Chadwick Steve: Securities (Local Authority Exemption) Amendment Bill — First Reading 
Chadwick Steve: Securities (Local Authority Exemption) Amendment Bill — First Reading 
[Volume:642;Page:11802] 
STEVE CHADWICK (Labour—Rotorua) 
: 
 The Securities (Local Authority Exemption) Amendment Bill as submitted today is a welcome relief for the local government sector. It is interesting how members in the Opposition forget what this has done to the ability of local government to raise cash for major infrastructure assets ever since 1996 simply because of the compliance cost. This bill is everything the Opposition argues for about the reduction of compliance costs yet when they brought in this in 1996— 
Simon Power 
: Steve we’re voting for it! 
STEVE CHADWICK 
: I know National is voting for it but in 1996 my golly what an imposition it was on to the local government sector when it could not even start to look at how it was going to raise funds for major infrastructure assets. 
I have attended the local government forum which Ministers attend and where it was said: “Thank goodness for this Government. Ministers are prepared to engage with us as chairs of local government and regional councils. We will share opportunities share some challenges directly at the table and there will also be sharing of information.” The Local Government New Zealand sector raised this issue to Lianne Dalziel as the Minister of Commerce. She took it seriously and took it on board and this bill with its introduction today is the result. 
In the 1990s under National no Ministers bothered to engage as a collective with the local government sector. I was on council at the time. We had one visit about a roading policy and that was the only one in the entire time I was on the district council. This is now a quarterly forum. It raises issues and if they are serious issues that impede the functioning of the local government sector they are taken on board. 
This bill will amend the Securities Act to exempt local authorities from the full disclosure requirements of the Act when issuing debt securities. For that reason it will go to the Commerce Committee. Local government has said as a sector that it has suffered with this disclosure exemption since 1996. It was introduced to try to establish a level playing field with private companies but they are different beasts—they are entirely different beasts. The exemption did not take into account any differences in the legal frameworks between companies and local authorities. They have been very constrained. Disclosure is just too costly. As the Minister said only one local authority since 1996 has picked up the opportunity here and that was Auckland which was able to meet the disclosure requirements. It would have been for a major capital infrastructure asset that they bothered even to meet that threshold. All councillors had to unanimously agree to sign off a prospectus to issue debt and to fund any project. All councillors—when has any local authority ever been able to get all councillors to agree on anything in a unanimous vote? 
Local authorities’ long-term council community plans show that the authorities are undertaking some $30.8 billion investment in the next 10 years on capital works whether it is network or community infrastructure up until June 2016. Due to potential front loading of those investments 50 percent of this amount could be required by 2009. So it is no wonder the local authority sector is really keen for this to happen. 
The Department of Internal Affairs is currently reviewing the recommendations of the rates inquiry that was led by David Shand. It is looking at rates pressures in the local authority sector—and they are definitely evident especially with the level of capital works that local authorities want to undertake. The report recommends that a 50 percent of rates ratio to operating costs is when the level is about right; at the moment it is currently sitting around 56 percent. So this recommendation is something very very welcome to the sector. I am sure the Department of Internal Affairs will be looking at other recommendations too that will help the rates pressure on local authorities. 
In Rotorua we are looking at over $100 million investment in infrastructure assets so that we can reticulate sewage screens to increase the water quality. There is no ability of local authorities to raise that funding without this exemption. The president of Local Government New Zealand Sir Basil Morrison said: “We are pleased that proposed change will make it easier for councils to raise funds from the public for major projects”—they are very diverse all over the country—“and will hopefully take some of the pressure off rates by allowing us to better match our borrowing strategies with the life of our assets.” He then went on to say: “Given the size of the capital works programme outlined in councils ten year financial plans the ability to once again issue debt securities will save councils millions of dollars of interest costs.” 
To end my little speech today I just want to say that this again shows that the Labour-led Government is really showing its commitment to strengthening the way in which councils can operate and serve their communities. This is a Government that listens to the local authority sector and responds to its demands. I commend this bill to the House and I know the Commerce Committee will do a great job with it.