Second reading of Local Government Act 2002 Amendment Bill

I move, that the Local Government Act 2002 Amendment Bill be now read a second time.

Mr Speaker, local government is a crucial component of New Zealand’s economy. The 78 local authorities make up 4% of GDP, spend $7.5 billion per year of public money, and manage around $120 billion worth of public assets.

But behind these numbers the simple fact is that most New Zealanders are affected by the decisions and actions of their council on a daily basis, and are certainly affected when they receive their quarterly rates bills.

Because local authorities have such an impact on the daily lives of New Zealanders, and because they are charged with spending ratepayer money, it is vital that they operate in an effective and efficient manner.

This means being financially responsible, transparent, and accountable to ratepayers.

That is why the local government reforms being undertaken by this government are so crucial to New Zealand’s communities. The reforms will improve the operation of local government in New Zealand. They will focus local authorities on operating more efficiently and effectively by doing things that only they can do. The reforms will encourage local authorities to reduce red tape and compliance, minimise rates for households and businesses, lower council debt, and provide high quality infrastructure at the least possible cost.

Mr Speaker, these reforms are not about bashing councils, or imposing constraints on local democracy, as suggested by the opposition members:

• These reforms are about putting in place a framework that means New Zealander’s rates don’t continue to increase on average by 7% per annum as they have over the last decade. Over this period local government debt has quadrupled from $2 billion to $8 billion. These trends must be stopped.

• These reforms are about ensuring that ratepayers are not put in situations that Kaipara District Council ratepayers are currently in. Where a council with a population of 18,000 runs up debt of $80 million, and the community is left with crushing rates increases as a result.

• These reforms are about ensuring that communities can decide how they want to structure their local governance arrangements. Since 1989 no local government reorganisation has taken place under the existing rules. It is a nonsense to suggest that circumstances have not changed in the last 24 years, or that communities have not wanted change. The fact is that the barriers for communities to effect change have been too high.

Mr Speaker, this Bill marks the first phase of the Government’s programme for reform of the local government sector.

It amends the Local Government Act 2002 to refocus the purpose of local government; introduce financial prudence requirements; strengthen council governance; and streamline local authority reorganisation procedures.

The Select Committee received over 500 submissions on the bill from individuals, organisations, and local authorities.  The level of interest was significant.

I am therefore disappointed that the opposition members on that Committee turned down an offer to work constructively on this Bill and the disregard they showed to the many constructive submissions.

An offer was made by the Chair to put some of the contentious parts of the Bill to one side and constructively engage on the rest. Unfortunately this offer was not taken up. As a result, the Bill has returned to the house largely unchanged.

Because of the Committee’s inability to agree, I will be tabling a Supplementary Order Paper during the committee stages on the Bill that will pick up on many of the good ideas from submitters, and address the issues they raised.  These include making it easier for communities to exercise their vote in a poll by changing the petition requirements to needing 10% of voters in any affected territorial authority area, and to increase the number of days allowed to complete the petition from 40 days to 60 days.

Further amendments in the SOP will:

• provide clarity around the circumstances when the Government might consider using the assistance and intervention framework; and

• provide for a more flexible structure for communities to reorganise their local governance arrangements, should they wish to do so. The proposal will enable some regions to utilise a two tier structure that would deliver the most effective local governance for the community.

The few amendments the Committee has recommended clarify the Bill’s intent and improve its operation, and the Government will be supporting them.

Mr Speaker, one area of the Bill that the Government will not be proposing change is to the purpose statement.  I have carefully considered the differing views on this issue, but I firmly believe a more focused mandate for local government is necessary.

The intention is not to prescribe what local authorities can and cannot do, but rather to better define the appropriate scope of their activities.  Individual local authorities and their communities will decide what activities matter to them, and how much they are willing to pay for them.

The new purpose statement will encourage local authorities to take a fresh look at what they are doing and why – and to seek their communities’ guidance as to what their current and future needs are.

Mr Speaker, this Bill is an important milestone that will improve the efficiency and effectiveness of local government; it will provide the right settings for the local government sector to play its part in growing New Zealand’s economy.

It will deliver vital reforms to benefit our communities, businesses, industries and households for many years to come.

I commend this Bill to the House.