Kaipara District Council (Validation of Rates and Other Matters) Bill — First ReadingText is incorporated into the Bound VolumeKaipara District Council (Validation of Rates and Other Matters) Bill — First Reading[Sitting date: 12 June 2013. Volume:691;Page:11087. Text is incorporated into the Bound Volume.]Kaipara District Council (Validation of Rates and Other Matters) BillFirst ReadingMIKE SABIN (National—Northland):I moveThat the Kaipara District Council (Validation of Rates and Other Matters) Bill be now read a first time. I nominate the Local Government and Environment Committee to consider the bill. No one is a fan of retrospective legislation least of all I suspect the local MP who is placed in an invidious position when asked to sponsor such a bill. However in some situations validating legislation is unfortunately required as we have seen recently with the Tasman District Council (Validation and Recovery of Certain Rates) Bill. This legislation is understandably unpalatable but I am of the view that in the case of the Kaipara District Council it is also required. Legislation of this nature is a last resort and reflective of failures by those entrusted by ratepayers to serve their district.In May 2012 major concerns over financial governance and community pressures on the council culminated in a ministerial review of the council. The review team was appointed to inquire into the financial and governance challenges facing the council. A damning report resulted in a request from elected members of the council asking the Minister of Local Government to appoint commissioners which did occur in September 2012.In addressing a range of irregularities the commissioners have asked for Parliament’s help. As the local MP I have agreed to assist as I think in these particular circumstances this bill is the only viable and practical way to deal with a history of errors made by the council. I hope that ratepayers all across the Kaipara accept that addressing these matters is necessary to bring clarity and certainty—something that is in the best interests of all moving through and beyond a very sad and sorry error of governance in the history of this fine district. I do however want to make something quite clear. This bill does not absolve those responsible for these errors and nor would I support it if it did. Although this bill is important to remedy the irregularities I want to assure the House and all ratepayers of this district that accountability is just as important in rebuilding the Kaipara as any part of this process.Alongside this bill the Office of the Auditor-General is conducting an inquiry into the Mangawhai EcoCare Wastewater Treatment Scheme the genesis of most of the debt blowout in this council. There is also an independent inquiry into the council’s auditors. The commissioners are carrying out their own inquiry into council decisions and activities including the actions of former chief executive officer Jack McKerchar.But turning to the specifics of the bill it seeks to correct a number of irregularities and errors mostly to do with rating by the Kaipara District Council. These procedural and substantive irregularities go back many years. There has been a substantial review undertaken including engagement with the community over the scope and extent of rating irregularities. Most of the rates that this bill attends to have been paid. Ratepayers have received services for which they were set but none the less these need to be validated once and for all so that the Kaipara can move on. The bill proposes to validate the rates set and assessed by the council from 2006 to 2013 and any penalties added tothose rates to treat all rate payments received by the council as having been lawfully paid and to authorise the council to recover any part of rates and penalties for those years that remain unpaid. The specific rates dealt with within the bill include a forest owners’ road impact rate the Mangawhai uniform targeted rate the Mangawhai uniform annual charge the waste-water disposal rate and the water supply rates for Maungatūroto and Station Village.The bill also addresses actions or omissions related to the continuation of the council’s 2006 development contributions policy the late adoption of its 2011-12 annual report and its 2012-22 long-term plan and finally the conduct of the council’s special consultative procedure for the 2012-22 long-term plan.This bill seeks to validate the rates that were actually set and then assessed against each property. It does this so that any ratepayers who are up to date with their rates payments are not required to make additional payments as a result of the local bill being passed into law. Some of the rates to be validated were set on the basis that was not provided for in the Local Government (Rating) Act 2002. There were also a number of discrepancies that reflect poor practice with no attention to detail to ensure that rates resolutions were consistent with the funding impact statement. Importantly these rates could have been lawfully struck if the council had simply ensured that the two documents were consistent. Similarly shortcomings exist and the same principle applies to all of the irregular rates that the council is seeking to validate through the bill.In short all of them could have been struck in a way that was consistent with and provided for in the Local Government (Rating) Act. That would have resulted in the same amounts being invoiced as occurred when it got this process wrong. That said these sorts of errors are totally unacceptable and are avoidable. But sadly the Local Government (Rating) Act 2002 as it stood at the time of this mismanagement incompetence carelessness and dysfunctional governance falls short of triggering the ability for the Government to intervene and bad practice does and has occurred. Ratepayers should be able to have confidence in their elected councillors to carry out their core functions but in this case the ratepayers in the Kaipara have been woefully let down and are rightfully upset angry and frustrated. The council accepts that it made mistakes. It is now asking for this Parliament’s help to correct the situation.I have received criticism from some people who are opposed to my decision to bring this bill to Parliament mostly from members of the Mangawhai Residents and Ratepayers Association. I have received angry letters emails and phone calls. I have attended meetings of irate ratepayers. I have received political threats. I have even received death threats. I accept and understand why people are angry at what their council has done but the problems must be addressed. None of these threats will deter me from exercising my judgment as best as I can in the interests of all constituents in this district. Constituents should expect this of their MP not expect their MP to steer away from dealing with the tough issues and to bow to threats however justified some people may feel in voicing them. Although the Mangawhai Residents and Ratepayers Association members acknowledge that this bill is required to fix up these irregularities they want it done their way. I encourage them to explain to the select committee what their way is.Like so many in the Kaipara people are angry at the council’s handling of the Mangawhai waste-water scheme that has burdened this district with enormous debt. It is important to note from the outset that the $30 million decision to expand the sewerage scheme is not subject to this bill. In 1999 the council estimated the cost of the Mangawhai waste-water scheme at $11 million. In 2003 it was estimated at $17 million. By March 2006 it was $35.6 million. In October 2006 the council approved a new contract for $58 million. The final actual cost was $62 million.Although there have been some changes in the scope of the scheme from what was envisaged in 1999 the question is how the council got this so wrong. The Office of the Auditor-General is investigating this and whether any individual or organisation is culpable. It would be wrong of me to comment further while this inquiry is under way but I await with great interest the outcomes of this inquiry including it must be said the role of the Auditor-General’s own office and that of Audit New Zealand as the council auditor. The public and the residents of Kaipara depend on Audit New Zealand as the council’s auditor ensuring compliance of their local authority with the law their standards of accounting and the necessary probity and financial prudence. Annual audits of public bodies are required for very good reasons.There are some serious questions that must be answered here. How could the cost of the scheme go from $11 million to $62 million with such limited consultation with its ratepayers yet the council still got clean audits? How could Audit New Zealand sign off on the long term council community plan when there were major inconsistencies between the financial projections in the plan and the funding arrangements being put in place to finance the project? How could Audit New Zealand also sign off on the long-term council community plan that relied heavily on the collection of development contributions when there were no development contribution policies in the plan? Similarly the long-term council community plan was signed off when the rates needed to fund the Mangawhai waste-water scheme were not even included in the funding impact statement that is critical to the council being able to set the rate.How can it be that the council can have such deep-seated and longstanding non-compliance and other fundamental financial mismanagement issues and still get clean audits year after year when people in that district were saying that there were problems? Why were none of the growing financial performance issues of the Kaipara District Council noted in successive audit reports? Have the auditors failed the ratepayers of Kaipara? If so that failure must be addressed. It must never happen again and accountability for failure must be sheeted home.The Kaipara has been caught in a situation where it needs Parliament’s help and the expeditious processing of this bill is important for the Kaipara to move on. I ask that the Local Government and Environment Committee award this bill priority. I commend it to the House.Su’a WILLIAM SIO (Labour—Māngere):I rise to present a view on this bill the Kaipara District Council (Validation of Rates and Other Matters) Bill and to say that the view of the Labour Party is that this ought to go to the Local Government and Environment Committee as recommended by the sponsor of the bill Mike Sabin. Although we will support it going to that select committee there are concerns and reservations that have been raised on this side of the House and that we will continue to discuss.Prior to the bill being introduced tonight I have had the opportunity along with my colleagues who will speak tonight to meet with the commissioners—in particular the chair John Robertson who is with us tonight—and we have met with Bruce Rogan the chair of the Mangawhai Residents and Ratepayers Association and its legal representative.Although we accept on the surface that the recommendation for this bill is that there is no other way and that this has been the last resort that we present to this House for consideration it nevertheless raises serious questions about why this has been allowed to get to where it is. I think members of the House on the other side recognise that last year the Hon Annette King who was the Labour spokesperson on local government raised at that point the need for the Government to act quickly. We criticised the Government for not acting quickly. I was not aware of the details of the situation butcertainly now I see why the Hon Annette King was very critical of the lack of action by the Minister of Local Government at that particular time.I think as outlined by the sponsor of the bill these issues are very serious. It is mind-boggling why a debt that started out so small was able to balloon into a situation where it is in the vicinity of $80 million. There are questions that we would want the select committee to hopefully have the ability to consider. Although on the surface of it yes you have got more than 10000 ratepayers who continue to pay their rates and who continue to put faith in the decisions that have been made there is certainly another group who rightly I believe have raised their concerns and want to hold somebody other than themselves responsible. The sad fact of the matter is that in the meantime they continue to receive the services for the facilities that the Kaipara District Council has produced.It concerns me also that this council and those involved in the decision making of the council made decisions about its rates and made decisions about the Mangawhai waste-water system without consultation. It boggles the mind to believe that the debt almost doubled and there was no consultation with the community which inevitably ends up paying for it.So I am quite pleased to see that in the latter part of the bill Subpart 3 “Other matters” is clause 14 “Council’s right to bring proceedings unaffected” because I think there are issues where the resident ratepayers have taken this to court asking for judicial review. I note that that is within their rights. So I think the select committee ought to be looking at that. There is the auditor’s report which has yet to be made public. The select committee also needs to consider that.But you have got to ask whether Kaipara District Council was asleep at the wheel when these decisions were made. Why did the councillors place so much faith in the chief executive officer and in the officials at that particular time? Why did they place so much faith in consultants—consultants who I have to say provided specification for the project and then ended up contracting themselves for the delivery of it. I am keen to know who those contractors are and who the right-wingers were who clapped from the sidelines lauding how wonderful the council was and the fact that the rates were low at 1 percent I am told with no thought for long-term projections in terms of how it was going to fund some of these long term. And how was it that the size of the Mangawhai scheme doubled in debt without the consultation of the very people who sure benefit from it but also have to pay for it?So there is a range of questions that I am not sure whether the select committee will be able to deal with but certainly they are questions worth asking and worth asking officials. I understand that the Government is supporting this bill and so I think that the committee ought to take every opportunity to be asking that the officials do take an investigation into this matter.The fact that with this bill the rights of the council will remain to proceed in the prosecution of anyone related to this “to bring any proceedings against any person arising out of or in connection with any actions or omissions validated by this Act.”—I think it is important that people can feel confident. But more important I would hope that the opportunity is taken up by every resident and ratepayer of the Kaipara District Council to raise their concerns to raise these matters because we here in Wellington may not have the full details and certainly officials may not have the full details in terms of what has occurred. I would like to hear from every resident ratepayer what the issues are that they now face.Irrespective of that I think the big question has to be asked—and we have dealt with this and tried to discuss this—of who pays. Who ultimately pays? I think there are concerns around the banks that provided the loan to the Kaipara District Council andquestions now have to be asked. Should the legal entities have that ability to lend money to district councils without proper due process of the ability of the councils to repay it and without proper due process to ensure that the process as outlined by the Local Government Act and the relevant legislation is being followed? These questions have arisen because of this.You know I do not want to raise the names that people have given me of people who might be at fault but the reality is that this is such an ugly mess that we have got to clean this up. But I would hope that in cleaning this up we do look for the lessons to be learnt and that we do look for ways of pursuing those who may have been responsible for this decision. OK if it is incompetence then let us say that it is incompetence but those people who are incompetent need to own up. They need to face the Kaipara District Council resident ratepayers.So although we would like to see this bill go through to the select committee thereby permitting the resident ratepayers of the Kaipara District Council district to have a say on this we have got some serious concerns. We are raising them for consideration and I hope that the committee takes every opportunity to seek them out.One of the appalling things I think is that there were no red flags by Audit New Zealand as to why—it never made any sounds. And if it did who did it make them to? Why did the council not pick up on that? This is quite sad because I know that on the whole councils do a wonderful job. They are elected by their constituency to do work and by and large constituencies hold councils and their mayors to account. But in this situation I fear that that did not take place. I am quite sad about that because this is now the reason why we sit here around this table trying to decide how we ensure that the work goes on and how we ensure that that council continues to implement and deliver the necessary outcomes for its local communities.I look forward to this bill being debated in the Local Government and Environment Committee and to that select committee giving it sincere and serious consideration and I look forward to hearing more from the residents and ratepayers. I want to thank the commissioners. I know they have sort of been the meat in the sandwich here; they have been tasked with the job. But I have to again say that this is the reason why the Hon Annette King pointed the finger at this Government and said: “Why aren’t you guys acting? You did the same with ECan in Canterbury.” Thank you very much for the opportunity.NICKY WAGNER (National—Christchurch Central):I rise to speak to the Kaipara District Council (Validation of Rates and Other Matters) Bill as well. I would like to thank MP Mike Sabin for bringing this to the House. As we have heard from the member who has just sat down Su’a William Sio this is a mess. It is a really difficult situation. I think Mike has worked through this bill intelligently and professionally and I do appreciate the work that he has done.This is not the sort of bill that MPs like to work on but validation bills do on some occasions have a purpose. They do come to this House because sometimes they are the best way forward for councils and communities when irregularities of process have happened. I would just like to draw attention to the previous member’s speech which covered a lot of issues around this bill but a lot of those issues are out of scope. This bill deals only with the irregularities around ratepaying.The Kaipara District Council is in a difficult situation but it does need to continue to fulfil its local government roles. It needs to be able to deliver the services for the 12000 constituents who have continued to pay their rates and it needs to allow the commissioners to get on with the job of getting the council operating efficiently and effectively and getting it ready for democracy and voting in 2015. We have been told that this is about irregularities in rates that the council is seeking to validate and thatcould have been struck correctly. They could have been struck correctly under the Local Government (Rating) Act and at the same amount of money as invoiced. We have been told that these irregularities are more about poor attention to detail and poor process than about something that is illegal or unfair.Currently 9 percent of the ratepayers have not paid any rates in the current year and because of the past irregularities the commissioners are not able to enforce their payments. So that current level of arrears is having an adverse effect on the other 91 percent of people who have paid their rates. To minimise the financial impact of that high level of rate arrears the commissioners have instructed staff to operate within the current level of debt and to achieve that end services and capital works funds that normally would have been spent have been cut by $3 million which in the long term is detrimental to the community. These issues need to be resolved and they need to be resolved quickly because the longer the rates are not paid the more difficult it is to provide the services for those ratepayers who have paid. Further non-payment of rates will also result in higher interest costs directly adding unnecessary and unaffordable costs to all of the district ratepayers.In summary this bill will support the 12000 law-abiding citizens in Kaipara and bring certainty and closure to a number of irregularities over the past 7 years. The Kaipara District Council acknowledges that number of irregularities and that they occurred in the way that the council set rates and this bill is about fixing that. The bill will mean that ratepayers will be liable for the rates that they were invoiced for but no one will pay more rates than they were historically invoiced for.As well as the rating irregularities the council presided over the controversial Mangawhai sewerage scheme at an increased amount of debt and that is what the previous speaker has just been talking about. This bill does not stop proper scrutiny of these decisions nor does it absolve anybody of responsibility or culpability.The bill does not impinge on any of the several inquiries that are under way. There is one by the Office of the Auditor-General into the EcoCare sewerage scheme. It does not impinge on the independent inquiry into the auditor and it does not impinge on the commissioner’s inquiry into matters aside from the above including actions of the former chief executive officer. This bill is about the fixing of irregularities and does not affect the scope of other issues that can be dealt with. I commend this bill to the House.PHIL TWYFORD (Labour—Te Atatū):So what is this bill the Kaipara District Council (Validation of Rates and Other Matters) Bill about? The bill seeks to address illegalities in the setting of rates by the Kaipara District Council. The context for this is that the Kaipara District Council entered into loans to pay for a waste-water treatment plant at Mangawhai which was worth substantially less than what was paid for it. In doing that the Kaipara District Council incurred an $80 million debt for its ratepayers and the consequence of that is that the ratepayers of Kaipara District Council and particularly the ratepayers of Mangawhai have been saddled with an unsupportable debt. The upshot for everyone here who am I sure pays their rates bill every month or every quarter is that ratepayers in Mangawhai who were paying say $2000 a year for their rates are now paying up to $6000 a year for their rates. That is the impact on the ratepayers of Mangawhai. Is it any wonder that they are ropeable about this situation?What this bill does this validation bill is set out to regularise to validate decisions that were made by the Kaipara District Council that I would submit based on the speech of the member sponsoring this bill Mike Sabin were variously illegal mismanaged incompetent and negligent if not corrupt. It should not surprise this House that the people of Mangawhai are ropeable about this situation. So what is to be done? The previous speaker Nicky Wagner talked about how difficult it is for the commissioners and how difficult it is for the current Kaipara District Council.I think that the underlying sense in much of this debate is that someone has to pay this debt. If it is not going to be the people of Mangawhai and the people of Kaipara District Council is it to be the rest of the taxpayers in New Zealand? Is that what should happen? I think most people would say: “Well I’m not sure that the rest of the taxpayers in New Zealand should be bailing out the people of Kaipara because the elected councillors and officials of Kaipara District Council made a series of appalling decisions on their behalf.”The Mangawhai Residents and Ratepayers Association has carried out a rates strike. That is what has brought this bill to the House. That is why the commissioners are unable to go about their business and achieve their task of sorting the finances out and getting the council back on track. The reason that the Mangawhai Residents and Ratepayers Association opposes this bill the reason it does not want to see a validation is that that will completely undermine any leverage it has in trying to engineer another kind of solution. What would it like to see? It would like to see a deal brokered that involved extracting payment from the auditors Audit New Zealand as Mike Sabin was saying which inexplicably repeatedly signed off the most bizarre decisions and financial commitments and claims made against the former councillors and against the chief executive and staff of the council.It is the view of the Mangawhai Residents and Ratepayers Association that its leverage to get some kind of burden-sharing solution will be undermined by this validation bill and I think that is a reasonable position to take. I think it is incumbent on this House and on the Local Government and Environment Committee to consider from a public policy sense what a fair and reasonable solution to this problem is regardless of whether as Nicky Wagner just told the House those matters are outside the scope of this bill. This bill has been brought to the House by the commissioners so that they can do the job they were tasked to do by the Government but I think there is a moral obligation on the House to consider what a fair ethical and enduring solution is for the people of Kaipara district and particularly the people of Mangawhai.I question whether or not it is fair that this solution should proceed before the Auditor-General has reported and before the High Court action has been allowed to run its course. I think those are reasonable questions to ask. So there are many questions surrounding this bill. Labour supports the bill’s referral to the Local Government and Environment Committee but we do so with reservations.EUGENIE SAGE (Green):Eighteen pages of this 26-page local bill the Kaipara District Council (Validation of Rates and Other Matters) Bill recite the numerous things that the Kaipara District Council did wrong in setting and assessing rates in 6 years from 2006-07 to 2011-12. The bill describes the errors as irregularities. Kaipara residents and in particular those in Mangawhai would describe the succession of decisions that the district council made since 2006—decisions that breached the Local Government Act 2002 and breached the rating legislation—in far stronger terms as illegalities rather than irregularities.It is the Mangawhai waste-water scheme that is the source of much of the problems that this bill seeks to fix and that scheme has a very bad smell indeed. It cost more than $62 million far more than the council had originally proposed to spend and far more than ratepayers were consulted on in terms of the size of the loans that the council raised to help pay for the scheme. So it is certainly an understatement to say that there are very many serious questions around how the whole waste-water scheme was managed. As other speakers have noted the Office of the Auditor-General has been inquiring into the council’s management—or should it be mismanagement—of that scheme since March 2012 and has yet to report. That report will be read with a great deal of interest and as the bill’s promoter Mike Sabin has noted there are also a number of questions aroundthe role of the Office of the Auditor-General and its oversight of the Kaipara District Council.I have been very pleased to receive a lot of correspondence and emails from Kaipara residents including members of the Mangawhai Residents and Ratepayers Association explaining why they have filed judicial review proceedings in the High Court to seek a declaration that the Kaipara District Council entered into the loans illegally and without adequate consultation and therefore that the rates demands that it made were invalid because of this. My understanding is that the association and Mangawhai ratepayers are not opposed to validating legislation per se but they want it to be part of a much wider package where the lender banks and not just ratepayers are asked to help repay the council’s debts.Nicky Wagner: It’s not part of the bill.EUGENIE SAGE: It may not be part of the bill as Nicky Wagner has noted but it is also about what Phil Twyford was talking about—a fair and reasonable solution.I also want to acknowledge the fact that there were many Kaipara residents who sought to raise a red flag and challenge what the council was doing more than 6 years ago. They thought to alert the appropriate authorities to engage and to act on what residents believed was poor and potentially illegal decision-making and mismanagement by the council. So it is hugely frustrating for them that we now have this validating bill acting retrospectively and that they also have the cost of that flawed decision-making in terms of the very large increase in rates that they are now faced with.The Green Party has very carefully considered its position on this bill particularly because it is retrospective legislation and we have looked at it partly in terms of where the balance of fairness is. On the one hand we have got the Kaipara ratepayers especially those in Mangawhai who are being asked to repay the loans which were improperly entered into and were much larger than were consulted on and are being asked to pay substantially increased rates because of that. Then on the other hand we have the many ratepayers in Kaipara who continue to pay their rates to the council and we have the fact that the council continues to deliver the services that one would normally expect of a council.So the Green Party will support this bill being referred to the Local Government and Environment Committee so that Parliament can hear directly from Kaipara residents. We think that this is particularly important because the Minister of Local Government Chris Tremain has declined an invitation to meet with residents to discuss this whole issue. As theNorthern Advocate noted in March this year the Minister has sidestepped the ratepayers’ stoush. It is really disappointing that the Minister is doing this sidestep when in so many other instances the Government has sought to intervene and override councils’ decision-making authority.We think that the legislation is needed to put the council’s finances on a viable footing but we have a number of questions and we look forward to hearing at the select committee from residents as to whether this bill should be supported further. Thank you.Mr DEPUTY SPEAKER: It is normally a call to another party but I will give it to Mark Mitchell. He is the only one seeking the call.MARK MITCHELL (National—Rodney):I wish I could say it is a pleasure to take a call on this bill the Kaipara District Council (Validation of Rates and Other Matters) Bill but I am very pleased to stand in support of my colleague Mike Sabin. It is obvious that there have been fundamental failures and mistakes made in the management of both the finances and the projects of the Kaipara District Council. This has been exacerbated by what appears to be an utter failure by the auditors to do theirjob properly. It is now the job of the Government to try to reach the best solution for what is a very bad situation.It would be much easier for Mike Sabin to walk away from the sponsorship of this bill but he is doing the right thing for the right reasons and that is to allow forward momentum to begin through a thorough public consultation process and the vehicle to do that will be the Local Government and Environment Committee. If he does not do this then the clear and present danger is that there is no forward movement towards a resolution. Without forward movement of some sort all that will be created is more frustration and uncertainty for those whom it directly affects.There are many different interest groups external commentators and local government experts who have expressed views and opinions and they will all have a contribution to make. However the people who really need to be listened to are the Kaipara ratepayers and up until this time many have felt that there has been no real opportunity to be heard or consulted with properly. So I feel strongly that the select committee will provide a very good platform for ratepayers to make their submissions and to be heard. The select committee chair Nicky Wagner has agreed that the committee will sit in Kaipara to ensure that people have easy access for submissions.Let me make it clear that the coming consultation will provide clarity for both the committee and the community as to whether this is the right path to take or whether there is another option or options available. The Kaipara community must be given the opportunity to present their own proposals and their own solutions to this situation.Finally I would like to acknowledge Minister Tremain and the work that is currently being undertaken to strengthen local government governance and accountability so that something like this does not happen again. Thank you.ANDREW WILLIAMS (NZ First):I take a call on behalf of New Zealand First on this somewhat unfortunate situation with the Kaipara District Council (Validation of Rates and Other Matters) Bill. It is with a somewhat heavy heart that I have to stand and talk on this particular matter. Having had 9 years in local government it is most concerning when you are faced with a situation like this where a relatively small council—of the 78 councils in New Zealand—has really really mucked it up badly. It is most unfortunate because at the end of the day we all suffer. New Zealanders as a result of this suffer whether we be ratepayers whether we be taxpayers or whether we be simply residents or bystanders. At the end of the day we all as a people of New Zealand suffer from an incident like this. It is unfortunate.I am sitting here looking at a whole range of papers that I have received and these are just a few of them from all sorts of sources in the Kaipara district—from residents from the Mangawhai Residents and Ratepayers Association people from advisers to the residents from the commissioners of the Kaipara district themselves who have come to see me to discuss the matter and from other informed parties and everyone agrees that this is a real mess.It was a mess that evolved over a period of 4 or 5 years when the Mangawhai community required an upgrade to its sewerage system. It was necessary and when we talk about this particular scheme we could equally talk about schemes that could occur anywhere else in the country because many many communities around New Zealand are requiring an upgrade of their sewerage systems many of which are well behind requirements of a First World country. This particular community found itself in that situation. Its council working through the executive of the council selected the consultants whom it chose to go ahead with the scheme. Obviously there has been a level of professional advice professional input determinations by the council and determinations by expert professional consultants and contractors and it is most unfortunate that much of it at the end of the day has been very very poor informationthat the council has received. As a result the scheme has blown out to something like $70 million or $80 million for a relatively small community. You feel very sorry for all the ratepayers of that community of Mangawhai who have ended up in a sense having to carry the can for some very bad decisions that have been made over a number of years.Mr Sabin the local MP has brought this local bill to the House to try to validate those wrongful decisions that were made and those errors that were made. I can understand his need to do that and we as New Zealand First can understand his need to do that because at the end of the day somehow this has got to be sorted. But on the other hand we certainly also have a great deal of sympathy with the residents who want to have their day in court and who want to have their opportunity to take this before the court to have it properly vetted in terms of all the information have it analysed and have it properly scrutinised under the true light of day.So we will be allowing this and supporting this to go through to the Local Government and Environment Committee for hearings. We will encourage many people to make submissions on this. We will encourage them to come forward and give their views on it. But at the end of the day we still do thoroughly support the residents also having their day in court and being able to have the opportunity through the court system to actually go after some of the people who were responsible for this. In particular I would say in my experience of local government that there will be some professionals involved in this who should certainly be accountable for their actions because they have very very badly informed the council there. They have provided information that has blown out by tens of millions of dollars and at the end of the day somebody should be accountable for this. So it is with a heavy heart that we will support this through to the select committee but we certainly will be scrutinising this very very closely.Hon MARYAN STREET (Labour):It is as others have said not exactly a pleasure to get up and speak to this Kaipara District Council (Validation of Rates and Other Matters) Bill but I do so. I want to acknowledge John Robertson who is in the House tonight as a former member of Parliament who is the chair of the commissioners in Kaipara at the moment and I acknowledge his work.First of all though I want to begin with a tribute to Mike Sabin. I think I agreed with every single word in his speech. It was a very strong speech. If there are members of the Mangawhai Residents and Ratepayers Association watching this parliamentary session tonight and they are people who have been annoyed with Mike Sabin for bringing this legislation to the House can I just say to them that he has done exactly the right thing. He has taken the right course of action. He has brought it here and spoken very strongly about what he sees to be the injustices and the inadequacies that are the precursor to this bill arriving in the House. So I want to commend him for that speech and for bringing this to the House because it is a difficult thing to do.Most of us I think—but I will just speak for myself—have a pathological aversion to validating legislation—a pathological aversion to it. For this Parliament to be used to make an illegality legal is an abuse of this House. For this House to be asked to turn the incompetence the illegal practice the mismanagement and perhaps malevolence on the part of any local council—not just this one—into fact or legal fact when it in fact becomes a legal fiction is an abuse of this House.In February of this year we heard from Damien O’Connor when he was in a similar position to Mike Sabin. The Tasman District Council had asked him as the local member for most of the area of the council’s catchment to bring a validation bill to the House. Again I spoke strongly about how undesirable this is and in that situation in particular I railed against the former chief executive officer who really bullied theratepayers in that situation—the Tata Beach and Ligar Bay ratepayers—who did not want to pay for something that they were not seeing any benefits from by saying: “Well you haven’t got enough money to contest this. We’ll take it to Parliament and Parliament will fix it for us.”Well can I just warn every single local authority in the country that two of these in 6 months is two too many and that that will provoke a reaction either in this Government or a future one that will take away the ability of local governments where they are incompetent. Mergers and amalgamations might be made forcibly if the local bodies their officers their officials and their honorary officials or elected officials are incompetent to perform the task.I think it is not good enough that ratepayers in New Zealand who should be allowed to have a say about how their rates are used are forced into this kind of situation by what I think is incompetence rather than malevolence in this situation. However such local authorities need to be brought to account and we need to know that those who guard the guards—in other words Audit New Zealand which guards the guardians of taxpayers’ money—are also brought to account because that is something this Parliament can do.So the Labour Party is supporting this legislation in its first reading but I have to say—and I cannot address Mr Robertson personally while he is sitting in the House—to the commissioners who have asked us to support this bill that our support is only in its first reading because if there is another way through this mess that addresses the wrongs that illegal actions have brought upon the residents and ratepayers of Mangawhai then let us find it and let us find it without having to make an illegal action legal. Thank you.MAGGIE BARRY (National—North Shore):I rise with pleasure to speak to the Kaipara District Council (Validation of Rates and Other Matters) Bill. Let me start with an understatement: the Kaipara District Council has had a very troubled few years. It is an area that comes through into my area. It is from Mangawhai in the north and many of my people—I think around 3000 of them—who live on the North Shore actually own properties in that area in the Mangawhai area. There are about 14000 ratepayers in the district and many of them are very very unhappy at the way things have turned out so far. Accountability as many speakers who have talked on this bill before me have said is vitally important. This bill does not let anybody off the hook. Audit New Zealand standards need scrutiny. As others have said it passed year after year after year with a clean audit a piece of work that really did not deserve to be passed. What was it thinking? There are questions on this that need answering. The sewerage scheme was originally costed at $11 million in 1999 by October 2006 it was up to $58 million and $62 million with limited consultation was the ultimate outcome. It is the reason why we have Resource Management Act reforms. Kaipara District Council remains the absolute bottom standard of what councils that run amok without proper consultation with their ratepayers can achieve and can drag their ratepayers into.This is a piece of legislation that is absolutely necessary in the same way as the Tasman District Council (Validation and Recovery of Certain Rates) Bill is as well. Our colleagues on the other side of the House have referred to that already. Damien O’Connor—as Mike Sabin has done—has taken the responsible view of a local member and has been forced to take that further. The Local Government and Environment Committee is where people who have done wrong by their ratepayers will be held to account. Let us look at what would happen if this particular piece of legislation were not passed. What are the options? Without validating legislation the council would need to refund all of the rates that were set incorrectly and set new rates to recover the money—what would that cost and who would have to pay—work itsway through a complex process of resetting rates for each year since 2006 which again would be a ridiculous exercise and enormously expensive or leave the status of the rates uncertain and open to legal challenge. Those are the three options without this bill. Sensible people would acknowledge that this piece of legislation needs to go through.This bill will be heard by the Local Government and Environment Committee as our chair Nicky Wagner indicated earlier—the same select committee that has had to hear the Tasman District Council issues. As a person who just sat down on the other side of the House indicated two in as many months is a ridiculous situation and it should not happen. It should not be allowed to happen. Once again the broader picture that this Government takes is that the Resource Management Act reforms are absolutely essential because of these kinds of problems that emerge. This bill will be heard in the select committee that I sit on. We will go to the Kaipara to make it as easy as possible for people to make their views known. I can assure you that submitters will be heard and questions will be asked and people will be very thoroughly questioned as to what the options are.The Kaipara District Council has created an ugly mess. There are many words that have been used around this: we have got “mismanagement” we have got “incompetence” we have got “dysfunctional” and even from members on the other side we heard “corrupt” which is rich coming from them. When we look at what is happening with this piece of legislation which needs to be examined we need to hold people accountable for this mismanagement and incompetence. We need to find a way through this dysfunctional mess for the sake of the ratepayers. There are some 12000 law-abiding citizens in Kaipara and they need to know with some certainty that this is going to be resolved. We need to help them through that process and the select committee the engine room will make sure that that happens. I commend my colleague Mike Sabin who has had to put in a lot of hard work to find a solution that just might be workable through this absolute muddle. It is complex. This is a problem not of his making. I commend the local member Mike Sabin and I commend this bill to the House.DAVID CLENDON (Green):In general in line with the theme of the evening I think I reiterate that the Greens are supporting this Kaipara District Council (Validation of Rates and Other Matters) Bill but we do so reluctantly and at this stage we are committing only to support it to the Local Government and Environment Committee. This is primarily because we believe that it is important that the people of Mangawhai and of the Kaipara more generally have an opportunity and a forum to come to to say their piece and to get some answers which have been sadly lacking to date. I have been slightly concerned to hear some comments about the scope of the bill. I would hope that the attitude of the committee is to be very open inviting and inclusive of submitters and is not to be overly restrictive or to endeavour to limit the very reasonable conversation that needs to take place around this bill.In line with one or two others I would also have to comment on the member who is presenting this bill Mike Sabin. It is a local bill; not a member’s bill. Although there is a long list of reasons one might choose from to be critical of Mr Sabin I think this bill is not one of them. I think he is fulfilling his duty as the local member to bring this bill to the House. Like other members I have seen a letter from the chair of the commissioners. It is a useful document. There is a line in it that I particularly like because I like understatement. It says: “Since 2006 the Kaipara District Council made a succession of decisions that failed to comply with the letter and the spirit of the Local Government Act.” That is a wonderful piece of understatement there. What in fact has happened of course is that the council has acted illegally—and I would argueimmorally—and has left a significant mess and considerable financial and other burdens on the ratepayers and residents in that place.The point has also been made tonight—and indeed it is in this letter from the chair of the commissioners—that all the irregular rating decisions made by the council could have been made in a perfectly legal and legitimate way that would have resulted in the same impact on ratepayers. Technically that is quite true. There is no disputing that. In practice however I seriously doubt—I do not believe—that had light been shone on what was actually going on had ratepayers known what financial and other commitments were being made in their name things would have gone as far or as terribly wrong as in fact they did. So I think it is slightly disingenuous to suggest that these things could have occurred in any case. This is why we have a robust local democracy in this country at least in most of this country and I think it is important not to overlook that.I do take issue too with the suggestion that the opposition in Kaipara and around Mangawhai is from—the classic phrase—a small but vocal minority. I went to a meeting in Mangawhai some 6 or so weeks ago on a sort of bleakish Sunday afternoon. There were over 200 people at that meeting and this was after many meetings and many engagements. I think that reflects the level of concern and the level of engagement. I think to say it is a minority—well yes it always is—is not right but I do think they represent the majority of people who have been treated very badly whose interests have not been well served. I think we ought to realise that if you can get a hall full of people—in excess of 200 people—on a given Sunday that represents very deep-seated and widespread opposition to what has been going on in that area.There is some commentary again in the letter particularly about the Mangawhai Residents and Ratepayers Association. I think it is somewhat easy to belittle that group. I think its approach is somewhat more sophisticated than it has perhaps been given credit for. It is not simply an opposing group; it has outlined a proposed solution or set of solutions. Yes it might be difficult reading for some but I think it has to be acknowledged that the group has come forward in a constructive way offering a pathway through. It is not a simple path but nor is it a simple problem.The group makes the point that there is an interesting legal distinction potentially to be made between the ratepayers and the council and who actually carries liability. I will not comment on the rights and wrongs of that first because I am not a lawyer and second because I understand that that is the point of law that the group will be taking to the High Court and I think good on them. The group makes the point that it feels very badly let down in this process by the auditor and again with good reason.Finally I would make the point that good projects projects that come in under budget and on time are carefully managed projects rigorously managed projects where somebody is in charge. In this case clearly that was absent. The ratepayers are bearing the brunt of financial and other mismanagement. We need to look very hard at this bill. Thank you.MIKE SABIN (National—Northland):No one is a fan of retrospective legislation. It is a last resort and is reflective of council failure. Unfortunately it is required and it is the only workable way to remedy irregularities and errors that were avoidable but none the less occurred. This is not an unprecedented situation. In recent weeks we have seen another example of it with the Tasman District Council (Validation and Recovery of Certain Rates) Bill.In summary the Kaipara District Council (Validation of Rates and Other Matters) Bill looks to correct a number of irregularities and errors mostly to do with rating made by the Kaipara District Council. These procedural and substantive irregularities in setting rates and associated documentation go back many years. Most of the rates thatthe bill attends to have been paid. Ratepayers have received services for which they were set but none the less these need to be validated once and for all so that Kaipara can move on with certainty.The bill proposes to validate the rates set and assessed by the council from 2006 to 2013 and associated penalties to treat all rate payments received by the council as having been done so lawfully and to authorise the council to recover any part of the rates and penalties for those years that remain unpaid. It seeks to address the actions and omissions relating to the continuation of the council’s 2006 development contributions policy the late adoption of its 2011-12 annual report and its 2012-22 long-term plan and the conduct of the council’s special consultative procedure for the 2012-22 long-term plan.It has been said that the $30 million decision to expand the sewerage scheme is not subject to this bill. All of the matters for which validation is sought could have been struck in a way that was consistent with the Act which was provided for which would have resulted in the same amounts being invoiced as would have occurred if it had not got this process wrong.The council accepts that it made mistakes and that it needs Parliament’s support to correct the situation but this will not absolve anyone of responsibility for the decisions that have led to these errors and I would not support this legislation if that was the case. I also made it very clear to the commissioners—and I want to put it on the record of this House—that accountability is just as important in giving ratepayers certainty when they have been so woefully let down by those they elected to govern their district and by a system that should have provided the necessary checks and balances to avoid this situation.The Office of the Auditor-General is conducting an inquiry into the Mangawhai waste-water scheme and the time being taken is understandably frustrating for ratepayers. Questions must be answered as to what role the Auditor-General’s office and that of Audit New Zealand has played in the failures of this council. The independent inquiry into Audit New Zealand must answer very serious questions as to the apparent failure of that authority to respond to a council with such longstanding and deep-seated non-compliance and other fundamental financial mismanagement issues. How was it that this council could still get clean audits year after year? If the council gets it wrong then ratepayers must be able to rely on the systems that sit above it to stop the rot. If they are shown not to have done this where they should have then they must accept responsibility and they must be held to account.Huge questions also need answering as to the operating relationship between the former chief executive officer Jack McKerchar and the elected members of this council the due diligence processes and the relationship between Mr McKerchar and consultants and contractors. I want to assure ratepayers that as a former detective I share your concerns and no stone will be left unturned by me in seeking justice and accountability for those ratepayers. I have trusted in the commissioners and I will support the commissioners in the pursuit of this.Many have levelled significant criticism at me for being willing to sponsor this bill and say that I am kowtowing to the powers that be by doing so. I want to say to those people that I am doing this because it is what I feel I need to do for my constituents not for anyone else and I will accept responsibility for that decision. It is not an easy decision to have made. It would be much easier to just turn and walk away but constituents should rightly expect that their local MP does not do that—that he does not shy away from the hard stuff. They should rightly expect that I will stand my ground and I will fight for them and I am saying on the record of this House today that I have been doing that and I will continue to do that for them.This matter deserves and needs the full scrutiny of this Parliament and I encourage my colleagues to give it just that. If elements in this bill do not pass the test then so be it. At least this process will have come to finality. This bill is part of a number of activities that are under way to help restore the Kaipara district. It is not the only part but it is a very important part and I hope that my colleagues on the Local Government and Environment Committee give it that level of attention. With regret I commend this bill to the House.A party vote was called for on the question that the Kaipara District Council (Validation of Rates and Other Matters) Bill be now read a first time.Hon TREVOR MALLARD (Labour—Hutt South):I raise a point of order Mr Speaker. There have been a number of Speakers’ rulings which I have not looked up because it has been quite a long time since they have been used because they were used mainly in the time when there was physical voting and there is an old rule in this House that vote follows voice. We appear to have had some sort of error. It may be that with this new party vote system that we have had for the last 20 years or so that no longer applies but it used to be the case that it was an obligation on members to vote physically in the way that they had voted with their voices.Mr DEPUTY SPEAKER: It is my understanding that that does not apply under the party vote and people charged with a proxy have the right to call that vote. I must confess that I did not hear the member when I initially declared the vote which might have led to the confusion. But members who are charged with a proxy to vote alternatively have the right to call for a party vote.Hon TREVOR MALLARD (Labour—Hutt South):I raise a point of order Mr Speaker. I sort of hate to push this too hard but my understanding is that people can call for a party vote only if they disagree with the way that you have ruled and in fact you ruled that the Ayes had it.Mr DEPUTY SPEAKER: Yes and I have already confessed to the fact that I did not hear the member calling and so that was in part my error and probably in part the error of the person for not being loud and robust. Let us learn from the experience.A party vote was called for on the questionThat the Kaipara District Council (Validation of Rates and Other Matters) Bill be now read a first time.Ayes116New Zealand National 59; New Zealand Labour 33; Green Party 14; New Zealand First 7; ACT New Zealand 1; United Future 1; Independent: Horan.Noes4Māori Party 3; Mana 1.Bill read a first time.Billreferred to the Local Government and Environment Committee.