, but we did not cancel it. We did not say no, we were not going to have it because we were worried about the outcome. But that is what this Government did when it came to Environment Canterbury. It said to good people like Eugenie Sage: “I’m sorry, that’s it. You’re out. We’re not going to do this, because we’re worried about the outcome.”

Well, there is the small matter of democracy. It is a tiny matter that this Government does not seem at all interested in protecting—certainly not at a local level. Because now the Government, having tried to disembowel the royal commission report and having taken out Environment Canterbury, is going to do it to everybody. Satisfied as it is with what it has done in Auckland and Canterbury, the Government has come along and said it is time to get rid of democracy at a local level right across New Zealand.

I want to focus in on the most insidious part of this bill, and that is the fact that the rights of local residents to have a say on the organisation of the governance in their area is taken away. The automatic right to a referendum is gone, under this bill. Gone! That is an attack on democracy. That is saying to local residents that they do not automatically have a right to have a say about how they are governed at a local level. That is wrong. Local people deserve a say in local decisions. What we now have is a process by which, yes, a poll, a referendum can be requested; it has to be requested by 10 percent of the voters in an area. And to get those 10 percent, the people who are trying to organise a petition have 40 working days. They have 40 working days from when a proposal is approved by the Local Government Commission.

In the Wellington region here, should a proposal come forward for a so-called super-city for the Wellington region, that will be around 48,000 signatures to collect in those 40 days. They cannot start any earlier than when the proposal comes up, and that is as good as it gets. It is democracy, if you can pull off that 10 percent. It is not democracy for everybody in the region. It is wrong, and that is an attack on our democracy. This bill today takes away democratic rights. What kind of Government comes to this House to take away people’s democratic rights? This kind of Government does—a National Government that is determined to see all of local government in the sense of corporatised, board-like relationships rather than it being part of democracy, rather than it being something that local people have a say in.

What we have today in front of us is a bill that effectively says that amalgamations will be coming. “You will get them, no matter what.” Now, some amalgamations may be a very good idea, indeed. But local people deserve the right to a say, not to have to go out and work to have a say—they actually deserve a right to have a say about what the structure of governance will look like in their area. This bill strips that right away.

The word “flexibility” keeps being used, but the question I have got to ask is how we balance flexibility streamlining against people’s right to have a say in how they are governed. This bill gets that balance all wrong, and it should not be allowed to pass.

The other part of this bill that I do want to put some time into is the question of the change from the removing the four well-beings from the 2002 Act, because there has been a lot said about the fact that councils are somehow out of control—that they are completely out of control with what they are doing as a result of the 2002 Act. To repeat what Mr Twyford has said, the Department of Internal Affairs says there is no clear quantitative evidence to suggest that the Local Government Act 2002 has resulted in a proliferation of new activities, or that local government is undertaking a wider group of functions. That is the Department of Internal Affairs. That is the Minister’s own advisers saying that actually the whole premise of that change does not even stack up. As Mr Twyford said before, frankly, the Government does not even know why it is changing this particular clause. It wants to look like it is somehow or other going to streamline and narrow what it is that local government can do. But the reality is that the Government does not know. Is it the V8s or is it the flower show?

Now, some people might argue that that is evidence of Maggie Barry’s influence over this Government—flower shows are in. David Bennett has no influence—V8s are out. That could be one argument for what is driving—[Interruption]—Tim Macindoe. Sorry, I forgot. Maggie Barry is in the ascendency; Tim Macindoe and David Bennett are out. Flower shows versus V8s. But actually I think it is simpler than that. The Government wants to look like it is making a change in this area, when in reality it is actually not. But what worries me more is that this is happening in the context of a time when the Government, at a central government level, is bailing out of important public services. It is saying that it is not going to be providing the kind of support in housing, health, and all the areas that we think of as central government’s role. Yet at the same time the Government is trying to tell local government that it should not be in those areas either. But it is confused. It does not add up, it does not actually make any sense in terms of what councils will be directed to do.

And here we have the Auckland Council with its magnificent new plan, founded on the four well-beings—sorry, not quite sure we fit into those any more! I have a prediction: I think they probably will be able to fit everything into the new structure, because this Government simply does not know what it means by its new purpose statement for core public services.

The other premise on which this bill flounders is the fact that the questions around debt and around the state of councils have not been accurately portrayed by this Government. Once again, Local Government New Zealand’s figures show that the average of all councils’ expenditure on interest repayments, as a percentage of operating income in 2010, was 4.53 percent. Now, it has gone up. It has gone up from 4.19 percent, which is not that big an increase. It is a small increase on average. [Interruption] The former Minister can pick out examples if he likes, but the truth is that the figures have been beaten up. The figures have been beaten up to try to make the case, and it does not make the case.

The Auditor-General said that debt levels were well within prudent financial standards. That is what the Auditor-General said about local government. Of course ratepayers want to see good, efficient public services provided by their councils. Of course they want to make sure, and there will be things we can do, but premising widespread amalgamations forced on local people, premising this whole bill on statistics that do not add up, is not good enough. The Government needs to be able to come through with proper proposals—consulted with the sector—that actually will improve the way that local government works. There are bits and pieces of it in this bill, but the reality is that the fundamental changes that have been proposed here are anti-democratic and are based on things that actually do not add up.

But in the end, I want to finish with saying where is all this ending up. Where all this is ending up is what the Government would like to force local government into doing, and that is asset sales. It is quite clear that is the agenda. In fact, I do not need to say it. John Key and David Carter have said it in the context of Christchurch. They want local government to shed assets. They want to take the harebrained scheme that this Government is trying to put in place—in the absence of any kind of real plan for economic growth—to sell assets, and they want to transfer that on to local government. That is wrong. It is wrong in principle, but it is also wrong in practice, taking away the rights from local government to make decisions, taking away the rights from local people.

We are opposing this bill, because although there may be some good streamlining of local government that could take place, and there may well be good amalgamations out there that could happen, they should not be brought about by taking away democratic rights from people, by taking away the rights of individual citizens to decide how they are governed. This bill is wrong, and the Labour Party opposes it.

EUGENIE SAGE (Green) : Tēnā koe, Mr Speaker. Local government has an enormous influence on nature, on our quality of life, on our neighbourhoods, and on the way our communities function. It has a crucial role in creating the places and communities that are safe and pleasant to live, play, work, and retire in.

The Local Government Act was significantly overhauled and changed in 2002. The intention then was to empower local communities. Local authorities were intended to be the instruments of local democracy through which communities achieved the outcomes they aspired to. This bill winds back that philosophy. It winds back the philosophy of councils being the instruments of their communities. By changing the purpose of local government and dropping the requirement to promote the four well-beings, it will restrict councils to nuts and bolts activities. This potentially prevents them from being the arm around their communities, from undertaking activities such as the very successful Christchurch City Council’s KidsFest school holiday programme, or from providing affordable rental accommodation. As the regulatory impact statement on the Better Local Government discussion paper notes, there may well be unintended consequences around changing the purpose of local government, because that whole concept of well-being is woven throughout the principal Act and throughout the whole framework of local government.

In relation to changing the councils’ purpose, this Local Government Act 2002 Amendment Bill is a solution—and a very poorly conceived one—looking for a problem. That is because section 11A of the principal Act already requires councils to “have particular regard to … core services … (a) network infrastructure: (b) public transport services: (c) solid waste collection and disposal: (d) the avoidance or mitigation of natural hazards: (e) libraries, museums, reserves, recreational facilities …”. It was not just the regulatory impact statement that said there was no evidence of a proliferation of council activities since 2003; it was also the report of the Local Government Rates Inquiry in 2007.

So the Green Party is opposing this bill. One of the other reasons is that it takes the “local” out of “local government”. It will mean that councils are potentially much more under the thumb and direction of Wellington, and that is because the bill gives the Minister huge powers to intervene and effectively direct what councils do. So instead of local councils and central government operating in their own spheres, with councils accountable to local electors, we will get a very strange hybrid. We will have local councils that will always have their eye on Wellington and that will be quite nervous of the Minister intervening through the appointment of Crown observers, Crown managers, or a Crown review team, or through the ultimate sanction of sacking elected councillors and replacing them with appointed commissioners.

These ministerial intervention powers concentrate much more power in the executive. They undermine local autonomy and they give the Minister very wide discretion to intervene, because of the very generous way in which the trigger for intervention is defined. It is defined as a “significant problem”, and how is “problem” defined? It is “a matter or circumstance relating to the management or governance of the local authority that detracts from, or is likely to detract from, its ability to give effect to the purpose of local government within its district or region;”. That allows a huge amount of subjectivity in the Minister’s decision. If it is easier for the Minister to get involved, he or she is more likely to, as the Minister did in Canterbury, and that will cut across democratic decision-making and it will cut across the fundamental principle of having no taxation without representation. What is most galling under this bill is that if the Minister appoints commissioners, it is not central government that pays for them; it is local electors and local ratepayers who are expected to.

Certainly there have been some well-publicised examples of poorly managed council expenditure, such as the V8 race in Hamilton and Kaipara’s costly sewerage system, but most councils are getting on with their job efficiently and effectively. Most councils are doing it in a financially prudent way. They have a financial strategy, they have a revenue and finance policy, and they are audited by the Auditor-General. In a recessionary climate we are already seeing in this year’s round of annual plans councils cutting and adjusting their spending.

If expenditure is capped and limited to no more than the ratio of the population growth multiplied by the rate of increase in the Consumers Price Index, this is potentially going to encourage councils to neglect investing in upgrading and maintaining their infrastructure, potentially burdening future generations with an increased cost. As the law firm Simpson Grierson has noted, benchmarking expenditure to the Consumers Price Index is troubling because local authorities’ costs, especially land and infrastructure costs, are increasing more rapidly than other costs like food costs that the Consumers Price Index measures. The Local Government Cost Index would be a much more relevant measure. We all know too that household sizes impact on the services that councils have to provide, so it is household numbers rather than population growth that would be a much better measure.

This bill is bad because it takes the “local” out of “local government” by the way in which it advances National’s agenda of creating supertanker councils—large unitary councils that are difficult for the public to access and to influence. It will see local councils that represent their local communities overwhelmed by the push to create the Auckland model and roll that out throughout New Zealand. As the Napier City Council has said in a letter to many MPs: “It is not reasonable to conclude yet that the Auckland model of local government will serve all in New Zealand well if it is used as a blueprint for every other region.” Outside Auckland that three-tier structure with the regional council, the city and district council, and community boards works well. If we are going to clean up our waterways we need to look at what is happening in urban waterways—the impact of stormwater and sewage discharges—as well as rural waterways. Where you have that separation of power between the regional council as an environmental regulator and the district or city council providing the services of stormwater management, the sewerage system, and the like, you get more accountability and more transparency. In Christchurch we would still have had treated sewage being discharged into the Avon-Heathcote Estuary if it had not been for the regional council having the decision-making role there, because it was the regional council commissioners who said no to that. The city council wanted to continue to discharge it into the estuary.

Government spokespeople have suggested that the current legislation around amalgamations is not working, and that is presumably because small communities with existing councils are voting to retain the status quo and not amalgamate. To me that is evidence that the legislation is working well. Votes against amalgamation show—and I quote the Napier City Council—“that communities have confidence in the localness of their existing council. They value their ability to communicate directly with local representatives and hold them accountable for the decisions they make.” That is the unanimous view of the mayor and all 12 councillors of the Napier City Council. This bill, by changing those amalgamation procedures and giving the Local Government Commission a central role, is anti-democratic because of the procedures that Mr Grant Robertson mentioned, where you have a poll over all electors in the area affected by the amalgamation and not just in each single council area, and the requirement that 10 percent of electors must demand that referendum. That is heavily weighted against small communities that want to retain their local voice and their independence through having their own council. Their voice risks being overwhelmed by all of the electors in the affected area, and that is anti-democratic.

In the Green Party we care about the places we live: our neighbourhoods and our towns. We want to make them better living places where people are better connected, where communities are stronger and more resilient, and where prosperity is shared. We want councils that are the voice for their communities, that manage their finances prudently, and that invest in sound infrastructure so that our stormwater and sewage discharges are well treated and do not pollute our rivers. We oppose the major thrust of this bill because it reduces the voice of local communities, it is anti-democratic, and it allows too much scope for Ministers to interfere with local government. It will muddle the accountability of local councils to their electors and make them more responsive to the Minister in Wellington.

Hon Dr NICK SMITH (National—Nelson) : Never have I seen a debate in this House that shows how out of touch the Opposition is with the issues facing New Zealand, and how much this John Key Cabinet—and I compliment the work of David Carter on this bill, the Local Government Act 2002 Amendment Bill—is on top of the issues that matter. I want to start with the core issue, and that is whether New Zealanders are satisfied that the 2002 Local Government Act is working. At the core of this argument are the speeches I have heard from Phil Twyford and the Green Party that say that it is all going hunky-dory and that it is all going awfully well. Well, I want to begin by quoting what the Labour Government said when it passed the 2002 Act. It said that the rate of rate increases would not change, and that the costs of local government would be well controlled.

Let us look at what has occurred in the decade since Labour rewrote the local government laws. Of all the 164 factors that are included in the Consumers Price Index, which one has gone up the fastest in the last 10 years? Has it been the price of fuel? Has it been the cost of food? Has it been the cost of housing? No, it has been the cost of rates. The cost of rates has gone up faster than any other area of cost for householders, and what the Labour Party and the Greens have said is that they do not care a toss. They do not care about the cost of rates bills for retired families, for working families, and for businesses. Over the last decade, rates have gone up by more than double the rate of the Consumers Price Index.

The first challenge I have for any member opposite is to please explain for me why it is that in the period from 1992 to 2002, the decade before Labour made those very significant changes, the average rate increase was 3.1 percent—3.1 percent for that decade. In the decade since, rates have gone up by more than double that rate. I say that it is absolutely right in these financial times for this Government to review how well that 2002 Act is working.

Phil Twyford: He’s just making it up.

Hon Dr NICK SMITH: The member says we are making it up. Let me give you another example. Why is it that households over the last 3 years, in response to the global financial crisis, have reduced their spending and reduced their debt? Businesses in New Zealand have responded by containing their costs and reducing their borrowing. Equally so we have seen in the farm sector people being more cautious, reducing their spending, and reducing their debt. In this Government we have adopted that, and we have seen that in the Budget that has been set down.

Why is it that the only sector whose spending is continuing to grow and whose debt is continuing to grow is the local government sector? And members opposite have got absolutely no idea what to do about it.

Phil Twyford: But it’s nothing to do with the Act.

Hon Dr NICK SMITH: Let Mr Twyford deal with some facts. The level of local government debt in 2002 was $2 billion. Do you know what the level of debt is within the local government sector since the previous Government passed the Local Government Act? It has gone from $2 billion to $8 billion—$8 billion.

Andrew Williams: What’s central government gone from? $8 billion to $52 billion.

Hon Dr NICK SMITH: I challenge Mr Williams, who is interjecting. If we look at the long-term plans that have been set down by councils for the next 10 years, we see that they are going to take that level of debt up to $20 billion. How many members of this House really believe that it is wise in these current financial times, when we are seeing countries in Europe wrecked by debt, to take our level of local government debt from $8 billion to $20 billion? What we have heard from Opposition members is that they are OK with that. They are OK with the level of local government debt in this country going from $2 billion to $20 billion.

Phil Twyford: His numbers are shonky. He’s making it up.

Hon Dr NICK SMITH: The member interjects and asks whose numbers. Well, I have a simple question for Mr Twyford. Has the level of local government debt gone from $2 billion to $8 billion since Labour passed the Local Government Act? He is the man who is shouting and continuously interjecting, suggesting my numbers are wrong. I put a very simple question to him, and he cannot answer it.

Let me come to one of the core debates that has been raised by members opposite, and that is the issue of the purpose of local government. The touchy-feelies on the Opposition benches think the role of local government should be to provide for the nation’s social, economic, cultural, and environmental well-being. I will ask an honest question. Every one of the needs of our community in New Zealand can be defined into those four areas. Do we really believe that with 4 percent of GDP, people can meet all of those needs? It is a nonsense.

What we need is a well-focused local government sector with a clear framework from Government about what its job is. Is it, for instance, the job of the local government sector to provide for welfare? No, it is not. It is a core responsibility of central government. How many members opposite think that it is really smart that the New Plymouth District Council owns 20 dairy farms in Tasmania? Does Mr Twyford, who has had so much to say when interjecting, think that it is smart that the New Plymouth District Council has got millions of dollars invested in dairy farms in Tasmania? He is suddenly silent. The reason is very simple. It is that just as we in central government define that we have roles for our courts, for our education, for our health, and for our welfare, it is absolutely sensible for Government to set down and say to our councils: “Your job is to provide good quality local infrastructure. It is your job to provide those good important local services like libraries and like parks.” And, thirdly, it is important—actually a very important role—for our councils to provide efficient local government services.

I want to deal with the issue of council mergers, because that has caused some commentary from members opposite. My challenge to them is this: there have been 14 attempts under the old legislation to reform councils, and every single one of them has failed. I have a simple question for members opposite: was it sensible when we had the Banks Peninsula District Council and Christchurch City Council wanting to merge—one, Banks Peninsula District Council, voted for, and one voted against—that that merger was able to be achieved by the Banks Peninsula District Council effectively voting itself hara-kiri? That was the way that that reform occurred. That is under the existing Act. Do members opposite really believe that that is a sensible way in which to advance local government reform?

Could I test a further idea around democracy. What the Greens have just argued is that you should not be able to have local government reform unless every single district agrees. Let us apply that to a very important referendum we had recently. Should we have a view that we should not have had MMP unless every electorate had a majority voting for it? There were electorates like, for instance, Clutha-Southland that voted no. They did not want MMP. So should we have said in 1993 when we reformed from first past the post to MMP that unless every single subcomponent of New Zealand agrees there will be no change? It is our view that in these times we do need to be looking at our local government structures to ensure that they are efficient. The track record is that the current system does not work, and that it is too resistant to change. I think we have to have an honest conversation. Auckland would never have reformed itself. And for all the noise that we get from Phil Twyford, my simple question to him is this: with the existing system, which is in the 2002 Act that you are responsible for, would you have got that long-overdue reform in Auckland if you had waited for the provisions of the existing Act to work? Every member of this House knows in their heart of hearts that those Auckland councils would never have been able to move forward and move Auckland forward in the way they have.

I want to make one last point, and that is about the intervention powers. It was somewhat ironic hearing from Eugenie Sage about the Minister of Local Government’s power to make decisions. Is it not interesting how Environment Canterbury has performed so well over the last 4 years? We have now got a plan to clean up Lake Ellesmere. We have got a higher level of compliance in resource consents. In fact, the biggest level of improvement in resource consent compliance has been in Canterbury. But the point I want to make is this: at the moment the only power the Minister of Local Government has is to fire a council. It is absolutely sensible that this bill gives the Minister lower-order powers—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the member, but his time has expired.

ANDREW WILLIAMS (NZ First) : It is a shame—I seem to always get the call with 2 minutes to go, and the line of thought can be a little bit interrupted when you have only 2 minutes to wind up. It is very interesting to hear the comments of the National members in relation to this bill, the Local Government Act 2002 Amendment Bill, particularly as most people in the National Government have had no experience in local government at all. They speak as if they have got huge knowledge. Ian McKelvie over there, a former Mayor of Rangitīkei, certainly does, but most of the National Party people have no knowledge. It is interesting, therefore, that they expound these utterances but they really do not know what they are talking about.

Coming from 9 years in local government, and as probably the only person in this Parliament elected as a community board member, elected as a councillor, and elected as a mayor—

Maggie Barry: Not at the last elections.

ANDREW WILLIAMS: —I do have a little bit of knowledge, rather than those who concentrate on gardening activities. There are those in this room who would not know that there was a certain National Party backbencher—John Key—who had a member’s bill back in 2005-06. It was not drawn from the hat in that Parliament, but he was trying, as a backbench MP of the National Party in Opposition, to create a super-city in Auckland. Is that not interesting? Most New Zealanders do not know that the person who was pulling the strings to create the super-city in the first place was a backbench MP by the name of John Key. Is that not interesting?

I now have only half a minute to go, but I will come back after the tea break, and I will continue this discussion on the proper history of local government and how we got to this stage, and the fact that local government in New Zealand is actually doing very, very well. For instance, the Shand report back in 2007-08 said that local government had $100 billion in assets and only $2 billion in debt, and it was the recommendation of the Shand report into local government that they should leverage their balance sheets—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. It is time for me to leave the Chair. This debate is interrupted.

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

ANDREW WILLIAMS: When we left off just before the dinner break, I was giving details of how the National Government cannot be trusted when it comes to local government. From 9 years of experience in local government, I certainly came to learn how the National Party, both in Opposition and subsequently in Government, could simply not be trusted.

I mentioned before the dinner break that John Key, as a backbench MP back in 2005-2006, put forward a member’s bill, which was not pulled from the ballot, to create a super-city in Auckland. When National became the Government, it handed that over to Rodney Hide and gave him the dirty work, but basically John Key’s paws were all over it, and it was his idea in the first place to create the super-city to back National’s rich mates in Auckland, to corporatise Auckland, and to create all the council-controlled organisations.

We are now seeing water bills in Auckland being posted out on a monthly basis under Watercare Services, we are now seeing weeds growing all over Auckland where they were not growing before, and we are now seeing the destruction of many of the services that were previously available in parts of Auckland. Those services are now all being centred on the centre of Auckland, where, basically, local government in Auckland in many respects, particularly in the case of communities, is going backwards.

We must recall that National, in those days, when it was still in Opposition, promised prior to the 2008 election that it would consult the people of Auckland on the creation of the one council in Auckland. It said it would consult on the outcomes of the royal commission of inquiry into Auckland. Well, 6 months after the election, such agreement to consult people of Auckland disappeared out the window. The commission reported on 31 March 2008, and subsequently, within 10 days, Rodney Hide threw that 800-page, $5 million report out the window and came up with his 34-page result for Auckland.

That was an example of how National works with local government, and this latest local government reform is basically a continuation of that, where it basically gives lip-service to local government in this country. We must remember that Australia has three levels of government. It has a Federal Government, state government, and then it has local government, whereas here in New Zealand we have only two levels of government—that is, our central government and our local government—yet this central government seems to want to get its paws all over our local level of democracy and basically have the Minister determining much of what will happen within the local councils and within the local authorities.

We have to remember what local government came out of. It came from hundreds and hundreds of years of history—the histories of town councils, town shires, and representatives of a town or a village or whatever being chosen by the people of their town, village, or district to represent the interests of the greater mass of people in that area and to do the work on behalf of that community. That is what local government is all about, and it is not for central government, which is supposed to work on high-level policy, high-level planning, and high-level direction in respect of central government issues, to start delving into how a local council should operate.

I mentioned before dinner that there was the Shand report in 2007, a very extensive report into the ratings structure in New Zealand and how local councils should be funded. This report, which was delivered by the commissioner, mentioned that local government in New Zealand was some of the most efficient local government anywhere in the world, and that New Zealand local government was the envy of local government around the world.

The report also said that New Zealand local government was sitting on about $100 billion of assets but only had about $2 billion of debts. If New Zealand was to increase its infrastructure, grow its infrastructure, and improve its infrastructure, those balance sheets of the councils should be leveraged to a higher degree and they should take on longer-term debt to pay for the infrastructure within New Zealand, which central government could not afford to fund.

Therefore, over the last 7 or 8 years that has been an ongoing case, and councils have extended their debt. For instance, in the North Shore we built a $120 million sewerage outfall pipeline to go 3.9 kilometres out into the Hauraki Gulf. That was costing $120 million, a lot of money for a population of 230,000 people, but because we amortised it over 50 years and we took a long-term debt on it, and we made intergenerational debt as part of that whole loan, we could afford to do that and basically provide the sewerage services for the community not just for the 50-year life of the loan but for the next 100 years that the asset would be there.

In that respect, when councils in New Zealand are turning over in the order of $7.5 billion a year, an $8 billion debt across our councils is not a huge amount of money in the greater scheme of things. This National Government, in 3 short years, took the national debt—I am not talking about the National Party’s debt; I am talking about the national debt of this country—from $8 billion to over $50 billion today. That is an extraordinary loading of debt in 3 short years, and it is projected that over the next 3 years it will go to $72 billion. So this bill is so hypocritical of National. It is the pot calling the kettle black. Then we had the Hon Nick Smith say that local councils went from $2 billion to $8 billion of debt, when they have $100 billion in assets, while central government—this National Government—has gone from $8 billion of debt and will end up at $72 billion of debt.

Another example of where National kicked local government in the teeth was a situation where Auckland was trying to fend for itself and trying to provide for itself. It needed the infrastructure and was prepared to put in a regional fuel tax to start at 2c a litre and rise to 9c a litre over a period of 4 or 5 years. It was negotiated over a period of 3 years with central government, and it was going to help fund much of Auckland’s infrastructure and pay for the likes of rail, ferries, public transport, buses, and all sorts of thing out of a fairly charged petrol tax across the region.

What did the National Government do? It got into power and within months it kicked the proposed regional fuel tax in Auckland for touch and cancelled it. It would have by now, today, been producing more than $1 billion a year for the Auckland region to pay for public transport and to pay for infrastructure in Auckland, but what did National do? It took it away but, typically, did not replace it with anything. It has ridden on the strings of the former Government, which was in partnership with the New Zealand First Party at the time, which was already rolling out projects such at the western ring route, the Northern Busway, and the motorway extension to the west.

Quite frankly, in closing I just say that I am very tired of people from the National Party who know nothing about local government, who have spent no time in local government, and who spout on about what they know about local government. Quite frankly, this latest reform of the Local Government Act 2002 is basically taking the councils right back to where they were maybe 20 or 30 years ago, where they simply had a town clerk who fixed some potholes, did some footpaths, and maybe fixed up the roads and patched up the local hall. Well, the days of that have gone, and the days of local communities expecting much more from their local council are here. It is a very sorry day in this country that this National Government is going back to those days.

NIKKI KAYE (National—Auckland Central) : I am very pleased to speak on the Local Government Act 2002 Amendment Bill in its first reading. Can I start by just saying, look, I think we need to reflect on why we are here. When we came into power, what we saw was excessive debt within local government. Over a period of time, we saw debt go from $2 billion to $8 billion. Let us just get that straight. Council debt quadrupled in New Zealand from 2002 from $2 billion to $8 billion. We also had a very difficult situation in Auckland where we had fractured local government and we had under-investment in infrastructure over a large period of time. We have had fractured local government and significant debt over a long period of time, and what we acknowledged is that we needed change. So what you have seen from this National Government is significant reform in both the Resource Management Act and local government that culminated in the Auckland local government reform. I am very pleased to say that we now have one council, one mayor, and one plan for Auckland.

But what this bill is about is saying there are many New Zealanders struggling at the moment. They cannot afford excessive rates rises. They need clarity around what local government is responsible for. And what we acknowledge is that when the previous local government legislation came in, it gave incredibly wide paths around the purpose of local government. That is where we have seen some of the debt blowout. What we are standing up and saying is that this is part of a package of reforms that we have had that is about reducing costs to the household, reducing costs to businesses, reducing compliance costs, and ensuring that people get speedy processes in terms of their interaction with their local authorities. We have seen that through the Resource Management Act and we are now seeing this as a package of local government reform.

Members will hear from the left that this is about taking away democracy. They will hear that this is about ensuring that some local body members do not have as much power. What I would say to members is that we have been very clear that we do believe in local government, but we believe in local government that is not duplicating the functions of central government. That is not good for the ratepayer, that is not good for businesses, and that is not good for New Zealand. We also believe in local government that ensures that businesses are able to get on and do what they need to, and not have excessive costs and time delays.

I just want to address a couple of parts of this bill that I am very confident many New Zealanders will be very pleased to see. The first thing is transparency and financial accountability in local government. Most New Zealanders I have talked to actually think that is a very reasonable, pragmatic thing to expect of local government. We do it at central government level. We have many different processes whereby New Zealanders can look and see the accountability and they can see the transparency around where funds are spent. And this bill is saying that we are going to have stronger governance, improved efficiency, and more responsible financial management.

The second thing that this bill is very, very focused on is those councils that struggle. Let me say that there are many councillors and local body members who do an outstanding job in New Zealand, but sometimes they get into trouble. This is what this bill says: we are actually going to put a process in place that strengthens those local authority governance provisions to enable central government to help those councils that may be struggling.

But it also does something that I think is very important, and the genesis of this was the Auckland local governance reform provisions, whereby we acknowledged that in order to empower elected representatives, we actually might need to give them more power over employment and remuneration authority. It is working reasonably well in Auckland, and we acknowledge that this is actually about empowering local members to be able to have greater control over their communities.

These are very reasonable and sensible reforms that most New Zealanders would understand. It is about ensuring we have greater financial accountability and transparency around funds and where they are spent, but also empowering those local members to be able to get on and do their agenda. I know there are members in this House—because I know them pretty well—who have been local representatives who have been frustrated when local representatives have not had the ability, with council officers, to control the agenda. And what this bill does is it gives greater power in that area.

Finally, I just want to mention that there is a person in the building tonight, Ambassador Huebner—and I am going to relate this to local government to ensure that it is relevant for my speech—who gave a wonderful quote last night from Oprah Winfrey about New Zealanders and Americans. He said lots of people want to ride with you in the limo, but the person you want next to you is the person who will catch the bus with you when the limo breaks down. I just want to acknowledge that—and I am going to link this to the local government reforms—the ambassador is in the House this evening. This bill is about delivering long-term infrastructure for communities, and what we are saying is that we are striking a balance in this bill to ensure that communities have the power over a significant period of time to pay for that infrastructure. What we have seen in a city like Auckland is significant under-investment over a long period of time, and the reality is that that has been in successive local authorities, and it is because we have not had a structure in place. I just want to acknowledge that what this legislation is about is ensuring that actually that is done in a reasonable and pragmatical way that is affordable for the many households that are struggling at the moment and cannot afford significant rates.

This Government is about greater financial transparency in local government, this Government is about ensuring that local bodies have their power and are empowered by the council employees that they have with them, and it is also, thirdly, about ensuring that local infrastructure is focused on what we need and is not duplicating central government. So I am very proud to support this legislation to the House. I support this legislation. Thank you.

Dr MEGAN WOODS (Labour—Wigram) : I am very happy to take a call on this bill, the Local Government Act 2002 Amendment Bill, and to continue the case of why it is that Labour is opposing this legislation. We have got very clear reasons why we are opposing this bill that has come before the House. We are opposing it because it is a politicised attack on local government, and it will undermine democratic processes and put a fiscal squeeze on councils.

We see this as yet another attack on democracy. Not content with stealing votes in Canterbury and its machinations in Auckland, this is a Government that is going after more democratic rights in this country—the raiders continue. This bill is a solution looking for a problem. It is a reform to a manufactured crisis based on manufactured statistics. We have heard members in this House tonight—we heard Nick Smith before the dinner break, and we have just heard Nikki Kaye—continuing this myth-making and spinning the numbers, even though their own officials do not agree with them. We have had the Department of Internal Affairs tell the National Government that this is not right. The regulatory impact statement for this bill raises the issues of the risks, whether the proposals will work, the significant sector reaction that is likely, and the assumptions that have not been partially tested.

The numbers that this bill is modelled on are shonky. We heard the previous member from the Government side talking about the need for greater transparency and budgeting in local government. Well, I put it to members here that actually the levels of transparency that we have around budgeting in local government far outstrip the levels of transparency we have at central government. The debt-equity ratios that territorial local authorities need to work to are transparently laid out not only in long-term council community plans but also in the annual planning process. There is this level of transparency, so let us not dress up what this legislation is really about. What this legislation is really about is yet another raid on New Zealanders’ democratic rights and their rights to be heard. What this legislation is also about is yet another way for this Government to try to sell assets in this country, and this is the focus of the legislation that I am going to talk about tonight.

It has not been dressed up at all by Government Ministers or, indeed, the Prime Minister that this is one of the primary objectives of the legislation. Provisions in this bill will enable the Government to really put the fiscal squeeze on councils to sell their assets. They are being advised by the Prime Minister and the Minister of Local Government to consider selling those assets. New Zealanders are telling this Government over and over again that they are opposed to asset sales at central government level, and they are also opposed to these sales at local government level. This is not something the community wants.

In January this year the Minister for Canterbury Earthquake Recovery, Gerry Brownlee, asked for a list of ratepayer-owned strategic assets in Christchurch, and said there would never ever be any pressure put on Christchurch City to sell those assets. Well, you do not ask for a list of something just to keep it in your back pocket, and, lo and behold, what has happened? There is continued pressure going on for the sale of assets in Christchurch. We are seeing a mayor and a council having to do a push-back to keep hold of those assets.

Let me tell you, John Key has said that it is time for us to have a grown-up conversation about asset sales in Christchurch, and Christchurch City’s holding on to that. Well, let us start that grown-up conversation right here and now about Christchurch’s assets. Let me tell you a story, a story of a city that withstood the ideological push over a number of years and retained its assets. It is a city that was branded—which the Business Roundtable at the time thought was going to be a put-down—as the “People’s Republic of Christchurch”. Well, I can tell members opposite, before you start trying to flog off our assets in Christchurch, this should actually be a bit of a warning bell. That was a tag we wore with pride. We did not sell our assets; in fact, we did everything we could to keep them. What does this city, which managed to keep intact its asset base, and this story have to teach the nation? This is a city that has an asset base of around $2.3 billion, plus, additionally, its city housing stock, of which it is the second-largest landlord in New Zealand. We have assets like our electricity supply company, Orion. We have our airport, our port, our City Care, and Red Bus—the list goes on.

These assets, these cumulative assets, which have been built up by generations of Christchurch people, what has the impact of retaining these assets been? The impact has been that Christchurch has rates that are, on average, 20 percent lower than the rest of the country. We are being told by the Government that one of the purposes of this bill is that it wants to reduce the burden of rates on residents around New Zealand. Well, here is a salient lesson through the story of my city, the story of Christchurch: do not flog off your assets and you get a dividend stream. That dividend stream to Christchurch is what has kept our rates low. How have we kept our rates low? Has it been by slashing and burning and not providing services to its residents? No. That has not been the way we have kept rates low; it is that dividend stream for these assets that we have jealously held on to, the dividend stream of around $40 million per annum that is returned to the city. That equates to around $2 per week for the average household that they do not have to pay in rates. This is a dividend stream coming from Christchurch City Holdings Ltd of around $100 million per annum. This is even a conservative take-back to the city that allows for the building of the assets. It just beggars belief that we might want to sell these off.

How much could these be flogged off for? Well, we do not know, because our council is being pressured to ready these assets for sale, according to information that I have had released under the Local Government Official Information and Meetings Act. I have a list of all the assets and what they are worth, and the council has been asked to put together a book value for them. That has all been blanked out, so we do not actually know what the Government thinks we could have, but we do know that the Government is asking the council to repeat the model, its mixed-ownership model—which is a fancy way of saying “selling off the assets”—that is happening at central government level at local government level as well.

What is the net result for Christchurch going to be if these assets are sold off, as this legislation is going to put the push on to do? It will be higher rates in the long run, because half—half—of that $40 million a year of dividend stream will now have to be received through the rates system. Even if Christchurch City has to endure the 7.5 percent rates increase that the council is currently proposing in its annual plan, rates in Christchurch will still be 16 percent lower than the rest of the country, simply because we had the foresight as a city to hold on to our assets. What we have now is a Government that says that it wants to force councils to sell their assets in an effort to keep rates low. Well, the story of Christchurch shows how short-sighted that is. It shows the fact that, financially, in the long run, all it is going to do is put rates up. It is exactly the same argument against selling State assets at central government level. This is an ideological commitment from members opposite to put on the block assets that have been built up by generations of New Zealanders that are not those members’ to sell and which they have no mandate to sell.

This piece of legislation does nothing to enhance democratic rights in New Zealand. It does nothing to better local government. All it will do is asset-strip the people of New Zealand in yet another way.

MAGGIE BARRY (National—North Shore) : I rise happily to talk to the Local Government Act 2002 Amendment Bill. I well remember when it came in, actually. It was the dark days of Labour. Political correctness was at its absolute height. Labour was redefining everything: light bulbs, shower with a friend—it got too nonsensical for words. And this is a piece of legislation that absolutely is long overdue. Let us have a little look at it, shall we? These so-called four well-beings—well, what exactly does that mean? It means that local authorities are suddenly getting involved in National Certificate of Educational Achievement (NCEA) pass rates. They have targets for this. Hello? Get back to your core business. This is what this piece of legislation is looking to do, and it will do, because we have the courage to address these issues, unlike Labour, which ushered in a lot of stuff and nonsense that is too expensive and utterly unaffordable. Let us have a little look at it, shall we?

We heard Nick Smith before, who knows a great deal about this, looking at the way in which the spending has grown. It has quadrupled since 2002, from $2 billion to $8 billion. What have we got? A lot of stuff and nonsense and politically correct rubbish, which has to go—and it needs to go. This piece of legislation will tidy it up, and we have the courage to do it. Frankly, local government can do better and it must do better. This bill aims to ensure that it does. We will make sure that local government is consistently measured across the country, so that we can see the poor performers and we can get a heads-up if some council is running amok with unaffordable, ludicrous sewerage schemes.

The ratepayers need protecting. They need protecting from people on the opposing side of the House, actually, because those members are the sorts of people who would borrow us into the sort of indebtedness that Greece would envy. It is a ridiculous situation, but we have to look at it really strongly. These four well-beings were always ludicrous, and now when we look at what we can do, we need to provide affordable and reliable services. We need to focus in on the basics. It is all very well to talk about NCEA passes when you have potholes on the road, you have stuff and nonsense happening all through the electorate.

I live on the North Shore. We have in my electorate people on fixed incomes who are really hurting because of the way the rates are being hiked by a big-spending mayor who lives on the other side of the harbour. He has big plans for rail. It will not solve any of the issues that plague us on the North Shore with transport. Nor is he going to necessarily put the kind of money into the infrastructure that the people on the North Shore are used to. These are people who deserve to be able to stay in their own homes and not face the kinds of rate hikes that profligate spending has brought upon them. It is wrong and it needs to be stopped, and this is the piece of legislation that is actually going to do something about it.

Legislation will help councils and give them more tools to keep the debt down and the rates affordable. If they do not want to, they will be brought into line. Accountability, greater efficiency, effective and affordable—these are alien notions to the people on the other side of the House. They could not run the Government that way, they cannot run their party that way, and they let local government run amok in this way. Councils need to be pulled back into line, and fortunately we are here to be able to do it. Stronger council governance labelled as a threat to democracy? That really is drawing a long bow. How typical that members opposite would bray and bleat about such measures. Councils need to be kept under control. We need to keep the debt down, and the rates, as I say, are the strongest thing.

Council governance—let us look at it. Central government will be able to assist struggling councils before the situation becomes critical. Elected council representatives will actually get stronger powers. If you listen to some of the chattering classes, you would think that they are actually having their rights reduced. In fact, mayors will be involved in the development of plans; they will be able to do more. They will be able to appoint a deputy mayor and committee chairpersons. They will have a stronger leadership role.

Leadership is, of course, a very touchy issue across the House. There are a lot of Davids clamouring for it. There is a Grant and no doubt a couple of Jacindas as well. They are all vying for the absolute void of leadership that exists across the House. But on the other hand, with the local government reforms that we are bringing in, mayors will be able to be held accountable, and they will be able to make more decisions about how the council is run. Again, it is about accountability, which is a word that Opposition members know very little about. They probably would not even know how to spell it, although if they get their NCEA pass rates up with local government they might be getting a bit better.

We plan it in a different way. Government does the governing and local authorities deliver the services. It is a pretty clear distinction, and I think it is probably an important one, and that is why this piece of legislation is needed. So we will do as we usually do and ignore the chattering classes and their cheap political points.

I have been interested to see, actually, that they are trying to knock gardeners. Gardeners are people who, along with the farmers, are good people in New Zealand. Suddenly, though, on the other side of the House we are being told that gardeners are no good, that they do not have a role and a place. How ludicrous! How sad is it for Opposition members that they are attacking gardeners. They are attacking people in their own backyards who are doing their bit to save the planet. The Opposition really has lost its way and lost its direction. This is, of course, not news to us.

But I return again to the statement, which is that the Local Government Act 2002 Amendment Bill is an excellent piece of legislation. I support it unreservedly, as does my North Shore electorate and as we do here on the sensible side of the House.

Mr DEPUTY SPEAKER: Chris Hipkins; this is a split call.

Chris Hipkins: It is indeed, Mr Speaker.

Mr DEPUTY SPEAKER: Five minutes.

CHRIS HIPKINS (Labour—Rimutaka) : If we needed yet another example of the arrogance that has taken hold of this Government in the last few weeks, we just got it there from “Queen Margaret” talking about the chattering classes. Anybody who did not agree with the current Government is part of the chattering classes—the chattering classes! Well, I have to say that the people in Upper Hutt are interested in this piece of legislation, because this legislation means that Nick Smith and Fran Wilde, who have been plotting and scheming to cook up an amalgamation in the Wellington region, can do so and take away the rights of Wellingtonians to have a say on it by way of referendum. We know that the plotting and scheming to do away with the democratically elected local councils in the Wellington region has been going on for some time in this Government.

Moana Mackey: She just said: “What’s that got to do with the bill?”.

CHRIS HIPKINS: What’s that got to do with the bill? Maggie Barry, or “Queen Margaret”, wants to know what that has got to do with the bill. This bill basically allows the Government to do away with the local authorities in the Wellington region without the people of Wellington having a chance to have a say on it. Actually, if someone passes me a copy of the bill, I might read it to her slowly so that she can actually understand what is in the legislation. I cannot believe that she managed to speak for a whole 5 minutes on it. Someone might have thought she might have read it. I think that is probably the longest speech she has given in the House, but clearly she has not actually read the legislation. The Local Government Act 2002 Amendment Bill removes the ability of the people from Upper Hutt to have a say on whether they want to be amalgamated with Lower Hutt or with Wellington city or the Kāpiti Coast. At the moment they have an ability to have a say on that, but it will be taken away by this arrogant, out-of-touch National Government.

What did the Government do to build the case for doing this? Well, first of all, it followed the Nick Smith playbook: manufacture a crisis—come out with a whole lot of bogus statistics and make up a crisis. When was the last time he did that? Oh, with ACC! How did that turn out for him? How did that turn out for Nick Smith in the end when he manufactured a crisis in ACC? It did not work out quite so well for him.

It all came unravelled when we found out that the statistics that he was using were totally bogus. His own officials came out and said that his statistics had been bogus, and they replaced them on the website with a statement. The statistics were up there on the website, but the Department of Internal Affairs replaced them with a statement that said that “there are issues with the data both in terms of its accuracy and in terms of the picture that was given for some councils.” The Department of Internal Affairs officials basically said that Nick Smith was not telling the truth. Their own Minister was not telling the truth about the true picture of local government. It is an indictment on the Government that Nick Smith’s own officials did not believe him. His own officials actually went so far as to put a statement on a website that said he was wrong and that he was not telling the truth.

Of course, there is a bit more to this as well, because this Government rushed this legislation in. Did it talk to the people who were going to be affected by it? No, of course it did not. The chair of Local Government New Zealand said that a number of its members had expressed concern at the lack of any consultation on the proposed changes before they were signed off by the Cabinet. Oh, now that is a bit familiar. Where have we heard that in the last few weeks? I think just about every teacher, principal, and school board of trustees in the country shared a similar concern for another set of changes the Government was pushing through.

This is not a Government that does things with people; this is a Government that does things to people. It does not actually care what the chattering classes—as Maggie Barry calls them—think. It knows better—National knows best. That is the mantra of John Key’s Government—National knows best. National will do whatever it likes. It will forget about referendums or anything where people might actually have a say. National will do just whatever it feels like. And this bill is yet another example of that in action. This bill has been introduced without the Government consulting properly with the people who are going to be affected by it, and without consulting with the people who might know something about local government—because this Government certainly does not seem to.

This is another quote from the Department of Internal Affairs, the Government’s own officials, and this is quite an indictment really. The department is worried that there is risk as to whether “all the proposals will work”. This is the Government officials saying they do not know whether the proposals in this bill are actually going to work, and then they further go on to argue that the assumptions that the legislation is based on “are not, or only partially, tested.” It is a bit like the crazy idea to increase class sizes.

DENISE ROCHE (Green) : I rise to take the Green Party call to oppose the Local Government Act 2002 Amendment Bill. I was going to list everything I could think of that was wrong with it, but, actually, I do not have time. But I will go into some of the problems that we see with it. This bill seeks to emasculate local government. Its overall intention is to reduce the ability of councils to respond to their communities. It seeks to wrest away the power they currently hold and give it to someone else. It seeks to force amalgamations of local authorities, enhance the powers of the Local Government Commission, and remove the democratic right of the people most affected by local government to have a say on it.

I can give you firsthand experience of what this feels like. I am a survivor of the forced amalgamation in Auckland, and actually—

Paul Goldsmith: Me too.

DENISE ROCHE: There are several others in the room. I acknowledge former city councillor Paul Goldsmith. I acknowledge former North Shore Mayor Andrew Williams. I acknowledge Sam Lotu-Iiga, and I also acknowledge the former mayor John Banks.

My community, Waiheke Island, was absolutely livid about the removal of our right to choose whether we wanted to be part of the super-city amalgamation. I do not care what the Auckland Central MP, Nikki Kaye, said about empowering. That is not what happened. We were disempowered in Auckland. Our rights were taken away from us, and it was her Government that did it.

We know from an experience like Waiheke’s that local government, or any type of democracy, really, works best when the people know their local representatives, when they can eyeball them in the supermarket and chew their ear off and make them accountable. That is how they get to be engaged in their communities. When people do that, they are actively participating in local decision-making, and that is when we get real democracy. We need that to happen more, not less.

Nearly a third of all New Zealand voters did not bother to vote at the last general election. Contrast that with the fact that about a quarter of the submissions on the super-city amalgamation legislation came from 0.8 percent of the 1.4 million people in Auckland—they came from the Hauraki Gulf, that 0.8 percent. They are active and engaged. Their concern and the concern we share about this bill is that the “local” is being removed from local government.

We are concerned that this bill is going to steal the heart out of local government. It wants to remove from the Act the four well-beings. It wants to remove the requirement for councils to provide for the “social, economic, environmental, and cultural well-being” of communities. Those words were a huge breakthrough in 2002. They underpinned a whole bunch of things that councils with heart do, and they do it in a very cost-effective manner. They recognise that local government has a role to create and support safe, vibrant, and healthy communities.

To use the words of David Hay, Mr Goldsmith’s good friend and the leader of the Citizens and Ratepayers cabal that was in the former Auckland City Council—and he was the deputy mayor then, too—he says that he has “always maintained that councils should focus on rates, roads, and rubbish”. That is what this bill wants to do. It wants to take everything else away, and just focus on that. He was really outraged about libraries, because he did not see that councils had a role in educating—like Maggie Barry, I guess—or inspiring the people who live in our communities.

I feel for our local councillors. I am heartened by Local Government New Zealand, because its research is accurate research. It can show that over the last 3 years the rates increase has been steady at 2.8 percent of household income; that is all that is being spent on rates. We are prudent financial governors in the local sector, and for this Government to disembowel democracy in local government is beyond the pale. It is another move that should be resisted.

ANDREW WILLIAMS (NZ First) : I seek leave to table an extract from an address by the Rt Hon John Key, Prime Minister, to the 2011 Local Government New Zealand conference, when he stated: “The Government is keen”—

Mr DEPUTY SPEAKER: You do not need to go into it. You have told us where it is from. Leave is sought for that purpose. Is there anyone opposed to that course of action? There is opposition. It will not be tabled.

PAUL GOLDSMITH (National) : I rise to support this bill, the Local Government Act 2002 Amendment Bill. It is interesting hearing the other side talk of manufacturing a crisis. I think Mr Parker will struggle in Epsom next time if he turns up and says that there is no crisis in local government. People are a little concerned that their rates are going to be going up 30 percent over the next 3 years thanks to the efforts of the left-wing mayor Len Brown and his council.

This is a timely bill. Local government is important. We have heard the figures: 4 percent of the economy, spending about $7.5 billion annually, controlling $100 billion—

Hon David Parker: I seek leave to table the audit accounts for Auckland City Council, showing that John Banks, when last—

Mr DEPUTY SPEAKER: Order! We are not going to interrupt a speech for tabling. Any tabling is done—

Hon David Parker: I raise a point of order, Mr Speaker. I am within my rights under Standing Orders to take a point of order seeking to table a document. What Standing Order are you relying upon to tell me that I am out of order?

Mr DEPUTY SPEAKER: I am telling the member that it is the convention of the House that we do not interrupt speeches to table documents, and I will uphold that convention.

Hon David Parker: Speaking to the point of order—

Mr DEPUTY SPEAKER: No, I have already ruled on it. The member will resume his seat.

Hon David Parker: I raise a point of order, Mr Speaker.

Mr DEPUTY SPEAKER: Is this a separate point of order?

Hon David Parker: I am very rare in my intervention in the course of a speech to table a document, but I do have the ability to do it under the Standing Orders. I do not abuse that privilege, and I am within the Standing Orders. I suggest—

Mr DEPUTY SPEAKER: Order! The member will resume his seat. I have ruled, quite clearly, that if the member wants to do that, he can do that after the member has concluded his speech. He will not interrupt a member, and that is the convention of this House.

Andrew Williams: I raise a point of order, Mr Speaker. Just in relation to this—

Mr DEPUTY SPEAKER: No, look, I have ruled on this matter. The member will resume his seat.

Andrew Williams: I raise a point of order, Mr Speaker.

Mr DEPUTY SPEAKER: I will hear the member, but if he is pressuring me, he may well leave the Chamber.

Andrew Williams: No, I am not pressuring you. What I am saying is that the honourable member on the other side of the House made comments in reference to the current Auckland Council that were misleading—

Mr DEPUTY SPEAKER: Order! That is not a point of order. It is a debating point. You cannot debate an issue through a point of order.

PAUL GOLDSMITH: There was nothing misleading about talking about 30 percent increases in rates, and I am continuing in my speech. We need a local government sector that is productive and efficient, and the effects are much broader than the 4 percent of the economy. It impacts on the costs of housing, the effectiveness of transport, and the ease of doing business in a city or a region.

Local government can absolutely be a force of good. My neighbourhood is well served by good footpaths, roads, and libraries, and the Auckland Art Gallery makes a wonderful contribution to this city—yes, but local government, like everything else, has to fit with the times. Like central government, we need to deliver excellent services to New Zealanders within tight financial constraints. This Government has just now brought through its second zero Budget. Households all around this country are looking for ways to look for savings, asking questions like “Do we absolutely need to be doing this?”, and sorting out their finances.

But the message has not filtered through to local government yet. In fact, it has been on steroids since 2002, when the council roles were expanded to promoting these four well-beings that we hear so much about: social, economic, environmental, and cultural. Since 2002 we have seen council debt quadruple from $2 billion to $8 billion. At the same time, council rates have gone up on average 7 percent per year, far outstripping inflation. In Auckland we have seen huge growth in this particular new council’s budget; the new rates are expected to increase by nearly 15 percent over the next 3 years.

I mean, if ever members of the House wanted a case in point on this, when this document arrived I thought it was a fancy art book from Germany, but indeed it turned out to be the Auckland Plan—a wonderful, very expensive-looking document. Then you look through at what this council is going to be doing in this comprehensive plan. Look at some of the sorts of things we are going to be doing: we are going to be ensuring that by 2017 all preschool children receive all Well Child checks, including a B4 School check, and are up to date with child immunisation. That is crucial for local government! We are going to reduce the rate of total criminal offences per 10,000, and there are going to be no gaps between the life expectancy of European, Māori, Pacific, and Asian ethnicities by 2014. Thank goodness my rates are going to focus on that! Then if we look over here at strategic direction No. 9, we are going to “Reduce the proportion of people living in households requiring at least one extra bedroom from 15.7% in 2006 to 10% by 2040.” Well, that is a marvellous piece of work from the council. Finally, if we look here we find that health services and facilities of all care types will be aligned across all Auckland and will ensure that all Auckland children can access primary schools within 30 minutes. There are all sorts of things that this council is focused on that in this Government’s estimation are far beyond what we should be focusing on in local government, and they are things that are dealt with by this enormous collection of taxes that central government has. That is where we need to be focusing on what central government does, and let local government focus on the essentials of what local government does.

Through this bill the councils’ core values and roles are to be focused on local infrastructure, regulatory functions, and public services. If we look at the legislation and the new purpose, local government is required “to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.” That, I believe, will be very important in sending a message about the kind of attitude to how local governments go about their business, which is about being cost-effective.

Finally, I just want to make the point, before we go on at great length, that this is the first part in a longer programme of reform. The second part will be looking at the Local Government Efficiency Taskforce work, which is just getting under way at the moment, and it will be developing an interface. We will also be looking at the use of development contributions, which I think have got somewhat out of control in the last decade as well.

There is a lot of work to be done in local government. It is a very important part of the government sector and of the New Zealand economy. It can be more efficient, it needs to be more productive, and I think that this is evidence of how the sector has lost its way a little bit, in my perception. This bill will go some way to rectifying that and getting it into a more streamlined sector of the economy. I support this bill. Thank you.

Hon DAVID PARKER (Labour) : I seek leave to table audit accounts for Auckland City Council for the 3 years to 2010, during which period Auckland City Council debt tripled under the governance of Mayor Banks.

Mr DEPUTY SPEAKER: Leave is sought to table those documents. Is there anyone opposed to that course of action? There is.