Mahuta Nanaia: Local Government (Rating Cap) Amendment Bill — First Reading 
Mahuta Nanaia: Local Government (Rating Cap) Amendment Bill — First Reading 
[Volume:632;Page:4473] 
Hon NANAIA MAHUTA (Minister of Customs) 
: 
 I rise to oppose the first reading of the Local Government (Rating Cap) Amendment Bill. This recycled bill is identical to the one that the previous Parliament decided should not be read a first time back in 2004. I see no reason today that would make this bill any more worthy of parliamentary time than it was then. 
The bill purports to help ratepayers. It will do no such thing. The author of the bill has forgotten or ignored a lot of things. First rates are not the only funding source for local government. One of the first consequences of the enactment of this bill would almost certainly be increasing levels of user-pays for community facilities like libraries swimming pools and sports grounds. Who among us wants to discourage people from reading with their children because it costs too much to take out a book? Who wants to discourage physical exercise? This bill will do precisely that. 
Second the bill controls the total level of rates levied by the local authority yet the average rates increase is only one of the factors that determines the level of rates paid by an individual ratepayer. Also relevant are movements in property values or a shift in the incidence of rating from one sector to another. A highly desirable water view property may increase in value more than neighbouring properties with no view which means the ratepayer may well pay more in rates than last year’s rates plus the consumer price index. 
Supporters of the bill are apparently labouring under the illusion that the bill will promote the accountability of local government to its communities. It will not. In fact it would reduce the strong system of accountability and transparency that the Local Government Act 2002 has established. Local authorities have just completed their first full long-term council community plans. These plans set out what services the council will provide—the quality and the cost. Where communities have been opposed to the proposals in these plans they have had far more opportunity to make their views known than ever before. 
Mr Hide’s old recycled bill will ride roughshod over this process by imposing an externally mandated cap. That will mean that if a local community wants its council to do something and it requires the raising of rates beyond inflation plus 2 percent the council will be able to do so if—and only if—the Minister of Local Government agrees. In short any future Minister who does not believe in local people setting the priorities and magnitude of their council’s work and rating system or who sees a potential political gain will be given the power to overrule the local process created under the 2002 legislation. Our communities deserve better than to be a political football. 
 I draw the attention of the House to the report of the Joint Central Government / Local Authority Funding Project Team published late in August. It concluded that there is a degree of catch-up needed in infrastructure roads water supply sewerage and stormwater disposal schemes—not frills but the infrastructure a growing economy needs. No one wants to see our roading network clog up to have people drink substandard water or to see poorly treated sewage tipped into our waterways. One of the root causes of this infrastructural deficit is the very kind of Luddite thinking that drives this bill that rates must not increase faster than the rate of inflation. For this reason essential maintenance was deferred projects were put off and renewal work went undone because depreciation was not funded—or not sufficiently funded—let alone adequate provision made for what was often highly desirable or even essential qualitative service facility developments. 
This bill overlooks the fact that New Zealanders as a society expect higher environmental standards than they did 10 years ago. Upgrades and clean-ups are in progress all around the country. This ill-considered regressive bill would choke this activity. Our scenic lakes would remain choked with agricultural nutrients waterways would be polluted with motorway run-off and sewerage and stormwater systems in some provincial centres would mingle in a heavy storm. Infrastructural catch-up in meeting society’s aspirations of improved environmental standards and community services all comes at a cost that is often greater than the inflation plus 2 percent that this bill would allow. 
For many communities the choice is not between more or less it is between more now and even more later. Like us the local councillors’ ultimate accountability rests with the voters at the ballot box. A local council that puts rates up without demonstrating value for money and without winning the support of its constituents is likely to find itself involuntarily retired. 
So the Government will not be supporting the bill. Of course the Government is concerned about the impact that rising rates have on those ratepayers on low or fixed incomes. That is why the 2005 Budget signalled the Government’s intention to make significant changes to the qualifying thresholds and level of assistance available under the rates rebate scheme. Those changes took effect on 1 July and up to 300000 lower income New Zealanders are now likely to be eligible for a rates rebate of up to $500. Those members genuinely concerned for those on low or fixed incomes would do well to remember that this initiative alone is a far better avenue for addressing these concerns than this ideological ill-thought-out bill. So we do not support the bill; it should not go past the first reading.