Hipkins Chris: Local Government Act 2002 Amendment Bill — In Committee Third Reading 
Hipkins Chris: Local Government Act 2002 Amendment Bill — In Committee Third Reading 
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CHRIS HIPKINS (Labour—Rimutaka) 
: 
 One has to hand it to the National Party and the ACT Party. At the last election they promised New Zealanders that they would not privatise any public services in their first term and of course they did not mention anything about local government services. Local government services are what this bill is all about. It is about privatising local government services and contrary to the previous speaker’s comments the bill is all about removing the ability of local communities to determine what shape of local government they want. Under current law it is up to local communities to decide what type of local government they want and what sorts of services they want their local councils to provide. Communities have the ultimate say but this bill is all about watering down their ability to determine what they want their local councils to provide. 
I particularly want to talk about core services and that is what the previous speaker Louise Upston—a single-term MP for Taupo—was talking about. I will talk about how councils will define a core activity because a core activity in one area will not necessarily be a core activity in another area. A core activity now might not be a core activity in the future. If I had been writing the Canterbury council’s list of core activities 6 months ago I am not sure that I would have put “earthquake recovery” on that list of core activities though I imagine that Canterbury local authorities are quite actively involved in that at the moment. These things change. The needs of communities change and councils need to be able to respond. Not a single submitter to the Local Government and Environment Committee thought that defining core services was a good idea. Can any members opposite name a single local authority that said that was a good idea? 
Dr Cam Calder 
: Yes I can and I have the piece of paper. Would you like me to table it Mr Chair? 
The CHAIRPERSON (Eric Roy) 
: Order! 
CHRIS HIPKINS 
: Give me the name. 
Dr Cam Calder 
: Wellington City Council; I have the document in front of me. 
CHRIS HIPKINS 
: Rubbish! The Wellington City Council did not argue that way. I sat through that council’s submission and it opposed the definition of core services. Not a single local authority thought that defining core services was a good idea. I sat through the hearings and none of the councils argued that it was a good idea to define core services. In fact the Government’s vision of what core services should be and Rodney Hide’s definition of what core services should be cut out a whole lot of stuff that local authorities currently work on. For example employment creation job creation and economic development are not part of this Government’s vision for the role of local government. I think that local government could play a larger role in these types of activities. The Mayors Task Force for Jobs for example was very successful but there is no accommodation for something like that within the definition of established core services. 
One of the reasons they say we have to shrink the size of local government is rates increases yet the Department of Internal Affairs advice to the select committee was that 97 percent of council expenditure was on the things that they list as being core services for local authorities. There is absolutely no need to define core services in legislation. All that will do is unnecessarily tie the hands of local authorities and make them less responsive to their local communities. They want to take the “local” out of local government. Local government should be about local communities saying that “These are the services that we want you to provide.” They need to be able to change. They need to be able to adapt to different situations. I am very concerned about this idea of local authorities having their hands tied. 
I want to talk also about the financial strategy that councils will need to put in place because potentially that will also constrain councils’ abilities to respond to local community needs. I support having a financial strategy but I am concerned that it will require councils effectively to cap the level of rates they will be able to charge. It is very popular to promise lower rate increases and therefore defer to future generations the costs of very necessary infrastructure upgrades and very necessary expenditure. In 10 years’ time or 20 years’ time when the plumbing stops working the water stops coming out of the taps and the roads are full of potholes the councils of 10 or 20 years ago will not be the ones that have to deal with the problems. Those problems will be faced by councils in the future. So 20 years ago those councils may have kept their rates low but future generations are the ones who will end up having to deal with the legacy that that will create; they will have to worry about that legacy. 
Overall the idea of a financial strategy for local authorities is a good one. We have a financial strategy for central government finances so having a similar mechanism for local government is perfectly acceptable. But I am concerned about putting an arbitrary cap on the level of rates. We do not do that for central government taxation. We do not say we will cap at a certain rate the amount of revenue that central government can earn and thereby everything else has to fall within that cap. Central government has the ability to raise taxes as it requires in order to fund the activities that it deems necessary and on which it goes out and campaigns for a mandate. Why should local authorities be subject to a different standard? Why should they be prevented from delivering the things they promised to their local communities in an election because there is an arbitrary cap on the amount of revenue they can create? 
If local communities want local authorities to provide certain services and they vote for local authorities to provide certain services then the local authorities need to be able to raise the revenue in order to deliver them. If the local people do not like it and are unhappy with the level of rates being charged then there is a mechanism they can adopt in order to deal with that—they can elect a different council. It is the same with central government. If people are not happy about the level of tax they pay they can elect a different Government. If they are not happy with the services provided by central government they can elect a different Government. Why should local authorities be any different? Why should central government be tying the hands of local authorities and preventing them from delivering on the services that local communities are demanding of them? They are effectively short-circuiting the local democratic process by saying that the local communities might say that that is what they want but that we in this Parliament know better. Actually we do not; the local communities should be able to determine what they want to have delivered. 
As I mentioned before putting an arbitrary cap on the revenue that local authorities can raise also constrains a council’s ability to deal with unforeseen issues that may arise from time to time and again I come back to natural disasters for example Canterbury’s earthquake. Why would we want to constrain the ability of local authorities to adapt to things that are unforeseen? The Canterbury earthquake is at the extreme end of the scale; I am talking about smaller-scale natural disasters. The Hutt Valley where I come from is prone to regular flooding. In the last 10 years or so there have been three or four reasonably significant floods. They are not the types of floods where every home in the Hutt Valley is flooded but ones where significant numbers of homes and businesses end up being flooded. Local authorities need to have the flexibility to respond to those disasters and to raise the revenue that they need in order to respond to those disasters without this idea of an arbitrary cap on them. If we put an arbitrary cap on the level of rates that councils can charge again what we are doing is encouraging local authorities to defer the burden of providing adequate infrastructure on to future generations. I think some of our local authorities already have an infrastructure deficit whereby the replacement of core pipelines and so on has not taken place because those local authorities have been striving to keep their rates down. As a result at some point a future generation will end up having to front up and pay an awful lot more in order just to keep the basics operating. 
Why should we place this constraint on councils? Why should we place this overriding objective on councils that keeping rates low is the ultimate objective no matter what the consequences? Ultimately we will get what we pay for. If we pay for a cheap shoddy water system and a cheap shoddy sewerage system that is what we will get. But if we are willing to invest in it now then we will be catering properly for future generations. I am concerned about that desire to cut down the role of councils by restricting them to what Rodney Hide thinks local authorities should be providing rather than what the local communities think they should be providing and by putting this arbitrary cap on the level of rates thereby restricting the ability of local authorities to raise the revenue for the services that local people want their local authorities to provide. 
Those are two things that I am particularly concerned about in this legislation. I know that the Minister has indicated that he will take the next call so I am quite looking forward to hearing his response to those two particular issues.