Twyford Phil: Local Government Borrowing Bill Local Government (Auckland Council) Amendment Bill (No 2) — Third Readings 
Twyford Phil: Local Government Borrowing Bill Local Government (Auckland Council) Amendment Bill (No 2) — Third Readings 
[Volume:675;Page:21295] 
PHIL TWYFORD (Labour) 
: 
 Labour supports this legislation; we have done so throughout its entire passage through the House. I reiterate our congratulations to the Minister of Local Government which were expressed during the Committee stage on the work that has been done in shepherding this legislation through its development and through its stages in the House. It is worthwhile legislation. It is good legislation and will save taxpayers money. That is always a good thing. 
The legislation offers a collective approach that will essentially allow local authorities to operate as a cooperative for the purpose of a coordinated and efficient approach to borrowing the money they need to invest in infrastructure around this country whether it is in buildings swimming pools or water treatment and supply—you name it. The infrastructure demands on local government are huge in many parts of the country. Many local authorities are struggling to meet those challenges and if the Local Government Funding Agency which will be established under the Local Government Borrowing Bill saves some money and makes it easier for those councils to do that then that is a good thing. 
What does this bill do? It establishes the new agency the Local Government Funding Agency and it amends a whole series of other bits of legislation in order to reduce compliance costs but also it gives confidence to the lenders who will be putting money into this bond bank. That is of critical importance. We have discussed in the various debates in this House but also at the Local Government and Environment Committee the figure of $25 million which was originally put about as the possible annual saving to local authorities. That figure may be a little optimistic given that the original calculation was based on the cost of capital a couple of years ago but I think we can be confident that a significant sum of money will be saved as a result of this bill going through. We are very happy to see it go through before the end of the parliamentary term. 
There is an added benefit which I think we all support and it is that this bill will make some small but useful contribution to the deepening of our capital markets. The idea originally surfaced I think from the Capital Market Development Taskforce. Since then it has been picked up and discussed in various places by political parties and has attracted near-universal support. It will offer to the mythical mum and dad investors the chance to buy local government infrastructure bonds which will not be guaranteed by the Government but will be backed by the highest-possible credit rating which our advisers were confident would be attained by the new agency. By golly mum and dad investors need things they can be confident of investing in. This bill gives them the chance to invest in the long-term future of their communities so that is a great thing. 
On the Labour side of the House we are particularly keen on this bill because it is an alternative to the track of privatisation and of establishing public-private partnerships that the National Party and the ACT Party are so keen on. Labour wants to see this country build up its assets not sell them off and that is why we are implacably opposed to the policy that this Government is taking into the election which is to flog off 49 percent of our most profitable best-performing and most-valuable State-owned enterprises. We are opposed to that policy as are the majority of the people of New Zealand. 
At the local government level the issue about assets and privatisation is very much alive. We saw that in the creation of the Auckland super-city when the National Government supported by ACT took away the right of Aucklanders to have a say through a referendum on any future proposal to privatise the Ports of Auckland. We saw in the Government’s amendment to the local government legislation last year that it opened the door to 35-year contracts in the municipal water sector which would allow private sector operators to own and operate water infrastructure for periods of up to 35 years. We had this debate many times in the House and we are still of the view that those 35-year contracts amount to a de facto privatisation. Every time New Zealanders are asked a huge majority say that they do not want their water privatised. 
The issue has died down a little bit in the last year or so but people are beginning to ask whether if the National Party is re-elected to a second term the city of Christchurch will be compelled to sell its significant community-owned assets to fund the reconstruction of Christchurch. The National Government has yet to provide a convincing answer to that question. 
The way that this Government is going with the infrastructure needs that are facing Auckland I wonder whether the Auckland Council will get the hard word from Steven Joyce and Bill English and will be told that if it wants to fund the city rail link—if it wants to fund a world-class transport system—it will have to sell off its airport shares or its ports. I can tell from the expressions on the faces of many people in this House and around New Zealand that they are completely opposed to that proposal. 
Labour wants to build up our assets not sell them off particularly in respect of natural monopolies which are so often the things that ACT and National want to put on the auction block. Those parties want to sell off our energy companies which together are effectively natural monopolies. They want to sell the ports when they are effectively natural monopolies. We know that when we privatise natural monopolies we basically hand over a licence to print money and a licence for rent-seeking behaviour. They will almost inevitably end up in the hands of foreign owners and we are against that. If this bill does one thing if it can provide local authorities with a cheaper readier source of investment capital for investing in infrastructure I think all New Zealanders will applaud that. 
There is in this legislation special provision for Auckland and that acknowledges and recognises the imbalance in size between the Auckland Council and all other local authorities in New Zealand. If the Local Government Funding Agency had to accommodate all of the capital needs of Auckland then there would be gross imbalance. We were advised at the select committee—and I think everybody was happy with the advice—that the Auckland Council has the capacity that it has a treasury unit that is capable of managing that risk and that all its international borrowing would be fully hedged. 
The whole issue of local government debt is I think really interesting and it has been brought up a number of times as this legislation has gone through the House. Before I finish I acknowledge the work of the Office of the Auditor-General in analysing the state of local government debt. A significant debt is held by local authorities around New Zealand and we are looking at a 55 percent increase over the next decade from $3.9 billion to $10.8 billion. That is significant but the Auditor-General made it very clear that he did not consider that level of local authority debt to be a problem. He did not consider it to be outside the normal parameters of fiscal prudence. I think that is noteworthy in light of the kinds of justifications that were being bandied around in this Parliament about a debt crisis in local government. We do not have one. Debt is a fair and efficient way to spread the cost of infrastructure across the generations of New Zealanders who will benefit from it.