Smith Nick: Address in Reply 
Text is incorporated into the Bound Volume 
Smith Nick: Address in Reply 
[Sitting date: 16 February 2012. Volume:677;Page:508. Text is incorporated into the Bound Volume.] 
Hon Dr NICK SMITH (Minister for the Environment) 
: 
 Can I begin this Address in Reply speech today in congratulating Todd McClay not just on that speech but actually on the stunning result that was achieved in Rotorua a seat that was previously held by Labour. A big increase in his majority over 7400 and actually typical of results right through provincial New Zealand where that middle group of New Zealanders strongly back the programme that this Government has set down under the leadership of John Key. Can I join other members and congratulate the new members of this House. I am particularly proud to be here as a National member and to see that new generation coming through with National and a whole range of very very talented people coming into this Parliament to make a contribution. The part that makes me particularly proud as part of this National Government is the extent to which on this side of the House there is an understanding of the challenges that face our country. I have to say that I do worry that those on the opposite side of the House have no idea of the challenges economically that our country faces the problems that we have incurred over the last decade and the importance for the future of our country that we get our economy growing more strongly.  
The Government in the Address in Reply debate has set out four really important priorities in this term of Parliament about responsibly managing a Government’s finances—about as we saw today with the Budget Policy Statement getting New Zealand books back into the black sooner and faster. When I look around the world and I see how many countries in the world are going to have their books in the black by 2014-15 there are very few and I am proud to be part of this Government that is achieving that. What surprises me is that in every question from Opposition members in every speech I hear lots of promises about how they will spend more money but very little about how they will actually grow the economy particularly the productive sector. That is the only way in which we can secure the incomes the jobs and the prosperity for the future.  
There has also been a huge focus across the ministerial team around building a more competitive and productive economy and about building better public services and I want to talk about that in some detail with respect to my own portfolios. And of course there is the huge challenge for this country and for this Parliament and Government of rebuilding Christchurch for which there is such a strong commitment and for which I pay tribute to the work of the Minister for Canterbury Earthquake Recovery Gerry Brownlee who I think every person in this House acknowledges has got one of the toughest jobs over the next 3 years. 
 A key part of the Government’s programme is about improving public services and improving New Zealand’s productivity. I want to talk for a moment about the challenges in the local government sector. You see one of the big concerns we have is that the productive part of our economy has actually been in recession going all the way back to 2002. If we look at our core exporting industries we see that the extra costs and impositions that were placed on them during the term of the previous Labour Government have seen those sectors stagnate and the big areas of growth have been both central and local government. I note for instance that over the last decade the single biggest increase in costs for households and businesses has been the increase in rates. For the last 10 years that increase has been at 6.85 percent per annum. That is more than double the rate of inflation and I want to reflect on the changes that were made in all the local government legislation in 2002. 
Sue Moroney 
: What are you going to do about it? 
Hon Dr NICK SMITH 
: I invite the member who is interjecting to go back and read the  
Hansard 
 of what the Labour Government said at the time. What the Labour Government said at the time was that those measures were actually going to generate cost savings. They have done the opposite. Let me put it this way. If rate increases over the last decade had been at the same level they had been for the previous decade prior to those changes Labour made the New Zealand annual rates bill would be a billion dollars—a billion dollars—a year less. What is more if we talk in terms of households that are under pressure in terms of their costs and their standard of living those changes have brought about $500 a year in increased rates for the average household over and above what they would be if those rate increases had been what they were through the previous decade.  
I want to challenge the member on a further concern and that is in terms of the level of debt within the local government sector. I have to say that debt is the issue of our time whether it be household debt whether it be country debt or whether it be debt within local government. This Government has been successful—we have seen over the last 2 years household debt come down after it burgeoned in the term of the previous Labour Government and what we have seen in terms of the farm sector is debt plateau over the last 3 years. But although the Government has been successful my worry is that over the same period we have seen local government debt not just go up but go up by ever-increasing amounts. Since the Local Government Act changes that were made by members opposite we have seen local government debt quadruple from $2 billion to $8 billion and continuing to rise. So I say—and members on this side of the House say—that ongoing growth in that debt is not right and that it will compromise the capacity for New Zealand to move forward and to be able to grow competitively.  
The first thing we need to do in response to the member’s question is go back and have a fresh look at those changes that Labour made to broaden the role of local government. I say to the member opposite that those changes that were made in 2002 which imposed very large compliance costs on our councils and expanded the role of local government far more widely have come with a very expensive cost for New Zealand households and New Zealand businesses and that is something this Government is looking to reform.  
I also want to draw attention to what has occurred around wage costs. If we look at the latest labour cost index this is what it shows. [ 
Interruption 
] If members would listen they might learn something. Over the course of the last Labour Government labour costs in the State sector and in the local government sector grew significantly faster than they did in the private sector. What this Government has been successful in doing is bringing back those increasing labour costs within those core Government agencies.  
But what worries me is this. Over the last 3 years the labour costs in the local government sector have been increasing at more than double the rate of those in the central government sector. It is our view that the same fiscal discipline that this Government has brought to central government’s books needs to be translated into the local government sector so that we can get those efficiency gains. We actually need both central and local government containing their costs. We need central and local government supporting those core productive industries that actually create the wealth for this country the jobs and the future prospects we wish for in this country of ours.  
The John Key - led Government over the last 3 years has shown that it is up to the challenges that this country faces in very difficult times. What the Government has set out in the Address in Reply debate is the changes we intend to make in a number of sectors to improve the competitiveness of this country. We as a close-knit team are united in our wish to raise New Zealand’s living standards and to provide the sort of policies that will mean that this country is able to prosper and go forward. I am looking forward this year to some of those local government changes that can assist in that bigger picture of making sure this country can be the best little country on earth.