Upston Louise: Local Government Borrowing Bill — Second Reading 
Upston Louise: Local Government Borrowing Bill — Second Reading 
[Volume:675;Page:20983] 
LOUISE UPSTON (National—Taupo) 
: 
 I am pleased to be able to stand and speak in the second reading of the Local Government Borrowing Bill. It is great to see that the bill is being supported by the Labour Opposition because clearly it is about reducing costs for local government. The member before me spoke about the fact that perhaps the level of debt owed by local government entities was not at the rate we had spoken about previously. But Treasury’s projections still are that local government borrowing will jump by two-thirds over a 5-year period and will reach about $10 billion. There would not be a week that goes by without my having a constituent in one of my electorate offices concerned about increases in their rates and probably more important their ability to constrain rates increases. That is really what the Minister of Local Government has had as one of the clear focuses in his work. 
The Local Government Borrowing Bill has two parts. The first of course is the creation and operation of the New Zealand Local Government Funding Agency and its ability to issue local government bonds to New Zealand and also to overseas investors who will then be able to re-lend to local authorities for capital and infrastructure projects. The second part of the bill concerns the ability for the Auckland Council to borrow in foreign currencies. As we heard from the Minister there were not many submissions in the select committee process—only six of which five were strongly in support with just a few comments about how we could possibly tweak the bill in order to improve it. 
This is a common-sense bill. It is solving a very real problem—a very real problem that affects district councils differently up and down the country. Some councils have incredibly high gearing; others have low. Some councils manage their capital investment requirements in different ways. In effect this legislation will level out some of those differences up and down the country and will provide the ability for local councils to borrow at realistic rates and get some real economies of scale in relation to their interest costs. 
We know that strong and good local government is vital for each of our communities be they small or large. The success of local government is vital to our economy and also to the protection of our environment but the reality is that we cannot be in a situation where rates continue to rise and debts taken on by local government are at unsustainable levels. The speaker before me talked about the fact that local governments are starting to change their behaviour. Some of the projects they have put forward in their long-term plans are different. I think part of that is that they are responding to a signal from this National Government and from the Minister of Local Government that there is an expectation that local governments should be more mindful of how they are spending ratepayers’ money. They are clearly more mindful of the economic conditions we are in right now. Just as every household is tightening its belt and just as central government is tightening its belt local government entities are doing so as well. They are responding to the circumstances we live in as well as to the signal from this particular legislation and it is great to see that they have taken that on board. 
This bill is very simple—it is about reducing costs. We could argue around the edges but we are talking about anticipated savings of potentially $25 million in interest costs for local councils. That is a massive saving and a reduction in the burden on our ratepayers. There is also a reduction in duplication. If we think of our different district councils we know that some are very small in size; others like the Auckland Council are large. But this legislation will reduce the burden on them in terms of their having to deal with the sometimes very complex issue of borrowing for and financing their debts. This does not mean that local councils have to borrow through this funding agency. They still have other funding options available to them. But the bill will provide them with a choice. As the Minister said in his opening comments there will be a strong move by many of the councils to get their funding through the Local Government Funding Agency. 
The other side is that the legislation also provides an opportunity for mum and dad investors. If National is successful in being re-elected after 26 November there will be other investment opportunities for people; there will be a whole suite they can choose from. If I look locally at the Taupo electorate I know there is a significant list of projects that need to be completed within the three different district councils all of which need funding. Some needs are significant and I spoke about water and waste-water projects in the bill’s first reading. I know having spoken to the councillors in the Taupo electorate just how grateful they are that central government is extending a significant hand of assistance to them in a very real and practical way which assists them in reducing their costs. That is why I am very pleased to support the Local Government Borrowing Bill in the second reading and I will be pleased to see it through to fruition.