11. PHIL TWYFORD (Labour) Link to this
to the Minister of Local Government
Does he stand by his statement that “given how these councils have been run I would be surprised if there wasn’t some ability to make savings”?
Mr SPEAKERBefore I call the Minister—[ Interruption] The noise on my right, on this occasion—from the Government benches—was so loud that I could not hear Phil Twyford, so I invite the member to repeat his question.
Does he stand by his statement that “given how these councils have been run I would be surprised if there wasn’t some ability to make savings”?
Hon RODNEY HIDE (Minister of Local Government) Link to this
Yes, indeed. The present Auckland councils’ combined operating budget is $2,000 million, and I am confident that the structure will ensure better value from rates and central government funding by reducing duplication and delays in previously intractable problems such as transport issues. Services such as administration, office systems, finance, human resources, and information technology will be integrated and streamlined. Each council now operates its own systems, so there are real savings to be made. Unified decision-making, better transport and infrastructure, and more efficient delivery of services will all contribute to a great Auckland region where people will want to live and do business.
Can he confirm that, under his third super-city bill, six of the seven council-controlled organisations planned for Auckland will be required to pay tax on council activities that are currently non-taxable?
We are still working through the tax details, but I can say this. Inland Revenue Department officials have advised the Minister of Revenue and me that there will be no increased tax exposure for the Auckland Council. Indeed, they advise that there will be less tax. For example—
I raise a point of order, Mr Speaker. I asked the Minister whether he can confirm that, under his third super-city bill, six of the seven council-controlled organisations would be liable for tax, and the answer so far does not address the question.
In fairness, I think the Minister said in answer that some of these decisions have not yet been finalised, but he then went on to advise the House of Inland Revenue Department advice that contains quite helpful information for the member, I would have thought. Had the Minister been political, I would have stopped him, but it seemed that he was being helpful to the House. If the member is now seeking the call to ask a supplementary question, I will let him do that.
Why did the Minister say that no decisions have been made on tax issues for the Auckland Council, when his third bill clearly makes six of the seven council-controlled organisations tax-liable; and is this not just another example of his rushed and shoddy handling of the super-city process?
Au contraire. Indeed, over $100 million of existing tax losses that are now stranded will be made available to the entire Auckland Council as a consequence of the work that I and the Minister of Revenue have done. I have been advised by officials that the tax savings for the entire Auckland region as a result of the restructuring is estimated to be about $10 million a year ongoing. If the New Zealand Herald told the truth, that would be its headline, because there will be tax savings for the new Auckland Council as a consequence of the work that this Government is doing.
Hon Jim AndertonAs the Minister seems to be relying on tax losses to make up for the extra tax involved in these council-owned companies, is the Minister aware that the Christchurch City Council runs its council-owned organisations at a significant profit, and that dividends of hundreds of millions of dollars are regularly made to offset rates charged in our city; if so, is he seriously telling the House that he and the Government are planning to run the new council-controlled organisations at a loss in order to prevent tax from being paid to the Government?
No, I am not saying that; I am saying that, tragically, there already is $100 million worth of losses within the structures of the Auckland councils that cannot be realised and is lost, and the new structure adds up to savings of $10 million a year for ratepayers. That is real money that will be saved. Indeed, the advice that we have had from the Inland Revenue Department officials is that there will be savings, in terms of taxes, of $10 million each and every year—I repeat for Mr Anderton—as a consequence of the restructuring. That is good news for Auckland.
Is it not true that even if we believe the Minister’s promise to make the council-controlled organisations tax-neutral, Aucklanders will still have to pay more under his plan in rates, water rates, and GST on rates, and, to top it off, $34 million in consultancy fees and executive salaries for the transition to a super-city they do not even want?
How is it fair for Aucklanders to pay all those extra costs when they have been given no choice on the super-city, when his council-controlled organisations will lock them out of decision making on three-quarters of the council’s operations, and when his local boards will have no powers to make by-laws?
Well, I am thinking, because I am trying to work out how to explain in a simple way for the member that the restructuring saves the tax liability of the Auckland Council to the extent of $10 million a year. I would have thought that was extraordinarily fair.
I raise a point of order, Mr Speaker. My question asked him about the fairness of Aucklanders paying the costs of the super-city while having no input into, and no decision making on, the outline and the shape of the super-city. He did not answer that.
I listened very carefully to the member’s question, because I feared that a point of order might be raised. The member made a series of statements in his supplementary question—a series of statements. How the Minister responds to a series of statements contained in a supplementary question is really up to the Minister. If the member wants detailed answers, he has to ask precise questions. Some of his colleagues could give him some lessons on that.