Local Government (Rating Cap) Amendment Bill

RODNEY HIDE (ACT—Epsom) Link to this

I move, That the Local Government (Rating Cap) Amendment Bill be now read a first time. This issue will not go away, and it is not something that Parliament can vote away. Rates throughout New Zealand are causing a great deal of heartache, hardship, and distress. In Auckland, residential rates are set to rise this year by 13.8 percent. No one is getting a salary rise of 13.8 percent, but people have to find an extra 13.8 percent for their rates.

In the last 3 years Wellington City Council rates have increased by 20.5 percent, Christchurch City Council rates by 19.4 percent, and Hamilton City Council rates by 15.2 percent. The average increase in rates across the country is 7 percent per year. That sort of increase would make the Sheriff of Nottingham blush if he were taking that money from the poor peasants among the people. Yet we sit idly by while local government is doing that to the citizens of New Zealand.

Parliament cannot duck responsibility for that, because it is this Parliament that has given the power to local government, to the councils, to set those rates. We cannot sit back in Parliament and say that it is an issue for local government; it is an issue for this Parliament. Every member of Parliament knows what an issue it is, because we all have constituents coming to see us who are on fixed incomes and struggling to pay their rate demands.

Hon NANAIA MAHUTA (Minister of Customs) Link to this

I rise to oppose the first reading of the Local Government (Rating Cap) Amendment Bill. This recycled bill is identical to the one that the previous Parliament decided should not be read a first time, back in 2004. I see no reason today that would make this bill any more worthy of parliamentary time than it was then.

The bill purports to help ratepayers. It will do no such thing. The author of the bill has forgotten or ignored a lot of things. First, rates are not the only funding source for local government. One of the first consequences of the enactment of this bill would almost certainly be increasing levels of user-pays for community facilities like libraries, swimming pools, and sports grounds. Who among us wants to discourage people from reading with their children because it costs too much to take out a book? Who wants to discourage physical exercise? This bill will do precisely that.

Second, the bill controls the total level of rates levied by the local authority, yet the average rates increase is only one of the factors that determines the level of rates paid by an individual ratepayer. Also relevant are movements in property values or a shift in the incidence of rating from one sector to another. A highly desirable water view property may increase in value more than neighbouring properties with no view, which means the ratepayer may well pay more in rates than last year’s rates, plus the consumer price index.

Supporters of the bill are apparently labouring under the illusion that the bill will promote the accountability of local government to its communities. It will not. In fact, it would reduce the strong system of accountability and transparency that the Local Government Act 2002 has established. Local authorities have just completed their first full, long-term council community plans. These plans set out what services the council will provide—the quality and the cost. Where communities have been opposed to the proposals in these plans, they have had far more opportunity to make their views known than ever before.

Mr Hide’s old, recycled bill will ride roughshod over this process by imposing an externally mandated cap. That will mean that if a local community wants its council to do something, and it requires the raising of rates beyond inflation plus 2 percent, the council will be able to do so if—and only if—the Minister of Local Government agrees. In short, any future Minister who does not believe in local people setting the priorities and magnitude of their council’s work and rating system, or who sees a potential political gain, will be given the power to overrule the local process created under the 2002 legislation. Our communities deserve better than to be a political football.

I draw the attention of the House to the report of the Joint Central Government / Local Authority Funding Project Team published late in August. It concluded that there is a degree of catch-up needed in infrastructure, roads, water supply, sewerage, and stormwater disposal schemes—not frills, but the infrastructure a growing economy needs. No one wants to see our roading network clog up, to have people drink substandard water, or to see poorly treated sewage tipped into our waterways. One of the root causes of this infrastructural deficit is the very kind of Luddite thinking that drives this bill, that rates must not increase faster than the rate of inflation. For this reason, essential maintenance was deferred, projects were put off, and renewal work went undone because depreciation was not funded—or not sufficiently funded—let alone adequate provision made for what was often highly desirable or even essential qualitative service facility developments.

This bill overlooks the fact that New Zealanders as a society expect higher environmental standards than they did 10 years ago. Upgrades and clean-ups are in progress all around the country. This ill-considered, regressive bill would choke this activity. Our scenic lakes would remain choked with agricultural nutrients, waterways would be polluted with motorway run-off, and sewerage and stormwater systems in some provincial centres would mingle in a heavy storm. Infrastructural catch-up in meeting society’s aspirations of improved environmental standards and community services all comes at a cost that is often greater than the inflation plus 2 percent that this bill would allow.

For many communities, the choice is not between more or less, it is between more now and even more later. Like us, the local councillors’ ultimate accountability rests with the voters at the ballot box. A local council that puts rates up without demonstrating value for money and without winning the support of its constituents is likely to find itself involuntarily retired.

So the Government will not be supporting the bill. Of course, the Government is concerned about the impact that rising rates have on those ratepayers on low or fixed incomes. That is why the 2005 Budget signalled the Government’s intention to make significant changes to the qualifying thresholds and level of assistance available under the rates rebate scheme. Those changes took effect on 1 July and up to 300,000 lower income New Zealanders are now likely to be eligible for a rates rebate of up to $500. Those members genuinely concerned for those on low or fixed incomes would do well to remember that this initiative alone is a far better avenue for addressing these concerns than this ideological, ill-thought-out bill. So we do not support the bill; it should not go past the first reading.

JOHN CARTER (National—Northland) Link to this

Ratepayers across this country are hurting, newly-weds in their first homes are hurting, businesses across this country are hurting, and elderly people—particularly those on fixed incomes—are hurting. The reason why they are hurting is that they are being loaded with rates charges that they cannot meet. Across this nation, there is a growing wave of ratepayer revolt that will reach the size of a tsunami and strike at every corner of this nation, and the Government needs to know that.

Let us look at what is happening in local government. There are three areas that drive costs. One is infrastructure. No one argues against the need for us to have infrastructural development; water, sewerage, and roading are all things we expect in our communities and are prepared to pay for. The second cost driver is inflation. In local government, for example, the increased price of petrol has added huge costs—up to 50 percent in some cases—to some of the costs of local government in relation to roading. But the third area that adds to the problem—the unnecessary addition to the problem—is the imposition of responsibility-shifting from central to local government.

That rack can be pointed directly at Helen Clark’s Labour-led Government, of which New Zealand First is a part. Those members should know and recognise that, in the time they have been Government, 67 pieces of legislation have shifted costs and responsibility from central to local government. The cost of that to ratepayers is huge. Let us remember that this Government puts its hands in one pocket of a ratepayer, takes taxes out, and puts them into its bank, while at the same time it expects local government to put its hands in the ratepayer’s other pocket and pull the money out of that, as well. So a ratepayer pays twice for the shift of responsibility.

Hon BRIAN DONNELLY (NZ First) Link to this

The previous speaker got one thing right and one thing wrong. The thing he got wrong was that New Zealand First is part of this Government. I tell him that I am not part of this Government. But everything else he said was correct, and we support him. We would support this bill going to a select committee if, in fact, it allowed debate on the issue of rates. It does not do that, and that is the problem.

New Zealand First has for some time been concerned about local body rates, and those concerns were reflected in its manifesto for the 2005 election. I will read out some of those policies: “New Zealand First will … explore options to reduce the rates encumbrance on seniors with a fixed income; … review the legislative burden that central government has placed on local government”—as the previous speaker talked about—“and the impact of this on ratepayers …;” and “reduce the layers of bureaucracy which have increasingly been superimposed onto local government”. Those are just some of the very significant issues around local body charges.

I happen to live in a place called Ngunguru on the beautiful east coast of Northland. Until the last couple of decades, Ngunguru was basically a seaside holiday spot joined to Whangarei by a dusty, winding road. Most of the dwellings were humble baches; some still are. But in the last quarter of a century, the place has been transformed. Property values have risen sharply and people who had modest homes are now asset millionaires. The trouble is that those same people are often reliant solely on superannuation. Rates are crippling many of those people and, as Rodney Hide explained, many of them are being driven to have to sell their homes.

The question is, does this bill address that problem? The answer is no, it does not address it. This bill limits the total level of rates, not the individual level. So if one part of a council’s region has value increases and another has decreases, then an individual’s rates could climb far higher than the limits set in this bill. Moreover, if a council’s area has significant growth—say, by 10 percent more properties over 3 years; and we think in terms of the growth in places like Tauranga—then it will not have the capacity to raise revenue for the additional costs, because it is limited down to the increase in the consumer price index plus 4 percent over the 3 years.

The second issue is Government-imposed costs. Will this bill rectify what our local regional council chairperson has referred to as incremental cost creep? The answer is no, the bill will not rectify it—very simply because of what Rodney Hide has already admitted. The bill allows for the Minister of Local Government to provide dispensation to go above the limits imposed by this sorry piece of legislation. Are we to believe that central government, having imposed additional costs on local government, will refuse dispensation to councils that ask it to accommodate those imposed costs? Of course not! Councils would push increases to the level that is allowed in this bill, add central government costs on top of that, and then go to the Minister and ask for a dispensation. That is exactly what has happened in New South Wales. I want to make the point that much of the additional bureaucracy within local government stems from the need to comply with central government directions. So every additional bureaucrat will be factored in as arising from central government’s compliance impositions, and will be added to the case for dispensation.

There is another important consideration. What happens when a local body seriously under-invests in infrastructural development over a considerable period of time? When that body is finally forced by circumstances to face reality—presumably with newly elected members, elected by people who have themselves seen there is a shortfall—then even if those people ask for increased expenditure on neglected infrastructure, the council will not be able to do it. The bill is nonsensical, and those who believe that sending it through to a select committee will enable an in-depth public analysis of the whole issue of local body charges are fooling themselves. Submissions will be confined to the very restricted concepts of the bill.

New Zealand First is calling for a well-resourced independent commission of inquiry, of the magnitude of the McLeod commission of inquiry into taxation, at central government level—and we will achieve it, unlike this bill, which will not be passed all the way through the House. Even if the bill passes its first reading tonight, I will make a bet—and I will lay money on this—that at a later stage in its process National will vote against it, because it knows that this bill is not workable in the real world. We believe that the only way the myriad of complexities surrounding the issue of rates will be unravelled in a truly independent fashion and the voice of the people will be allowed to be heard across the full range of issues—rather than playing silly political games that raise false hopes and have no possibility of satisfactory outcomes—will, in fact, be to have a fully fledged commission of inquiry into all the issues in terms of local body charges. Thank you, Madam Assistant Speaker.

METIRIA TUREI (Green) Link to this

The Green Party is opposing the Local Government (Rating Cap) Amendment Bill. We have received a large number of letters and emails about it and have given the issue very serious thought, because the matters raised by members of the community have been really serious. We understand that rates are increasing massively in some places. We know of areas where rates have increased by 300 percent and of cases where properties worth $22,000 are being rated as if they were worth $800,000. We certainly know, and have known for a very long time, that Māori have been increasingly forced off their land as a result of rates increases that make it simply impossible for them to continue living in their papakāinga areas. They are being rated highly and the increases are happening very quickly.

But we think we have to be very, very careful if we are to restrict the power of local government to raise the income it needs to manage the local infrastructure it is fundamentally responsible for managing. With a lower rating base, many crucial infrastructural projects, such as public transport, water, and waste management simply would not be affordable. And if that were to happen, the next step would be local government coming to central government to ask for more money to provide for those services, thereby driving up the general tax demand by central government. It is not a mechanism for finding the solution to the problems.

One really important issue for the Green Party is that the bill—and I think to some extent, though not entirely, the campaign behind it—is a diversion from the real causes of increasing land prices and the subsequent rates rises. I think if the ACT party were not so ideologically bound, as it is, to the whole mantra of economic growth above all else, its members might consider dealing with some of these underlying causes. One of those significant causes, a few steps back from local government, is the uncontrolled increase in foreign investment in land in this country, built on the relentless pursuit of unsustainable economic growth, which is helping to drive up land prices, particularly in coastal land and in Māori land. It is not even productive job-creating investment, it is just investment in purchase of land.

In 2004 the Overseas Investment Commission approved the sale of nearly 200,000 hectares of rural land to foreign investors. Foreign-owned land now covers more than one million hectares of New Zealand. Even the Financial Stability Report of May 2006 recognised that significant proportions of foreign capital are being invested and used for the banking sector in residential mortgage lending. So there are steps behind the rates rises that are helping to cause those increases and we need to be able to deal with those background issues rather than try to put band-aids on the problem. The fact is that there is no monitoring of this investment in New Zealand, nor any real monitoring of its impacts on New Zealand communities, such as those impacted by the issues that the ACT party is trying to resolve.

I recently went to a showing of a New Zealand - made film in Māhia called The Last Resort, and it is currently on at the film festival. It describes these processes and the background to them in great detail. It uses the example of the sale of the Blue Bay camp ground in Ōpoutama in Māhia. The council sold that camp ground—it was 60 years old—to the lessee who then sold it on to a developer. The developer has turned it into 44 sections worth hundreds of thousands of dollars each. The local hapū held an occupation of the adjoining reserve to try to raise consciousness about the impacts of councils doing this with community-owned land in order to help drive up the rate base. This increases the rates for all the houses around the area that are not worth hundreds of thousands of dollars and are owned by people who have been living there for generations.

These are significant issues for those people. I understand that ACT is trying to find a solution to these issues, but the fact is that unless we curb unsustainable growth that then leads to increased land prices, and therefore to the economic exclusion of ordinary New Zealanders, as we are seeing. We simply will not be able to stop the subsequent effects of that exclusion—rates rises and councils taking advantage of increased land valuations being one of those effects.

This bill distorts and distracts us from the real issues behind why these things are happening for local ratepayers, and we consider that we simply cannot support a bill that really only provides a band-aid approach and does not deal with the real issues. We would welcome the support of ACT and other members of this House to deal with those background issues if they are prepared to set aside their absolute adherence to unsustainable economic growth as the only option for this country, because that is in large part the problem. Kia ora.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) Link to this

E tautoko ana te Pāti Māori i ērā kaupapa ka taea e te iwi kia kitea i ngā mahi e mahi ana, e whakapono anō hoki te tangata, nāna nei ngā mahi. Ko tā te pire nei, he whakarerekē i Te Ture ā-Rohe 2002. Ko tāna hei whakapōtae kia kore e rahi ake ngā reiti kua tohungia e ngā kaunihera ā-rohe ki runga i te hunga e noho ana ki reira. Ko te tāhuhu kōrero mō ngā taake whenua ki a ngāi Māori kei a ia ōna piki me ōna heke, kia pēnei, kia pērā. I tērā atu rau tau, i kitea i ngā mahi nanakia a te tari taake, kia whakarahi ake te wāriu o te whenua Māori ki te whenua Pākehā, ā, i te kore utu i ngā reiti, ka tāhae te kāwana i aua whenua. Anei anō. i tērā rau tau i whakaitihia te wāriu o ngā whenua Māori i te rohe pōtae o Tainui kia taea a tauiwi te hoko i aua whenua. E mea ana a tauiwi, ko te take o tēnei tino iti o te wāriu, te kore wāriu anō hoki i te mea, he tini rawa ngā tāngata nā rātou te whenua. Ko ēnei ngā mahi tūkino a ngā ture wāriu whenua, ka nui te whakamā.

He rahi tonu ngā whenua Māori, horekau he tangata e noho ana ki reira, a, kāhore te whenua i mahia. Hanga pakeke ana te utu reiti mō ngā tāngata nā rātou ēnei whenua. Ko ētahi he rawakore, ko ētahi anō e kore hiahia kia whakamahia te whenua kia riro rawa rātou. Ko ngā take e pēnei ana, arā, ko te āhua o ngā tāngata nā rātou te whenua; ko te āhua o te whenua ehara i te whenua pai kia whakamahia, kia noho rānei te tangata, me te mea anō ko te whenua he whenua taratahi.

Kei Te Ture Kāwanatanga ā-Rohe 2002 he wāhanga hei tautoko i te Māori kia mahi i wā rātou mahi tawhito i aua whenua. Kia taea hoki e ngā tāngata whenua te whakahaere i ētahi mahi rawa i raro i te mōhioranga, kei reira anō he wāhi tapu.

Ko tētahi wāhanga o Te Ture Reiti i whakaritea kia ōrite te āhua o te whenua Māori, ki wērā atu o ngā whenua whānui. Engari, kua kite tātou i ngā tau kua pahure ake nei, kua piki haere ngā reiti o ngā whenua Māori, tata atu ki te whā rau te rere ki tērā o ngā whenua whānui a wētahi o ngā kaunihera. Ko te tikanga, mā te reiti ka ngaro anō hoki te tangata i ōna whenua. Koia nei te take, kāhore te Pāti Māori i tautoko i te “pūtea kotahi te utu”, mō ngā mahi nunui i raro i Te Pire Whakarerekē i te Ture Kāwanatanga ā-Rohe i te mea, he momo anō tērā kia whakarahi ake atu ngā reiti.

E tika ana kia wānangahia i tēnei kaupapa i tēnei rā i te mea, e wānangahia anō hoki e mātou ngā kōrero mō Te Tiriti O Waitangi i tēnei rā. Ko tā Pita Rikys: “Ko te tino whakaaro kia riro e te Māori i tōna mana i raro i te mana o te Tiriti, ā, kia tōtika tonu ngā tikanga me ngā kaupapa ka hangaia kia pono te mahi i muri mai o tērā.” Ko te whakapono a te Pāti Māori, kia ōrite te mana o te mana whenua ki te mana o ngā kaunihera ā-rohe i ngā wā e wānangahia ana kia reiti, kāhore rānei te whenua Māori. E whakapono ana mātou, mā te Māori, mā te iwi whānui hoki e whakaritea: ko te mahi whakapōtae reiti te ara tōtika; me whakatū tikanga hōu; me ū rānei ki ngā tikanga utu reiti o ēnei rā. Ko ēnei ngā tino kaupapa kia whakaarohia e te Māori: ko tōna whakapapa ki te whenua; me te whakaaro kia ū, kia mahitahi hoki i te whenua rā.

Ko tā mātou wawata mō te pire nei, kia puta mai te māramatanga, kia mārama te kite i ngā mahi e mahingia ana, kia kaua te tangata e kī, ehara nāna, nā tētahi atu, ā, kia hangaia he āhuatanga hei kī, ko te whenua, ko tātou. Me kaua tātou e wareware i te tūturutanga o te whenua ki te ao Māori. I te Kooti i te tau 1987, e mea ana Te Kaunihera Māori o Niu Tīreni i tona tautohe ki te :“Nā te whenua ka mōhio mātou ko wai mātou, i ahu mai mātou i hea, e haere ana mātou ki hea. He whakaaturanga kia mōhio ai te ao, he iwi mātou mai rāno, he tangata whenua o tēnei whenua, ā, he tohu anō i ngā kaupapa ā-iwi, whanaungatanga hoki. Ko te whenua te tūrangawaewae. Tērā te tohu o te wakapapa, te honohono ki ngā tūpuna kua ngaro atu, ngā rēanga kei te haere mai. He tohu tūturu mō ake tonu atu, mēnā he whenua, he Māori anō hoki.”

Anei ngā kaupapa e kawe nei e mātou i tēnei rā, ā, i ngā pire katoa kei roto i tēnei Whare. E tautoko ana mātou i te pire nei i runga i te whakapono, kia whai mana ēnei ture, kia whakaritea he kaupapa, kia taea e mātou te noho ki ō mātou whenua, hei tiaki i te whenua, ka taea te kōrero, āe mārika, ko mātou te tangata whenua. Kia ora tātou katoa.