Twyford Phil: Local Government Act 2002 Amendment Bill — First Reading 
Twyford Phil: Local Government Act 2002 Amendment Bill — First Reading 
[Volume:662;Page:10707] 
PHIL TWYFORD (Labour) 
: 
 In the lead-up to the Local Government Act 2002 Amendment Bill coming to the House tonight New Zealand was treated to the Minister of Local Government Rodney Hide parading up and down the country all last year with his transparency accountability and financial management agenda. It was a cut-and-paste job from the Business Roundtable’s policy on local government. We saw a number of proposals for the rates-capping of local government for mandatory referenda—Sue Kedgley very well set out that mandatory referenda have brought Colorado’s state Government to its knees—and for Rodney Hide’s agenda for core services. I do not know whether this agenda provoked more horror or more mirth in local government. I am glad to say that not much of Rodney Hide’s nutty agenda from last year has made it through into this bill. 
But this bill does contain some substance: the provisions around encouraging and promoting public-private partnerships and Build Own Operate and Transfer (BOOT) schemes in the municipal water sector. It is significant that Rodney Hide devoted only half a sentence in the final paragraph of his speech to the issue of water privatisation. If he thinks that New Zealanders are so thick that they will not even notice what the real agenda is here he has another think coming. The Government is playing silly semantic games. The explanatory note of the bill says this measure is not about privatisation. The Prime Minister got up in the House last week and said it was not privatisation. Well this bill allows the private ownership of New Zealand’s water infrastructure for periods of up to 35 years. That is privatisation. If it is not privatisation I want to know how long these contracts would have to be before this Government considered them to be privatisation. Would 50 years be long enough? Would 100 years be long enough? It is privatisation whichever way one slices it. 
The argument seems to be that it is not privatisation because it is not the sale of a pre-existing public asset. Well times have changed since Margaret Thatcher and Roger Douglas and Richard Prebble sold off all the assets in the UK and in New Zealand in the 1980s. The public-private partnership is now the dominant mode of privatisation all over the world. Throughout the world public-private partnerships are the dominant mode. That is how it is done. It is widely referred to in all the international literature as privatisation; the World Bank refers to it as privatisation. Why do members on that side of the House not front up have the courage of their convictions and admit to the New Zealand public that this bill allows the privatisation— 
Hon Gerry Brownlee 
: I raise a point of order Mr Speaker. I think you would agree that the member made a very unparliamentary statement in the midst of his speech. It is a serious point and I think he should withdraw it. There is no need to apologise but he should withdraw the statement. It is not appropriate to accuse others of not having the courage of their convictions. 
The ASSISTANT SPEAKER (Eric Roy) 
: I think that is a fair point; I was just trying to identify the part that the member was referring to. All members are honourable members and the member will withdraw that statement and desist from making further inferences. 
PHIL TWYFORD 
: I withdraw. The point I was trying to make was that the members on that side of the House lack intestinal fortitude when it comes to being up front with the New Zealand public about their policies. They decided that the issue of privatisation was off limits for this term of Government but they are not willing to be up front with New Zealanders and acknowledge that this bill kicks away the democratic safeguards against the privatisation of our water system. They are playing silly games. 
I will talk about public-private partnerships specifically. Labour is not against the concept of public-private partnerships. 
Hon Members 
: Oh really! 
PHIL TWYFORD 
: No we are not. We not against public-private partnerships per se. However we believe that public-private partnerships should be carefully considered and subject to the most careful scrutiny in order to determine where the costs benefits and risks are distributed. There is a view on the Government side of the House that public-private partnerships are some kind of panacea and that they deliver free money for public infrastructure. Nothing could be further from the truth. One way or another either the State or user charges pay for the cost of public infrastructure. Public-private partnerships do not deliver free money; they are not a panacea. They can however distribute the cost of infrastructure to particular users and they can postpone that capital expenditure and put the burden on future generations. So let us be honest and let us be clear about that with regard to public-private partnerships. 
Labour is against public-private partnerships in relation to some particular sectors: prisons schools and water. Along with 80 percent of the New Zealand public we believe that having free access to water is a human right. It is a public good and it is the job of the State to hold that public good in trust to ensure that all New Zealanders get equal access to it and it is managed in the public interest. Does the Minister of Local Government think New Zealanders are so thick that they will not realise that this bill is designed to encourage and promote the privatisation of our water system? Thirty-five years of private ownership is privatisation. 
There is a kind of mythology that public-private partnerships are some sort of golden egg that will deliver cheaper and better infrastructure. I look forward to this matter coming before the Local Government and Environment Committee because there is a very high pile of case studies of failed public-private partnerships in the water sector from all over the world. One example is Paris which is the home of water privatisation—public-private partnerships. Paris is the home of Veolia Water which is the parent company of United Water and last year Paris brought its entire municipal water system back into public ownership because of decades of failure and cost overruns. 
I will read for the record a cautionary tale from the Tampa Bay area in Florida which has a population of 2.4 million people. It is a similar size to Auckland for example. In 1999 a 30-year contract for $129 million was let to a company to build operate and manage a water treatment plant. At the end of 2007 the project was 4 years behind schedule and nearly $80 million over the original budget. The local authority then sued the original engineering companies for faulty design. In 2004 it awarded a $29 million contract to another company to try to fix all the problems. The project was 5 years late 16 percent under capacity and 44 percent over budget when it was finally up and running. That is a cautionary tale and there are plenty more where that came from. 
When this sordid bill comes to the select committee I hope that New Zealanders will have the chance to scrutinise it properly and make submissions. People will be very interested to measure up the provisions in this bill against the international experience of water privatisation. 
The bill is obviously not all about water privatisation and I make it very clear to this House that Labour is not against streamlining the Local Government Act. We are not against the transparency provisions and we are not against achieving efficiencies. The provisions in this bill around core services community consultation being cut back integrating the community outcomes planning process inserting financial strategies and imposing a requirement on councils to issue a pre-election financial report are all worth considering on the face of it. I am sure they will be subject to adequate scrutiny at the select committee. But all of those points will raise questions in the minds of people who are concerned about the state of our democracy. On the question of core services for example there is a blatant omission of social development or community well-being and there is nothing about economic development. Rodney Hide was told time and time again last year that those matters are important to New Zealanders and important to our local government. 
The question that I have when looking at this bill is whether the bill would pass the test of the cost-benefit analysis provided for in the Minister’s own Regulatory Improvement Bill. We have had advice only in the last couple of days that this bill will result in a net increase in compliance costs for councils. I think it will be very interesting to see that issue teased out in the select committee. New Zealanders will be concerned about the proposals to cut back the requirement for community consultation. Perhaps there are too many requirements of that sort in the principal Act. But given the track record of this Government and this Minister in cutting back the democratic process and showing a disregard for people’s democratic rights in local government these proposals will ring alarm bells. 
Labour will vote against this bill. It is repugnant; the water privatisation provisions are repugnant. They are unwelcome and they are the latest piece in the jigsaw of this Government’s gutting of the public domain in relation to local government. This is the latest instalment. We have seen the corporatisation of Auckland local government the shutting down of Environment Canterbury and the scaling back of our democratic process.