Tolley AnneLOCAL GOVERNMENT ACT 2002 AMENDMENT BILL (NO 2)Second ReadingHon ANNE TOLLEY (Minister of Local Government): I move That the Local Government Act 2002 Amendment Bill (No 2) be now read a second time. New Zealand has a strong and growing economy and as a result we are seeing regions right across the country grow and thrive as never before. However with growth comes challenges and we know this growth puts pressures on local authorities. So we need to ensure that essential infrastructure services are provided efficiently and sustainably.The current legislation does not do enough to support changes to the delivery of these services. In some cases it would require making radical changes or large-scale amalgamations of multiple councils to achieve results that are in the best interests of the regions and their residents. There are already a large number of shared services between councils across the country. Many of these are doing well including here in Wellington which serves as a good example in the water space. But there are few shared services in areas like transport and there is no legislative framework for the management of large organisations delivering core water or transport functions on behalf of multiple councils.This bill will support improved service delivery and infrastructure provision at the local government level. It provides for a more flexible and responsive process by the Local Government Commission. It also allows local councils to lead their own reorganisation processes for the first time. It provides for more collaborative structures for councils to use when delivering services to their communities. These new processes and tools are designed to be enabling and will result in changes for councils only if that change is in the best interest of the region and makes sense locally.I want to convey my appreciation to the Local Government and Environment Committee which closely examined the bill and recommended by majority that it be passed with a significant number of amendments. I am disappointed however that having spoken with the local government sector having listened to its feedback and having made a large number of the changes that had been asked for the Opposition members of the committee were still not prepared to support the bill. I understand that the committee received 188 written submissions heard oral evidence from 84 and that many submitters supported the bill's intent to enable improved service delivery and infrastructure provision at the local government level. However I believe many also expressed reservations about the way that the bill set out to achieve this. The select committee has acknowledged the submissions of Local Government New Zealand and the Society of Local Government Managers which were particularly useful from both a policy and a technical standpoint.There were a number of points on which submitters had particularly strong views. The introduced version of the bill allowed the Local Government Commission to create a multiple-owned council-controlled organisation (CCO) without the agreement of all affected councils. Whilst the bill was never intended to enable the commission to impose CCOs without full consultation with local authorities and communities it obviously caused concern. I am therefore pleased to note that the power for the commission to create those multiple-owned council-controlled organisations without the agreement of all affected local authorities has been removed from the bill.Concerns were also raised about apparent unilateral powers for the Minister of Local Government to require additional information relating to council performance. Having spoken at length with and having listened to the sector I am satisfied that the local government sector can and should lead performance improvement programmes in collaboration with central government. We therefore support the select committee's initiative to remove these provisions from the bill.Other changes have been made to address a number of points where submitters had particular concerns. A number are to clarify certain aspects of the bill and avoid misinterpretation. For example where councils had to seek the approval of the Local Government Commission before consulting on the establishment of multiple-owned CCOs changes have been made to clarify that the Local Government Commission must grant permission unless it is satisfied on reasonable grounds that the disadvantages significantly outweigh the advantages.Now that these changes have been recommended I believe we have a bill that will be more practical for the local government sector. The intent is clearer and the opportunities it provides are more accessible. We have a bill whose core reform principles remain: to encourage and enable timely improvements to the delivery of services and provision of infrastructure at the local level. We are introducing the ability for councils to lead reorganisation processes directly if they so choose. This will be the first time that councils will be able to lead processes like this and many councils have told the committee that they are supportive of this empowering change.There will be an improved menu of options for councils to choose from when delivering services including CCOs joint committees and transfers of functions. This is a bill that will also provide for new flexible reorganisation processes. The Local Government Commission will be able to tailor its approach directly to local circumstances and issues not just in terms of what is under discussion but also in terms of the process and consultations with councils and the public. It will have greater latitude in responding to reorganisation proposals so that the most pressing receive its urgent attention. Along with its independence and this greater flexibility the commission will be held to more stringent and transparent accountability arrangements.I do need to point out that the local government commissioners are doing a fantastic job. Over the last couple of years they have taken a collegial approach to their conversations with councils and communities. The changes we are proposing through this bill will help ensure that this collaborative transparent model of engagement is embedded in the way that the commission works.I would note that while a lot of the bill is concerned with governance and accountability mechanisms for CCOs this is not because CCOs are the preference. These reforms are not designed to impose a set of structures on local government. Rather they are intended to create a system of rules to ensure that shareholders can maintain an appropriate level of oversight over their council-controlled organisations.The Local Government Act 2002 Amendment Bill (No 2) will lead to better local outcomes for our communities. As a result of this bill we expect to see affordable and sustainable value for ratepayers and residents through more cost-effective delivery of services and infrastructure. We will see councils empowered to jointly deliver water and transport services which could achieve benefits from scale integration and specialist expertise.The Government supports the recommendations made by the Local Government and Environment Committee on this bill. The empowering nature of this bill is an opportunity for the sector to show its local strategic leadership which may require hard decisions about difficult options in order to secure a positive future for its communities. The need for decisive action varies in its urgency but it is very real. For some struggling councils the status quo is already not a viable option.The Government hopes that councils will take up the tools and opportunities presented by this bill such as the new locally led reorganisation provisions and use these to assist with improving their service delivery and infrastructure provisions.Finally I want to thank the select committee for the work it has done on the bill. I commend this bill to the House.