Local Government (Salary Moderation) Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Local Government (Salary Moderation) Amendment Bill — First Reading 
[Sitting date: 15 August 2012. Volume:682;Page:4446. Text is incorporated into the Bound Volume.] 
Local Government (Salary Moderation) Amendment Bill 
First Reading 
Hon ANNETTE KING (Labour—Rongotai) 
: 
 I move  
That the Local Government (Salary Moderation) Amendment Bill be now read a first time. 
Hon Simon Bridges 
: This is a honey of a little member. 
Hon ANNETTE KING 
: I nominate the Local Government and Environment Committee to consider the bill. Thank you to the member who has just interjected. This is a honey of a bill. In fact it is a very very exciting night for this member in the House because it is a totally new experience for me as a member of Parliament. Never in my many years—not as long as Maurice Williamson and a few others—of being in this House have I had a member’s bill drawn from the ballot. So you can imagine the excitement I felt— 
Hon Maurice Williamson 
: The ecstasy. 
Hon ANNETTE KING 
: —the ecstasy—when this bill was drawn out of the ballot. I have introduced Ministers’ bills very good ones and not so good ones. I have voted for many other people’s bills and have been very very proud to do so. But this is the first opportunity I have had to have a member’s bill in my name. You know this whole member’s bill opportunity is very very addictive because there are many many more bills to come from this side of the House. We are very excited about being able to make a difference in New Zealand by being able to introduce bills that people are keen on. Of course what we have managed to do is to shame the National Party into lodging something like 14 members’ bills over the last 2 weeks. 
But I want to start with this bill and thank the writer and author of the bill who did the work for me Charles Chauvel. He is an asset to any party in Parliament. He has the ability to write legislation for us in a very short time and he does most of the law drafting for us on this side of the House. We do not have a bevy of law drafters to do the work for us unlike Mr Auchinvole with his Habeas Corpus Amendment Bill. Of course when the Law Commission provides a report it also writes the entire bill and hands it over to the Government of the day and Mr Auchinvole was very lucky that all he had to do was pick it up and table it. Well in this case Charles Chauvel was the author of this bill. 
I want to thank my colleagues who have supported me in this bill. I want to thank the members of the Maori Party who have said they support this bill and New Zealand First members who have given me an assurance that they are supporting it. In fact they have a similar bill in the ballot and they are looking to move a Supplementary Order Paper should it get to the select committee stage and back into this House. The Green Party has also indicated support for it. I am unsure as to where the National Party sits on this bill. I am also very pleased with the community who brought this issue to politicians’ attention. 
This bill is aimed at helping local government not hindering it. It is aimed at providing an evidence-based approach to setting remuneration for chief executive officers of local government. It is aimed at providing a transparent accountability mechanism which will ensure that it is very open to the public as to what is happening when it comes to the setting of pay conditions and remuneration. And it gives the ratepayers some confidence that there has been put in place a process where an independent rigour has been applied to salaries and conditions and it is able to be compared with others in a similar situation. I also think it provides protection for elected councillors from public criticism. 
Where did it all start? Well it started in December 2011 following the devastating earthquakes in Christchurch. The Christchurch City Council through a very small committee of councillors including the mayor set the remuneration for their chief executive officer at an additional $68000 a year—an increase in salary of 14 percent that took his pay to $538529. Many councillors had no knowledge of how and why this figure was reached. It was done secretly and it was considered by many local people to be an obscene increase in the chief executive officer’s salary. Consider the conditions that people in Christchurch faced in December 2011. They were still without their homes. They had lost their jobs. They had lost family. Some of them still had no water and no sewerage. They were working long hours. Some of them had no pay and had hard work. And they had all the pressures that that community has had on them. They could see no justification for a pay increase that was 1½ times more than the average salary at that time. And it was not helped by the chief executive officer taking an overseas holiday during the earthquake spending time during work time at the golf course and then going out and adopting a very public and arrogant justification towards the pay increase that he got. For some it was the last straw. 
But Christchurch was not alone in this respect. There has been disquiet in many local government areas about the remuneration of chief executive officers and how it is set. We had the case in Kapiti of a pay increase of $44000. Although I understand there were different circumstances there was still not the transparency and openness that ratepayers have been expecting. You see different approaches taken by different councils when it comes to setting chief executive officer remuneration pay and conditions. Some have small committees that are done in private some have full councils and some pay their chief executive officers right up to the top of the market in the private sector which is what some of the complaints have been about. Others pay under that. There is no consistency. 
So what is this bill about? This bill is aimed at ensuring from a hit-and-miss affair that we have now that there is a uniform approach and transparency which are absent now. What I want you to do is to compare what happens with the public sector and how we set remuneration terms and conditions and appointments in the public sector. To begin with Cabinet does not appoint a small group of Ministers to sit around and interview chief executive officers performance review them and set remuneration. It is actually done at arm’s length because under the State Sector Act 1988 the conditions of employment of chief executive officers are determined in each case by agreement between the State Services Commissioner and the chief executive in the first instance. But the commissioner then obtains the agreement of the Prime Minister and the Minister of State Services before finalising the conditions of employment with the chief executive. The process is tried and true is based on experience and is appropriately moderated between other chief executive officers looking at what their responsibilities are the size of the job and other benchmarks. It provides the appropriate evidence as to why a chief executive has received the level of remuneration. 
Well this bill amends the Local Government Act to add a requirement that terms and conditions including remuneration of a chief executive of a local authority must be approved in advance by the State Services Commissioner. At the outset the condition of employment will be determined between the local authority and the chief executive. That can be done in whatever way the local authority decides but before it is finalised announced and decided the territorial local authority must obtain written consent of the State Services Commissioner to any such agreement or any variation of that agreement. There would then be a requirement on the State Services Commissioner to ensure that the remuneration is comparable to that in a similar job size and so on. I think it gives a very clear and transparent path using the expertise that is available in the State Services Commission and having been a Minister of State Services I understand the work that they do and the very high quality of that work in assisting a Government in setting remuneration pay and conditions. I think it would be a very good tool for local government to be able to use and when the comparisons are done by the State Services Commissioner they can then say: “We know the Rangitikei District Council is paying this amount because it is comparable to a similar job size. It is not way up above the level it ought to be. It is not set against unknown benchmarks. It is done in a proper transparent open and fair way.” I commend this bill to the House. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 This bill the Local Government (Salary Moderation) Amendment Bill which imposes on local government the strictures of the State Services Commissioner is a desperate attempt by the Labour Opposition to play catch-up on the necessary reform that needs to take place within local government. You see there is quite deep concern across New Zealand about the cost of rates and about the huge increases that have occurred over the last decade and the people of New Zealand are looking for a Government that will show leadership around addressing that issue. 
In March this year the Government announced a comprehensive package of reform to deal with the challenges within local government. Labour which has been opposed to those reforms has suddenly woken up to the fact that it is on the wrong side of the public argument has desperately pulled this bill out of a drawer and is trying to get into the public discussion around costs within local government. But the first challenge for members opposite is that they need to be accountable for their record in Government around the increase in rates caused by their reforms. 
You see in 2002 Labour put in place the biggest changes in many decades to local government laws. Labour rewrote the Local Government Act it rewrote the Rating Powers Act and it rewrote the Local Electoral Act. Members now on this side of the House said then that that was going to be a very costly reform. We warned Labour not to embark down that path. Members opposite members of the Labour Government of the time assured New Zealanders that there would be no spike or increase in rates arising from those reforms. Exactly the opposite occurred. 
What we saw after 2002—and it is a matter of record by Statistics New Zealand—was that rates increased faster than any of the other 186 components that make up the Consumers Price Index. They have gone up by a compound rate across New Zealand of 7 percent for every year since 2002. That 7 percent increase means that New Zealanders today in this time of economic difficulty are really struggling to pay their rates bills and change is required. 
If we look at the rates increases that occurred in the decade prior to Labour’s reforms we see that they averaged just 3 percent. I want to draw to the attention of the House the advice from the Department of Internal Affairs that if rates rises over the last decade had been what they were in the previous decade the average Kiwi household would be paying $500 a year less in rates and we as a country would be paying a billion dollars a year less in rates. So I challenge Labour and say that its legacy of local government changes has been a hugely expensive burden for households for businesses and for farmers and change was required. 
The Government announced in March a comprehensive package of reform to refocus the purpose of local government on to the infrastructure the local public services and the regulatory functions that can be done only by our councils. Equally so we have strengthened the governance powers of what councils can do including very significantly a requirement for councils to disclose not just the salaries of their chief executive officers but the salaries of all their staff in their annual reports. That package of change changes the Local Government Act 2002 and actually gives the power to our elected representatives our mayors and councils to not just have a say in the salary of their chief executive but actually to set down a remuneration policy for all of the 23000 staff who work across New Zealand’s nearly 70 councils. That same package of reforms makes it easier for councils to be able to reorganise. It sets down improvements in the fiscal responsibility requirements of councils and is a far more comprehensive package of reform than this lightweight teeny-weeny little change that Labour has put on the agenda of the House this evening. 
There are a number of significant flaws in this bill. The first is that the member Annette King who sponsored it has said that it increases the openness and the transparency of the appointment of chief executives. It does no such thing. There is absolutely nothing in this bill that requires anything other than the State Services Commissioner to approve a contract between a council and a chief executive. The member would well know as an ex - Minister of State Services how much transparency is there. Does that involve disclosure? In terms of when the Government appoints chief executive officers it makes not a dime of difference. 
If those members were interested in transparency in the salaries of chief executives they would have voted for National’s reform bill that very specifically requires disclosure of not just the salaries of the chief executive but also the bands as is required of public entities all the way through. It is a matter of record that Labour voted against that bill which provides for that increased level of transparency. 
This is the real fraud with this bill. There are 23000 employees of local government. Annette King somehow pretends that by making a change in the salaries or in the way in which the contracts are drafted for just 68 of those 23000 staff somehow it is going to make a difference to ma and pa’s rates. We know that is not true. That is not real Annette and the member knows it. It is as we have said a flaky bill that is not dealing with the substance of the issues that face local government. 
It also is rather rich because I checked on the speeches from Labour members when National introduced its local government reforms. They had the audacity to say to this Parliament that National was treading all over the rights of councils. Well that is a bit odd. I would say one of the most important decisions that a council makes is who it appoints as its chief executive and what it pays them—what is in the contract. Everybody who is practically involved in governance knows that the appointment of your chief executive is one of the most important decisions and now Labour is saying that a council cannot appoint a chief executive without getting the tick-off of central government. If that is not a nanny State approach to councils I really do not know what is. 
I have a challenge for the Labour members who are interjecting. Why would you impose a tighter control on councils appointing their chief executive than the vast bulk of State entities for which this House is responsible? What is the logic behind that? Why would you have the process by which a school board appoints its chief executive officer or a district health board appoints its chief executive officer—the controls that are imposed in this bill go significantly beyond that and that has no rhyme nor reason. 
You see the member says this bill arose out of the issue in Christchurch over the appointment of its chief executive. The interesting thing is that when we appointed a Crown observer Labour criticised that. But it is interesting to know—and it shows how slow Labour is—that Annette forgot to mention that actually the chief executive of Christchurch City Council has not taken that $68000 pay increase. This shows just how much behind the pace Labour is in terms of addressing the issues that are of concern to New Zealanders. 
If we are to make local government more efficient if we are to make local government more fiscally responsible and if we are to make it more transparent and accountable then members of the public need to look to the sensible eight-point plan of reform that National has set down and is before the Local Government and Environment Committee. What we do not need are these small flaky bills that pretend they are dealing with an issue. This bill really is about Labour playing catch-up. It has suddenly realised that it has made a hash of local government and that it has caught itself on the side of big rates and big cost increases and in a desperate attempt to play catch-up it has introduced this puny bill which does not deserve the serious attention of the House. 
MOANA MACKEY (Labour) 
: 
 So speaks the former “Minister for Manufactured Crises” Nick Smith. So speaks the former Minister not for local government but against local government. I congratulate my colleague Annette King on bringing this bill the Local Government (Salary Moderation) Amendment Bill to the House. It is a matter that impugns all of local government and it does not need that when it has an enemy in the current National Government. And it has a very real enemy in the current National Government. 
Let us not forget that the former Minister who just took his seat was the one who manufactured a crisis in ACC so that he could push through reforms that he knew were deeply unpopular and that would undermine our world-leading scheme. He then went on to try to do exactly the same thing with local government with figures that were so dodgy that they were taken down off the Government website not long after they were put up. The reforms that he has lauded here in the House today were all based on figures that were so shoddy they had to be removed from a Government website—so shoddy. 
Local government debt is at prudent levels. In fact it was not that long ago that local government was being accused of having lazy balance sheets and of not borrowing enough to fund infrastructure. It was not that long ago that that was a criticism of local government. The good thing about the 2002 Local Government Act was that it required long-term planning. This is one of the areas where local government had gotten into trouble. Instead of looking for a long-term plan for its infrastructure needs and spreading that cost out over a period of time so that massive rates increases would not be required local government was not doing that. So we did see some big rate increases to pay for core infrastructure. 
Everything this National Government does now continues to undermine that position of local government. Let us look at the issue of local roads for example and the cost to local government of them. Well our provincial councils have lost huge amounts of support and assistance from central government because it is all being sucked out to pay for the roads of national significance. How does that help those provincial councils? They are now facing rate increases not because of the Local Government Act 2002 and not because of the former Labour Government but because this Government is making decisions to suck money away from them to stop assisting them. That is what is causing rates increases in a number of the provincial councils Dr Smith. 
The Local Government Act 2002 did a very important thing: it allowed mayors and councillors to decide what was really important to their communities what was really going to be the game-changer and what was really going to assist their communities to grow economically environmentally culturally and socially. The mayors have taken that job on with two hands and relished it. They have led charges against youth unemployment. In Kawerau they have led charges against youth suicide. They have led charges for economic development. Local government is not just about potholes rubbish and waste water; local government is about communities. That is why Labour does not support the approach of the current National Government which wants to take those abilities and those powers away from local government based on figures that are so dodgy that the Government itself had to pull them from the website. 
 I hope that the Hon Dr Nick Smith who is a member of the Local Government and Environment Committee will attend all the submissions so that the local mayors can actually say direct to his face in a way that they have not been able to before what his reforms are going to do to local government in this country. They are retrograde they will take communities backwards and no amount of dodgy figures made-up reasons and manufactured crises change the fact that those reforms are going to be very very damaging for local government. And what is damaging for local government is damaging for the country. 
So I welcome this piece of legislation from the Hon Annette King. It provides a process for local government that is welcome. It provides some kind of comparison between like jobs which I would have thought would be welcomed. The Local Government and Environment Committee is about to hear submissions on the Government bill. This would seem to me to be a good time to send Annette King’s bill to select committee alongside that local government bill so that we can consider the two together. 
The issue of remuneration of chief executives is important but how very telling that Nick Smith said that that is the most important thing local government does. He said that the most important thing local government does is set the chief executive’s salary. That is not the most important thing local government does. 
Hon Dr Nick Smith 
: The appointment of the chief executive. 
MOANA MACKEY 
: It is important but the appointment of the chief executive in my mind and from what I see local mayors in my community doing is not the most important thing they do. They are community leaders. They are the face of that community when something goes wrong when we have a civil defence emergency when there is some kind of social issue and when there is an economic issue. They are the ones who front on behalf of their community. To say that the most important thing local government does is to set the chief executive’s salary shows just how much contempt the National Party has for local government. Nick Smith can roll his eyes— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I am sorry to interrupt the honourable member. Her time has expired. 
Hon ANNETTE KING (Labour—Rongotai) 
: 
 I seek leave to table the figures in the first version of the Department of Internal Affairs’  
Better Local Government 
 only for them to be removed a few days later. I then seek leave— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Is this a public document? 
Hon ANNETTE KING 
: No. I tell you what: it has been removed so it ain’t public. 
Hon Dr Nick Smith 
: This is a public document. 
Hon ANNETTE KING 
: No it is not. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Order! [ 
Interruption 
] Order! There is a point of order being heard. 
Hon ANNETTE KING 
: No it is not available because it was on the website and then removed— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Order! I will put leave. Leave is sought for that purpose. Is there any objection? There is objection. 
Hon ANNETTE KING (Labour—Rongotai) 
: 
 I seek leave to table version two of the Department of Internal Affairs’  
Better Local Government 
 which has got the figures removed from it. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Is that—[ 
Interruption 
] Hang on. 
Hon ANNETTE KING 
: Yes it is available. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Well we are not putting leave on something that is available. 
Hon ANNETTE KING (Labour—Rongotai) 
: 
 I seek leave to table a letter from the current Minister of Local Government to me saying that he will not release the corrected— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Order! 
Hon ANNETTE KING 
: You need to know what it is about. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: No. You have told me; it is a letter from the current Minister of— 
Hon Dr NICK SMITH (National—Nelson) 
: 
 I raise a point of order Mr Speaker. There is a long-established Standing Order that you cannot seek leave for the same document twice. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: No this is not the same document; this is a letter. She is asking for leave— 
Hon Dr NICK SMITH (National—Nelson) 
: 
 I raise a point of order Mr Speaker. I think we misunderstood each other. On a previous occasion the same member sought leave— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I have already ruled on that and that is the end of the matter. Leave is now sought to table— 
Hon Dr Nick Smith 
: I object. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Well I have not put it yet. Leave is now sought for—[ 
Interruption 
] You cannot say that. Leave is sought to table this letter. Is there any objection? There is objection. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 I seek leave to table the Department of Internal Affairs’ official advice showing that in the 10 years after Labour’s local government reforms— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Is this a public document? 
Hon Dr NICK SMITH 
: It is advice provided—[ 
Interruption 
] 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Order! We are asking; he is speaking. Is this a public document? 
Hon Dr NICK SMITH 
: It is individual advice so it is not a document that has been openly on a website. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Is it in the public domain? 
Hon Dr NICK SMITH 
: Like any document that has been provided as departmental advice it can be obtained under the Official Information Act— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Well we are not going to table that. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 I raise a point of order Mr Speaker. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: If it is on the website then it is in the public domain. [ 
Interruption 
] Hang on. I will need clarification. [ 
Interruption 
] I am dealing with a point over here. I will ask the member whether this is on the website. 
Hon Dr NICK SMITH 
: No. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: It is not on the website so I will put leave for this purpose. Is there any objection? There is no objection. 






Document by leave laid on the Table of the House. 
Hon CLAYTON COSGROVE (Labour) 
: 
 I raise a point of order Mr Speaker. I just briefly seek your advice. I am not challenging the fact that leave has been declined for a series of documents—that is the House’s right and privilege—but where a member has constantly made statements around figures for instance being untrue as that member has repeatedly and then he denies leave for the figures to be tabled what are the remedies— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: No. We have put leave—[ 
Interruption 
] Order! We have put leave for these purposes. It has been declined. We are moving on. I am calling Nicky Wagner. 
NICKY WAGNER (National—Christchurch Central) 
: 
 I rise to take a call on this Local Government (Salary Moderation) Amendment Bill. I understand that there are some concerns about the level of salaries of council chief executive officers because coming from Christchurch I am particularly familiar with the argument. There has been considerable angst about the salary of the Christchurch City Council chief executive officer increases in that salary—particularly because they were made during particularly difficult times in our city—and how the back payment should be made. But generally speaking councils manage the employment and remuneration of their chief executive officers with good judgment they seek remuneration advice and except for a couple of high-profile situations generally it is under good control. 
Of course the National Government is extremely interested in the costs of local government. We are appalled by the rates increases that have happened in New Zealand to ratepayers since 2002 and the change legislation. We want our councils to be more efficient more responsive and better focused. Ratepayers need to be confident that their councils are spending their money wisely that they are operating in a cost-effective manner and that they are delivering the services that they need and want. As has been discussed in the House we are working hard on reforms that will provide that stronger governance more responsible financial management and improved efficiency. 
We agree with Annette King that ratepayers would like a more transparent process of managing the chief executive officer’s appointment—both their employment and remuneration policies. Under the new legislation that is going through the House at the moment councillors will be empowered to set these policies and to put explicit limits on staff numbers. This is not just about the chief executive officer; this is about all the staff who are employed by councils across the country. We will also require increased disclosure in the annual reports of the numbers of staff who are employed and their salary bands. We believe it will be that disclosure—those open-to-the-public information requirements—that will keep costs in check. So although the National Government is concerned about the costs and the chief executive officers’ remuneration is a significant expense we think it is something that locally elected councillors can and should manage. 
This bill requires that the State Services Commissioner should approve the terms and conditions of remunerations. We do not believe that this is the role of central government. We trust local decision-making for local communities. It is particularly important that decision makers in this process are accountable to their ratepayers. Certainly the State Services Commissioner would not face that accountability. Councillors would be very unwise to make flamboyant decisions in this case because they tend to be voted out. It will be interesting to see what happens to councillors in the long term. In summary we support local democracy and decision making as close as possible to the communities that pay so we cannot support this bill. 
EUGENIE SAGE (Green) 
: 
 I am puzzled. The previous speaker the member for Christchurch Central said “We trust local decision-making and we trust local democracy”. Yet this Government with its programme of sweeping change in local government is taking a stab at the heart of local democracy as one mayor said to me today. Its proposals to deny local electors a vote when there are proposals for amalgamation is substantially reducing local democracy. Its proposals in the changes to allow Ministers to interfere much more in appointing Crown observers review panels and managers is again not trusting local democracy. So why if we have the Minister-in-exile saying that one of the most important things that a council does is to appoint the chief executive is the Government not trusting local councils to do the other much more important things we think which is provide the services and facilities that communities value? 
The Green Party supports this bill the Local Government (Salary Moderation) Amendment Bill because it is an example of how some issues in local government can be addressed in a constructive way without undermining the current purpose and intent of the Local Government Act. The bill seeks to bring local authority processes in line with other Public Service chief executive remuneration processes. It requires any local authority to get approval from the State Services Commission on the remuneration rates—not on the appointment per se as some previous speakers have suggested—for their chief executive and that these rates must be moderated by reference to other comparable positions in for example Government departments and the public sector generally. 
Local government provides huge value to communities. It is involved in a whole range of services that make places pleasant to live work and retire in. Local councils are responsible for significant assets—up to more than $92 billion of infrastructure and other assets—and it is very appropriate that the salary scale for chief executives reflect the significant responsibilities of councils. But it is also really important that they are not out of step with council staff who provide those key services. They are the staff who manage the libraries the swimming pools and the parks and who organise the sewage treatment the stormwater the provision of water and the recycling collection. 
In Christchurch we know that it is those people who are most important for our quality of life. It is the people who dig the drains who connect the sewerage pipes and who keep the water system running who are some of the most valued council workers and contractors in Christchurch. They do the strenuous and dirty work; they are often not rewarded adequately for that work. We have seen as the member Annette King noted the very controversial process around the remuneration for the chief executive officer of Christchurch City Council when he was given a $68000 pay rise taking his salary to $538000. That was partly because the consultants advised the council and it was the council’s own policy to align the salaries with the general market—a mix of public and private sector salaries—rather than aligning them as this bill seeks to do with public sector salaries through the involvement of the State Services Commission. 
 The whole process of setting chief executive officer salaries from my experience in local government can become incredibly politicised. It puts media attention on the salary rather than on the issues that the council is dealing with. This bill is a sound step toward depoliticising that process introducing transparency and having a check and balance on what the council does. It is a bill that we will be supporting. Thank you. 
Hon CLAYTON COSGROVE (Labour) 
: 
 I want to reflect briefly on the contribution from Dr Nick Smith who for those who do not know was the Minister who checked out of Cabinet—or maybe he does need to be checked out; it is one of the two. That member got up and gave an array of figures about the historical cost of local government. He made it up then he accused speakers on this side of the House of not telling the truth when they disputed it and then of course he blocked singularly—I think he was the only National MP who blocked—the tabling of those figures that show the truth. I just say to Dr Smith as his hair stands on end as he speaks that he has no credibility when it comes to— 
Hon Christopher Finlayson 
: At least he’s got some. 
Hon CLAYTON COSGROVE 
: That is true Mr Finlayson. I grant you that but I do not need to be checked out unlike that member. I say this: Dr Smith has absolutely no credibility when it comes to citing figures given as Moana Mackey said his disgraceful conduct in respect of manufacturing crises and saying as Minister that ACC was going to go broke so that he could slash and burn it. And now we know of course that its investments are at a record high. That member is a bit like John Banks. His credibility is in the political sewer. 
I stand as a Canterbury member as a person who has lived in Canterbury for most of his life—both as a politician and before being a politician—and I can say this. In respect of the salary increase of the chief executive of the Christchurch City Council and the controversy around that individual and the mayor not just because of the salary but because of the lack of performance I have never seen—and I am sure Mr O’Rourke who is a former councillor will probably agree with me—conservative business elements and others in the community so united to rid themselves of an individual. I am not making a judgment on that but they are so united to rid themselves of an individual because of the lack of performance. I just place that on the record. I am not making a judgment on Mr Marryatt but the facts speak for themselves. I have never seen a time when businesses came together and demanded that he go and demanded accountability from that council. Therein lies the difficulty because we have a crisis in Canterbury. 
Let us just speak about Christchurch. We have sadly a dysfunctional in my view local authority where there has been infighting and where there has been a lack of transparency. I would cite even Councillor Tim Carter who is related to a member opposite and is a good councillor. He may not be the political colour that I am but he is a good councillor. He and others have joined hands across the aisle in demanding accountability from that local authority. I commend Councillor Carter and others for that.  
What the Local Government (Salary Moderation) Amendment Bill simply seeks to do is to obtain some accountability from that council. When you have a council in Christchurch that is dysfunctional and not performing and a local authority area in Canterbury in crisis and suddenly there is an approval for a $68000 salary—and Nick Smith said of course in his usual slipshod way slippery with the facts that the chief executive officer did not accept the $68000—in Nick Smith’s small myopic world this system works. Well maybe he has forgotten the outcry that came from all quarters of Christchurch—all quarters of Christchurch and across by the way the political divide including some of his mates few though they are—saying that this is not on. This is not on. Very few levers exist for a council to stop that behaviour. Why did Mr Marryatt not take it? Well Dr Smith wakey-wakey it was the strength of public opinion. He did take $26000 though of course. He did take that. 
If Dr Smith demands accountability and transparency he should support this bill. If he does not like it and he wants to improve it then what he could do is allow it to go to the Local Government and Environment Committee show his real steel—if he has got any—and propose some amendments to improve it. But oh no tonight it is pray and spray from Nick Smith. He has no ideas himself. If he had legislation that we voted against he could put it up again when he is a Minister but he has checked out in a number of ways and he knows it. He has checked out completely. I would say that that member will not be back in Cabinet any time soon. If he does not agree with the legislation and he thinks it can be improved then he has an option and that is to get up and vote for it send it to the select committee and prove us wrong. But he does not like it. It has been proposed and yet again he and his party have sold out the people of Canterbury. 
DENIS O’ROURKE (NZ First) 
: 
 New Zealand First supports the Local Government (Salary Moderation) Amendment Bill because increasing the salaries of local government chief executive officers has caused strong public protest—very strong public protest—throughout the country. That is especially so in Christchurch. Despite the comments by Nick Smith it is the chief executive officer’s salary that is upsetting people and quite justifiably. It is not the general salaries received by people who work in local government. It is not the general salaries of people who work in local government that is upsetting people. It is in fact the chief executive officer’s salary that is upsetting people. That is a fact. Go and ask them if you do not believe me. 
It is complete nonsense for Nicky Wagner to say that the processes by which councils are currently assessing chief executive officer salaries are satisfactory. I know nobody in the community who knows anything about local government who believes that the current processes are anything like satisfactory. So for Nicky Wagner to say that they are OK is complete and utter nonsense. 
The Christchurch City Council did increase the remuneration of its chief executive officer by 14.4 percent—$68000—to $538000 and that was declined only because of the most extraordinary level of protest that has ever been seen in that city on any subject. This increase was despite the functions of the city council now being more limited because of the role currently performed by the Canterbury Earthquake Recovery Authority. That simply does not seem to have been taken into account in the decision to increase the remuneration of the chief executive officer. 
The council’s performance in Christchurch and especially that of the chief executive officer was widely criticised in Canterbury by both the people of Christchurch and the business sector. They had some justification for that. The performance failures were in fact partly admitted by the council itself and it therefore makes it very difficult for the council to explain the magnitude of the remuneration increase for the chief executive officer in those circumstances. As a result it was only great public concern that led to that increase in fact being declined in the end. 
The Local Government Act 2002 specifies mandatory criteria for consideration by the Remuneration Authority in fixing the remuneration of mayors councillors and community board members but it is silent about the remuneration for chief executive officers. This bill proposes an amendment to the Local Government Act that preserves chief executive officers’ salaries being negotiated and agreed between the chief executive officer and the council but requires that agreement to be approved by the State Services Commission effectively a power of veto. 
New Zealand First agrees with that. But New Zealand First says that that does not go far enough. There is in fact another bill in the ballot in my name which has not yet been drawn that would establish some appropriate criteria for application by local authorities in fixing chief executive officers’ remuneration. Those issues were not addressed by Nick Smith—a glaring omission of substance on his part because it is not just about transparency; it is about the lack of criteria. The sorts of things that need to be included are to take into account special circumstances such as the existence of the Canterbury Earthquake Recovery Authority in Christchurch. It also needs to take into account what the chief executive officer of a local authority should receive in comparison with the chief executive officer of a commercial organisation. That is an extremely important point. 
Those criteria would qualify the words “quite comparable to those that apply in similar positions” as in this particular bill. There is a precedent for such a discount because the directors of State-owned enterprises have what is called the Public Service element taken into account as a discounting factor for their remuneration. 
So New Zealand First would support this bill but at the appropriate time will move a Supplementary Order Paper to insert in this bill the same matters that I have set out as a list of criteria for the assessment of chief executive officers’ salaries in the bill that I have drafted and that is in the ballot. With those qualifications New Zealand First will support the bill going forward. We look forward to further debate on those other issues that I have mentioned. 
JAMI-LEE ROSS (National—Botany) 
: 
 Ratepayers across the country are receiving rates bills at the moment and ratepayers across the country are telling elected members of Parliament how the rates in their city are hurting them. We have got together a package of reforms that will have some real impacts on driving down costs for ratepayers in New Zealand. 
The guys on the other side are absolutely opposed to everything that we are doing but their great reform their great change in local government is to change the way in which the chief executive’s salary is set. That is their only solution to the issues with local government. I have to tell you that this is not the solution to any of the problems that ratepayers across the country are telling us as parliamentarians that they have to face on a daily basis. 
The way in which the chief executive’s salary and employment conditions are set at the moment is spot on. I have to say as someone who has actually been through the process of setting a salary for a chief executive on a local authority—and I have done that several times sitting on a chief executive review committee—that councils go through a very detailed process. Councils get expert advice from independent human resources people. We spent a huge amount of time going through the process of setting the chief executive’s salary at an appropriate level. Sure you might not agree with absolutely every decision made by a council but those are the decisions that should be left to councils to make. 
Council officers are all accountable to the chief executive and under the system of local government in New Zealand the chief executive is the only officer whom the elected councillors have influence over and have control over. Now we have members of this Parliament wanting to take away the control over the salary and the employment conditions of the only officer whom a council is able to have control over. I have to say that it certainly blurs the accountability lines as well. Accountability is very important in legislation. We have to get that right. 
Accountability is important because in this case if this bill was to go through we would have an unusual situation where a chief executive would not only be accountable to the council but also would have a link to the State Services Commissioner. The State Services Commissioner is accountable to the Minister of State Services and that would lead to a position where the State Services Commissioner would have to be answerable to the Minister of State Services who would be answerable to Parliament on how a chief executive’s salary is set. That is absolutely wrong. 
What we know is that we have people on the other side of the House who say it is OK for councils in the last 10 years to have raised their rates by 6.8 percent when over the previous 10 years it was at 3.9 percent. That is OK! They are saying it is OK for in the last 10 years council debt to have quadrupled from $2 billion to $8 billion. They do not care about that but a small portion of council costs that of a chief executive’s salary they are now expressing concern about. If this bill was to go through it would be parliamentary overreach. It would be interference by Parliament in the roles of councils and chief executives. 
Members opposite do not like what we are proposing which is to limit the scope of councils which would have a huge impact on the costs of councils and would help to get the costs of councils down considerably. No they want to tinker around the edges. They want to interfere in the role of a chief executive within a council. That is their only solution and it would do very little for ratepayers. It would do absolutely nothing. If they really wanted to get on board and support ratepayers in getting the costs of their councils under control they would be supporting our legislation. They would be supporting some real changes some real reform in local government and some real reform that would help to keep costs down. If a council is spending roughly $300 million let us just say as an example on expenditure but its chief executive’s salary is say $300000 that is one one-thousandth of the costs to the council. That is the only tinkering we are getting from the other side. 
The process in place for setting chief executive salaries and employment conditions is sound. It is rightfully the councils’ decision and the councils’ decision only. This Parliament should not be interfering in council decisions on chief executive employment conditions. We should change the purpose of local government. We should change the scope. We should put in place fiscal responsibility to get their costs under control. But councils should be the ones setting the chief executive salaries. That is their core responsibility; they should be sticking with that. 
PAUL GOLDSMITH (National) 
: 
 It is my pleasure to speak on this bill the Local Government (Salary Moderation) Amendment Bill. To be honest I would be happy to support this bill if it was the “Local Government (Rates Moderation) Amendment Bill”. But that is not what we have got. We have got only the Local Government (Salary Moderation) Amendment Bill. If it was rates moderation I would be very in favour of this bill because that is the biggest issue that we are facing up in Auckland particularly at the moment with rates going through the roof in Epsom—10 percent a year—year upon year upon year. It does not matter so much how much money the chief executive officer is getting in his or her bank but by how much the rates that people face are rising that we are concerned about and that is what this Government is focused upon. 
In Auckland we do have a real issue. The current mayor can blame all sorts of things for that but there are two drivers that are driving rates up to unaffordable levels whereby people—particularly those on fixed incomes in some parts of the city—are finding it difficult to make ends meet. The first of the two drivers is spending—undisciplined continual spending. The Government has got its spending under control and is focused on getting back to surplus. Households around the city and around the country are readjusting their spending habits. They are saving more and responding to the global situation. But unfortunately too many councils in this country have not quite got the message. They continue to go on increasing spending by 10 percent or 15 percent each year as if somehow the households can afford to pay it. So we need to adjust ourselves to the situation. 
The second driver of course—in Auckland particularly—is the way that the rates have been organised with a very very low uniform charge which has put so much emphasis on to property valuations. That has driven huge rate increases into areas such as the North Shore which some members here should be worried about. 
Looking at this bill which is really just a diversion and is not dealing with any of the broad issues in local government that are about controlling spending it is a piece of nonsense that we will not be supporting. I would urge the House—and I would urge Annette King who has a great interest in local government—to pay more attention and focus more on the issue that householders are concerned about which is rates and getting them under control and to focus on some of those basics that we need to focus on there. One of the main areas that we are going to be dealing with over the next few weeks is focusing local government back on some of the core activities and not getting so carried away with the four well-beings which have been a charter for the massive growth in spending in local government over the last decade since the 2002 legislation. So I am looking forward to hearing Annette King explain to us what is going to be happening there. 
Thank you very much. I would so much like to have had the opportunity to show some bipartisan spirit and to have supported Mrs King in her legislation here but unfortunately—like I say if it was the “Local Government (Rates Moderation) Amendment Bill” I would be very supportive. But it is not so I have to stand opposed to it. Thank you. 
Hon ANNETTE KING (Labour—Rongotai) 
: 
 Can I first of all thank most of those who have made a contribution in the debate tonight on the Local Government (Salary Moderation) Amendment Bill including the member who has just resumed his seat Paul Goldsmith and Nicky Wagner the members from the Greens and New Zealand First—thank you very much for the support—and my own colleagues. But I have to say of Nick Smith’s contribution that it was a very very shallow contribution indeed. I have got more to say about that in a moment. 
But I have to say to Mr Jami-Lee Ross that he is very very concerned about rate rises at the moment and why we need local government reform. Well what an irony because what is in the paper today under National’s local government reform? “Homeowner stunned at 225 [percent] rate rise increase”. Where did this happen? This happened in Auckland and what does this poor person get? They get no footpaths no streetlights no sewerage and no water and their rates have gone from $4300 to $14000. That is the reform from National when it comes to local government. 
Then we come to the contribution from Nick Smith. This is the man who brought in a policy that within days was proved to be made up of myths and a handful of egregious examples. He proudly had put up on a website figures that showed rate increases and debt of local government. Within 5 days they were removed from the website— 
Hon Dr Nick Smith 
: Not true. Not true. 
Hon ANNETTE KING 
: Go have a look. It tells you that they were removed. It tells you that they were wrong and they have never been replaced. Why were they not replaced? Well the new Minister of Local Government who I am sure was incredibly embarrassed said he is not going to give the corrected figures because it would distract from the reforms. Let us not base any reforms in local government on anything to do with evidence! 
Of course local government has got about $8 billion of debt. What did the Prime Minister say at the forum for employment? Remember that big forum he had on employment? He told local government at the employment forum that they had lazy balance sheets and they ought to be taking on more debt when there is a global financial crisis. That is what he told local government. Local government brought forward much of its infrastructure spending. When you go through and look at what the money has been spent on in local government in terms of debt it has gone into infrastructure. That is another myth from Nick Smith. I have to say his whole attack on the 2002 Local Government Act has been totally rejected by local government around New Zealand. I give a warning to the rural and provincial members of the National Party and those who have got a little bit of knowledge about local government: your local governments and their communities are very very unhappy with the reforms proposed— 
Hon Members 
: No they’re not. 
Hon ANNETTE KING 
: Oh yes they are and Nick Smith will be listening to the submissions when they come in. 
I have to say that the National Party is totally out of touch with the public. To think the public do not care a hoot about what chief executives are paid is to be in la-la land. They do care and they want a process that is accountable. They want one that does some good comparisons—that compares local government from one end of New Zealand to the other. They want a process and what do we get from National? We get a collection of amendments and reforms based on myths wrong examples and figures that are incorrect and based on a view that Nick Smith had before he came into Parliament that he wanted every council to be a unitary authority. When he lost in his own area—because Tasman voted not to have a unitary authority—he brought in a bill that takes away the right of communities to vote for amalgamation. You talk about democracy Dr Smith but you take away the right of local communities to make local decisions by local people by taking away the right to vote for amalgamation. Lost the vote in Tasman—decided to punish the lot. This bill at least is a sensible helping hand to local government and not a big sledgehammer to crack a small nut. 
A party vote was called for on the question  
That the Local Government (Salary Moderation) Amendment Bill be now read a first time. 
Ayes 59 
New Zealand Labour 34; Green Party 14; New Zealand First 8; Maori Party 2; Mana 1. 
Noes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Motion not agreed to.