The rural sector is a significant contributor to our nation. From an economic perspective - Agriculture is the backbone of most of our provinces - and, it is one of the few areas where New Zealand leads the world. 

We are the 12th largest agricultural exporter by value. The success of New Zealand's agriculture is reflected in its value to our economy, making up around 12 per cent of GDP and over 12 per cent of employment. 

We are facing challenging times. This creates unique opportunities for local government in their relationship with the rural sector. 

However, local government generally does a good job, at times under difficult circumstances.

Today, we do have difficult circumstances.

To meet these challenges, Councils have to balance factors such as the public's rising expectations for more and better services with ratepayers' concern about rising rates. It can be difficult to satisfy both sides.

In this environment,
o Councils are exercising fiscal restraint.
o Council decision-making should be clear, transparent and accountable.
o The benefits of regulation should outweigh the costs.
o Central government should look at the impact of costs and burdens of regulation on local government, including the devolution of functions from central to local government.

Rates have been rising much faster than inflation. From 1 March 2001 to 31 December 2008, the Consumer Price Index (All Groups) increased by 23 per cent. The Consumer Price Index (Rates Sub-group) increased by 61 per cent over the same period.

This level of rates increases is unsustainable, particularly in the current economic climate.

The Government has received many hundreds of letters from ratepayers worried about their rates and council spending. Some ratepayers, particularly those on fixed incomes, are struggling to pay the increasingly higher rates set by their councils.

There are no plans to cap rates, but the development of a financial strategy for councils that provides straight-forward information on costs to ratepayers and the resulting service levels are being considered.

All councils recognise the need for restraint in setting rates. Some have already recognised that rates increases well above the rate of inflation are not acceptable in the long-term, and are proposing more modest increases. 

This is a promising trend that all councils should aspire to.

Councils can make efficiencies and savings by placing greater emphasis on finding ways to work cooperatively with each other to reduce unnecessary duplication and activities. 

This Government is determined to see that any rates increases are justified because they represent added value.

I am conscious that across New Zealand councils are well aware of these problems, and it is good to see that remedies such as the development of best practice are underway.

However, this information is not always shared across councils.

The Government will work with Local Government New Zealand to ensure all councils are conversant with best practice and, as a consequence, establish a regime of benchmarking, whereby councils and their ratepayers and residents can gauge for themselves the standards that are achieved by their local council.

This will result in councils being able to show that they give value for money, and for ratepayers to see they are getting value for money. The Government will encourage and work with local government to develop joint service delivery opportunities. Some Councils are already leading the way.

Local government legislative framework

Another area, I believe, where increased value can be obtained is in the mandatory consultation provisions of Local Government Act 2002. These provisions may be creating costs and delays. Officials have been asked to look at the consultation requirements in the Act. 

The scope and timing of the long-term council community plan process would be part of this work, but changes to processes will not be made while the 2009-19 long-term council community plans are being developed. 

There are some clear areas to look at, including:
o simplifying the main accountability documents;
o providing information in a useable form to improve transparency for voters and councils - for example, ‘plain English' financial information and information to enable voters to compare councils' performance.
o the auditing requirements for LTCCPs.

Council decision-making should be clear, transparent and accountable.

To achieve this we need a system that makes the debate about priorities clearer and easier for councillors and ratepayers. Ratepayers, voters and councillors need to be able to understand their council's performance more easily.

We need to achieve the goal of a more streamlined, efficient, and responsive local government sector. A review is underway.

This review has three related work-streams:
o long-term planning and financial management
o management of service performance, and
o accountability and decision-making.

I must note that this review is not about stopping councils from doing things. 

It is about giving ratepayers and citizens more tools to have a greater say in what is done on their behalf and with their money.

It is about simplifying processes, and ensuring that ratepayers and citizens have the right information to make informed decisions about what they want for their communities.

The benefits of regulation should outweigh the costs.

Some Councils have become very unnecessarily risk averse and are being overly cautious applying regulations and guidelines. This has led to higher costs for ratepayers and citizens, as well as barriers to development. 

Councils should be thinking about how to streamline processes, cut red tape and reduce compliance costs.

The Government is looking at ways to reduce councils' risk and at a more appropriate apportioning of liability; for example, in the building regulations.

The work on the Resource Management Act will also seek to streamline processes.

The Government is looking at the impact of costs and burdens of regulation on local government, including the devolution of functions from central to local government.

One way for central government to help local government hold down rates increases is to create an environment that minimises local government compliance costs. Reducing costs on councils will have the flow-on effect of reducing the financial burden on ratepayers.

The Government has identified the need to address the impact of costs and burdens on local government that come from central government as one of its priorities.

Consideration will be given to options for a more rigorous evaluation of functions that are being considered as additions to local government's role.

When the need for new functions are identified this Government intends to carefully consult with the local government sector before adding new responsibilities.

Review of regulations

The Minister for Regulatory Reform has started a wide-ranging review to cull unnecessary and outdated rules and regulations. 

Areas identified so far that could assist local government include laws covering swimming pools, shop trading hours and water drinking standards. 

We also need to have a systematic approach to continually reviewing existing regulations, to make sure that they are still relevant and implemented in the most efficient way. 

The Government has already announced reviews of the Resource Management Act and the Building Act. These Acts are seen by many as imposing unnecessary rules and regulations on citizens, and as adding to councils' costs.

Resource Management Act

Streamlining the Resource Management Act (RMA) is an important part of the Government's programme. Measures such as simplifying processes and removing the ability to make frivolous or anti-competitive objections to developments will help New Zealand's economic recovery.

The reforms are intended to provide an appropriate balance between a reasonable level of public participation, the need for councils to protect the environment, and the improvement of national infrastructure. 

The reforms will provide new measures to strengthen the environmental protection provisions in the RMA, as well as measures to speed up resource consent processes and plan changes.

Phase One will simplify and streamline resource management processes.

Phase Two will set up an Environmental Protection Authority, and put in place reforms for aquaculture, fresh water, urban design and infrastructure.

Building Act

The review of the Building Act will have a particular focus on bringing down regulatory costs associated with building, without compromising quality. 

The Minister for Building and Construction will be looking at ways to:
o simplify consenting and inspection processes to reduce compliance costs;
o remove unnecessary building regulation and focus on information and education, so people can make better informed decisions;
o use technology to improve efficiency and consistency within and between councils;
o better apportion risk and liability in the building sector; and
o develop an alternative approach to weather tightness, with greater emphasis on getting homes fixed.

I am also interested to shift the responsibility for construction from council to the industry.

For instance one of the tools we are considering is a home warranty system. 

This is a matter of getting developers and builders to stand behind their work and put things right where needed.
Infrastructure

The Government is committed to fixing the infrastructure problems that hold back New Zealand.

The Government is committed to targeting projects that will help build a higher performing economy. 

We will establish two new groups to help in achieving this - an infrastructure unit and a board with private sector and local government representatives.

The National Infrastructure Unit and National Infrastructure Advisory Board will be established to plan for, and rank, New Zealand's key infrastructure needs. 

The aim is to prioritise projects providing the greatest economic benefit and to help identify investment gaps and emerging infrastructure bottlenecks.

The Unit will provide advice on the Government's strategic infrastructure priorities.

The Board will provide direct advice to the Minister for Infrastructure as well as different perspectives for the new National Infrastructure Unit to draw on.

By the end of 2009, the two will create a 20-year, high-level blueprint of New Zealand's infrastructure priorities. They will then monitor its implementation and update it every three years.

Water standards

Some communities were rightly concerned at the possible cost of upgrading water supply systems to meet drinking water standards. 

Councils told the Government that the cost of compliance would significantly exceed the previous government's estimates, and this Government acted by placing a delay on requirements for communities to meet new drinking water legislation by three years. This will allow for a more considered approach.

As you have heard there is a broad array of reform work underway and officials are engaging with the sector and working with LGNZ on much of this work.

Councils are being encouraged to contribute to the ongoing work through this organisation. 

The Government acknowledges that there are real challenges in the current environment. But within the Local Government portfolio the opportunities for enhancing and strengthening the sector should still be grasped, as delay would only hinder prospects for growth and our nation.

Thank you for all you do. It is really appreciated.