Local Government Act 2002 Amendment Bill — First Reading 
Local Government Act 2002 Amendment Bill — First Reading 
[Volume:662;Page:10707] 
Local Government Act 2002 Amendment Bill 
First Reading 
Debate resumed. 
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. 
LOUISE UPSTON (National—Taupo) 
: 
 I am delighted to rise to speak in support of the Local Government Act 2002 Amendment Bill. As my very able chair of the Local Government and Environment Committee Mr Auchinvole said: “Good local government is essential for our communities our economy and our environment.” As Mr Auchinvole very ably led the Local Government and Environment Committee I am very proud to follow him in supporting this local government amendment bill. 
The bill of course amends the 2002 principal Act and the three principles that members will hear again in this speech will be “improving transparency” “accountability” and “financial management”. The previous Labour speaker Phil Twyford did say that Labour was supportive of those three principles so I am very pleased about that. 
The National Government values an honest and open working relationship with the local government sector. We recognise that there is not a one-size-fits-all approach to local government. We understand that communities up and down New Zealand are different; even within an electorate they are different. I will demonstrate this for a moment by talking about the Taupo electorate. 
When we look at the case of the Waipa District Council we see that this year it is hosting the World Rowing Championships at Lake Karapiro in November. This event will be the biggest sporting event in New Zealand since the 1990 Commonwealth Games. The council will be significantly involved. Last week the South Waikato District Council signed a $3.4 million contract for the New Zealand Cycle Trail project in respect of the Waikato River Trail. It will ensure that the last 41 kilometres of the cycleway is completed in time for the World Rowing Championships. 
The Taupo District Council—a very different council again—has recently been awarded accreditation as an International Safe Community. The World Health Organisation has examined Taupo and its commitment to safer communities. Taupo is known as a wonderful tourist destination and the accreditation will boost our image. The Government the Minister of Local Government Rodney Hide and the Associate Minister of Local Government John Carter understand that there cannot be a one-size-fits-all approach to local government. We keep the “local” in local government. 
I remind members that this bill is about transparency accountability and financial management. The Local Government and Environment Committee worked incredibly well together last year on simplifying and streamlining legislation in the reform of the Resource Management Act. It is fair to say that we work well together at simplifying and streamlining things and this bill is another example of that. I know that we will be working together to reduce costs and waste in local government. 
This bill works on two different levels. First on a strategic level the bill aims to change the way that local authorities set their direction and the way this can be influenced and assessed by their communities. There are several provisions in the bill. I will not cover all of them and I defiantly will not dedicate 90 percent of this speech to issues to do with water. Some members of the Opposition seem to have forgotten the main issue of strategic changes which this bill will reform. One change that I think is really important is the introduction of a pre-election report which will encourage and inform the debate during the elections. It means that voters will have better information on which they can base their decisions. It will introduce a financial strategy to the long-term council community plan and it will help local communities and authorities debate and resolve the key financial and service delivery trade-offs that they have to make. 
At the second level are the operational reforms. The bill aims to simplify decision-making processes. A couple of these changes include the removal of unnecessary auditing. If members talk to local councillors up and down the country they will find that that is an area of financial waste that they would rather do without. The bill will remove unnecessary auditing by taking a number of operational policies out of the long-term council community plan. It will also level the playing field to better enable the private sector to deliver local authority services. 
Local government is essential for our communities our economy and our environment. We on this side of the House recognise that there is not one size that will fit all. We recognise the differences in our councils up and down the country. I have given examples of three different councils in the Taupo electorate and things that are important to them. This bill is about improving transparency accountability and financial management. Ultimately it will make councils nationwide far more accountable for their actions. That is what ratepayers want what local politicians want and what the National Government wants. 
SU’A WILLIAM SIO (Labour—Mangere) 
: 
 I am grateful for the opportunity to speak on the Local Government Act 2002 Amendment Bill in its first reading. I want to reflect a little bit on where we have come from. 
Members will recall that on 17 November 2008 Martin Johnston of the  
New Zealand Herald 
 wrote an article—members may have read it I do not know—that said: “ACT has a radical agenda for local government but party leader Rodney Hide is keeping his lips sealed.” The article went on to say: “ACT wants councils to privatise their commercial activities and to supply water on a ‘fully commercial basis’ but Mr Hide would not identify yesterday which activities should be prioritised or discuss these policies at all.” Later in that same month Brian Rudman of the  
New Zealand Herald 
 wrote another article entitled: “Hide and local government a scary mix”. I quote: “There are many in local government scratching their heads after the appointment of Act leader Rodney Hide as Minister of Local Government and wondering what on earth they did to upset Prime Minister John Key so much.” The article continued: “Top of the scorched earth local government policy list Mr Hide was elected on was that ‘local government will be required to shed its commercial activity thereby eliminating the need to separate regulatory and commercial functions between local and regional councils’.” 
Members will also be aware that Mr Hide as the Minister of Local Government rammed through the implementation of the Auckland super-city. They will recall that the Government said that it would consult widely with the people of Auckland once the Royal Commission On Auckland Governance had released its report. That was never done. Members will also recall that earlier this year Mr Hide with the support of this Government removed the 14 elected councillors of Environment Canterbury. That regional council will not have the ability to replace those elected officials with new elected officials in this year’s local body elections. They are being replaced by commissioners who have been politically appointed by the Minister of Local Government and the Government. 
I thought it would be useful to give some background as to what is happening with regard to local government and what is yet to occur with the final Auckland super-city bill going through the House and now with this Local Government Act 2002 Amendment Bill. I support what my colleagues have said: we in Labour are opposing this bill. There are a variety of reasons why. 
Let me begin by saying that in quickly going through the bill I saw a range of areas of concern that I wanted to bring to the attention of the House. I am hopeful that the people of Auckland the people of the Canterbury area and everyone who is passionate about local government will take the time to make submissions on this bill. New section 11A in clause 5 makes reference to “core services”. The bill states: “a local authority must have particular regard to the contribution that the following core services make to its communities:” then lists “network infrastructure:” “public transport services:” “solid waste collection and disposal:” “the avoidance or mitigation of natural hazards:” and other community infrastructure. 
People who are working in business improvement districts will be asking—I know that those in Manukau will be asking—whether economic development is a core service of councils. Is the business of business improvement associations a core service? Will this bill specifically put a circle round or define the limitations of what is regarded as a core service? I am saying this because currently all local government bodies and communities are able to participate in identifying what local core services are through the annual plan process; that is when communities come forward to their councils and identify what their needs are and what is important to them. 
For example only last month many people throughout New Zealand—all of us I suspect—celebrated Anzac Day. The events on that day are generally organised by community boards and are funded by councils. Our local event in Mangere Bridge is organised by the good Rev. Les Dixon of the Anglican Church there. He estimates that the council puts in about $10000 to pay for that local event. People are now asking whether Anzac Day celebrations and other events that local government bodies currently support are core services. 
From talking with members of the local government fraternity I have a suspicion that we could see a situation where local government bodies use lawyers to try to define what a core service is. I do not believe that this bill will achieve what it is designed to do which is to reduce compliance costs and to reduce the rates burden on ratepayers if councillors need to consult and to seek the advice of legal advisers to identify what is a core service and what is not a core service and to determine which current community activities will be part of local government services in the future. 
I come to community consultation and to clause 8. Several amendments in this Government bill seem to me to take away the opportunity currently available to members of the public to provide input into the long-term council community plan. If on the one hand the Government is saying that it wants transparency and wants accountability why on earth is it removing the particular part providing for wider community participation and for communities to hold local government bodies to account? The removal of participation by communities is explicit in that particular part of the bill. I do not know why the Government is doing that. I hope people will be consulted and will be able to raise their concerns. The risk is that under clause 8 community considerations will not be given a full and fair hearing at key stages of the process. 
I come to the area that the Minister of Local Government did not spend a lot of time on. It must be considered the most significant part of the bill. It is about partnerships the private sector and making it easier for the private sector to take control of an asset and to take control of an income stream that comes from the water industry. The Minister spent little time on it yet it is probably the most significant part of the bill. 
My colleague George Hawkins said that if these contracts will last for 35 years ratepayers who are now aged 65 will not get a say in what happens to those contracts until they are 100. Ratepayers now aged 35 or 40 will not have a say for the next 35 years. They could be dead at 70 if they are Pacific or Maori. They will not have a say in how the private sector will run the water industry under that particular clause. 
It is a weird situation to have a bill that aims to reduce compliance costs but on the other hand adds other compliance costs. On the one hand the Government says it wants more transparency but on the other hand it tries to keep a lot of the decision making that will be made by the private sector away from the community so that the community is not participating and the community is not involved. There are major concerns about this bill and I hope the public of New Zealand listening to this debate will take the opportunity to make submissions on this bill. Thank you. 
NIKKI KAYE (National—Auckland Central) 
: 
 I rise to speak on the Local Government Act 2002 Amendment Bill. This bill is about delivering to New Zealanders greater transparency and accountability in local government. As MPs we often have constituents coming to us when they have issues in getting basic information from councils and when they think issues are very complex so I am very pleased to be able to speak on this bill because I think we will be able to do something in this Parliament to help those constituents get greater access to information. 
If I could sum up this bill I would say that this is about greater freedom of information for residents and ratepayers. Recent analysis by the Department of Internal Affairs shows that the cumulative increase in rates per head in the next 10 years will be 49 percent. We know that many ratepayers are concerned about increasing rates so more and more New Zealanders want to know how their hard-earned money is being spent. We on this side of the House stand up for the right of those New Zealanders to have access to that information. 
That is why I find it so difficult to understand members opposite and their position on this bill. They are opposed not only to New Zealanders having greater access to information and accountability on how their rates are being spent but also to giving communities more power over that information which could see better use of that money. So when members come to this House and talk about helping disadvantaged people and greater transparency it is really hard to believe them. When it comes to the crunch with a bill about transparency and delivering greater use of people’s rates what do they do? They vote against it. It is really difficult to believe those members of the House. 
As we sat through the select committee process on the legislation that changed Auckland governance so many people came and said they could not get even basic access to information about how their rates were being spent. It is really difficult to understand the position of members opposite on this legislation. 
The other point I will talk about is public debt. It is forecast to increase by 97 percent and expenses are forecast to rise by 91 percent. We on this side of the House think it is unacceptable to have a situation where local government cannot produce transparent information about how people’s rates are being spent. Let us talk about some of the mechanisms that are within this legislation to try to achieve this greater transparency and accountability for the New Zealand taxpayer. 
The first step in this bill is about a principle that says local government should operate within a fiscal envelope. As I have said before we all know of examples of local authorities that have racked up accumulated debt in a way that has not been transparent to the New Zealand taxpayer. The other key thing which came out during the select committee hearing of submissions on the Auckland governance legislation is that within long-term council community plans some of these documents are hundreds of pages long. Do we on this side of the House really expect people to wade through those documents to understand how their little local project is being dealt with? Actually that is not possible for a lot of New Zealanders. 
We on this side of the House support the fact that the Minister of Local Government the Hon Rodney Hide and this Government are interested in making these plans simpler and clearer for people to understand. What we are trying to do is give more individual power to New Zealanders through clear and simple information about how their money is being spent. The bill also includes provisions on financial disclosures which have to be in plain English. This ensures that simple information is available to members of our community be they local board members within Auckland or constituents who are able to decipher the gibberish that is being thrown up by some of these councils. I think it is important to acknowledge that this information could also be more available to some community newspapers. I have had some of them come to me and say they cannot get basic information about projects within their areas. 
The other key aspect of the bill which is very important and I find it very interesting that members opposite do not support it is the concept of pre-election reports. That is about saying to local body politicians that they must go into an election with greater transparent information about what the council’s financial position and commitments are. How can members opposite not support that basic level of transparency? No longer will I accept those members going around public meetings in Auckland talking about transparency and accountability when they are voting against this bill. Under this legislation the chief executive of a local authority will have to prepare a report before each triennial election providing information to promote public discussion on the issues facing that local authority. 
The next aspect of the bill that is very important is the concept of a financial strategy. The purpose of this document is to help facilitate local authorities’ proposals for funding and expenditure by making transparent the overall effects of funding and expenditure proposals on local authority services rates debts and investments. Again this was a core principle that came through a number of submissions from people within the community who said “Look we just want to know what our council is doing what the debt is and what the basic financial position is.” I find it very difficult to understand how members opposite cannot support those provisions. I also believe that the council consultation processes are unnecessarily onerous and complex so I am really pleased that the bill will help achieve less complex consultation processes. 
In conclusion I say that this National Government is delivering legislation that is about greater transparency and accountability for the New Zealand taxpayer. I am proud to support this bill. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 The speech made by Nikki Kaye the member who has just resumed her seat was a fascinating insight into the way she approaches issues. There are 53 clauses in this bill and Nikki Kaye chose to focus her speech on the elements that everybody agrees on—but in a strident tone of anger at members on the other side of the House; how dare we agree with the Government about those clauses—whilst proceeding to completely ignore the clauses that have the greatest degree of controversy which obviously are the clauses that deal with water privatisation. Nikki Kaye’s approach was quite extraordinary. 
I want to talk mainly about the water privatisation issue and to make absolutely clear that on this side of the House we of course support improved transparency and putting out good financial statements but we cannot support a further erosion of democratic rights in the local government sector. Time and time again in the 18 months I have been in this House we have seen National bring forward measures that diminish our democracy at a local level. 
Some of the first speeches I made in this House were about the early Auckland governance reforms which took away some fundamental elements of democracy from the royal commission’s recommendations. We have seen ongoing programmes in Auckland in relation to the council-controlled organisations where people’s ability to have a say has been removed. The ability of people to have a say at the most basic level of democracy has been removed and I think that is an appalling thing to do. 
Then there was the situation with Environment Canterbury. That was a remarkable move. Not only did the process get rid of an elected council but also it cancelled an election that would have enabled over 350000 Cantabrians to elect their regional council. Around the world there are names for countries that cancel elections. “Banana republic” is one of those names. Yet in this House the National Government blithely cancelled an election. It cancelled part of the democratic process in this country. Nick Smith actually told the  
Timaru Herald 
 that one of the reasons the National Government did that was that he was worried about the outcome of the election. He was worried about the outcome of the election so he cancelled it! He got rid of it. That is the kind of approach to local democracy that we have seen consistently from this National Government. 
Now today we have the Local Government Act 2002 Amendment Bill which despite Nikki Kaye’s protestations is not really about transparency. It is about freeing up the privatisation of water—the ability to let a 35-year contract for private water services. In 35 years Mr Hide will be 89. My good friend Phil Twyford whose birthday is today will be 82 in 35 years. It will be that long before they will be able to have a say and we know that Mr Twyford will be a very grumpy 82-year-old if he has not been able to have a say in respect of the way water services are changed in Auckland. But that is what this bill will do. It will push out the ability of people to have a say about the way in which a core part of our infrastructure is delivered for 35 years and that is privatisation no matter what language is put around it. 
We know what the ACT Party’s agenda is here. We know that Mr Hide would get rid of anything that would prevent the privatisation of water and National is now complicit in the de facto privatisation of water services for 35 years. I want to refer to a particular part of this bill that I think shows how this anti-democratic agenda is taking place at a local level. This bill repeals section 88 of the Local Government Act 2002. Currently when a local authority wants to change the delivery of a service it is required to use the special consultative provisions of the Act. That means that when a major change is in place the council is obliged to go out and talk to people but that provision is now gone. The 2002 Act recognised that the way a core service like water is delivered is pretty important and needed a special consultative process. That is gone with this bill. That important check and balance in the democratic process is gone with this bill. 
How much clearer can it be that the agenda of this bill is to reduce participation reduce democratic rights and put in place a process whereby privatisation can be bulldozed through for 35 years at a time? That is anti-democratic. It is against the core principles that New Zealanders hold dear. New Zealanders want to have a say in the way services are run and they want to know that if they want to stand up for publicly run services they can. That will go under this bill. 
As Mr Twyford said earlier Labour is not opposed to public-private partnerships in principle but we need to take a careful approach. Public-private partnerships lock Governments into all kinds of things. They are the “Hotel California” of Government arrangements—“You can check out any time you like but you can never leave.” If there is a debt it will be with ratepayers forever. Ratepayers will not be able to get away from that debt; it will be with them forever. The experience internationally is that when things go wrong ratepayers and taxpayers will have to pick up the debt. 
Public-private partnerships should be approached with caution but this bill goes in exactly the opposite direction. It opens the floodgates. It puts at risk assets that have been built up by ratepayers for years and years and it puts them in a basket so that they are up for grabs by the private sector and taken away from the democratic process. I think that is completely wrong. 
Some other aspects of this bill need to be analysed closely by the select committee. What are services and why are economic and social development not mentioned within core services? Those are important questions that the select committee needs to give its attention to. The bill also reduces community consultation processes. There is a useful debate to be had about where and when consultation best takes place but it should not be an exercise in simply throwing the baby out with the bathwater and saying that community consultation is not important. 
Of course members on this side of the House support the things that will make processes more streamlined and give more transparency in financial statements but we will not support the taking away of democratic rights and the further erosion of local government and keeping decisions close to local people. We oppose the privatisation of water and that is what this bill is designed to do. 
A party vote was called for on the question  
That the Local Government Act 2002 Amendment Bill be now read a first time. 
Ayes 64 
New Zealand National 58; ACT New Zealand 5; United Future 1. 
Noes 58 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1. 
Bill read a first time. 
Bill referred to the Local Government and Environment Committee.