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Local Government Act 2002 Amendment Bill

Third Reading

Thursday 18 November 2010 Hansard source (external site)

HideHon RODNEY HIDE (Minister of Local Government) Link to this

I move, That the Local Government Act 2002 Amendment Bill be now read a third time. The purpose of this bill is to improve transparency, accountability, and financial management in local government. Before the development of this bill, the Local Government Act 2002 contained few mechanisms to apply the principles of transparency and accountability, which it seeks to promote. Although it resulted in a lot of information being made available by councils, it was not always easily accessible to ratepayers or easily understood.

The accountability mechanisms are retrospective, so do not provide ratepayers with any effective ways to control their councils. With this bill, I hope to change all that. It includes a number of new measures to improve transparency and accountability. Having a financial strategy, for example, makes transparent the overall effect of council proposals on rates, debt, investments, and services. It sets limits on rates and borrowing, which creates an accountability mechanism. Further transparency and accountability are then provided through the pre-election report. This will compare actual rates, rates increases, and borrowing and returns on investments with the limits and targets set out in the financial strategy. Voters will receive this and other information about their council’s finances and proposed projects at the time they are best able to hold members to account—the local election.

There is more focus on financial information and management. A basic understanding of council finances is crucial if people are to ask better questions, or indeed any questions, of their council. Not everyone is an accountant, which is why having plain English financial information and standardised reporting is so important. Standardised information is particularly useful for infrastructure services. The ability to fund investment in infrastructure is the biggest factor affecting councils’ financial sustainability and is where the most money is spent.

Providing ratepayers with comparative data on the levels of service for things like roads, water, and waste water helps to inform them about what they are getting for their money. It also helps them to ask questions about their council’s performance and the issues they are facing, relating to these services. The Government takes seriously infrastructure and its important links with economic growth. Ensuring councils provide good information about their infrastructure assets and services is essential so that neglect does not hinder economic performance.

The proposals in this bill can go only so far in making a difference, though. What happens next is up to councils, individuals, and communities. The bill provides for better quality information, so there are more transparent processes for making decisions about strategic issues. Councils will be left to establish and run these processes for themselves. However, no one can force ratepayers to take advantage of this new information or to be more actively engaged in local debates and decision making. It is up to them to choose to participate. On that note, I do not think fears that there will be a lack of consultation in the future are warranted.

Community engagement is not just about making a submission as part of a formal consultation process. People should be encouraged and enabled to make their views known whenever they like. Having better information about a council’s finances and proposed projects, about how much services will cost to deliver, and about what they are getting for their money—and being able to compare this with information from other councils—will put ratepayers in a better position to put their views across to their council more clearly and more comprehensively. It should mean that when consultation does occur, the public will be in a stronger position to participate. It should mean that when councils are required to make themselves aware of, and have regard to, the views of communities, as the Act requires, they can generally give effect to this principle.

During the course of developing and enacting this bill, much has been made of the concern that it encourages the privatisation of water and other council services. The bill does not privatise anything. The councils and their ratepayers will make their own decisions. If at some point in the future they decide that some private involvement in their services is the right thing for them, that it is the best way for them to pay for these services and keep them affordable for local people, then that is up to them. If the bill makes it a bit easier for them to make these decisions, then I say it is great. If they do not make any change at all, then that is their choice too.

Likewise, if councils want only to provide so-called core services and their communities are happy with that, then that is up to them. If councils want to provide more, and they have community and ratepayer support, that is their choice, as well. But ratepayers have a right to challenge the council if it wants to spend their money on something that is not a core responsibility, particularly if it might take priority over other more essential local services. Having the core service provisions in the Act will help to guide councils and communities when they are debating these issues. That, along with the financial strategy and other new information, will empower ratepayers to question council decisions and to discuss trade-offs on a more equal footing.

As I have mentioned throughout my speech, this bill is about choice. It is about giving councils and communities more flexibility to choose to deliver local services in ways that are right for them. It is about giving ratepayers better information about their councils so they can choose what kinds of services they want and how they want to pay for them, to choose how and when to be involved in decisions, and how and when they need to hold councils to account for those decisions.

Councils will start developing their first long-term plans using the provisions of this bill early next year. I hope councils and ratepayers will choose to take advantage of the new opportunities the bill introduces. I thank the House for its support.

TwyfordPHIL TWYFORD (Labour) Link to this

Labour members oppose the Local Government Act 2002 Amendment Bill with every bone in our bodies. The bill claims that it will increase the transparency and accountability of local government. In fact, it will do the opposite. Like all of the local government bills the Minister of Local Government has brought to the House in the last 2 years, it will undermine our public institutions and undermine our democratic process.

We have talked about water privatisation a lot, and no matter how much screeching we hear from the Government backbenchers about whether this bill allows, in fact, water privatisation, New Zealanders will not be fooled by the blatant lack of transparency that the Minister of Local Government has displayed in bringing the bill to the House. The bill will allow long-term contracts of up to 35 years for private sector operations to control our water supply. Section 137(4)(d) in clause 32 explicitly allows the sale of pre-existing water infrastructure as part of those long-term contracts. It is not, as the Associate Minister tried to argue this morning, simply something that will give more options to cash-strapped small rural councils. This bill will allow the billion-dollar water monopoly set up under Rodney Hide’s super-city in Auckland to be contracted out to United Water for periods of up to 35 years, including the private ownership of pre-existing water infrastructure.

The ratepayers and the citizens of Auckland could be given no say, under this bill. At the same time as it allows water infrastructure to be sold to private sector interests, it also does away with the provisions in our local government law that would guarantee citizens the right to be consulted before their assets and their services are either corporatised or contracted out. The combination of those two things will imperil our public ownership or ratepayer-owned assets and resources. We are talking about water specifically, but the same principle applies to all sorts of other strategic assets. Does anybody other than the deluded members opposite—

TwyfordPHIL TWYFORD Link to this

—believe seriously that the privatisation of our water supply will not result in the inevitable price hikes that people have seen that have accompanied other botched privatisation initiatives that we have seen over the last few years? We know that if we hand over to the private sector a natural monopoly like water supply, it will almost inevitably end up in foreign hands. The guaranteed profits that will flow from private ownership of a natural monopoly will flow overseas. That money will go out of the pockets of New Zealand ratepayers and householders and straight into the pockets of overseas-owned companies. Does anybody believe that if we hand over resources of this scale—a billion-dollar water monopoly in Auckland—to the private sector, it will not result in huge corporate salaries further gouging the pockets of the ratepayer? This is not a good idea.

I remind members opposite that the most recent independent opinion polls on this issue have shown that 80 percent of New Zealanders are opposed to any privatisation of our water system. It is a matter of choice, as the Minister pointed out. When New Zealanders go to the polls next year, they will be mindful of what the Minister did to Auckland local government, they will be mindful of what the Hon Nick Smith did to democracy in Canterbury, and they will be mindful of this bill opening up their municipal water supply to privatisation, and they will make a choice at the polls. This Government is gutting our local government public institutions and the democratic process, and those two things go hand in hand. They are taking the voice away from ordinary people, and they are opening the door to private control and ownership of assets and resources that New Zealanders have built up over generations through their rates. New Zealanders will not forget that.

There are other obnoxious aspects to this bill that Labour members have opposed steadfastly throughout this whole process. One of them is the idea of core services that this Minister, whose party currently commands about 2 percent in the polls, is able to impose—

TwyfordPHIL TWYFORD Link to this

Is it not 2 percent? He is able to impose an ideological and arbitrary list of core services that he defines as core services. Nobody else does. Hardly a soul turned up at the Local Government and Environment Committee to say that it is a good idea; 98 percent of the submitters who came along said it is a lousy idea. They said that we should either put their issues and services in the list or not have it at all. The implications of what that list could mean is that a rural community, for example, that wants to provide free premises for a general practitioner service so that it can have a doctor in its rural community could be vulnerable to claims, through either the annual planning process or normal political debate, that it is not a core service—

MackeyMoana Mackey Link to this

Or a legal challenge.

TwyfordPHIL TWYFORD Link to this

—or, in fact, a legal challenge—and therefore it should not be engaging in it. This idea tilts the playing field away from the democratic process that allows citizens to decide in conjunction with their elected representatives what constitutes a core service.

This bill also makes a number of cuts to the obligations currently on the councils to consult their citizens. It allows the councils to contract out public services to the private sector. It allows them to corporatise their assets and operations by shifting them to council-owned companies without consulting their citizens. That is a breach of people’s fundamental, democratic rights. It constrains the whole process of setting community outcomes, setting the high-level goals that go into our councils’ long-term plans. Under Rodney Hide’s bill, a council could make up the community outcomes out of thin air, or out of the last thing someone said to one of its members on the street or in the supermarket. The councils are not required to consult the community in setting those outcomes.

The bill also restricts the community outcomes unduly by requiring that they can only be things that the council itself can deliver on. Many of the most pressing issues for local communities, such as crime, safety, alcohol, and pokies—any number of those issues—cannot be made a community outcome, because the councils do not have access to all the levers to solve those problems. That is yet another example of this Government and this Minister taking democratic rights away from New Zealanders.

They have gutted the consultation process for decision making about many of the important things that go into the annual plan. Currently, there is a four-stage process that we have admitted was overdue for streamlining and could have easily been reduced down, but this Government has thrown the baby out with the bathwater. Now there is no principle-based mechanism that requires consultation on these important decisions. I predict that many of the Government’s natural supporters and voters in leafy suburbs up and down this country, who are the people who are most demanding of their local authorities, will blame the National Government for taking away their democratic rights.

We have seen three bits of legislation that imposed an unpopular, Rodney Hide - inspired super-city on our country’s biggest city. Most of that legislation was pushed through this House under urgency. We saw the sacking of Environment Canterbury by the Hon Nick Smith, which was, again, done under urgency. This bill is the third leg of the treble. It guts our local government legislation, and it hands over our resources to privatisation and corporatisation. That is the legacy of the Minister of Local Government, who set out with such grand aspirations to be the “Minister of Ratepayers”. This is what he has done: he has weakened and undermined our public institutions, and taken away the voice of New Zealanders over things that they justifiably have a right to a say on and to be consulted on. He comes to this House trumpeting transparency and accountability, but everything about the way that he has implemented this legislation and implemented his policies speaks of the opposite. It is not transparency and accountability; it is the opposite. The public of New Zealand will hold him and this Government accountable for it.

AuchinvoleCHRIS AUCHINVOLE (National—West Coast - Tasman) Link to this

I am a little saddened to hear the desultory speech from the previous speaker, Phil Twyford, who has been at least involved in the full process of the Local Government Act 2002 Amendment Bill. I think he could have done better than he did. However, it was comforting to hear Shane Jones speaking at an earlier stage. He is a loquacious speaker.

Debate interrupted.

Sitting suspended from 1 p.m. to 2 p.m.

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