Twyford Phil: Local Government Borrowing Bill — First Reading 
Twyford Phil: Local Government Borrowing Bill — First Reading 
[Volume:672;Page:18746] 
PHIL TWYFORD (Labour) 
: 
 I speak in support of the Local Government Borrowing Bill at its first reading. Labour thinks this is an excellent bill and a sound sensible idea which we are happy to support. We look forward to debating it at the Local Government and Environment Committee. 
It makes eminent sense for the local government sector to come together to form a bond bank with the support of central government. It is estimated that this bank will save the New Zealand ratepayer something in the order of $25 million a year and that is not to be sneezed at. This is a very practical response to the problem that many councils around the country face which is the challenge particularly over the next 6 to 7 years of funding the infrastructure bulge if you like—the catch-up that many councils all around New Zealand are having to make to build infrastructure. So we support this bill. We support the idea because it makes total sense for the savings of Kiwi investors to be mobilised to invest in local government infrastructure. We believe that that is a much better option than the privatisation and public-private partnerships that this Government has been so keen to advance over the last couple of years. We prefer the option that community-owned infrastructure around New Zealand stays in public hands and community ownership and this bill to establish a bond bank or a local government funding agency is one way that that aim can be advanced. 
The concept of a local government bond bank was first proposed by the Capital Market Development Taskforce which was set up by the Labour Government in 2008 and reported back to the Government in 2009. Although the current Government has said it supports this recommendation I think it is odd that it has dragged its feet to the extent that we are only now seeing this bill come to the House. The idea of a bond bank for local government was raised at the so-called Job Summit and it has taken a full 2 years or more for this bill to see the light of day. 
The funding agency is a win-win for local government and for New Zealand investors the so-called mum and dad investors but it will also make a contribution to the deepening of New Zealand’s capital markets which I think is something we all agree is a great benefit. 
Labour members are particularly keen to support this bill because it provides an alternative to the agenda of privatisation and public-private partnerships that this Minister of Local Government has been so keen to advance. I ask members to cast their minds back 18 months when there was not the quiet unassuming lame duck Minister of Local Government that we see in the House tonight but the self-styled “Minister of Ratepayers”. He was more of a rooster than a lame duck. His feathers were shiny his best years were ahead of him and he was there to single-handedly reform the local government sector. He was going to rescue the ratepayer from spiralling costs skyrocketing rates and councils that were out of control. His agenda last year was called the transparency accountability and financial management agenda. He wanted to bring in mandatory referenda if the councils wanted to step outside the terms of their long-term plans. He wanted to restrict the councils to an arbitrary definition of core services. He wanted to privatise the water sector. He was going to clean out red tape and liberate the New Zealand ratepayer from the oppression of free-spending profligate local authorities. Well how far the mighty have fallen. This modest sensible and pragmatic bill that Labour is very happy to support tonight is a far far cry from the zealotry and extremism of Rodney Hide’s local government reform agenda. 
When Rodney Hide set out on this track only 18 short months ago he began to lay the groundwork to try to justify his cuts to local government his agenda to roll back the scope of local government and to open the door for privatisation. He tried in a number of speeches and public statements to paint a picture that the councils were out of control: they were doing all these terrible things that they should never have been doing they were spending ratepayers’ money with abandon and they simply would not have the financial resources to invest in the infrastructure that was needed. A couple of things happened. We saw Cabinet pull the rug out from under his feet and tell him that after all the damage he had caused in Auckland he was not to go anywhere near the reform agenda he was proposing. But just as important we saw coming out of the Office of the Auditor-General analysis and data that showed that in fact there is no financial crisis there is no debt crisis and there is no infrastructure crisis in local government in New Zealand. 
There is a challenge over the next 5 to 6 years. There is an infrastructure deficit that local councils are planning to meet and they are increasingly turning to debt as a sensible way to spread the intergenerational burden of assets that have a long life. According to the Auditor-General’s office the level of borrowings held by local authorities in the 2009-10 year was $673 million higher than in the previous year and the ratio of debt to total revenue increased by 8 percent over the 2009-10 year. One might think that was significant but the highest debt-to-revenue ratios were only for a couple of very high-growth local authorities—places like Queenstown and Tauranga—that are largely funding that infrastructure debt through development contributions. When we look at the big picture we can see that an analysis of the long-term plans between 2009 and 2019 shows an increase in debt. It is likely to go from $3.9 billion to about $11.2 billion at its peak in 2015-16. The Auditor-General’s office makes the comment that that is “not so large when considered in the context of local authorities’ overall balance sheets their annual revenues and expenses.” 
When the Local Government and Environment Committee asked the officials from the Department of Internal Affairs to do some comparative analysis of local government income over the next decade compared with central government income and in fact household income what emerged was that local government income was relatively static in a growing economy and was experiencing nothing like the increases in household income or central government income. The whole standard clichéd right-wing bogey that Rodney Hide was trotting out to try to justify an agenda of rolling back local government and opening the door to privatisation and public-private partnerships turned out to be just that—a bogey. Thankfully his agenda for local government never got to first base. All we saw in the Local Government Act 2002 Amendment Act 2010 last year was a pretty watered-down diluted shadow of the original ideas that the Minister was touting at the beginning of last year. 
As I said Labour is very happy to support this bill. We think it is sensible and pragmatic. We look forward to debating it at the select committee. In light of the back-down that the Minister has had to make on the whole question of debt levels we hope that John Key’s Government will take a similar look at its own approach to privatisation of State assets and the disingenuous way that public debt has been misrepresented in the mainstream media to justify the sale of State assets.