Local Government Act 2002 Amendment Bill (No 3) — Second ReadingText is incorporated into the Bound VolumeLocal Government Act 2002 Amendment Bill (No 3) — Second Reading[Sitting date: 22 May 2014. Volume:699;Page:18284. Text is incorporated into the Bound Volume.]Local Government Act 2002 Amendment Bill (No 3)Second ReadingHon Peseta SAM LOTU-IIGA (Associate Minister of Local Government) on behalf of theMinister of Local Government: I moveThat the Local Government Act 2002 Amendment Bill (No 3) be now read a second time. When the previous Minister of Local Government introduced this bill he followed on from the good work of his predecessors particularly the Hon Dr Nick Smith. Dr Nick Smith initiated the Government’s Better Local Government reform programme back in 2012. I now add to those credits the fine work that the Hon Chris Tremain did in 2012 and 2013. That included the preparation and introduction of this bill.This bill is the final legislation in the Better Local Government programme. This bill is to support local government in becoming better with better accountability and being better at managing assets which will lead to New Zealanders living bolder better and brighter lives.In 2002 the Local Government Act introduced a new purpose statement. This compelled local authorities to take a fresh look at their activities and priorities. It encouraged them to re-engage with their communities. This was so that their needs and preferences would have first call on scarce resources. We are seeing the benefits of this more sensible approach to expenditure which most councils are taking and it is a better way to work. The first bill provided new and improved mechanisms where local communities could initiate investigations of alternative local government arrangements for their areas.Several communities are exploring those alternatives even as I speak and we will see the fruits of that in coming years. That bill also provided an updated and expanded range of options for Ministers to support and assist councils that were struggling.The second bill builds upon that work. It increases the range of options through which local authorities can achieve efficiencies. This is at the scale at which services and facilities are better delivered. For some councils and communities the best option may be to follow the reorganisation path to amalgamation or restructuring.The bill expands the options for local authority reorganisations so they are better able to support their vision for the community. The Local Government Commission can consider establishing local boards as part of the governance arrangements for new and existing unitary authorities. These may have features similar to those in Auckland but can be tailored to local circumstances. The bill makes it clear that reorganisation schemes can deal with council-controlled organisations. They can also put in place joint committees where these are warranted.For circumstances where reorganisation is not justified or not possible the bill makes it easier for councils to find alternative solutions such as working together and sharing services. The bill’s provisions encourage councils to cooperate and collaborate to improve and provide better services for their ratepayers.The bill also includes measures to enable councils to achieve efficiencies in other ways. For example it provides councils with more flexibility about how they consult their communities. This bill enables councils to design and use engagement processes that are appropriate to varying circumstances and community interests. All this should be done at less cost. The new significance and engagement policy will provide a clearer guide about how and when communities can expect to be engaged.This bill reduces the number of occasions where the costly and time-consuming special consultation procedure is implemented. It facilitates the wider use of technology with which councils can communicate with their communities and the bill also improves consultation on council long-term plans and annual plans.It provides for consultation on specialised documents with a focus on the issues that are important to ratepayers. They should not focus on draft plans containing hundreds of pages of detailed information that is understood by few. The bill also seeks to improve the strategic management of local authority infrastructure. Local authorities own more than $96 billion in fixed assets. This is mostly an infrastructure used to provide basic services that families and businesses rely on every day.The majority of councils manage their assets well on a day-to-day basis but all communities need assurances that their critical infrastructure is managed strategically and sustainably over the long term and that it is resilient to natural hazards. This bill therefore strengthens the emphasis on asset management planning as a key aspect of council obligations. This will ensure prudent stewardship of resources. To support that principle clause 34 of the bill requires local authorities to include in their long-term plans an infrastructure strategy covering at least the next 30 years. The strategy will identify the significant infrastructure issues that will be faced by the local authority over that period. It should also disclose the options for addressing the issues and the implications of those options.The Local Government and Environment Committee has made a number of changes to provide clarity about the purpose and expectations of that strategy. Submissions and other feedback revealed concerns about the uncertainty involved in anticipating what will or is likely to occur up to 30 years in the future. Some councils feared that they would be held to account if their projections subsequently proved to be wrong. That is not the purpose of these strategies; they are not accountability documents and they are not plans.The changes to the bill make it clear that what is sought is an outline of the scenarios for the provision renewal or replacement of major infrastructure. These are the assets that the local authority considers most likely to be needed over the 30-year period. Rather than detailed costings what is expected is estimates that indicate the impacts of projects. This will mean that councils and communities are aware of them and can plan how to manage them. The select committee also emphasised this by allowing strategies to group blocks of 5 years for the last 20 years covered by each strategy.One means through which local authorities raise money to pay for infrastructure to meet growth is through the development contributions. Development contributions are one of the costs of building new houses and therefore affect their sale price. It is therefore important that development contributions are fair and no higher than they need to be. This Government does not want future generations priced out of homeownership. However local authorities should not be prevented from investing in the infrastructure necessary to help our communities grow. A balance is required.This bill introduced measures to ensure that development contributions are better focused and more transparent and that they support development to meet demand for new housing. The bill does this in a number of ways. The range of community infrastructure for which development contributions can be charged will be narrowed. This change reflects the principle that new homebuyers should pay for only the basic infrastructure that is required for the completion of that development. Infrastructure that will benefit the whole community including larger community assets such as sports stadiums should be paid for by the whole community. For some territorial authorities this will require them to find alternative revenue sources to replace development contribution funding of facilities not defined under this legislation. In those cases we expect that communities will enter into debates as to whether they are prepared to pay the extra funds that will now be required for those projects.I believe this to be healthier than obscuring the true cost with a veil of unclear development contribution levies. However the select committee heard from councils that have already completed or were building such projects in anticipation of future funding from these development contributions. It would be unfair to ratepayers and to those who have already paid development contributions for that stream of revenue to be cut off at this late stage. That would leave an unavoidable shortfall that ratepayers would have no choice but to fund. The select committee has avoided this by inserting a transitional grandparent clause in the bill. This provides that a territorial authority can continue to require and collect development contributions for a project that is completed or substantially completed. These assets may in fact be outside the scope of the new definition of community infrastructure.Many of the other changes are more technical. The select committee received 120 submissions on the bill predominantly from local authorities and the development industry. There was strong support for the bill’s objectives and there were many useful suggestions for improvement. I want to thank all those who made the effort to make a submission for their input and I wholeheartedly commend this bill to the House.PHIL TWYFORD (Labour—TeAtatū): This bill the Local Government Act 2002 Amendment Bill (No 3) is yet another paper tiger from National and its ongoing mission to project the image to the New Zealand public that it is actually doing something about the housing crisis. We have come to expect this from the Minister of Housing Nick Smith and now we see the Minister of Local Government taking a similar path. This bill deals with much more than housing affordability but I want to focus my comments on the development contribution components of the bill.Labour’s view is that this bill represents a wasted opportunity. This would have been a great opportunity for a thorough and fundamental review of the way that we fund infrastructure and services to support new urban development and new residential developments. Sadly because of the shallow and limited approach that this Government has taken on this issue as it has with so many other aspects of housing policy this bill will make we believe very little difference if any. It will make perhaps a small contribution to reducing the cost of building a new home. It is another example of National chasing a headline and trying to convey an idea and throw people off the scent really and distract them from the reality which is that very little of substance has been done by this Government on housing affordability. In a nutshell the changes to the development contributions regime are better than nothing but that is a very very low bar.What the bill does is essentially give developers the right to appeal against development contributions that are levied upon them by councils. It sets up a review process. Arguably that will give some transparency to the process and may impose a little bit of discipline on councils that it is argued by some are using developmentcontributions as revenue gathering. The second thing it does is limit the things that councils can levy development contributions for. It excludes community infrastructure. So from now on councils will not be able to levy development contributions for local parks and reserves swimming pools community facilities and local libraries. That is a distinction that National chooses to make—that community infrastructure is not necessary and that it is a “nice-to-have”. What it will inevitably mean is that some councils will find themselves in the position of approving developments and subdivisions and those new communities will not get the community infrastructure that they should be able to expect. It shows the values that National has—that it does not regard community facilities like swimming pools local libraries and community halls as being as important as water and electricity. That is National’s value system. That is the choice it makes. This harks back to Bill English’s comments the other day when he said that developers should be able to build more shoebox apartments. That is his idea—that people should be able to live in shoebox apartments and not have access to community facilities. That is National’s solution to the housing crisis.The big consequence of this bill is that the costs of infrastructure and services for development are going to get pushed over to the ratepayer. The Auckland Council submitted that what this bill will mean for them is an 8.5 percent increase in the average rates bill by 2021-22. So that means an average increase of 8.5 percent on the rates over the next 7 years.Hon Nicky Wagner: Not right.PHIL TWYFORD: That is what Auckland Council said. It provided the workings and the calculations. The impact of this bill is going to mean that the ratepayer is going to have to pick up the cost. It has been shunted from the buyers of new homes on to the general ratepayer. I think that is an irony because for the last 5 years this National Government has railed against councils and all their irresponsible lending and borrowing and irresponsible spending but what this bill actually does is to simply shift the cost that developers normally pass on to the buyers of new homes. Those costs are going to be passed on to the general ratepayer. That is an irony.Arguably that is a reasonable policy choice to consider. In the middle of a housing crisis it is perfectly valid to consider where you draw the line between the user-pays approach that is embodied in development contributions and the rest of the community paying for infrastructure and services that support new development. That is a reasonable policy choice to consider. But I do not want the National Party members in the House today to leave here thinking that they can simply shovel the costs from the buyers of new homes to the general ratepayer. Someone has to pay all right? That is the reality. Someone has to pay for this infrastructure and what National is doing is simply getting the ratepayer to pick up the tab. This measure is National just kicking the can down the road. It pretends to be serious about tackling the drivers of expensive housing but in fact it is doing nothing. It is just kicking the can down the road. If National was serious about tackling the cost of infrastructure and services it would have done a much more fundamental review of how the costs of new development are shared out and how they are dealt with.I want to just put on the record for the benefit of this debate three areas that National could have addressed if it was serious about this problem. The first is that it could have considered the idea of spreading the cost of infrastructure and services for new development over the lifetime of that infrastructure. What happens with almost all the other costs is that they get loaded on to the price tag for a new house. They get capitalised into the value of that house and structured into the market price of new housing in this country. That is what happens. Although development contributions contribute only 4 percent on average according to the Government’s own figures of thecost of a new build when you add all the other costs of infrastructure and services that a developer has to pick up it can add $50000 $60000 or even $70000 to the cost of a new house. That gets added straight on to the price tag of a new house and that is a huge barrier for the New Zealand homebuyer and particularly the first-home buyer.One approach that the New Zealand Initiative has done a lot of work on is spreading that cost over the lifetime of the assets. One way to do this in the New Zealand context would be to pay for that infrastructure and those services by bonds by taking advantage of the low cost of borrowing for local government and then using a targeted rate to pay that back over the next 30 to 50 years. That would not reduce the cost but it would at least spread it. The Government could have considered what a number of overseas jurisdictions do and that is use development levies or contributions to incentivise the kind of development that you want—for example more intensification more brownfield development instead of sprawl—but no the Government showed no interest in that. It could have chosen a productivity approach by getting together with industry and the private sector to look at how infrastructure and services for new urban development could be done in a more efficient way and make cost savings that would ultimately be passed on to the homebuyer. A lot of new urban developments are employing more sophisticated process management of the process of laying down broadband and the three waters and electricity and roads and footpaths and lighting—all the infrastructure that goes into new subdivisions. They are doing that and they are saving a lot of money. If the Government worked with the private sector to template that kind of approach then it could have delivered real cost savings instead of this paper tiger.All we are seeing is Nick Smith and his cronies in the National Cabinet pretending to do something about housing affordability just like they pretended that taking the tariffs off varnish and nails andGib board in the Budget last week would save $3500 for the first-home buyer with no thinking about how they would prevent that windfall from being pocketed by builders and developers in an overheated market. Just like the Government’s lame Auckland Housing Accord which will struggle to do any more than what the market is already delivering in terms of new development this bill is a disappointment. Like we did at the first reading Labour will vote for this bill but with serious reservations.Hon NICKY WAGNER (Minister of Customs): I am very pleased to be able to take a call on the Local Government Act 2002 Amendment Bill (No 3) in its second reading. This is a bill that is about better more effective and more efficient local government and it amends the Local Government Act 2002 to give effect to the second phase of the Government’s reform of local government. It is all about providing councils with tools to give local authorities the ability to provide better services to their communities and it focuses particularly on improving housing affordability through the changes made to development contributions. Local government just like central government needs to be able to deliver better services to New Zealanders through tight fiscal times and this bill and its reforms are part of National’s programme for building a more competitive and productive economy and for delivering better public services.It was very interesting listening to the member Phil Twyford talk about the bill. He obviously does not understand the detail. I want to make it very very clear that all infrastructural costs of a new development for housing must be paid by the developer. That is in terms of the roads the sewers the water etc. etc. including parks reserves and community centres. The only extra facilities that cannot be put on those development contributions are those that are also used by existing residents. In other words we are sharing it fairly across the whole community.National does not want future generations to be unable to afford to buy their own homes nor do we want local authorities to be unable to invest in the infrastructure necessary to make our communities grow. It is so important then that development contributions are fair and no higher than they need to be and I think everyone agrees with that. Some councils have had specific projects that have required ongoing development contributions for bigger projects and so we put a transitional clause into this bill to allow them to continue to collect those contributions for things that have already been built or that are currently under construction.We have also changed section 200 of the Act. Clause 54 amends the section to clarify that territorial authorities cannot charge development contributions for infrastructure that has already been provided for and funded by the Crown. In other words if the Government pays for it the ratepayer does not have to pay for it and that seems ultimately fair to me. The bill also requires better and more transparent planning for the costs of infrastructure and we noticed that these huge infrastructure programmes like those for water sewage—those sorts of things—really put the pressure on rates. So this bill specifies that the council must have a strategy that says that the most likely scenario—Denis O’Rourke: They have always had those. This is not new.Hon NICKY WAGNER: —for the management of the infrastructure assets’ indicative estimates and projected for capital and operating expenditure. Some councils may have done this but what we are looking for is a consistency across the councils to make sure it is very transparent for ratepayers. These estimates will be linked with their long-term plans over 10 years to start with and then for 5 years as it is further out.At the request of the local government sector this bill extends the local boards model that has been used in Auckland. It is a model where the local boards share the governance with the councils’ governing body. It is something a little bit like community boards which people are familiar with across the country. But these local boards are statutory bodies. They have mandated responsibilities and cannot be sidelined by the council which often happens with community boards.Ratepayers are very keen for their councils to deliver services efficiently and well. This bill will encourage greater collaboration and shared services between local authorities and it will provide local authorities with a range of really practical ways to achieve efficiencies of scale without necessarily having to amalgamate. The bill also focuses on better consultation decision making and planning. It provides councils with more flexibility and clarity about how and when to consult. It allows that consultation process to be easier and simpler and it also specifies that they have to use plain English documents which I think will please a lot of ratepayers. It also allows councils to use new modern technologies and techniques to consult with the public and hopefully that will keep the price of consultation down.The final goal of this legislation and of all National’s local government changes is to provide better services and to keep rates affordable. Rate rises are getting under control. The average rate rise in 2012 was 3.1 percent and it has been coming down year after year under the National Government since the high peak of 8.62 percent in 2007 under Labour. I think that is good news for all New Zealanders.MEKA WHAITIRI (Labour—Ikaroa-Rāwhiti):Tēnā koe Mr Deputy Speaker.Tēnātātou katoa. I am honoured to take a call on the second reading of the Local Government Act 2002 Amendment Bill (No 3). I was not a member of the Local Government and Environment Committee but I did read with interest the select committee report that came back and was presented to the House. Just by way of clarification the bill that we are debating tonight makes various reforms to the Local Government Act including amending the process by which regional councils maytransfer responsibilities to territorial authorities expanding the ability to have local boards as part of any reorganisation of local government by the Local Government Commission and by allowing the Local Government Commission to impose council-controlled organisations during the process of amalgamation. The purpose also includes reforming the consultation requirements for councils restricting the ability of councils to charge development contributions and finally enabling territorial authorities to enter into development agreements which are legally enforceable contracts with developers.It is on the fourth point reforming the consultation requirements for councils that I would like to make my contribution. Labour clearly believes in local democracy and the right of communities to have a say on major decisions affecting them. We believe that local decisions are best made locally. We are absolutely committed to close and collaborative working relationships with our local government agencies to ensure they are empowered and resourced to meet the needs of their communities. Consultation at the local level is a right for all New Zealanders. But in recent times as a very recent member of this House I have witnessed in my own electorate of Ikaroa-Rāwhiti in my own home town of Hawke’s Bay local democracy being sidelined severely in pursuit of economic development. We are of course talking about theRuataniwha Water Storage scheme. People throughout the Hawke’s Bay have absolutely felt sidelined in terms of their views on this proposal. I have seen some really questionable actions by our Hawke’s Bay Regional Council and for me that particular incident is still leaving quite a bitter taste particularly as a ratepayer myself around how poor processes can lead to poor decision-making.In that situation in today’s time I guess the question of the Hawke’s Bay Regional Council appointing its chief executive at the time to manage the project removed the ability to be objective when a proposal was sent to our governors our Hawke’s Bay Regional Council. So from day one when we are talking about this bill and ensuring that local democracy-making abilities are protected here is an example that I am sharing with this House where I have seen anything but local democracy. People throughout the Hawke’s Bay particularly Fish and Game and other NGOs including iwi have fought to get their voices heard around the decision of theRuataniwha Dam scheme and I have been at those meetings. Coming back to this bill again for me it highlights that when we are talking about strengthening consultation requirements for councils I am left with this kind of scepticism in me because we have had plenty of examples where that has not occurred at the local level.But let us look at the positive side. In this bill we are trying to strengthen and hold local governments to account particularly local authorities to ensure the voices of our ratepayers our general public out there are heard when we are talking about major infrastructure. When I read the select committee report I noted that under the title “Special consultative procedure” the bill removes the mandatory requirement for councils to use the special consultative procedure on significant decisions such as the establishment of council-controlled organisations or the disposal of regional parks. There probably is not a member in this House who has not enjoyed the facilities of local parks or local swimming pools. We have all benefited in one way or another or our children or our grandchildren have—whatever the case may be. So I am concerned to hear that this bill removes that. I am concerned for our people in the sense that the bill removes that. It includes little guidance on what decisions are significant so I pick up what was said in the select committee about when the special consultative procedure should be used.Although some local authorities may be more innovative in their public consultation the bill removes the certainty that councils will consult widely and well on significant decisions particularly as good practice guidance has yet to be developed by theGovernment. Yet again it goes towards the heart of whether when we talk about improved consultation when we talk about protecting local democracy we are seeing this in this bill.The other part that I found quite interesting when reading the select committee report was around the narrow definition of community infrastructure. I do believe that there were quite a few submitters to the select committee who put up strong opposition to that part and talked about the limited community facilities. But for me what came through in this part of the report was the fact that a lot of the councils will be left holding the cost of keeping some of these infrastructural facilities open and given the rate burden that a lot of our people are facing now I am concerned that more costs are going to be put on to ratepayers to keep open our local swimming pools to keep open our local community halls—our libraries even. It gives me concern that the bill will force some of that cost back on to the ratepayers and like the submitters clearly demonstrated that is an added burden in what are already trying times.I do also want to note that one of the submitters was from the Christchurch City Council and they went to the heart of the extra cost that they would be left with with this bill passing. There is a revenue shortfall for Christchurch City Council of some $32.2 million over 10 years. This is on a city council already facing a huge dilemma with the earthquakes and the rebuild. For this bill to have that consequence on an already strapped and challenged council I think is one of those unintended consequences that need to be brought to the attention of this House in debating this bill.I take on board my colleague PhilTwyford’s comments that the heart of this bill is around unlocking potential in terms of housing development but clearly from our side it does not go far enough. When you see a change in Government come 20 September you will see a Labour-led Government that will absolutely commit to housing throughout New Zealand restock our social housing and ensure that we put first home owners first. Kia ora.DENISE ROCHE (Green): I rise to take the first call for the Greens on the Local Government Act 2002 Amendment Bill (No 3) in the second reading of this bill. I have to say I am a bit perturbed by the fact that the Local Government and Environment Committee is currently hearing submissions in the South Island and so it is left to people like me to pick up the slack if you like. My colleague Eugenie Sage will probably comment on this in the second call that we have.New Zealanders expect councillors to provide good-quality infrastructure good water supply drainage sewerage roading and community facilities. Development contributions provide capital to fund investment in infrastructure to help meet the needs of a growing population. Development contributions ensure that new ratepayers pay their share of the costs of putting in new infrastructure to service them rather than existing ratepayers paying for it.Auckland Council is expecting substantial population growth and is planning major investment in infrastructure to support this. The council anticipates that over the next 10 years the city will grow by approximately 270000 new residents which is about 58 percent of New Zealand’s population growth. Auckland Council plans to collect about $2.1 billion in development contributions over the next 10 years if the status quo remains and the council plans to spend $480 million of those contributions on community facilities such as libraries swimming pools sports facilities and other public amenities to help provide the quality of life and amenities that people expect in our largest city which we want to be the world’s most liveable city. This bill has a major impact on the council’s ability to do this because of its very narrow definition of community infrastructure and its prohibition on development contributions being used to fund libraries and swimming pools in particular. Many submitters opposed this newamended definition and asked for their current provisions to remain. Auckland Council said that without development contribution funding for these community facilities they would not be built or rates would have to rise by 8.5 percent.Auckland Council’s development contribution policy has been standardised across the region and it was a major piece of work after the forced amalgamation. It was developed after extensive consultation with developers and the community and it was praised even by some submitters on this bill. Yet with these changes to development contributions this bill creates considerable uncertainty about whether Auckland Council and other councils will be able to fund community facilities without increasing rates or whether they will be able to provide adequate community infrastructure in growth areas.The introduction of an objection process is also likely to cost councils and reduce development contribution revenue still further. I am referring specifically to the Auckland Council submission I know but it was a very important one because it has been the test case. Auckland Council said that the objection process was likely to cost about $1 million in additional staff and legal costs and other expert resources with a potential loss of development contribution revenue of $3 million to $4 million each year which means $40 million over 10 years. And who benefits from this? Mostly it is subdividers and property developers.The other problem that this bill will compound is how to fund the replacement of ageing community facilities. Local government provides or supports the overwhelming majority of recreation and sports opportunities available to communities. The New Zealand Recreation Association in its submission estimated that local government owns $7 billion worth of recreation and sports assets and invests $800 million a year in operational costs for these facilities. The association noted that a significant number of recreational and aquatic facilities are coming to the end of their useful life. Sport New Zealand said that about 40 percent of our indoor courts are over 40 years old and 35 percent of Auckland swimming pools are over 45 years old as well. Many swimming pools are ageing. In Auckland we need another 10 to 12 swimming pools over the next 20 years. In my own community of Waiheke we have been relying on a 30-year-old primary school pool as our only public facility. Our local board has been advancing this quite well I have to say but will we be able to access council funds to build one and will any other community be able to access funds for something like this? That is another matter. This bill will make them unaffordable. It will deprive communities of basic recreational amenities.There was a very strong submission during the select committee process from Public Libraries of New Zealand which opposed changing the definition of community infrastructure and I quote from its submission. It said: “Larger new developments significantly increase demand for local libraries and other community services. Young families migrants young people and older New Zealanders—the very people to be found in many new developments—rely on public libraries to connect with their communities the wider world and increasingly the many services they rely on from central and local government.” It is not fair for local residents to face increased rates or user charges for library services to access information that should be free but that is what this bill risks. Think about what libraries are now. They are community hubs. They are modern comfortable areas where the public can read and learn where kids and adults can access the internet and where activities happen that consolidate our communities and bring us together.This month is New Zealand Music Month by the way and at my local library there are performances every weekend from local musicians. We are showcasing the Waiheke choir CantoIsola this Saturday as well.Grant Robertson: What time?DENISE ROCHE: My daughter is in that choir by the way. We risk depriving new communities in the new developments that are being pushed through by this Government with the housing accord. We risk depriving them of the tools to build community health well-being and cohesiveness. If we do not do that what we have are ghettos.We oppose this bill because we still remain concerned about the push for amalgamation of competent councils and rolling out the local board model for other regions not just Auckland. We have to question why we need to continue to force amalgamations. Is it to remove pesky democratic processes and reduce the effectiveness of regional councils to monitor and protect our air water and land from degradation? After all that is why the elected Canterbury councillors were sacked by this Government 4 years ago.As a super-city survivor myself and a former Waiheke Local Board member I speak from experience about the erosion of local democracy as a result of forced amalgamation of local and regional councils. Before amalgamation in Auckland we had a regional council that acted as a safeguard for us. Where I live we had several cases where the city council several times issued resource consents to the most out-of-scale and environmentally degrading developments. We were saved by the regional council taking action. It included an 80000 cubic metre clean fill that the council put through a consent for saying that it was just earthworks. Regional councils are our checks and balances. More than 3 years into amalgamation we see that development continues and our regional council our check and balance has been lost. And guess what! With that amalgamation there came no cost savings whatsoever. What happened was that we were forced to undergo a system of taxation with no representation when we had seven council-controlled organisations foisted upon us. We do not think this is a democratic process that should be rolled out anywhere else in Aotearoa New Zealand. We will be opposing this bill.Hon PHIL HEATLEY (National—Whangarei): I rise to support the Local Government Act 2002 Amendment Bill (No 3) in its second reading. This is the second phase of National’s Better Local Government reforms. It forms part of that and it will give local authorities the tools to provide better services to local communities.It is probably timely to remind the Green member Denise Roche that in fact the regional councils she speaks so fondly of were not utilised by her and her lobby groups as a check and balance; they were utilised as a way of stopping stuff happening. For the extreme environmental movement if you cannot stop something slowing it down is the next best thing and that is what it uses the processes for. It is interesting to note that that extreme environmental group they call the Green Party has alongside Labour used every opportunity to stop what this Government has put forward to improve housing affordability.When we said we needed to open up new land for housing they opposed it on the basis that cities would get larger so cities could not move out. When we said that we would change the Local Government Act the Building Act and the Resource Management Act rules so that there would be denser housing—in other words building up—we found that the Labour Party and the Green Party opposed that. So if you cannot grow a city out and you cannot grow a city up that means that there is nowhere to go. That is why the Labour Party members this weekend when they talk to all their ethnic groups—the Indian community the Chinese community the Samoan community the South Pacific community—they will be telling them that they can no longer come to New Zealand because Labour’s solution to housing affordability is to stop immigration stop those people coming into New Zealand.This is another bill where we are introducing measures to improve housing affordability and that is the ability of councils to make the person who builds a new house pay development fees for the library that is going to be built 10 kilometres down the road or the swimming pool down the road. What we are arguing is that that should be funded through the general rate take or other mechanisms.Denis O’Rourke: Driving rates up. You want to put rates up.Hon PHIL HEATLEY: The difficulty for the new member of New Zealand First is that you cannot oppose everything that we work hard to bring to this House to address housing affordability. You cannot just stop people having children. You cannot stop families coming from countries overseas or even New Zealand families returning. You cannot do all that social engineering in order to drive house prices down. Actually you have got to build more houses—houses going up or houses on sections or redeveloping land that has been used for building or commercial purposes previously.I support this Local Government Act 2002 Amendment Bill (No 3). It is part of the answer; it is not a silver bullet. It is part of a suite of changes that we are making to improve housing affordability and I will certainly be voting for it.DENIS O'ROURKE (NZ First): It has always been clear to me that this National Government hates local government. It always seeks to diminish it. It always seeks to micro-control it. It always seeks to castrate local democracy in decision making. It thinks it knows best and that local councils need to be told how to deliver facilities and services. In fact councils already do long-term planning have fair development contributions and do not need to be told how to suck eggs by this Government.The worst part of this utterly misguided Local Government Act 2002 Amendment Bill (No 3) is the new and totally unnecessary provision about development contributions. This is retrograde legislation that will worsen local government performance not improve it. The changes will reduce costs for developers but will increase costs for ratepayers. National has clearly been influenced by developers who will no doubt make donations to the National Party. But National spits on the needs and rights of local communities to make their own decisions about what is fair and appropriate and who pays for what.The reason these provisions are misguided and unnecessary is that they will not help to substantially reduce the cost of new homes. That is supposed to be why the limits on development contributions are being introduced although the last speech I heard from Mr Heatley hardly justified that at all. In fact the reason is to help National’s developer mates to make more money.Local Government New Zealand figures show that development contributions comprise an average of only 4 percent of the cost of a new home. These new provisions will reduce development contributions by only 10 percent at the most. Overall the effect of these changes is to reduce house costs by a pathetic 0.4 percent on average—big deal.The truth is that these provisions show that National is utterly bereft of ideas about how to solve the housing crisis which it has spent the last 5 years doing next to nothing about. This bill is all it has to offer along with a pathetic $3500 per home reduction in duties on building materials. These things are not just drops in the bucket; they are drops in the ocean. These measures are a poor excuse for a real housing policy. What is needed in this country is a comprehensive long-term housing plan as set out in New Zealand First’s housing policy.In his speech introducing the bill Maurice Williamson spoke about the principles in relation to development contributions. He showed how badly National has got this wrong. This is what he said: “The range of infrastructure for which development contributions can be charged will be narrowed. This narrowing reflects the principle thatdevelopers should pay only for the infrastructure that is required by the development whereas communities pay for the infrastructure that will benefit the whole community.” What absolute nonsense that is. The true principle is that development contributions must provide a fair proportion of all facilities the whole community needs which they have sought from their councils. So these new provisions are useless ineffective and utterly misconceived and are based on totally the wrong principles.Another so-called principle is the one in new section 197AB(c) inserted by clause 48 which says: “cost allocations used to establish development contributions should be determined according to and be proportional to the persons who will benefit from the assets to be provided (including the community as a whole) as well as those who create the need for those assets:”. What absolute nonsense that statement is. How could it possibly be proportionate both to the persons who benefit and to the community as a whole? It is an utterly illogical and self-defeating statement. It shows just how badly this bill has been thought out.Another principle is in new section 197AB(d)(i) also inserted by clause 48 which requires development contributions to be used for the activities for which they were collected. This effectively requires hypothecation putting all contributions into special accounts to be used only when by some unknown mechanism they can be spent. That is not only unnecessary but an absolute bureaucratic nightmare to administer and is very very badly thought out.These changes on development contributions deliver no new benefits unless of course you regard 0.4 percent on an average house to qualify as a benefit—so really there are no real benefits at all—but they are bad news for ratepayers because they will ensure that rates go up and go up fast. That is not what the people in this country are looking forward to. Rates are high enough already. This Government has in the past railed against rates increases and now it is putting them up with this legislation. Well let me give the Government a message—Paul Goldsmith: Well spend less.DENIS O'ROURKE: —and especially that member who just interjected—there is no free lunch. If development contributions go down then believe me there is no other thing than for rates to go up.Paul Goldsmith: Well spend less.DENIS O'ROURKE: Spend less? Spend less? I will come to that. I will come to that in just a moment.In Christchurch the additional cost from this bill will be $32.2 million over 10 years. That is the council’s own estimate and of course that has to be found in rates. That is why the rates will have to go up and go up significantly. That is in a city that is already stressed in the provision of infrastructure and a council that is already struggling and struggling greatly in dealing with its costs for the reasons we all know. But that is not all.These changes will also drive down both the scope and range of community facilities provided by councils as demanded by their communities. That is the answer that I give to that member Paul Goldsmith who just interjected. He says “Spend less.” Well it is not that easy. The fact is that communities do not want to have the scope and range of community facilities reduced; they want them improved. The proper way to do that is a fair proportion to be met through development contributions. This bill will not deliver that but more than that it also drives down the quality of those facilities. In fact the truth is that if this bill passes and is implemented and I hope it will be repealed if it does pass then many such facilities will not be built at all.The bill limits the use of development contributions to only community halls playgrounds and toilets. That is pathetic. There is a long list of other things that shouldbe included: community libraries; kids’ swimming pools; adults’ training pools; gyms and fitness facilities; local parks area sports fields and facilities; facilities for the elderly; reserves for conservation drainage and retention; and similar purposes. All these are necessities to build communities—not just housing ghettos.Furthermore there is the effect of development contributions in driving capacity increases not just for water sewage drains and local roads for new developments but also for arterial roads as capacity demands increase for them including bridges and traffic control infrastructure also major sewage and drainage collectors and pumps public transport facilities and services and the list goes on. The limit in the legislation is ludicrous. Not only is that short list ludicrous but the effect is disastrous for local government causing rates to increase unfair and ineffective development contributions regimes to be implemented and a reduction in the scope range and quality of local facilities while delivering no real reduction in the cost of new homes at all.PAUL GOLDSMITH (National): It is my pleasure to speak in favour of this bill the Local Government Act 2002 Amendment Bill (No 3). I think we need to see this bill in its broader context which is around improving housing affordability. None of the solutions to dealing with the high cost of housing particularly in Auckland is easy. They all require hard work and discipline. They require disciplined spending by the Government which keeps interest rates lower for longer; special housing areas which are difficult and opposed by the other side of the House; and reducing the cost of building materials.This aspect that we are dealing with in this bill is about getting some discipline around the development contributions in local government. From members on the other side of the House we constantly hear wailing about housing prices but they oppose all our solutions. It is interesting to see that they are doing the same thing again here today and I lament that. This is a good bill. It is a small part of a broader solution to housing affordability and on that basis I commend it to the House.Debate interrupted.