Sage Eugenie: Kaipara District Council (Validation of Rates and Other Matters) Bill — Second ReadingText is subject to correctionSage Eugenie: Kaipara District Council (Validation of Rates and Other Matters) Bill — Second Reading[Sitting date: 13 November 2013. Volume:694;Page:39. Text is subject to correction.]EUGENIE SAGE (Green): Tēnā koe Mr Assistant Speaker. I am not pleased like other colleagues that Parliament is having to consider retrospective legislation but I am pleased to take a call on the Kaipara District Council (Validation of Rates and Other Matters) Bill. New Zealand’s 78 councils manage around $98 million worth of public assets most of these being infrastructure assets that enable the provision of essential public services like stormwater waste water and drinking water. For the most part councils do this work well on behalf of their communities but Kaipara is a horrendous example of what happens when it goes wrong. The community is being landed with a very expensive waste-water scheme which costs $62 million instead of the $17 million that was originally estimated. The former council made a series of disastrous decisions and a series of rating resolutions that failed to comply with the Local Government Act. This bill seeks to validate those resolutions and the $17.3 million of rates that were improperly set.It is very disappointing that we are debating this bill before receiving the report of the Auditor-General and the inquiry into the waste-water scheme. That report has been delayed until early December. But as others have said the Auditor-General has reviewed the bill and advised the Local Government and Environment Committee that the bill contains nothing that interferes with or compromises its pending report or any actions that might eventuate from it. If the report does identify shortcomings in the work of Audit New Zealand in relation to the council’s financial statements then some compensation from Audit New Zealand may well be in order. Similarly with the contracts that were signed by the council the commissioners need to apply the same assiduous look that they applied to the council’s tangled finances to the contracts and the opportunities for penalties being paid by contractors for cost overruns and budget blowouts in the scheme. If the Auditor-General’s report indicates that legal action should be taken against past decision makers at the council or key advisers at the council then the Government agencies need to take that action and pursue those proceedings with a lot of energy and effort.We are very pleased that the select committee decided to amend clause 14 of the bill which makes it very clear that the bill does not remove the right of anyone—originally it was only the right of the council—to bring proceedings against anyone connected with any acts or omissions associated with the matters validated by the bill. That is one of the amendments made by the select committee. We acknowledge the work of the Mangawhai Residents and Ratepayers Association and its advocacy because that saw the clause being included in the bill in the first place.The Green Party is reluctantly supporting this bill because it appears to be the only way that Kaipara’s financial problems can be resolved and that the council can be put on a sound footing for the future. The Local Government and Environment Committee has sweated blood over the bill. I pay tribute to the work of Mike Sabin and the committee chair Nicky Wagner. I pay tribute to all members of the committee the commissioners for the advice that they provided and the 150 people who made submissions and those who presented to the committee. The hearing day in the Maungatūroto Country Club was one of the more memorable hearing days. Even thoughpeople will not be satisfied with the report-back version of the bill we have considered those submissions and the issues they raised very very carefully.One of the reasons the Green Party is supporting the bill is the evidence that not passing it would significantly increase the cost to the wider Kaipara community. It has a very small rating base of 14000 properties. The evidence that the commissioners provided was that the longer the bill takes to become law the larger the amount of rates that are being withheld and the larger the council’s deficit funding problem. At the end of June this year the amount of rates being withheld totalled $3.85 million or about 12.5 percent of the rates set. That has created a significant funding shortfall which has meant that some capital expenditure has had to be deferred. If it continues there will likely be cuts to services. The commissioners estimated that not passing the bill means that the cost of delay would total about $530000 a month and that that is likely to lead to cuts in services because of the cost of refinancing the debt and also amending the long-term plan.What we are debating today will not be popular but I would like to pay tribute to the work of the Mangawhai Residents and Ratepayers Association because it blew the whistle on what was happening at Kaipara. It did that over many years and it was not until relatively recently that Government agencies started to listen. We heard repeatedly from submitters that people who were withholding their rates were law-abiding citizens and that they normally took payment of rates very seriously but the fact that they were so frustrated by the failure of authorities to act on the recognised problems at Kaipara led to their frustration and led to the withholding of rates. So the agreement that the select committee negotiated through Mike Sabin with the commissioners—that they would agree to waiving the penalties—is just a small consolation I guess and a token acknowledgment of the work of the whistleblowers and it acknowledges that they should not have to pay penalties because of their withholding of rates to draw attention to the problem. But also the fact that people need to pay rates recognises that they are getting their services as Darien Fenton noted and that the council has continued to provide those services to everyone in the community.We also support the bill because of the evidence that the council stood to lose its share of funding from Transit New Zealand for the maintenance of local roads. Again if the problem continues then there is a wider cost that the whole community bears. So it has been a pragmatic decision that if we want to get Kaipara District Council’s financial problems on a much sounder footing then the issue needs to be resolved and the bill by validating those improper resolutions in the past is a way to do that.Opposition parties certainly made the case that the Government should provide some assistance to Kaipara to reduce the impact on ratepayers of having to repay that debt. That was rejected on the basis that the Government did not want to set a precedent for other local authorities but we call on the Government to reconsider it once the Auditor-General’s report is out and to consider whether some assistance could be in the form of a suspensory loan to the council.The Green Party also really seriously considered the submissions that proposed that rather than ratepayers and the local community bearing the full cost of the council’s malfeasance the banks should take a bit of a haircut because they failed to do due diligence in their lending to the Kaipara District Council. The response here was that this would mean that interest rates for council borrowing across New Zealand would increase significantly if banks regarded local authorities as a less than secure lending proposition. What may result in a fairer solution in Kaipara would potentially cause inequity over a larger area. But it still rankles that the burden of repaying this debt falls on the community of Kaipara which was not responsible for incurring the debt when the council did not abide by the provisions in the Local Government Act. We arereluctantly supporting the bill because it does seem to be the only way forward to put the Kaipara District Council on a sounder financial footing.