Smith Nick: Local Government (Salary Moderation) Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Smith Nick: Local Government (Salary Moderation) Amendment Bill — First Reading 
[Sitting date: 15 August 2012. Volume:682;Page:4448. Text is incorporated into the Bound Volume.] 
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.