Sabin Mike: Kaipara District Council (Validation of Rates and Other Matters) Bill — In Committee Third ReadingText is subject to correctionSabin Mike: Kaipara District Council (Validation of Rates and Other Matters) Bill — In Committee Third Reading[Sitting date: 04 December 2013. Volume:695;Page:15267. Text is subject to correction.]MIKE SABIN (National—Northland): Mr Chair—Hon Annette King: This is your big moment.MIKE SABIN: I do not know about that. Firstly can I just acknowledge the members of the Local Government and Environment Committee in respect of what has been a very very challenging piece of legislation. It is something that no one takes any pleasure in and certainly no one wants to deal with it. I would just like to acknowledge the chairperson Nicky Wagner Mr Twyford and members from Labour and members from right across the select committee. They have done a very good job of getting their heads round something that is very complex.I also want to acknowledge the Minister of Local Government. Actually there have been three Ministers through the journey on this particular bill but the latest Minister is Chris Tremain who in the main has dealt with this matter and I want to acknowledge the support he has given. I also want to acknowledge the commissioners and the chief executive officer from the Kaipara District Council for the role they have played in preparing this particular piece of legislation and their objective of trying to return the Kaipara District Council to democracy and stability.I want to acknowledge some people from the local community—Mike Howard JohnDickie Larry N Mitchell Mark Farnsworth Greg Gent Peter and John Bull and a number of other people who have worked very hard. We did not always agree on things but we worked very hard to try to ensure that the light was indeed shining where it needed to be.I just want to set the scene for this bill so that members can traverse some of the ins and outs at this Committee stage. First and foremost I just want to say that no one takes any pleasure in being involved in a piece of legislation like this. This council found itself in trouble and it became something of a perfect storm of challenges that involved everyone—the councillors the chief executive officer JackMcKerchar and the Audit Office which includes Audit New Zealand and the Office of the Auditor-General. Yesterday the release of the report from the Office of the Auditor-General into the MangawhaiEcoCare Wastewater Treatment Scheme and the auditor shone a very very damning light on all of those parties and Audit New Zealand and the Office of the Auditor-General did not escape that.This bill deals with a number of matters not only related to the Kaipara District Council waste-water scheme. It goes a lot further than that. There are a number of other matters being dealt with such as theMaungatūroto water scheme other waste disposal schemes in Dargaville and the forest owners’ road impact rates. This bill actually incorporates a number of failings on behalf of this council over a significant period of time dating well back into the 1990s. Although the lightning rod certainly has been the waste-water scheme at Mangawhai this bill is remedying a number of other issues that absolutely need the attention of this House.If we turn now to what is the most substantive matter theEcoCare scheme we see that it goes back to the mid-1990s when a decision was made to investigate and ultimately plan for and build a reticulated waste-water scheme for the community of Mangawhai. Indeed it is well recognised that some form of a waste-water scheme was certainly needed. But I just note how the council went about it how out of its depth it got in the course of doing that the way in which it contracted out or sought the advice of others because it did not have that advice within the council and ultimately the way in which it lost complete control of this particular project seeing the debt blow out. The scheme was originally costed at around $11 million but ultimately ended up costing somewhere in the vicinity of $63.5 million.If we just go back to the history of that scheme in the mid-1990s a decision was made to progress the scheme and it was going to progress as a “BOOT” scheme—build-own-operate-transfer—over a 25-year period. The aim of this small council was to try to keep the debt off its balance sheet. Although that may have had some merit at the time it all unravelled in 2002 when a law change meant that the public-private partnership was no longer workable. The council then set about reinventing a process—a morphed “BOOT” scheme if you like—that was never going to be fit for purpose. So rather than having a 25-year period in which that scheme could be transferred and having the incentives in the right place in terms of the public-private partnership the aim was to immediately transfer that debt straight back on to the council within a very short period of time which changed the incentives and set this whole tailspin off.So the council found itself in a position where it was under-equipped it was under-qualified it was seeking advice outside interested parties within the council and it did not stop to think and reassess the implications of what it was doing with the change of law in 2002. It set itself on a path that ultimately has led to where we are now. At the end of 2004 and the beginning of 2005 this was not helped when the contractor for the plant its parent company went into receivership. Rather than going back to the market to build a new scheme under the new legislation the council persisted and carried on as if on a treadmill with only one direction to head in. It engaged another contractorEarthtech Contractors to take the project—one that was certainly more expensive than originally envisaged. But that continued to actually complicate the process thereafter.The council then found itself in a position where by the time it signed a contract for this scheme in late 2005 it had practically lost control of the project and I am not sure whether it really knew what it was getting itself into. At this stage the scheme was projected to be in the order of $35.6 million. But just to give one small example of how far the council got this wrong the disposal for the waste-water scheme had not been included as part of that consenting resolution and approval process. Something it had allowed $360000-odd for ended up costing $14 million. So when we start looking at the way in which this project got out of control that is one small example of some of the failed decision-making.I just want to cover off where things have got to in the last few days. As a result of the election in 2011 obviously I was elected and this was the No. 1 the first priority to actually try to make some sense of. Since that time a Government-appointed reviewteam got in around there and the damning report that was released as a result of that review team saw the resignation of councillors and we saw commissioners put in place. Obviously one of the issues that they needed to deal with was the fact that you had had a council for a number of years that had failed to set rates and failed to manage due process in accordance with its requirements—something that was obviously highly litigious and needed to be remedied.When we look at the opportunities to do this they are very limited. That is why no one wants to actually be in the position that I am in today having to be confronted with this particular legislation. It is an acknowledgment that a lot of people have got it wrong and blame needs to be sheeted home and it will be sheeted home. In very recent times I have made some very strong comments about the role I think the Auditor-General has played in this and also of course the councillors the contractors and JackMcKerchar the chief executive officer.Before I was willing to sponsor the Kaipara District Council (Validation of Rates and Other Matters) Bill I needed an assurance from the commissioners that there was no better way to actually achieve this. There clearly was not. Refunding the rates where some would have an enormous windfall of rate refund and where others would suddenly be burdened with a massive rates bill that they in no way shape or form deserved would be wrong. Then to go about resetting rates by working through each individual rate through each individual resolution and through each individual process again over that period would take probably a year to 18 months and would be almost impossible and unworkable. So we find ourselves where we are here today. I said that I would not sponsor this bill if it absolved anyone of responsibility—members will cover that—and if it was seeking to validate stuff that the council could not otherwise do in law. In other words it had to be stuff that could be done inside the law in the first place. I said that I would not support anything that validated behaviour that was ultimately criminal and the decision to expand the scheme the $30 million decision was not part of that.