Smith Nick: Local Government Act 2002 Amendment Bill — Third Reading 
Text is incorporated into the Bound Volume 
Smith Nick: Local Government Act 2002 Amendment Bill — Third Reading 
[Sitting date: 29 November 2012. Volume:686;Page:6959. Text is incorporated into the Bound Volume.] 
Hon Dr NICK SMITH (National—Nelson) 
: 
 That speech from Annette King showed the House that Labour has learnt absolutely nothing from the global financial crisis and its period in Government when New Zealand’s external borrowing increased by $100 billion and when our public sector grew uncontrollably while our private and exporting sectors stagnated. It reinforces that Labour and parties opposite believe in the nirvana of a big-spending big-borrowing all-encompassing public sector with no thought for those who pay the bills or those who have to repay the debt. 
I want to focus my comments on the changes that I initiated to the purpose of local government in New Zealand. The background is that in 2002 the then Labour Government required councils to provide for the economic social environmental and cultural well-being of communities. Labour’s assurances that this new expansive purpose would have no impact on costs have been proved horribly wrong. As my colleague Maurice Williamson has said average rate increases which in the previous decade had averaged just over 3 percent have averaged 7 percent per year council expenditure as a proportion of GDP has grown by a third and debt has quadrupled from $2 billion to $8 billion. And if you add up the 10-year plans that councils have just published they are intending to take that debt from $8 billion to over $19 billion. 
No one should be surprised that National does not support this expansive and expensive purpose for local government. Firstly we opposed it in 2002. Our fears about the impacts of costs proved to be absolutely correct. Secondly the global financial crisis makes the case for change even stronger. Excessive spending and debt are driving both central and local government in Europe to their knees. New Zealand households businesses farms and central government are all tightening their belts and being more focused and disciplined—so too must councils. 
Thirdly there is a philosophical dimension to this issue. National believes in limited government. We do not look to government whether it is central or local to meet every human need. Government and councils play an important role in society but so too do the private and community sectors. We on this side of Parliament do not believe it is either possible or desirable for councils to try to meet every single economic social environmental and cultural issue in their communities. 
The fourth justification is very practical. For any organisation success requires that we are clear about who does what. Everybody doing everything does not work. It is true for successful businesses and organisations and it is true for a country. We have a Ministry of Education to run our schools we have a Ministry of Justice to run our courts system we have the Department of Conservation to run our national parks and we have a health ministry to run our hospitals. It makes no sense for councils to duplicate the role of public agencies yet the broad current purpose section suggests they have a role in absolutely everything. 
As the Minister said previously councils should focus on things that only they can do and then do them really well. That is why the new purpose clause focuses on very important local infrastructure like roads important local services like libraries and parks and those all-important regulatory functions like building and resource consents. 
This new purpose clause for local government does not pedantically constrain councils. It rightly leaves locally elected councils with considerable flexibility in defining the right level of infrastructure and public services for their communities. But the change is still significant. No longer will there be that false expectation on councils that they have to meet every economic social environmental or cultural need in their communities. 
Two considerations will be important for councils in complying with the new purpose clause. Councils will need to think carefully about what is a public good or service and what is better done by the private sector and they will need to think carefully about what the responsibilities of local government are as compared with central government. 
These robust arguments for reform have been met by the shallowest of reasons for opposition. Labour has never attempted to argue the big picture. It cannot challenge the global figures from Statistics New Zealand on the record rate increases and the quadrupling of debt. Instead it has delved into the minutiae. Take the 2000 figures that were published by the Department of Internal Affairs on councils’ numbers where there were a small number of errors. None of these changed the national figures but Labour then used them to argue that the whole reform was flawed. 
This bill will make an important change for local government. It is the first step in a significant change that is part of this Government’s wider plans to make New Zealand more competitive and productive and to build the brighter future that National promised.