Sage Eugenie: Kaipara District Council (Validation of Rates and Other Matters) Bill — In Committee Third ReadingText is incorporated into the Bound VolumeSage Eugenie: Kaipara District Council (Validation of Rates and Other Matters) Bill — In Committee Third Reading[Sitting date: 04 December 2013. Volume:695;Page:15276. Text is incorporated into the Bound Volume.]EUGENIE SAGE (Green):Tēnā koe Mr Chair. Like others in this Chamber I am not pleased to be speaking on retrospective legislation but I am pleased to take a call on the Kaipara District Council (Validation of Rates and Other Matters) Bill to explain the Green Party’s position and why we are supporting the bill. I would like to congratulate the Office of the Auditor-General on its very thorough report and inquiry into what happened with theMangawhaiEcoCare Wastewater Treatment Scheme. It tells the story of what happened over the 15 years of the project’s life and sets out the facts as the Auditor-General understands them in what she describes as a “woeful saga”. It is written in a very clear and accessible way and it is very easy to read.What the Auditor-General said was that she was shocked by the state of the Kaipara District Council’s records and its loose approach to decision making given that it has involved a huge amount of investigation and effort to actually analyse piece together and describe what happened. Certainly many submitters told the Local Government and Environment Committee that the Kaipara District Council had failed to meet its fundamental obligations both legally and in terms of its accountability to thecommunity. The Auditor-General has confirmed that the council did not have a grasp at all really of the very complex contractual financial and borrowing arrangements that it was involved inin relation to the waste-water scheme and it effectively lost control of that scheme and the cost of it blew out. So it has been a saga of poor governance of poor management of poor record-keeping and of a council that was completely out of its depth in terms of decision making.One of the other reasons why I would like to comment on the report is the way in which the Auditor-General and her staff have done a very thorough review and made a full and frank disclosure of the significant inadequacies in the way in which one of the office’s business units Audit New Zealand did its work particularly between 2006 and 2009. As the Auditor-General admits “some of the audit work has fallen disappointingly short of the [expected] standards”. Some of the problems there were just the whole quality of the documentation supporting the audit judgments—as Phil Twyford noted—the failure by the auditors to reassess the status of the waste-water scheme despite the significant changes to it—and the over-reliance of Audit New Zealand on the information that council management was providing.So there are a number of lessons that can be learnt from reading this report. Other councils throughout New Zealand particularly councillors and staff would do well to read the report and to look at whether they have the capacity to effectively control what is being done on their behalf when work is contracted out.But this is little consolation to the people of Kaipara and particularly to the people of Mangawhai because it has been their rates that have increased significantly in order to repay the cost of the blowout in the scheme. They are paying for the incompetence and poor governance of the council. It is there that we share with Labour the need for Government to take action because the chair of the commissioners John Robertson said in a media release in February: “At some point council may wish to take action against the decision-makers involved in issues at Mangawhai. We don’t want to prejudice our legal position by including this in the Bill. [The commissioners] want to keep their options for seeking redress on behalf of ratepayers open.”In the commissioners’ terms of reference two of their key tasks are to engage with the community and iwi to rebuild trust and confidence in the council and to “ensure financial resilience and equitable and sustainable funding”. The commissioners have applied a huge amount of effort to getting the council’s finances on a clear footing going forward. Now they need to apply that same energy to seeking redress for ratepayers to reduce the debt burden on the council and to restore the community’s trust in the council by putting it on a sustainable footing.It was the Minister of Local Government who appointed the commissioners and to whom the commissioners report so he has the very real responsibility here of ensuring that there is that sustainable solution. Reducing the debt burden on ratepayers is essential and central to ensuring that the council is financially resilient and is sustainable in the longer term. Although the Auditor-General did not find any illegality in what happened in Kaipara the factual situation that this report outlines is a very strong platform for the Kaipara commissioners and others to consider taking legal action against a range of parties to share the burden of those cost blowouts.We agree here with New Zealand First that the commissioners should consider pursuing companies such asBeca Group Bell Gully the directors of the now defunct EPS ConsultantsEarthtech Contractors and also Audit New Zealand and their insurers given their admission of inadequacies in undertaking the audit role. It should not be ratepayers who are lumbered with the whole bill for the council’s incompetence and mismanagement of the contracts involved in constructing the waste-water scheme. The scheme started out as a public-private partnership initially a build-own-operate-transferwhich morphed into a design-build-finance-operate model—a very different type of contracting arrangement with quite substantial increased risks to council.A public-private partnership is about shared responsibility. It is not about the public in the form of the Kaipara community and ratepayers picking up the tab for everything that went wrong with the scheme and then having private sector engineering consulting construction companies law firms and the banks all just collecting their fees their interest on the loans the profits and then just wandering off into the sunset. The private companies involved to preserve their reputation must step up and must bear some of the responsibility and contribute to the burden of reducing the cost of the blowout. Otherwise the public cannot have any confidence in public-private partnerships being used to construct major new infrastructure such as waste-water schemes and public transport in the form of light rail if citizens and ratepayers are going to be left to carry the can and private companies and the banks can simply profit by taking their fees.The Auditor-General has been very frank in investigating and outlining the shortcomings of Audit New Zealand and certainly Mr Sabin in his public statements has focused on Audit New Zealand contributing to reducing the burden on ratepayers and the need for a financial settlement. But the net must be cast much wider and the commissioners must look at the professional and contractual responsibilities of all of those involved in the eco-care scheme. It is not fair to put it just on Audit New Zealand because it has owned up. The net has got to go a lot wider. We think that some of the work that the Auditor-General has done in reconstituting the records of the Kaipara District Council and actually finding out what did happen may help in pursuing that legal action because it is fundamentally unfair if it rests just on ratepayers.I would like to finish by just commenting briefly on Supplementary Order Paper 406 in Andrew Williams’ name. Like Labour we considered very carefully the issues involved in this we met with Dr Palmer legal counsel for the Mangawhai Residents and Ratepayers Association and we looked at and recognised the important constitutional principles about Parliament not overriding existing court action—in this case the Mangawhai residents’ and ratepayers’ judicial review proceedings in the High Court. This bill does not explicitly prevent that legal case from proceeding but in validating the mistakes in the rating resolutions it will of course remove some of the legal grounds for the association’s actions.But we will not be voting for the Supplementary Order Paper because we believe that Parliament is sovereign and although Mangawhai residents have been unjustly treated by council supporting the Supplementary Order Paper would do a greater injustice to the wider Kaipara community. The bigger Kaipara community needs financial stability. It needs the council to have a clear plan for the future. That means the council must have the certainty that it can levy rates and collect rates to fund council services from roading to stormwater to waste collection and libraries. We do not see any benefit in the council—