Local Government Bill

It is a pleasure to see this bill back in the House after what has been a very long and thorough process by two select committees. If ever there was a bill that cannot be accused of being rushed through, it is this. The Local Government Act is outdated, it has been amended until it is like the proverbial axe with so many new handles and so many new blades, one has to ask if it is the same axe. It predates the Resource Management Act, which now prescribes much of the work of local authorities, and it predates all the international discussion about sustainable development.

Last year many people expressed their views in the review of the old Act. That process took many months, and it included many public meetings, submissions, and hui. After all that process, and almost exactly 1 year ago today--in fact I seem to remember it was the night of the premier of the The Lord of the Rings — it had its first reading in the House.

The Local Government and Environment Committee sat for many weeks hearing submissions and travelled to seven different cities. Nearly 400 submissions were dealt with, and we heard about 200 orally. People really participated in the debate and to a great extent the bill has been rewritten as a result.

The snap election came at a very unfortunate time. We had finished hearing submissions and going through the key issues in the bill and we had begun clause by clause consideration. The officials had done a lot of reports on the submissions and on responses to the submissions. We then had to adjourn for 3 months. We came back to find an almost totally new committee. Three of us had been sitting in hearings of the bill previously. I am aware of how hard it has been for new members to get up to speed with the bill. In particular, I want to commend Jim Peters and Larry Baldock, who are also new to Parliament, on the way that they have read submissions and done their homework and made substantial contributions at the select committee dealing with the issues, not the politics.

Some argued that we should begin again. That included, of course, all of those who disagreed with the bill and wanted to stop it or to delay it. We agreed to invite two key submitters with contrasting views that represented many others - Local Government New Zealand and the Local Government Forum, which represents large business, to present their views again and to answer questions, particularly from members who were new to the committee. Those who argue that we should start all over again as a year ago from now should reflect on how submitters would feel being asked to make all that effort again to travel to wherever we were sitting and to re-present their views as though we could not read, when in fact there is already a written record of what they said and what they wrote.

The conflict over this bill stems from two opposing views of what local government is. Those who do not like government of any kind wish to see local government as just another business - that is, a service provider that should stick to its drains and potholes. They would like to see it funded through a fee for service where one can identify how much of a service a person uses, and failing that, preferably by a poll tax on all citizens or, failing that again, a flat charge per property.

This bill is not founded on that philosophy. It sees local government as an essential level of elected democracy in its own right, able to engage in whatever services will benefit its communities, provided that it remains accountable to those communities. This accountability must be more than just the ballot box every 3 years.

The bill requires modern processes to allow citizens to participate in decisions. It must be said that local government has not always behaved in this accountable way and has not always sought the views of its communities. There are those who still believe democracy means electing people every 3 years, letting them get on with it, and throwing them out if they do not perform. A number of councillors argued in submissions that this is sufficient for a democracy; others wanted to be much more fully involved in the way their communities developed. This bill tries to provide opportunity for that sort of involvement.

The central argument about local government is also about who pays and how they pay. Most democratic countries have local, as well as central Government taxes, and some, like Australia and the United States, have three levels of taxation - that is, federal, state, and municipal. So New Zealand is not unusual in having both central Government and local government taxes. It does not seem to hold other countries back. What is unusual about the New Zealand tax system is the almost complete lack of any property, asset, or capital gains taxes. At central Government level there are none, and revenue is derived from expenditure: from income, transactions and profits. The only capital-related tax we still have is rates, which provide a balance to the taxation system overall. The argument is much wider than just how much a particular farmer pays towards the library, for example.

After careful consideration of submissions we have substantially re-written some parts of the bill, but we have not abandoned its central purpose. The general power of local government, curbed by various statutes and by accountability to its communities, remains, and so it should. We have, however, made some important improvements.

The world has just attended the Rio Plus Ten Earth Summit on Sustainable Development in Johannesburg. It is 10 years since the Agenda 21 principles of sustainable development were developed at Rio. It was not appropriate to let this chance go by without recognising that work at all, in the main statute governing local authorities in New Zealand. Sustainable development is hard to define because it is a process, rather than an end point.

We have not tried to define it legally, but it requires councils in promoting the social, economic, environmental and cultural well-being of their communities to take a sustainable development approach. This is later explained to include the need to maintain and to enhance the quality of the environment and the reasonably foreseeable needs of future generations. This brings the purpose of the Act closer to that of the Resource Management Act and closer to a lot of legislation in other countries that have already adopted sustainable development as an approach to managing resources.

A practical example of sustainable development was in the bill as introduced, and remains. Before the introduction of the bill I proposed to the then Minister Sandra Lee that we needed some guidance for water authorities considering new water supply or wastewater infrastructure. Under this bill all councils must do water assessments for their districts, and part of this assessment of future needs is to consider the full range of technologies and options, including on-site collection and disposal, re-use of grey water or storm water, and demand reduction strategies, including both water-saving technologies, and behavioural changes. I appreciate the way the former Minister took these ideas on board when the bill was drafted.

The bill as introduced prohibited the sale of water and wastewater assets, but allowed contracting out of the management of the whole system for up to 15 years. There is a great deal of concern among the public for what is seen internationally as creeping privatisation of water. Large international corporations have seen water as the key resource of the future, and are establishing a stranglehold over its production and sale in many countries. More than any other resource, if one controls a nation's water, one wields a huge influence over its Government and its people.

Most corporates have realised that they do not need to own the assets to do this. It is just as effective and much cheaper to control the key decisions of the organisation, which is what a management contract does. We have amended the contracting out provisions to restrict such contracts to operation of the system. Most people have no problem with contracts for the maintenance and running of the plant, as long as the key decisions on new water sources, water quality, and water pricing are kept under public control. That is what the clause now says.

The next issue to arise was public-private partnerships. Unlike roading, where they could not happen without new legislation, public-private partnerships are available now for water, and so we thought it appropriate to apply the same conditions for contracting out to public-private partnerships.

In concluding, I thank the members of both committees, who put in a great deal of work on this legislation. I thank the officials of the department who also worked extremely hard and became pretty stressed out. In particular, I thank, for their assistance, the staff from the Auditor-General's office and the Parliamentary Commissioner for the Environment, who attended throughout and made valuable contributions, and the officials of the committee itself: the committee staff went way beyond the call of duty in allowing us to get this legislation in, in time.