Williams Andrew: Kaipara District Council (Validation of Rates and Other Matters) Bill — Second ReadingText is subject to correctionWilliams Andrew: Kaipara District Council (Validation of Rates and Other Matters) Bill — Second Reading[Sitting date: 13 November 2013. Volume:694;Page:43. Text is subject to correction.]ANDREW WILLIAMS (NZ First): I take a call on behalf of New Zealand First on the Kaipara District Council (Validation of Rates and Other Matters) Bill. Communities all around New Zealand and in particular on our coastline have been experiencing over the last decade or so increasing demands for the treatment of waste water and stormwater. Communities are up for significant amounts of money to cover the costs of upgrading to reduce the spillage into our waterways and into our harbours. As a result the Mangawhai scheme is an example of that. The Kaipara District Council was required in conjunction with the Northland Regional Council to address how it would curtail the problems from runoff from septic tank systems and small communal systems in the Mangawhai area.During the late 1990s and early 2000s a scheme was proposed for Mangawhai to put in a central waste-water scheme. During that period it was developed so that it would provide for 21 kilometres of sewers 18 kilometres of property drains 15 pumping stations 6 kilometres of rising mains a new waste-water treatment plant and a 110000 cubic metre storage dam—a sizable scheme. It was designed to cope with a population of 3000 and in the summer a peak of up to 8200 people who move up on to that Northland coast. During that period in the mid-2000s the people of Mangawhai and the ratepayers of the Kaipara District were consulted with on the basis of that scheme to the point of a $31 million project.As a result of that consultation the council determined in August of 2005 that it would proceed with the project and it negotiated a facility with ABN AMRO Bank to the tune of $31 million. In October of that year it appointed a company by the name of Earthtech Contractors to design construct and operate the EcoCare facilities and in so doing it commenced to draw down the loans. In May of 2006 some 9 months later Kaipara District Council appointed Beca Group to manage the implementation of EcoCare. Beca Group is a well-known consulting firm based in Auckland which provides to local authorities all over New Zealand. It was there to oversee the implementation because the company Earthtech Contractors was Melbourne-based and it was seen by the council to be preferable to have a sizable local consultancy firm to oversee it.This is where it starts getting a bit hazy. Within 1 year in December 2007 the project deed was amended and the ABN AMRO Bank loan facility was increased to $53 million. The people had been consulted on a loan of up to $31 million and suddenly the council took out a facility with ABN AMRO Bank for $53 million. Subsequent to that the council then actually borrowed $58 million to fund the project. During that whole period of time there was no consultation with the people of Mangawhai or the people of the Kaipara District but that council took on huge increased debts to cover it. This was a sign of extremely poor governance by the council by the mayor by the deputy mayor and by the management—in particular by the chief executive officer of the Kaipara District Council who had been a chief executive officer there for some 18 years.It was concerning. During the Local Government and Environment Committee hearings I questioned some of the attendees and I asked a councillor from the Kaipara District who attended and said that surely in the quarterly financial reviews that councils are provided with and councillors should be provided with it would have shown a rocketing amount of funding going into the scheme and borrowing going into the scheme. I was appalled to be told that the councillors of the Kaipara District Council were not provided with such quarterly financial reviews and in fact the councillor had been denied that information by the chief executive officer and by the council.I give an example. When the North Shore City Council built a $110 million outfall pipe on the North Shore while I was the Mayor of North Shore it was originally budgeted at just over $110 million. When we came to the commencement of construction it was signed off at being $116 million. When it was finally completed it came in at just close to $120 million. This was a massive 6 kilometre 2.8 metre diameter pipe—a huge project—but we managed to contain it. During that whole project our council our councillors and the management received regular reviews on how that project was going and how the costings were going. In this case with Kaipara that did not happen and it ballooned out. During that same period the Audit Office gave its annual audit of the Kaipara District Council. I am also appalled that the Audit Office during that whole period of time with its annual reviews did not pick up that this was an absolutely ballooning disaster waiting to happen.During that period of time the ratepayers themselves started sounding the alarm. I give full credit to all those ratepayers who did so including the Mangawhai Residents and Ratepayers Association. They started raising the alarm bells and it fell on deaf ears. They were told to go away. They were ignored and yet they were on to something.During that period of time ABN AMRO Bank was taken over by the Royal Bank of Scotland which in turn went under and was sold to Lloyds Bank. Lloyds Bank then passed on the loans to National Bank and National Bank was subsequently merged with ANZ. I am advised that those book value loans today are nothing like the book value loans that were taken originally by ABN AMRO Bank and in fact ANZ is now sitting on those loans at a considerably written-down value. In that respect therefore the ratepayers of Mangawhai and the Kaipara District are still being required to repay those sizable loans at the full book value rate. However it would appear that the New Zealand bankers are making a healthy margin out of this. In that respect we are calling on the Government to intervene and have proper talks with ANZ to get this back on track and to see how much it can discount these loans by in order to ensure that the ratepayers themselves are not left out of pocket by paying for something that ANZ actually did not end up taking up.At the same time there needs to be a review in terms of some of the people involved—the likes of the contractors the likes of Earthtech Contractors the likes of Beca Group the likes of the chief executive officer for 18 years of the Kaipara District Council and the likes of the mayor and the deputy mayor who had a big involvement in this whole thing. It all needs to be investigated and they need to be held to account. We are very pleased that as part of this bill there is an allowance for people to go after them and to sue those who have been found to be negligent and in fact to ascertain whether there have been any unlawful actions on the parts of some of those people. I was most concerned that one clause in the bill clause 3(g)—which I requested be removed—said that this would also “validate any other actions or omissions of the Council relating to the financial years 2006/2007 to 2012/2013 (inclusive).” That basically gave carte blanche validation to this whole thing in terms of any other omissions that the Kaipara District Council had undertaken. I was pleased that that was removed from the bill.In closing I would just like to say: all credit to the ratepayers. A legal opinion has come through to me that said: “The illegalities in entering the loans … are not mere technicalities or formalities. It goes to the heart of local government’s obligation to consult ratepayers before entering into large financial commitments and whether rates can be set to cover illegal loans. … The wider solution should involve Government providing leadership to broker a deal with the [Kaipara District Council] … and the lender banks to fill the financial gap faced by the [Kaipara District Council.] … The bill retrospectively validates illegally set rates …”—and is not right.I do commend the work of the commissioners who have worked hard on this. They are in an invidious situation in being basically given a hospital pass to try to sort this out. However despite their work to try to do this it cannot belie the fact that people have acted in an appalling manner in terms of the governance of this council in terms of the management of this council and in terms of those contracted to this council.New Zealand First and the New Zealand First caucus cannot support this bill. We wish that Parliament would ensure that those who are culpable in this matter are brought to account.