Mahuta NanaiaHon NANAIA MAHUTA (Minister of Local Government): Nanaia. CHAIRPERSON (Hon Anne Tolley): —Nanaia Mahuta. Hon NANAIA MAHUTA: That's OK. It's 9 o'clock at night—CHAIRPERSON (Hon Anne Tolley): It's been a long day. Hon NANAIA MAHUTA: —but I thought I should preface Supplementary Order Paper (SOP) 323 that will be debated and provide a bit of a synopsis of some of the changes that we can anticipate will be debated in the committee of the whole House stage. The bill as amended by the Government SOP makes a number of improvements to the local government system implementing the changes in the SOP and will assist the Government in working constructively with local government to improve community wellbeing. This Government is progressing the bill to demonstrate its partnership approach to working with the local government sector. Reform will not be imposed centrally but will be addressed in conversations with local government to ensure that both arms of government are working together to benefit local communities. In fact when I gained this particular role one of the strong messages from the Local Government New Zealand sector group was that they wanted to work more in partnership with central government on the key issues facing them. The bill will provide an opportunity for the Government to set a clear signal of intent as to how it will support the local government sector to address the challenges which communities face. It will remove the threat of amalgamation from local authorities by restricting reorganisation requests to local authorities the Minister or those receiving community support requiring a petition of at least 10 percent of local electors to proceed. It was most concerning that many of the amalgamation questions that the Local Government Commission (LGC) were addressing actually didn't pass the test and we're going to improve that through this particular amendment. In terms of council-controlled organisations (CCOs) the Government SOP removes the focus on enabling CCOs to provide core council services previously in the bill. Instead new tools are provided to help councils govern CCOs and to provide better accountability and reporting mechanisms. CCOs are accountable to local communities through councils that control them and we can do more to improve transparency and accountability. Powers for the Local Government Commission to create CCOs through the local government reorganisation process are removed. In terms of Local Government Commission changes and the reorganisation process the bill implements stage one of a reform programme for LGC and its role in the local government reorganisation process. At this point I just want to acknowledge the former chair the late Pita Paraone who had a brief but important role in chairing the LGC. There's no foreseeable need for large-scale local government reorganisation such as amalgamations in the near future and the changes that we're putting through will I think give greater definition and more functional contributions of the LGC. Greater powers for the LGC and greater accountability to central government are removed. The LGC should not have a greater role in local authority reorganisations. Interim measures are introduced to constrain large-scale reorganisations to alleviate the local government sector's concerns about the threat of amalgamation—and I'm sure tonight they will be very pleased to hear that—and to provide breathing space while new arrangements are being developed. The bill will require that the support of 10 percent of electors is needed for an investigation to commence in response to a request from the community. The LGC will have discretion to decline to investigate. This will ensure that only reorganisations that have significant community support will be investigated. It replaces the current settings that effectively require the LGC to investigate a reorganisation application made by an individual. The bill enables a reduction in the number of commissioners below the current requirement of three. If the anticipated reduced workload enables a reduction temporary commissioners will start to be able to be appointed as and when required. If there is a single commissioner the Minister of Local Government will make the appointment in consultation with both Local Government New Zealand and the Minister for Māori Development. The power of the LGC to initiate an investigation is removed from the bill. Accountability to central government is removed for example through the annual work programme and annual reporting requirements. The Minister of Local Government's power to direct the LGC work programme is removed as is the ability to set detailed performance measures and expectations. The transfer of the LGC staff out of the Public Service is removed. Flexible reorganisation processes in locally led organisations were generally supported by the local government sector and these are retained. The bill contains appropriate transitional arrangements for reorganisation investigations that are ongoing at the date of enactment. In so far as CCOs are concerned provisions promoting the use of multiply owned CCOs to deliver core council services are removed. The detailed funding and financing arrangements for multiply owned and substantive CCOs are also removed. The bill improves accountability and transparency settings relating to CCOs. Planning and reporting mechanisms for CCOs will be enhanced. The bill requires local authorities to publish CCOs' statements of intent and annual reports on their websites. This is an important step forward in terms of transparency. These provisions are enhanced by extending the requirement to CCO half-yearly reports. Reports must be published within one month of their receipt. Local authorities have the power to defer the statutory time line for preparing and adopting a statement of intent for their CCOs by up to one month. This enables the local authority's long-term plan to be prepared first and it informs statements of intent for the CCO. Councils are also empowered to specify additional planning and reporting requirements for a CCO including requirements to prepare asset management plans long-term plans and thematic plans such as climate change adaptation and mitigation plans; to report progress against any additional plans as appropriate; and to report progress against its statement of intent quarterly rather than half-yearly. The bill also enables a local authority to set out a statement of expectations for a CCO specifying how it should undertake its operations. The provisions relating to CCO obligations to Māori are retained and local authorities are encouraged to address the issue of CCO relationships with Māori. When appointing to a CCO board a local authority must consider whether knowledge of tikanga Māori is relevant to the governance of that CCO. Provisions relating to the shift for Watercare the Auckland water CCO from infrastructure growth charges to development contributions are withdrawn. The prohibition on infrastructure growth charges may have inhibited Auckland Council's capacity to borrow and consequently to provide for future growth. These matters will be considered as part of future work on development contributions and targeted rates under the infrastructure funding and financing work stream of the Urban Growth Agenda. There are some minor changes. The SOP removes provisions in the bill relating to non-financial performance measures. It also removes provisions which impose financial performance measures relating to financial prudence requirements. The current provisions for regulations to set parameters and benchmarks are retained. Clause 30A of Schedule 7 is amended so that ex officio members of a council joint committee are excluded from the quorum count. This helps to remove a small but important problem for the operation of joint committees. That's a brief prelude to the Part 1 component of the bill but can I say that I'm grateful to the Local Government and Environment Committee for their consideration of the SOP and ensuring that a thorough assessment of the changes aligned to what we were hearing from the local government sector. That's an important thing because one of the things that this Government has done is assure many New Zealanders that we're serious about engaging with local government and working with them to ensure that the legislation that governs them is fit for purpose and does address some of the sharpest challenges. Can I say this: in terms of the CCO improvements it is a step towards what we really want to achieve which is greater accountability to the shareholder councils of how CCOs operate. Again I know that the consideration of the select committee on these particular issues was done at a time when there was some anxiety around the water reform work that I was leading and how the sector was perceiving the potential use of multi-CCOs. We're not in that space. We're going to change up the conversation with local government. We're going to ingest greater transparency in some of the core areas to which they delegate functions through CCOs and we're going to change up the conversation around the issues to do with how councils work together which is why we're improving some of the functionalities of the Local Government Commission.