Local Government (Rating Cap) Amendment Bill — First Reading 
Local Government (Rating Cap) Amendment Bill — First Reading 
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Local Government (Rating Cap) Amendment Bill 
First Reading 
RODNEY HIDE (ACT) 
: 
 I move  
That the Local Government (Rating Cap) Amendment Bill be now read a first time. 
 This will be a test for the Labour Government. Does the Labour Government stand for those Kiwis on a fixed income who are stuck with spiralling rate increases? Does the Labour Government stand for working families that are struggling under higher and higher taxes a higher and higher cost of living and to beat it all off a 300 percent rate rise that year from local government that is out of control? 
We have heard the protests up and down New Zealand from low to middle income families and pensioners who are struggling. What has the Government’s response been? “Oh it’s nothing to do with us.” Labour MPs can do something about it tonight. They can vote to send this bill to a select committee and indeed pass it. After tonight if they do not do that they will not be able to look their constituents in the eye and say there is nothing they can do about councils that are raping and pillaging people’s pockets every week. [ 
Interruption 
] The Greens call out that that is not true. I would like Mike Ward to come up to Auckland to a meeting with Grey Power members and say to them that what Rodney Hide is saying is not true that no council is raping and pillaging their pockets that it is all hunky-dory according to the Greens. A rate increase of 400 percent according to Mike Ward is OK. That is what he says. 
The Minister of Local Government Chris Carter stood in this House day after day saying that there was nothing he could do as Minister. We should understand the constitutional procedures here. A local council can strike a rate only because Parliament gives it the authority to do so. Local government I say to Mr Ward operates within the rules set here in Parliament. That is what happens. I suppose that if one is a Green MP a 400 percent increase is not very much for other people to pay but if one is stuck on a pension I say to him or working each week and struggling to make— 
Mike Ward 
: How many of these 400 percent increases were there? 
RODNEY HIDE 
: Mike Ward asks now he is thinking about this bill how many there were. Heaps! He should come to Auckland go to some meetings and talk to some people for a change instead of wandering around on cloud nine with his mate Nandor Tanczos who is not even on the planet. He should come to Auckland and talk to some people about what is happening in New Zealand with rate increases. The Auckland Regional Council I say to him put up its rates on average by 30 percent. That is what happened under the Government that the Greens support. That is what happened. 
John Carter 
: Who did? Which council? 
RODNEY HIDE 
: It was the Auckland Regional Council. There was a 30 percent increase across the board and some elderly people on fixed incomes I say to Mr Ward suddenly discovered that their rate bills had gone up 400 percent. Do not worry the Greens say it is not happening. 
Well here is what ACT proposes to do about it. We say that Parliament should cap the ability of councils to put rates up on a ratepayer in any one year. What would be wrong with that when one sees rates go up 4.5 percent a year on average yet the rate of inflation is 1.5 percent? I say to Mr Ward that everyone—except Green MPs—has to live within a budget. But the council does not. It finds itself running out of money and it just puts up the rates. Then what happens? Low-income families pensioners—the sort of people I thought the Greens wanted to represent—have to lose their disposable income and their net income goes down as a consequence. I know that might be hard to grasp but that is a fact of arithmetic and running a budget. This bill says: “Sure put up your rates but only in any one year by the rate of inflation plus 2 percent.” The truth of the matter is I think that is too generous. No one is sitting there getting an automatic wage rise of inflation plus 2 percent. But I thought if I was generous my colleagues in the Labour Government would have a heart show that they cared show that for once they are listening to the pain of middle New Zealand and of our pensioners and say that that is not bad and is quite reasonable—the rate of inflation plus 2 percent. 
There is another constraint in there—that is in any 3-year period rates can go up by only the rate of inflation plus 4 percent. That tightens it somewhat over a 3-year period. If any council wants to put its rates up by more than that then it will have to get special permission under this amendment to the Act. 
We have a chance here to show that we care to show that we have listened to the rates revolt and to show that we understand what it is to struggle on a low income and be hit out of the blue by local authorities whose spending is out of control. I have to say to Mr Ward that some of this out-of-control spending is a direct consequence of obligations placed on them by none other than this Government. We hear them on the podium. Constituents come to see me and say: “Well I’ve been to see the Labour MP who was very sympathetic.” They say that Chris Carter was very sympathetic to their plight but then he said that there was nothing whatsoever that he could do—and that was from a Minister. Well I am giving the Labour MPs and even the Green MPs— 
Simon Power 
: Steady on! 
RODNEY HIDE 
: Well maybe not. Even the Green MPs have an opportunity to show that they care about hard-working families and pensioners on a fixed income and show that they understand the toughness of living on a tight budget and send a firm message to local government that it cannot turn round and out of the blue increase a person’s rates by 400 percent. That is what we are deciding tonight. Do we think that is fair? If we think it is not fair to increase someone’s rates by 400 percent then I implore members of the Government to have a heart and to vote for this bill to go to the Local Government and Environment Committee to be considered. Then we can hear from I say to Mr Ward Grey Power and the ratepayers of New Zealand. Let us do that. Let us have some consultation which the Greens are keen on. The way to do that is to vote for my bill and to send it to the Local Government and Environment Committee. For once let us hear from the people. 
Hon CHRIS CARTER (Minister of Local Government) 
: 
 This bill is a political stunt and a deceit. It purports to help ratepayers by placing a cap on the amount by which a local authority can raise its rates both in any 1-year and in any 3-year period. As Minister of Local Government I can say clearly that this bill will do nothing to help ratepayers. It ignores the fact that we have local democracies in this country—elected by ratepayers—to make local decisions about how to deal with local priorities and how to fund them. Local Government New Zealand does not support this bill and I am not surprised. 
This bill is an instrument of central control; rather strange from the ACT party does one not think? It is an example of ACT decreeing what is good for local communities instead of letting the people who live in those communities decide for themselves. It would mean that if a local community wants its council to do something that would require the raising of rates beyond inflation the council cannot do it if the community paying the rates does not want it. Mr Hide knows best—that is what this bill is all about. 
It does not come as a surprise to anyone to learn that Mr Hide does not know what is best at all. His bill is prefaced on the idea that there are no compelling financial reasons driving local rate rises larger than inflation—just the frivolous whims of councils and local people. Obviously ACT has not spent any time at all talking to New Zealand’s local authorities. There may be some poor decisions made by some local authorities around the country but across the board there are also real financial problems facing councils after a decade of failed free-market policies. Councils are struggling to meet the huge cost of upgrading vital community infrastructure such as sewers and water pipes because of the deferred maintenance that occurred in the 1990s under the pretence of greater efficiency. That has been a key driver in rate increases in recent years and this bill completely ignores it. 
The bill will significantly restrict the ability of councils to meet infrastructure costs. Improvements to roading sewerage and water systems will be nobbled. Communities will have to continue to endure health and economic problems that run down infrastructure courses and so will the taxpayer. After all it is the taxpayer who ultimately picks up the tab for hospital bills and lost productivity. Because of the infrastructure imperatives that are driving rates if this bill were to become law councils would have little choice but to attempt to find other ways of raising money to try to meet those imperatives. Those attempts could have unforeseen consequences. This bill is a stunt because the very thing it seeks to stop—significant rate rises for ratepayers—it cannot prevent. An individual’s rates might rise massively even though his or her council has not increased rates overall beyond the parameters set by this bill. That is because the bill does not account for a movement in property values or a shift in the incidence of rating from one sector to another. 
The bill implies that its authors are conversant with the new local government legislation and its application. It is quite evident that they are not. The Local Government (Rating) Act passed by this Government seeks to give councils more flexibility on how they rate in order to more fairly spread the rates burden. That Act and the Local Government Act 2002 seek to provide communities with more transparent and understandable information about rating decisions. These days a council must front up to its community with clear and compelling reasons for rate rises. The community has greater opportunity than ever before to influence a council’s spending priorities. Councillors are explicitly required to take into account the necessity for rate rises any reasonable steps that should be taken to mitigate an increase and the level of community support for it in their decision-making processes. The supreme irony of this bill is that it effectively repeats those requirements in its dispensation provisions. Apparently its architects were ignorant of the fact that such requirements are already in legislation. 
As a final comment let me say that while this bill is totalitarian—and that should hardly be surprising I suppose considering whom it has come from—Rodney Hide’s underlying concern for efficiency in local government is commendable. I suggest that he redirect his efforts toward working with councils to improve efficiencies rather than against them. We have a lot of councils in New Zealand—86 in total. If we are to maintain the number we have—and ultimately that is down to communities to decide—then we must ensure that those 86 councils work together in the most prudent ways possible. There is immense scope under the Local Government Act for councils to save their ratepayers money by jointly providing services and sharing costs. We do not have to issue parliamentary decrees to achieve that. We can provide evidence and information about the savings that can be made and convince councils and local people with persuasive arguments. 
The Labour Party will not support this bill. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 National will support this bill because it is the only way we can give a message to that Government and that Minister that the ratepayers of New Zealand are under substantial financial pressure. During Chris Carter’s watch rates have gone up more in real terms than they have during the term of any other Minister of Local Government in this House. Mr Carter holds the record. That is what the official figures show. They have increased at three times the rate of inflation. If we are to believe Mr Carter the community wants these increases in rates. Well I say to him that that may be what the councils tell him but it is not what the people and the ratepayers are saying. 
The real reason this bill is required is that this Minister and this Government pass one after another bills that impose additional costs on councils and ratepayers. Let me go through just a few of them. Did the ratepayers ask for a Prostitution Reform Bill that imposed costs on every one or our councils? I do not remember that matter being raised with ratepayers in any part of my community or in any other part of New Zealand. The Minister imposed that law on councils. The new dog laws have huge extra costs for councils. 
Simon Power 
: They’ve worked! 
Hon Dr NICK SMITH 
: Yes! They have been a disaster. They have not been in place 12 months and we now have another bill to try to patch up the Minister’s last mess. I ask the Minister to tell us when the ratepayers asked for those additional laws. What about the gaming laws? It was this Minister who imposed additional responsibilities on councils to regulate gaming machines. They were not asked for by councils or ratepayers but who gets the bill? The long-suffering ratepayer gets it. Then there were the Government’s amendments to the Resource Management Act which impose another layer of Labour’s politically correct dogma on our councils. Did the ratepayers ask for them? Not on your life! Again they were imposed by this Minister and Marian Hobbs. Now we have another bill; they are not finished yet. Tomorrow we are being asked to put forward the Foreshore and Seabed Bill. 
Simon Power 
: It’s going well! 
Hon Dr NICK SMITH 
: Yes there have been a few people a bit upset today. The explanatory note states that this bill will lead to increased costs for councils and that means increased costs for ratepayers. It contains all of this nonsense about ancestral connection and customary rights. All of that material is going to send another bill off to the ratepayer. Is there any way in which this Parliament and the ratepayers of New Zealand can send a message to this Government that the ratepayers have had it? They are sick of the extra bills that Chris Carter and his Government’s policies are imposing on them and this bill is as good a mechanism as ever. Then I heard the Minister say: “We believe in local communities deciding.” Well well well! I have to say that that is a first. If councils want to introduce a charge for their library books or for the odd porno video or the like are they allowed to? No they are not. The Minister steps in and passes a bill that prohibits any charge of that sort. This Government says: “We will support local decision-making provided you do what you’re told.” and that is a nonsense. 
Then we had the biggest driver of increased costs for local government: this Minister’s Local Government Act. That new Act has our councils involved in a huge navel-gazing exercise with its 5-year community plans. Do members know how many plans this Minister now requires my council in Nelson to have? He requires it to have eight different planning documents. Councils spends so much time strategising so much time planning and so much time meeting the bureaucratic requirements of the Minister that they do not have time to get on with the job of providing footpaths roads and some of the basic services that the ratepayers of New Zealand require. We say it is time there was a limit because this Government is saying it will dump a whole lot of responsibilities on to the councils and then send the bill on to the ratepayer. We say that some control must be put in place and that is why this bill should have the support of this Parliament—so it can be referred to a select committee. 
DAVID PARKER (Labour—Otago) 
: 
 From the Opposition benches we have heard from the two greatest self-promoting populists they have—Rodney Hide and Nick Smith. Everyone knows they are self-promoters and this bill is no exception. What nonsense! The suggestion that central government should step in and by writ of Act of Parliament control the budgets of local government would I think find no support anywhere in Western countries. I have recently been to Russia and the members would have had trouble poking it through even there. It is just nonsense. 
What is being said in the press? I will read out a few extracts from the press. They come from all over the country. In Gore it was reported that the council has kept rates increases under the rate of inflation for a number of years but that it got into trouble and is now facing an infrastructure upgrade it cannot afford. It has therefore had to increase its rates beyond the rate of inflation. The article says that this legislation would not work and is nonsense. What are they saying in Southland? A senior Invercargill city councillor said that linking local rates to inflation threatens to fill New Zealand with Third World centres. 
Hon Dr Nick Smith 
: What do ratepayers say? 
DAVID PARKER 
: Ratepayers exercise their rights to say something when they go out to vote for their councillors every 3 years. That is why they have elections. What are they saying up north? Hastings’ mayor Lawrence Yule blamed most of the rates increases on people’s growing expectations of higher standards in council services. Central Hawke’s Bay mayor Tim Gilbertson slammed Mr Hide’s proposals as ludicrous and stupid. Mr Gilbertson said he was annoyed at a proposal driven by politicians parading their egos and trying to score political points. He is on to it. He is right. That is totally consistent with what the public knows of both Mr Hide and Dr Smith. 
What do the editors say? Let us move away from the elected councillors and mayors the people who have a mandate from their people to exercise decisions for them and to levy rates through the councils and see what editors say. I will read from the  
Timaru Herald 
: “Yes ratepayers are entitled to be angry”—about rate increases—“and to seek to overturn the council’s decision first by weight of submissions and second at the ballot box. That is called democracy. But it is a quantum leap from there for Parliament to limit the rate increases local bodies can apply. Mr Hide and the supporters of his bill—already National and the Business Roundtable are with him—appear to forget the key word in regional city and district councils is ‘local’. The councils are made up of local people elected locally and accountable to locals. If locals want to address major local issues using local money surely it is their affair and nothing to do with Parliament.” The newspaper is quite right. It is appropriate that Parliament exercise some sort of guidance in the way councils run their business and levy rates and that is one of the reasons that this very good Government in the last amendment to the Local Government Act required more long-term budget forecasts to be set out by councils. 
Hon Dr Nick Smith 
: More bureaucracy. 
DAVID PARKER 
: Well on this occasion that additional bureaucracy is necessary. There have been occasions in the past where councils have in very quick order thrown over their old budget estimates and embarked upon some very expensive additional capital expenditure that has been forced through rather hurriedly. The new Local Government Act would make that more difficult. It is still possible because in the end it is the right for councils to do what they say they want to do but they would have to go through a slightly longer process and make it clear what the financial ramifications would be on rates in the longer term. So in closing I think this bill ought not to be given even the decency of a referral to a select committee. It is nonsense to suggest that rates should be controlled at central government level. Those are local government decisions made by elected local members who have a mandate from their population to make them. 
JIM PETERS (NZ First) 
: 
 New Zealand First supports the referral of this bill to the Local Government and Environment Committee for the simple reason that in so doing members of this House who support it or who do not support it are informed as to the true nature of local government. It is certainly not because New Zealand First believes that the bill has merit; it is merely because we as a democratic party let the people have their say—and so be it. First of all I found it rather strange when I delved back into the history of the ACT party and found such common visions as “people are important” “power should be put back into the hands of the people” and “everyone should be given as much choice opportunity and independence as possible” that that party of so-called independence and liberty has adopted if this were to be its policy an almost Stalinist approach of regulation and restriction without any ability at all for individual councils to exercise their independence and rights. 
Secondly there has not been any period in local government when councils have not had to increase their rating base for the simple reason that Governments have introduced legislation that they must take into account—and there has been no more costly one than the Resource Management Act. Today in this country there are councils and ratepayers who right now are still paying out thousands of dollars to implement some of the far-reaching implications of that 1991 Act. So it is not really correct to come to this House and say that any one piece of legislation has had an impact apart from one—that is the 2002 amendment to the Local Government Act. The Hon Nick Smith is absolutely right: that Act imposed a huge burden on our ratepaying community. That burden is not for just this year; it will be for at least the next 3 to 4 years as we try to work through what for many councils is a heedless and needless operation—namely more long-term planning than they ever thought they would ever need. Maybe it was needed in the case of Auckland Wellington or some of the larger councils but it certainly was not needed in this detail for some of the smaller councils in this country whose ratepayers have a very heavy burden at the present time. 
However in so saying I do not want to convey the impression that I or my party shares the viewpoint expressed by Mr Hide with regard to the Auckland Regional Council. The real reason for the problem the Auckland Regional Council faced last year was that our good friend Mr Philip Warren screwed down that council’s spending so tightly over such a long period of time that nothing to do with roading and other infrastructural needs was met. When the council had the opportunity under the Local Government (Rating) Act to do something about that it looked at the nature of rating and last year it took the step to effect a new rating policy—which I would have thought Mr Hide would find highly agreeable—that better reflected the services responsibilities and duties of the council. It took capital value as the basis for its rates it did not impose a uniform general charge for no sound reason—which is the refuge of some councils—it took into account the needs of business and it did not have a superimposed subsidy on the business community that was several times the charge on residents or vice versa. In other words last year the Auckland Regional Council adopted a clear transparent rating system. Its problem probably is that it did not do it with sufficient care and precision with regard to the presentation to its ratepayers. However I certainly would not want to leave the impression that New Zealand First saw the Auckland Regional Council as being an unusual council in respect of its rating system. The council has learnt from the exercise as its ratepayers are finding at the present time. 
So in 1999 2000 or 2004 no matter what year one takes councils have had the same issues that they are facing right now as they prepare their long-term community plans and their annual plans. Those issues are what the overall needs of the community are. I live in Kaikohe where the Far North District Council has huge infrastructural needs and to suggest upon our council after careful consideration and planning that there should be a 2 percent increase would be a long-term burden on our community and that is something the council would look at carefully. 
MIKE WARD (Green) 
: 
 I do speak to ratepayers and I do speak to local councillors. The idea that we should set rates or limit rates flies in the face of the power of general competence and flies in the face of the principle of appropriate decision-making. 
The ones to make decisions on rates should be the councils. Ratepayers have the opportunity to do something about those decisions come the planning process—every year they have their say on council plans and have their say to shift council plans—and every 3 years they have the power to shift councils if they choose. 
This bill undermines both the appropriate decision-making principle and the power of general competence. It is particularly inappropriate when the Government has been devolving responsibilities to local authorities for some years now without devolving the funds to meet those responsibilities. This bill suggests that local authorities are eager to increase rates. I have sat through so many budget rounds that I can tell members that getting rates shifted upwards is an extraordinarily difficult thing to do. Local authorities are most reluctant to raise rates. 
Jim Peters 
: Especially this year an election year. 
MIKE WARD 
: At any time. Are rates unaffordable? I suspect that for some people they are and I suspect that for those people a lot of other things are unaffordable. Are rates good value? Yes they are if we think about what we get for them. The average rate is something like $1000 per year—roughly the cost of a cup of coffee per day per household per year. What do we get for it? If all that we received for that was a road and access to all the places we needed to be that would still be extraordinarily good value. 
Not even rural folk get so little. Most get a great deal more. They get their playing fields libraries somewhere to be buried footpaths street lights toilets that flush clean water parks and gardens. If somebody’s dog bites then our rates pay for somebody to catch the dog and look after it. If somebody’s stereo keeps one awake at night then someone else will come out and do something about that at any hour. If someone plans to build a fish factory next to one’s house then somebody will make sure that that is appropriate. Councils make sure that our properties retain their value by looking after the things that people do around us. 
Are rates too high? For some people they are. I am all in favour of measures that look after those folk who cannot pay—measures to defer rate payments and measures to look at the rate of abatement so that people on low incomes can get a rebate to pay their rates. 
I have been around the country talking to people and one thing they have been saying to me and to local authorities is: “Remember that little authorities don’t play by the same rules as big authorities. We need you to let us make our rules different in order to do things differently.” 
A rule like this treats all local authorities the same and in fact they do have different needs. Not all local authorities have the same pressures on them. Those that are growing certainly do and local infrastructure demands will increase along with increasing populations. The best thing we can do for them is to ensure that the small communities from whence those larger growing communities derive their populations are kept strong. 
We find that in places such as Nelson where the population grows every year—and we trumpet the virtue of growth—our water supplies become inadequate and cost a great deal to upgrade. Our sewerage treatment becomes inadequate and is very expensive to upgrade. Our roads are inadequate and what do we do? We simply try to build more of them and of course we fail miserably there as well because we cannot keep up with the rate at which cars keep coming on to the roads. 
I am sure that this bill will look popular on the surface but it panders to the misinformed the ill informed and those who have little idea about where their rates go. As I said if we sit down and think about it the price of a cup of coffee a day for all the things we get for our rates is extraordinarily good value. The Greens will not support this bill. 
GORDON COPELAND (United Future) 
: 
 United Future will not be supporting this bill. That said I should say immediately that United Future shares the concern expressed by the bill’s sponsor Rodney Hide. In a number of instances recently rate increases have been way too high and beyond affordability for many people including those on fixed retirement incomes. 
However whilst United Future agrees with the diagnosis set out in the explanatory note to this bill we disagree with the treatment prescribed. This bill smacks of the cost-plus mentality that used to prevail in this country in the Muldoon years. This bill is a Muldoon-style bill. Experience during those years demonstrated that if we give local authorities in this case the ability to ratchet up rates each year by the consumer price index plus 2 percent that is exactly what they will probably proceed to do. 
In addition as a party that voted for the power of general competence to be bestowed on local authorities through the Local Authorities Act of 2002 we think it is far too soon to rush to the conclusion that a restriction of that power is now justified. We have not allowed the new Act to bed in. I believe that the wiser course of action is to allow local councils the freedom to run their own affairs without further interference from central government. 
That said the principal reason why United Future opposes this bill is that we have placed in the ballot a members’ bill in my name to zero-rate GST on rates. We believe that that is a better solution to the problem. The enactment of my bill would see an immediate reduction of 12.5 percent in the out-of-pocket cost for all residential ratepayers in this country. This idea has the strong backing of Grey Power and many citizens’ rating action groups up and down the country. It is a principled position since in terms of tax policy if GST on rates is justified then GST on income tax is likewise justified. It is inconsistent and therefore wrong to impose GST on local government’s taxation of its citizens simply because the name “rates” is attached to that taxation whilst at the same time exempting rates levied by central government from GST. 
I am hopeful that my bill will be selected from the ballot in the near future. If so I hope other parties in this House might give it their support since it will continue to allow local bodies the power of general competence but at the same time reduce the rates burden. When we think about it we can see that the restraint on the power of general competence we have given to councils should in fact be the democratic process. They are up for re-election every 3 years and will if they want to stay around for a while listen closely to the concerns of their citizens. This bill interferes with that relationship. 
By contrast the bill United Future is proposing is an action that central government can and should take in the interests of reducing the overall tax burden resting on the shoulders of hard-working New Zealanders and those who are endeavouring on fixed incomes to enjoy their retirement years without undue financial stress or worry. 
STEVE CHADWICK (Labour—Rotorua) 
: 
 I rise to add my support to Labour’s opposition to this bill. I was a district councillor and I am absolutely astonished that the initiative for this bill comes from the ACT party. I find that a complete conundrum as ACT supports the approach of civil libertarians and letting people make decisions for themselves. It is a little bit like the situation with the Building Bill but here ACT is saying that we should reregulate rebuild centralise and take control. It just does not fit with its central platform of allowing people to make decisions about their own future. It also shows me that nobody in the ACT party and nobody Mr Hide would have consulted has any idea about rate-setting policies on local authorities. 
It is a very complicated process and yes we do require them to consult. I am glad we do because in the end we hit a bottom line where a community agrees that it simply cannot afford to carry out its projects below the line of what is a financially sustainable threshold of rate-take and agrees that those capital projects have to be deferred for the out-years. Communities make quite sensible decisions through their local councillors and this bill simply imposes over that right of elected district councillors to make those sensible decisions on behalf of the communities they represent. We certainly will not be supporting this very bizarre rate cap. 
Dr MURIEL NEWMAN (ACT) 
: 
 The reason this bill is in front of the House is that all around the country ratepayers are finding that their rates bills are going through the roof. While we have heard all sorts of excuses the reality is that the responsibility has to be put fairly and squarely at the feet of the Labour Government. This is a tax-and-spend Labour Government that has devolved more and more responsibility on to local authorities without giving them any of the financial resources to be able to manage except by increasing their rates. Labour is to blame for the fact that in some communities around New Zealand rates have been rising by 30 to 40 percent and Labour members have the audacity to stand here tonight in this debate and try to pretend that they are blameless. That just will not wash with thinking New Zealanders. 
I went to a Grey Power meeting not too long ago and that last member talked about there being no consultation and how the people do not realise what is going on—blah blah blah. New Zealanders know very well that their councils are being asked to do more consultation. They are being asked to do more social responsibility planning and now they are being asked to build houses. This is the newest initiative by the Labour Government and somehow Labour members think that that cost will not be passed on. Well anybody knows that it is passed on. It is passed on to ratepayers and on to pensioners who are struggling to get by. This Government is making those people’s local councils pass on huge extra costs. 
The power of general competence was a first step but there is a whole new tier of Government responsibility about to be passed on to local authorities that ratepayers will have to pay for and Labour is to blame. That is why the ACT party is putting forward a bill that actually tries to restrict this all-out wholesale expansion of Government. It has gone from central government—which this Labour Government has bloated like crazy because they are a tax-and-spend Government—down to local government so the poor old Kiwi has to pay not only through higher taxes through stealth taxes but now through increasing rates. I say that is not fair on working New Zealanders. 
This Government has no right to pass the costs of its social development its social rebuilding and its other ideas on to ratepayers—and that is exactly what it has been doing. I say it is an arrogance of Labour to think that the people out there do not realise what is going on. In my own community the rates will have to go up by 3.5 percent. That is an extra $700000 to comply with the new Government responsibilities that have been passed on to that council. I am not referring to the regional council—it has to pay another $400000 to $500000 for all the added consultation and all the other stuff that Labour has passed on to it. That is just the tip of the iceberg because that is just a little council. Members can imagine what the bigger councils have to pay and the burden of that will be passed on to other New Zealanders who are struggling to get by. 
This week in the House we have already heard about families on $55000 who cannot make ends meet. This Government does not care. That is the reality. It is running a surplus it is taking too much money off taxpaying New Zealand and it is using it to spend hither and thither on its great pet projects. Now it is hitting local government as well and hitting New Zealanders through their rates. 
Councils are there to deliver community services such as sewerage roading parks and things like that. No ratepayers worry about that but they worry about the cost of all this Government’s social interventions which are being passed on to councils. That is why ACT put forward this bill. 
JILL PETTIS (Labour—Whanganui) 
: 
 Ladies and gentlemen that was one of the contenders in the ACT primary Ms Muriel Newman. I have to say that that speech was really about an ACT primary—it had very little to do with the bill at all. This Government is not supporting this bill because it does nothing for ratepayers. It does nothing about reducing rate increases. In fact it takes the power away from ratepayers. 
This Government supports local democracy. One of the things I have been delighted to hear as I have been moving around my constituency is that people are appreciating the increased dialogue between central government and local government. Certainly those local government members who are actively engaged with their community are making statements along the lines of: “We appreciate the fact that for the first time in a number of years central government is talking with us and listening to the concerns we have as local government members.” 
In effect this bill would mean that if a local community wants its council to do something that requires the raising of rates beyond inflation the council would not be able to do that even if the community paying the rates wants that. I have to say that there is a disconnection between what the proponents of this bill are advocating and what is really happening out there in the community of New Zealand. To denigrate the positive impact of consultation really reflects how little face-to-face contact or trust some members on the other side of the House have with the community they purport to represent. I suggest they get out and engage with the people on a one-to-one basis or talk in small groups. It is an enlightening experience. Consulting with the community is a very positive thing for both local government and for the community itself. 
In my opinion local government does have a social responsibility and I am sure that is the opinion of my colleagues on this side of the House. Local government has historically exhibited its social responsibility in for example the provision of housing. Council housing in my electorate has been an important part of the essential infrastructure that helps to make the community I represent strong. Social responsibility is an integral part of the overarching responsibility that local government has. If one is not consulting talking with or listening to the community one represents I have to say that one is in serious trouble and risks being accused of being arrogant and out of touch. I am proud of the relationship that this Labour-led progressive Government has forged with Local Government New Zealand. We do meet with local government in our area on a regular basis and I personally appreciate the relationship I have with my local government representatives. That is one of the reasons that we will not be supporting this bill. 
RODNEY HIDE (ACT) 
: 
 That was Mrs Jill Pettis the senior Government whip giving Parliament a 10-minute lecture on consulting the community—thatfrom a Government that manages to unite Maori and have them march from all over Aotearoa! There were 15000 people on the front steps of Parliament and the Prime Minister Helen Clark was hiding under her desk in her office in the Beehive too scared to go out to talk to the community the Maori people and the people who voted Labour. 
Government members turn round and say that they consult the community. “We talk to the community.” they say but when the people turn up Helen Clark is hiding under her desk too scared to come out from under it let alone go on the steps of Parliament where I am proud to say every ACT MP was. We front up I tell Mrs Jill Pettis so she need not come into this Parliament and talk about consultation. When 15000 Maori want to talk to the Prime Minister I would have thought that a Prime Minister with balls would be out there talking to them. 
We heard from Chris Carter about his consultation and what the people want. We discovered that when the Minister of Local Government talks to the people he talks to the councils. He talks to the villains of this piece. He does not talk to ratepayers taxpayers pensioners or hard-working families. No he swans off on the local government cocktail circuit. That is what he does. They have a cocktail together and they ask: “Why are the people complaining? It’s a great Government. Here have another drink have another sandwich have another meal.” That is what is happening with this Government. 
I ask the Minister of Local Government why he does not talk to the people who are paying for local government rather than to local government—which is the beneficiary of big rate hikes. What did the Minister of Local Government come here to report? He said that councils do not like not being able to put up their rates by 30 percent a year. Well that is a surprise is it not? Then he happened to say that people want that to happen. Well which people? I look across to my colleagues in New Zealand First and to Jim Peters. Does he remember people in Northland and Auckland being consulted about their rate increases? No. I look across to Mr Benson-Pope. Does he remember the people of Dunedin being consulted about their rates increase? 
Hon David Benson-Pope 
: Yes. 
RODNEY HIDE 
: Oh he does! What was the result? 
Hon David Benson-Pope 
: They know about the public process. 
RODNEY HIDE 
: He knows about the public process. Already Mr Benson-Pope is backing off. We know he does not think before he opens his mouth in this House. That is why they had to take the whip’s job off him actually. No one in his own team liked him. He could not get them to do anything. One way to sack a whip is to make him a Minister. That is what they did. What a desperate tawdry Government it is and it will be measured. 
Russell Fairbrother 
: Is this an election speech? 
RODNEY HIDE 
: The member can bet it is because an election is just around the corner with the way Helen Clark is running things. I look forward to debating with Mr Russell Fairbrother why his constituents have to pay more and more rates because he would not stand up for them and vote for my bill. He would not even vote for my bill to go to a select committee so that the people of New Zealand could make submissions. The Government does not want to hear from Grey Power does it? Why not let Grey Power make a submission on my bill? Why not test it? Did anyone hear an explanation from this Government as to why Grey Power cannot make a submission turn up to Parliament and give its views on this bill? The Government is a disgrace. It is about time it was gone. 
A party vote was called for on the question  
That the Local Government (Rating Cap) Amendment Bill be now read a first time. 
Ayes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata. 
Noes 71 
New Zealand Labour 52; Green Party 9; United Future 8; Progressive 2. 
Motion not agreed to.