Hide Rodney: Local Government Act 2002 Amendment Bill — Second Reading 
Hide Rodney: Local Government Act 2002 Amendment Bill — Second Reading 
[Volume:668;Page:15518] 
Hon RODNEY HIDE (Leader—ACT) 
: 
 I move  
That the Local Government Act 2002 Amendment Bill be now read a second time 
. This bill aims to improve financial management transparency and accountability in local government. It will also remove unnecessary consultation requirements and level the playing field for private sector participation in providing local government services. 
First I refer to the provisions to improve financial management in local government. The bill requires councils to develop a financial strategy that includes limits on rates and debt levels. Critics suggest that the strategy will stop councils from responding to community needs. This is incorrect. Councils set their own rates and debt limits and can exceed those if necessary. If disaster strikes the bill will not prevent a council from responding. The financial strategy will encourage councils to be rigorous in prioritising spending proposals and to provide clearer accountability over expenditure and funding. Councils need not fear ratepayer scrutiny if decisions are made wisely. 
Prudent financial management for any organisation includes sticking to core businesses. These are the services that local government must pay particular attention to because they are fundamental to what a community is. This bill requires councils to have particular regard to the contribution of those services to their communities. It does not direct them to be provided but reminds councils to consider these services during planning and decision making. 
Normal financial reporting practices allow much variation on how councils report their affairs. This bill will make council accounts more transparent and allows regulations to be made for standardisation of some accounting disclosures. It also introduces an additional accounting statement that councils must produce which is a funding impact statement. 
It promotes transparency in the management of council infrastructure. Providing roads water services stormwater disposal and flood protection are core local government activities and take the greatest part of council investment funds. If councils neglect infrastructure the future cost of restoring those services would be huge. The bill requires councils to show each service separately in plans and reports with clear information on planned and actual capital expenditure. This gives ratepayers a clearer idea of how prudently councils manage assets on their behalf. 
It is important that ratepayers can compare services offered by the council with those offered by others. Developing standard performance measures enables that comparison. This is not a ploy for central government to tell local government what level of service to provide; each council will still determine its performance targets. The select committee recommended changes to clarify this provision—thank you. The result should be a simple set of measures that informs ratepayers about the major aspect of each service whether it is provided by a council or a council-controlled organisation. 
The bill proposes that councils produce a pre-election report before local authority elections to give candidates and voters important information at a time when elected members can be held to account. The select committee recommended two changes to this provision. One slightly narrows the report’s scope so that the chief executive’s responsibility is limited to statements of fact. The other provides an alternative reporting option for small councils which have limited reporting capacity at this busy time. 
The bill proposes substantial changes to the Act’s community outcome process. Councils should not have to coordinate wide-ranging community debate about services they have no direct responsibility to deliver or fund. This makes them appear accountable for things that they have no control over. The bill also changes some of the Act’s provisions on public consultation such as repealing councils’ requirements to consider the views of affected and interested people four times during decision making. The courts have interpreted this provision strictly. This is leading to repeated and meaningless consultation. Although councils must still consider the views of such people the when and the how is for them to determine. 
The bill repeals section 88 of the Act relating to proposals to contract out activities. This means only that councils need not consult ratepayers about changes in how a service is delivered. Proposals to change the quality or quantity of service still require consultation. We doubt ratepayers greatly care who mows the council’s sportsgrounds as long as they are mown in the most cost-effective manner. The section 88 consultation requirement is unnecessary and repealing it allows councils to get on and manage their services. 
Finally I want to raise the proposals on water services. Local government should have the option to use the private sector to develop new water services investments. Choosing that option is a decision for each council. An example which was established before the 2002 Act is Wellington’s sewage treatment plant. It was built and is operated by a private company. The arrangement works adequately and I doubt that most Wellingtonians know or indeed care that the plant is privately operated. We cannot see why other councils should not have that option. The bill is clear that councils cannot sell existing water service assets to private companies unless it is incidental to and desirable for the proposal’s success. If a private company were building a new treatment plant the council could sell the land on which it was to be sited but not the rest of the network. The bill as reported back also clearly prohibits concession arrangements like that currently operating in Papakura. This bill is not about privatising water services. Local authorities will remain responsible for providing water services but may contract private partners to assist them to do that and they should be able to do so. 
I thank the Local Government and Environment Committee for its excellent work on this bill and particularly the chair of the select committee Mr Chris Auchinvole who has done an outstanding job and a great service to the people of New Zealand particularly those in his own district. The committee has been attentive to submitters and its changes will aid significantly in achieving the bill’s intentions. I commend this bill to the House.