Lotu-Iiga Sam: Local Government Act 2002 Amendment Bill (No 3) — Second ReadingText is incorporated into the Bound VolumeLotu-Iiga Sam: Local Government Act 2002 Amendment Bill (No 3) — Second Reading[Sitting date: 22 May 2014. Volume:699;Page:18284. Text is incorporated into the Bound Volume.]Hon Peseta SAM LOTU-IIGA (Associate Minister of Local Government) on behalf of theMinister of Local Government: I moveThat the Local Government Act 2002 Amendment Bill (No 3) be now read a second time. When the previous Minister of Local Government introduced this bill he followed on from the good work of his predecessors particularly the Hon Dr Nick Smith. Dr Nick Smith initiated the Government’s Better Local Government reform programme back in 2012. I now add to those credits the fine work that the Hon Chris Tremain did in 2012 and 2013. That included the preparation and introduction of this bill.This bill is the final legislation in the Better Local Government programme. This bill is to support local government in becoming better with better accountability and being better at managing assets which will lead to New Zealanders living bolder better and brighter lives.In 2002 the Local Government Act introduced a new purpose statement. This compelled local authorities to take a fresh look at their activities and priorities. It encouraged them to re-engage with their communities. This was so that their needs and preferences would have first call on scarce resources. We are seeing the benefits of this more sensible approach to expenditure which most councils are taking and it is a better way to work. The first bill provided new and improved mechanisms where local communities could initiate investigations of alternative local government arrangements for their areas.Several communities are exploring those alternatives even as I speak and we will see the fruits of that in coming years. That bill also provided an updated and expanded range of options for Ministers to support and assist councils that were struggling.The second bill builds upon that work. It increases the range of options through which local authorities can achieve efficiencies. This is at the scale at which services and facilities are better delivered. For some councils and communities the best option may be to follow the reorganisation path to amalgamation or restructuring.The bill expands the options for local authority reorganisations so they are better able to support their vision for the community. The Local Government Commission can consider establishing local boards as part of the governance arrangements for new and existing unitary authorities. These may have features similar to those in Auckland but can be tailored to local circumstances. The bill makes it clear that reorganisation schemes can deal with council-controlled organisations. They can also put in place joint committees where these are warranted.For circumstances where reorganisation is not justified or not possible the bill makes it easier for councils to find alternative solutions such as working together and sharing services. The bill’s provisions encourage councils to cooperate and collaborate to improve and provide better services for their ratepayers.The bill also includes measures to enable councils to achieve efficiencies in other ways. For example it provides councils with more flexibility about how they consult their communities. This bill enables councils to design and use engagement processes that are appropriate to varying circumstances and community interests. All this should be done at less cost. The new significance and engagement policy will provide a clearer guide about how and when communities can expect to be engaged.This bill reduces the number of occasions where the costly and time-consuming special consultation procedure is implemented. It facilitates the wider use of technology with which councils can communicate with their communities and the bill also improves consultation on council long-term plans and annual plans.It provides for consultation on specialised documents with a focus on the issues that are important to ratepayers. They should not focus on draft plans containing hundreds of pages of detailed information that is understood by few. The bill also seeks to improve the strategic management of local authority infrastructure. Local authorities own more than $96 billion in fixed assets. This is mostly an infrastructure used to provide basic services that families and businesses rely on every day.The majority of councils manage their assets well on a day-to-day basis but all communities need assurances that their critical infrastructure is managed strategically and sustainably over the long term and that it is resilient to natural hazards. This bill therefore strengthens the emphasis on asset management planning as a key aspect of council obligations. This will ensure prudent stewardship of resources. To support that principle clause 34 of the bill requires local authorities to include in their long-term plans an infrastructure strategy covering at least the next 30 years. The strategy will identify the significant infrastructure issues that will be faced by the local authority over that period. It should also disclose the options for addressing the issues and the implications of those options.The Local Government and Environment Committee has made a number of changes to provide clarity about the purpose and expectations of that strategy. Submissions and other feedback revealed concerns about the uncertainty involved in anticipating what will or is likely to occur up to 30 years in the future. Some councils feared that they would be held to account if their projections subsequently proved to be wrong. That is not the purpose of these strategies; they are not accountability documents and they are not plans.The changes to the bill make it clear that what is sought is an outline of the scenarios for the provision renewal or replacement of major infrastructure. These are the assets that the local authority considers most likely to be needed over the 30-year period. Rather than detailed costings what is expected is estimates that indicate the impacts of projects. This will mean that councils and communities are aware of them and can plan how to manage them. The select committee also emphasised this by allowing strategies to group blocks of 5 years for the last 20 years covered by each strategy.One means through which local authorities raise money to pay for infrastructure to meet growth is through the development contributions. Development contributions are one of the costs of building new houses and therefore affect their sale price. It is therefore important that development contributions are fair and no higher than they need to be. This Government does not want future generations priced out of homeownership. However local authorities should not be prevented from investing in the infrastructure necessary to help our communities grow. A balance is required.This bill introduced measures to ensure that development contributions are better focused and more transparent and that they support development to meet demand for new housing. The bill does this in a number of ways. The range of community infrastructure for which development contributions can be charged will be narrowed. This change reflects the principle that new homebuyers should pay for only the basic infrastructure that is required for the completion of that development. Infrastructure that will benefit the whole community including larger community assets such as sports stadiums should be paid for by the whole community. For some territorial authorities this will require them to find alternative revenue sources to replace development contribution funding of facilities not defined under this legislation. In those cases we expect that communities will enter into debates as to whether they are prepared to pay the extra funds that will now be required for those projects.I believe this to be healthier than obscuring the true cost with a veil of unclear development contribution levies. However the select committee heard from councils that have already completed or were building such projects in anticipation of future funding from these development contributions. It would be unfair to ratepayers and to those who have already paid development contributions for that stream of revenue to be cut off at this late stage. That would leave an unavoidable shortfall that ratepayers would have no choice but to fund. The select committee has avoided this by inserting a transitional grandparent clause in the bill. This provides that a territorial authority can continue to require and collect development contributions for a project that is completed or substantially completed. These assets may in fact be outside the scope of the new definition of community infrastructure.Many of the other changes are more technical. The select committee received 120 submissions on the bill predominantly from local authorities and the development industry. There was strong support for the bill’s objectives and there were many useful suggestions for improvement. I want to thank all those who made the effort to make a submission for their input and I wholeheartedly commend this bill to the House.