Hon Richard Prebble speech to the ACT Annual Conference; Barrycourt Accommodation & Conference Centre, Parnell, Auckland; Saturday, March 12 2011.
At 12:51pm on February 22 2011 an earthquake not only destroyed New Zealand’s second largest city, but set off a political aftershock that is going to have an equally dramatic impact on this year’s general election.
The electorate is realising that the issue of the election is how to pay the cost of the two earthquakes is now estimated at $15 billion by Treasury and $20 billion by Fletcher construction. Treasury concedes that its estimate does not include the personal costs of the earthquake. To most of us that is Jo Giles, who was a very popular ACT candidate who was killed in the CTV building collapse.
The news that whole suburbs of 10,000 homes will have to be demolished is giving us an idea of the scale of the disaster and the cost.
I doubt that my relative’s losses are in the Treasury estimate. In the first earthquake he lost his possessions when he was not allowed to return to the house he rented. In the second earthquake his new home was destroyed and he lost his most valuable possession - his van. He has lost his job as a contract cleaner because the central city is closed. He, and his wife and children, just own the clothes they are wearing and are now living with his mother-in-law in Wellington. None of his possessions were insured.
His case illustrates what the earthquake means to the nation: a huge loss of wealth. Assets that had taken 170 years to build are gone. The payouts by the Earthquake Commission will require the Commission to sell billions of dollars of assets. Every insurance-holder will be levied to rebuild the Commission’s reserves.
Even insurance is really a group savings scheme with a provision in certain circumstances for a payment. Insurance companies expect to make a profit. Insurance premiums will rise as actuaries re calculate the risk and, through significant increased premiums, we are all going to pay the insurance cost of the earthquake.
Then there is the uninsured risk of the Crown’s assets and council infrastructure.
An American friend of mine said he had worked out that, relative to the size of our economies, the Christchurch earthquake is 15 times larger than Hurricane Katrina – America’s costliest natural disaster, and no one thinks New Orleans is America’s second city. Six years later thousands of residents are still living in temporary accommodation.
New Orleans is what happens if we get our response wrong.
There is a political consensus that Christchurch must be rebuilt. There is also a consensus that there is no way the ratepayers of Christchurch can meet these massive bills. There the consensus ends.
No Party has yet been upfront with the electorate about the magnitude of the cost, or been realistic about how to pay.
We are facing one of the biggest challenges in our nation’s history.
We formed the Association of Consumers and Taxpayers because the two old Parties would not face reality and put up positive solutions to the problems facing the nation.
Someone has to say that things that were affordable on February 21 are not affordable today. That someone is us - the ACT Party.
Someone needs to spell out that on the day of the earthquake the Government spent $48,857,142 more than it earned. Not that the 21st day of February was, in that respect, an unusual day - the National Government has been borrowing $300 million a week all year and plans to continue to borrow until 2014.
Bernard Hickey has calculated that by the time the borrowing programme is complete it will cost $2.4 billion every year just to pay the interest. This calculation was done before the Christchurch earthquake.
When we add in the private debt to the Government debt, New Zealand has one of the highest levels of per capita debt in the world - right up there with the basket cases Ireland and Greece.
There was a view that we only had to worry about the Government’s debt. That cherry view was destroyed in a few hours just three years ago when the Australian Banks informed the Government they had $40 billion of short term borrowing and, following the collapse of Lehman Brothers, no lender was willing to roll the loans over without a guarantee from the Government.
Lenders are asking whether countries can ever repay.
When I started writing some notes for this speech I wrote that:
“The risk with the Government’s plan to borrow now and return to surplus later is not only is the global debt crisis not over there is other economic events that could affect our economy.
“History has taught us that as a small trading nation we are very vulnerable to economic shocks. These future shocks that will rock our economy can come from anywhere.
“The only thing we can be sure of is that these economic shocks will come from a direction we did not expect. The next economic shock could come before the next election”.
There have been two major shocks the earthquake and the oil price between my starting drafting this speech and its delivery.
We all know that in our households that we should put money aside for a rainy day. Government is no different. We will look back on the last three years and realise what we thought were hard times were actually good.
Someone needs to say that borrowing $300 million a week is reckless folly when the money is being borrowed to finance Labour’s spending programmes that National, in Opposition, said were wasteful, unaffordable and unnecessary.
The someone who needs to say that is us: the ACT Party.
Let me, as an aside, deal with the repeated claim that government spending is needed to sustain the economy.
There is no evidence here or anywhere ever that you can grow your economy by state spending. If it were true government would be easy. The Soviet Union would have won the Cold War. State spending has not boosted the New Zealand economy. The economy after four years of deficit spending and record export prices is in a technical recession.
This should be our issue.
We formed our Party because we know neither National or Labour can be trusted not to spend, borrow and hope. We are the low tax, small government party.
That’s our brand; that’s our purpose.
ACT may well be re-elected because we have a powerful tactical message. MMP means that National will need a coalition partner. The Maori Party, even before it started its meltdown, cannot provide stability. Peter Dunne will go with anyone who will give him one of the new Ministerial BMWs. ACT is the only Party that can provide a stable coalition partner to National.
Rodney Hide being elected to Epsom could well decide whether National forms the next government, and the voters of Epsom are the most sophisticated in the country.
But, as Rodney has often said: “we do not want to be elected just to make up the numbers”.
I was delighted to see our leader’s statement last week “Reprioritise, Rebuild”. Rodney Hide set out what should be our manifesto.
“Our second city is devastated…We are forced to make hard choices, to focus intensely on only the highest priorities – we need to face reality.
“Our starting point is not good. Our government has been borrowing $300 million a week simply to keep afloat. That’s almost $200 per week for each and every Kiwi household. And now we have Christchurch to rebuild.
“The middleclass wants free childcare. Students want interest-free loans. Pensioners want …gold cards.
“We could not afford that before the earthquake and we absolutely can not now.
Government must live within a budget as tight as the budget that ordinary households face”
No other Party leader would have made that statement. Rodney’s statement is why we need ACT.
Our creditors are going to demand that the government balanced the books and this day may come much sooner than anyone thinks.
Spend, borrow and hope is not a sustainable strategy. As Greece and Ireland have discovered a nation’s creditors can say almost overnight “We will not lend you any more”.
There are only three ways to balance the books, cut spending or increase taxes or do both.
Labour’s policy solution to every problem is to spend more taxpayers’ money. Phil Goff says he will finance Labour’s spending promises by taxing the rich. Labour is somewhat vague as to who is rich knowing that even the rich do not think they are rich.
Anyone who owns their own business, employs someone, gives professional advice, has a trade, they are the “rich” Labour is talking about. The people who live in Epsom are right in the bull’s-eye of Labour’s target. There is no electorate that has more at stake in this election than Epsom.
Just electing a National government is not going to protect Epsom taxpayers.
Epsom voters have been wondering “who are these people Phil Goff says have had huge tax cuts”. National’s tax changes were not designed to reduce the amount of tax raised. The fluctuation in the government revenues are caused by the recession not by tax changes.
The government is borrowing because under National government spending as a percentage of GDP has increased from 31.2% of GDP under Labour to 34.9 percent today. A National government has increased government spending as a percentage of GDP by a massive 10 percent.
Even with the income tax rate changes many households in Epsom are paying more tax today than they were three years ago. Epsom voters pay the increased GST. Owning a rental home is the preferred savings scheme in Epsom. Rental home owners have been hit hard by National’s tax changes.
Is it only me? Why should anyone be surprised that there is now shortage of rental accommodation in Auckland?
National’s change in depreciation rates for which there is no economic justification has resulted in many companies paying more tax this year than they paid under Labour.
Someone needs to say that. There is no scope to finance the Christchurch rebuild by increasing taxes.
Someone needs to say taxes do not become good just because the government has changed colour.
That someone is ACT.
There has been a debate in ACT since we started whether we are more influential inside government than out.
The real issue is that ACT must be able to speak out on our issue; the need to balance the books, reduce red tape and lower taxes.
The Free Democrats in Germany are a low tax, smaller government party like ACT. The Free Democrats are very out spoken on the need to reduce taxes and spending even though they are in government.
So I am delighted to see Rodney speaking out on our issue.
The electorate expects us to set out our program for the next three years.
We need to say that government must stop spending that does not meet any sort of cost benefit test such as urban rail in Auckland or roads of national significance that just happen to be in marginal seats.
To listen to the left all government spending cuts hit the poor. If government spending just benefits the poor how come after such a massive increase in government spending people are still poor? As Rodney pointed out in his statement gold cards for millionaires, interest free loans to the sons and daughters of the rich and free child care to high income earners does not help the poor. Cutting government spending is the way to ensure we all contribute to the rebuilding of Christchurch.
If we return to the level of government spending as a percentage of GDP before Labour took office we can easily rebuild Christchurch without new taxes or new borrowing and balance the budget. It is that simple.
Someone needs to say that. That someone is the ACT Party.
There are a lot of things that ACT can say that no one else will. Having over 50 billion in under performing assets and growing debt is absurd. The state’s businesses should be privatised not to repay debt but because government is hopeless at business. The Crown agency that monitors SOEs reports last year under a National government that the state’s businesses earn less than half the returns of the average public company that is a loss of hundreds of millions of dollars a year for taxpayers.
Some one needs to say we need to privatise the state’s businesses because it will result in low prices, better efficiency, more tax revenue and a wealthier New Zealand.
That someone is ACT.
Having taken three years to notice that the civil service is bloated I have little confidence that National will reduce the number of civil servants or tackle the problem that civil service terms and conditions are too generous. For over a decade government employees’ wages have been rising faster than the private sector.
Someone needs to say that we not only need fewer bureaucrats but their pay and benefits should not be higher than the pay and benefits in the private sector. That someone is ACT.
When asked for an example of how to stream line the bureaucracy the Prime Minister suggested amalgamating the departments of agriculture, forestry and fishing. When in business has the merge of three inefficient businesses resulted in one efficient slim business? The fact that the state unions think the merge has merit should be a warning sign.
Someone needs to speak out and say that the only effective way to reduce the size of government is for the government to stop doing things.
That someone is ACT.
Having taken three years to notice there are 300,000 able bodied people on welfare gives me little confidence that a re elected National government will tackle Welfare reform. John Key says it makes him feel squeamish. Someone needs to say that one of the most important principles of good government is “Do not pay for the things you do not want more of”.
That someone is ACT.
I think a re elected National government will decide it is easier to raise taxes than cutting spending.|
You can just see National having accepted the myth that rental home owners somehow got a tax break will next decide we need to increase taxes to be “fair”.
The Conservatives in Britain are taxing bankers in the name of fairness. There is no economic logic that says people in banking should pay a higher rate of tax just as there was no logic in saying rental businesses should pay taxes that other businesses do not pay.
Someone needs to be saying that the real solution is to grow the economy. Someone has to say that it is entrepreneurs that create jobs. If we want more new jobs then we need to tax the job creators less.
It is that simple.
Someone needs to say it.
That someone is us, the ACT Party.
We formed this party because no other party will say we need low flat tax.
I believe we can be rightly proud of our party and our MPs.
The reorganisation of Auckland is the biggest single reorganisation in our nation’s history, local or central. It has been accomplished in two years. It is the most remarkable achievement of the Key government.
Let me tell you something else that no MP will say. The reason the MPs hate Rodney is because Rodney Hide has ended the payment of parliamentarians by perks.
When Rodney first spoke out against MPs travel perk I said to him “Rodney you do realise that perks is how MPs are paid. The day will come when you are a minister and will need to go overseas. You are not paid enough to pay your own way. Be careful never to say that you will not use the travel privilege”.
Rodney promised me that he would never make such a statement. The media and the Opposition have been through every statement Rodney as ever made and they can not find a statement from Rodney saying he would not use the travel entitlement. If he had they would have told you again and again.
What killed the perks was a personal decision by Rodney not to accept the parliamentary travel entitlement and to repay the taxpayer for travel he was legally entitled to.
I have to confess as a retired MP when I saw Rodney had decided to take his stand I said “Dam, Rodney has just killed my travel perk. The parliamentary travel entitlement can’t last now one MP is paying it back”.
John Key may have signed the death certificate but Rodney Hide killed the travel perk. Much as it hurts me I am very proud of Rodney.
Just as I am proud of John Boscawen who was voted by the press gallery the most effective backbencher and is now being an effective minister. I am an open fan of Heather Roy. I have not forgotten David Garrett. He achieved more in two years than most MPs achieve in their total careers. His final achievement may be his greatest getting Hillary Calvert into parliament; she is going to be a future star.
Our MPs have spoken out on the issues ACT campaigned on; ETS, the anti smacking bill, three strikes and one law for all.
Which brings me to Sir Roger; Roger your output is amazing.
When I first visited Europe and saw the youth unemployment I said to myself: “How can any nation tolerate a system that results in a third of all young people being unemployed? At least in New Zealand young people can get jobs”.
We now have one of the highest rates of youth unemployment in the OECD. If we include the young people doing training courses because they can not find work we have the highest youth unemployment of any developed country - 62,100 young people between the age of 18 and 24 are unemployed. For those of you from out of town you travelled through Mangere to get here - 62,100 is more people, man woman and children that live in Mangere. It is a wicked waste of young lives.
Our young people are better educated than ever and more unemployed than any time since the great depression.
There is no shortage of work. There is just a shortage of jobs where employers can afford to hire an inexperienced, immature, young person with no work experience.
In some regions of New Zealand over half of all young Maori are unemployed because it is illegal to offer young people a job at what they are worth.
When I graduated with two degrees as a lawyer I had to find a barrister who would agree to take me as his pupil for no fee. It was a good deal for me to work for no pay because as anyone will tell you, I learnt more on the job than I ever did at university.
Who speaks out in parliament on the importance of young Maori getting that all important first job experience? Not the Maori Party. Not the Labour Party. The Greens want the minimum wage for an illiterate, innumerate, inexperienced and immature 18-year-old who was expelled from school lifted even further.
The man who has introduced a private members bill to let young people get that all important first job is parliament’s oldest MP Sir Roger Douglas. We are so proud of him.
They all deserve to be re elected.
As a nation we do not want to look back in six years like the people of New Orleans and say what went wrong? How did we drive our skilled people to Australia with high taxes? How did we borrow so much we have lost our credit rating? How did we put our grandchildren into debt? Why are thousands in Christchurch still in temporary accommodation?
It is vital ACT MPs are re elected.
I believe our best days are still ahead.
The consumers and taxpayers of New Zealand need an ACT party to speak for them now more than ever.
Hon John Boscawen speech to the ACT Annual Conference; Barrycourt Accommodation and Conference Centre, Parnell, Auckland; Saturday, March 12 2011
Good morning, ladies and gentlemen.
Welcome to our conference, and thank you for your support.
It is an honour and a privilege to stand before you this morning as a Member of Parliament, a Minister and the Deputy Leader of ACT – something I never dreamed of when, in March 1995, I sent away for a copy of ACT’s founding document ‘Common Sense For a Change’. I signed up as a volunteer soon after - that was 16 years ago.
Without a doubt, the state of our economy is the number one issue facing New Zealanders today. And with two tragic earthquakes the situation has just become a whole lot worse - and the need for solutions and political courage even more urgent.
I want to start with National’s proposed changes to our foreshore and seabed laws, which passed their Second Reading just this week and are set to become law within days.
Few New Zealanders understand the constitutional significance of the Marine and Coastal Area (Takutai Moana) Bill, nor the massive transfer of wealth it will facilitate to a select few from other iwi and non-Maori New Zealanders.
This Bill restores nominal customary title and ownership over the entire coastline and, as Tariana Turia and Pita Sharples correctly wrote in the ‘New Zealand Herald’ this week, “The Crown will now have to prove customary rights have been extinguished, instead of iwi having to prove they remain intact.”
Customary title will have commercial benefits similar to freehold title and, while public access must be guaranteed and the land cannot be sold, a title-holder will also be able to develop a plan that regional councils must - and I repeat must - recognise and provide for. This is a major benefit far exceeding any conferred by a freehold title, and is not available to all other New Zealanders. It breaks National’s 2008 election commitment of ‘One Law for All’.
It is unsurprising that few New Zealanders understand - or have even taken an interest in - what is happening. National has repeatedly perpetuated the fiction that the test for customary title requires continuous, exclusive use and occupation of an area since 1840 - despite knowing this is patently untrue. The Bill specifically allows for others to have used and occupied an area, and for the claimant group to maintain a charade of continuous and exclusive use and occupation.
I agree with Sharples and Turia when they say: “We have achieved amazing results in a short time.”
Now to the economy.
At the turn of the last century New Zealand was regarded as having the world’s highest standard of living. By the 1950s we’d dropped to fourth. Today we rank around 25th of around 30 OECD countries. We’ve suffered a massive drop in prosperity and living standards by comparison.
Today we borrow around $300 million a week – over $1 billion monthly – and following the earthquake this will only get worse. This can’t continue. We’re living well beyond our means.
Sooner or later, the countries lending to us will demand a higher rate of return to reflect the higher risk – or will stop lending and demand repayment.
Our social welfare system traps people, stealing their self-esteem, and disincentivises them through high effective marginal tax rates. We’ve added to that by scrapping youth rates and requiring 16 and 17-year-olds to be paid the minimum wage. The unintended consequence has been to deny thousands of young people the first step on to the employment ladder and instead force them on to the Unemployment Benefit.
We lead the world with the most comprehensive Emissions Trading Scheme, despite none of our four largest trading partners having such schemes. The Government is effectively taxing all New Zealanders $500 million annually for electricity and petrol, and paying this as a massive subsidy to foresters. The Government is giving away free forests to those smart enough to know how the system works.
We also have an interest-free loan scheme that incentivises students to borrow the most they can and locks them into debt. Little wonder that outstanding debt has increased from $5 billion-$11 billion over the past six years - all funded by foreign creditors. How much longer will this continue?
And we have a Government publicly committed to paying current superannuation to those aged 65 – despite the fact that people’s life expectancy and working lives are both increasing. This says nothing of the greater health costs, as a consequence of an aging population and improving technology. Surely we owe it to those approaching retirement to give them as much notice as possible of changes that can only be required.
Is it any wonder that over the past 20 years we’ve seen a mass exodus to Australia, where opportunities and incomes are greater? Today, Australian incomes are some 35 percent higher than here.
In 2008, ACT campaigned to eliminate this gap and ‘bring our children home’. Sadly, the 2025 Taskforce that was set up at our insistence has been largely ignored by National.
To date, the Government has done little to address these issues. Government expenditure continues to rise, we continue to borrow heavily from foreign creditors, and the Government has quickly dismissed unpopular solutions.
In his State of the Nation speech to Parliament in February 2010, the Prime Minister spoke of “unlocking access to our abundant natural resources” and “unleashing the untapped economic potential of New Zealand.” Sadly, National backed away from these goals.
ACT believes we can no longer afford to leave valuable resources in the ground. We must do all we can to maximise their value for the good of all New Zealanders.
Just one example of a major natural resource crying out for development is Southland lignite.
New Zealand has literally billions and billions of dollars worth of lignite – essentially low-quality water-logged coal.
The good news is that, far from lying in national parks, this lignite lies under Southland dairy farms. Better still, those dairy farms are owned by you and me - the taxpayer - through Solid Energy.
Given the state of the New Zealand economy, the world economic recession, Pike River, and two Christchurch earthquakes, there has never been a better and more important time to develop this than now.
Solid Energy CEO Dr Don Elder told me this week that the company has the capability and know-how to commercially develop this lignite into diesel and urea for fertiliser.
He advises me that, at today’s prices, New Zealand would be better off by around $2 billion per annum from the development of this resource. That’s just the difference between the cost of importing urea against what it would cost to produce it here. That’s the profit alone - the overall addition to GDP would be even greater.
It is a national imperative to develop this resource in the fastest way possible. New Zealand stands in ‘pole position’, and we need to move now to take advantage of those investors who want to help us develop this resource - before other countries get there first.
Incredibly, late last year, the Environment Commissioner recommended that these resources not be developed due to the carbon emissions that would purportedly be released. Solid Energy refutes these claims.
The Government must move to clear all the hurdles necessary to commercialise this resource – now. The reality is we simply can’t afford not to.
Ladies and gentlemen: in 1984 ACT co-founder and then Labour Finance Minister Sir Roger Douglas and his colleagues were confronted with a closed, over-regulated and bankrupt economy.
They seized the opportunity and displayed the courage and vision to make the bold decisions necessary.
Sadly New Zealand is again in a similar position.
Not only do we need to rebuild Christchurch, we need to rebuild New Zealand. We can no longer afford to continue to tinker around the edges. We need a bold government; one that will set out the problems, articulate the solutions, and show the political courage required to implement them.
John Key has said he doesn’t want to take the “big bang” approach that Sir Roger did in the 1980s, preferring a slower and more incremental approach. The time for that has gone.
It’s time for John Key and National to show the same political courage ACT’s co-founder displayed over 20 years ago.
It’s time to reform our economy and to save, and then transform, this country.
The time to act is now.
These are grim times for Canterbury. And for New Zealand.
Our second largest city is devastated. The people of Christchurch are enduring the hardest of times. Our economy has taken a huge whack.
The task ahead for New Zealand is big – we have a mountain to climb.
We can do it. We have done it before.
But we need to face reality. Something kiwis are good at.
We are forced now to make hard choices, to focus intensely on only the highest priorities.
Our starting point is not good.
We already faced serious problems before the February 22 earthquake.
Our Government is borrowing $300 million a week simply to keep afloat. That’s almost $200 a week for each and every household. We are broke. And now we have Christchurch to rebuild.
It’s not just Government.
As a nation we have built up overseas debt of $162 billion, 85 percent of GDP.
We have seen the economic and social turmoil in the most highly indebted European countries. The future has arrived for them. Those in deep trouble were the countries with the highest current account deficits, the highest overseas debt levels, the highest government debt levels. If you need to know what the future holds on our present track, just look at Ireland, Greece, Portugal, Spain.
2025 Taskforce Chair Don Brash summarised our dire predicament in a speech last month:
“Government spending as a share of GPD is now more than it was in any year of the last Labour Government, and the structural budget deficit is now bigger than it was under the Muldoon Government”.
Our debt and deficits are symptoms of deeper problems.
We all know that in a country of just over four million people, something is terribly wrong when we have around 350,000 people permanently dependent on welfare; when one in five kids are in benefit dependent homes; when sickness and invalid beneficiary numbers have increased by 70 percent in just a decade.
This year 60,000 children started school. On our present track, 16,000, or almost 30 percent of them, will leave unable to read or write adequately for a job. That’s despite 11 years compulsory schooling and a billion dollars of spending on their education.
For Maori children, that failure rate is almost 50 percent.
That it is not just a problem – it’s a calamity. We must address that failure.
Our economy and our society can’t afford that level of failure.
The ACT Party campaigned for over a decade, and finally passed, the Three Strikes legislation. Three Strikes will get the most violent repeat offenders off our streets. I am proud of ACT’s achievement.
But it’s not enough.
It’s tough for young people these days. It’s made especially tough for those who can’t read and write and who have only ever lived in a community dependent on the state and a background of crime.
If we are to truly make our streets, our places of work, and our homes safe, we need to reverse intergenerational welfare dependency and provide every young child with the skills they need in the 21st Century to provide for themselves and their family.
It’s tough being among those who Helen Clark labelled rich too. Constituents say to me they feel government policy attacks middle income families, the families that are hard-working and self reliant, the families that do it right.
If you are on a benefit or low income, then the support keeps coming regardless how many children you have.
But if you take responsibility for yourself and your family – if you acquire skills, work hard so that your income rises, and you only have more children when you can afford them – then somehow you become the mug in the system. You pay for more than your share, and get little back in return.
Under the Working For Families system, middle income families find themselves with marginal tax rate of 53 percent (the 33 percent band plus an additional Working For Families abatement of 20 percent).
So despite all the care, all the diligence, all the hard work that has got you into the broad middle income bracket in this country, you are scarcely any better off. What then is the point of doing some overtime, of working harder or getting a promotion? You get to keep less than half of what you earn.
That is how our tax and benefit system destroys the incentive to get ahead from your own efforts.
Families that exhibit every day the traditional kiwi values of personal responsibility and self reliance – which are core values to the ACT Party – are the ones that get hammered in our tax and benefit system.
And they aren’t the rich. Not by any means. So many of them are doing it real hard.
Think about what these families are up against.
Because they care about their children so intensely, if their local school is not up to scratch they look for an alternative school.
If it is an independent school, they get little credit for the taxes they have paid, so end up paying twice.
Or they might decide to relocate into a zone with a better state school, but then they will have to pay more for their housing.
To look after their family, they might take out health insurance and again end up paying twice, by removing some of their health cost burden from the state.
As one woman said to me recently, “you do everything right, but you end up paying twice. It’s just not right.”
And she is right.
It’s not right.
It’s wrong. It’s unfair. It’s inequitable.
We need to support and reward personal responsibility. Not punish it like we do now.
In 2008, ACT set the goal with the Prime Minister of catching Australia by 2025. Our aim was to boost jobs and to boost wages. We set up a Taskforce to measure our performance and to recommend what was needed to close the gap.
That Taskforce in 2009 estimated Australian incomes on average to be at least 35 percent above those in New Zealand. They made some modest recommendations to boost our economic reforms. That National part of the Government rejected them as too politically tough. The gap has now undoubtedly widened and will continue to widen.
We should not be surprised that the ‘New Zealand Herald’ recently reported that there was a net loss of almost 22,000 kiwis to Australia last year. The Kiwi diaspora looks likely only to worsen. The second 2025 Taskforce report predicted on our present path a loss of over 400,000 over the next 15 years. We cannot afford to lose our best and brightest at the rate of a hundred per day.
We need to implement the 2025 Taskforce reforms. We simply can’t afford not to.
We pay a lot of attention to the polls in New Zealand. We need to pay a lot more attention to the kiwis voting with their feet.
We have a big challenge. Let me cover just two policies ACT is working on this year to reverse our country’s fortunes.
First is getting government spending under control.
The reason we have so much wasteful, pointless and counterproductive government spending is that politicians have every incentive to spend more, and promise too much, and no incentive to save money, cut programmes, and eliminate departments and agencies.
The middle class want free childcare. Students want interest free loans. Pensioners want pensions and gold cards. On and on it goes.
Every interest group wants their own government department or agency. Helen Clark perfected the art of spending money on key interest groups to keep and to hold power. Through Working For Families she reduced hard working kiwis to taking government handouts. National, anxious to hold the middle ground, aren’t prepared to reverse the spending promises.
To control government spending, we need to change the political dynamic. That’s what ACT’s ‘Spending Cap (People’s Veto) Bill’ does. The Bill caps real spending per capita. If any government wants to increase spending, they will have to seek the consent of the people through referendum. That’s only fair – it’s the people’s money after all.
The Bill changes the political spending dynamic. The total amount of government spending is set by the people, not by politicians bit by bit pandering for votes to a multitude of special interest groups. The general good gets to prevail over narrower self-interest and government must live within a budget set by the people.
It’s modest enough. It’s not a cut to spending. It’s just holding it in real terms.
ACT’s ‘Spending Cap (People’s Veto) Bill’ will make a huge difference to New Zealand’s economic fortunes and to jobs and to wages. As the 2025 Taskforce showed, if we had held government spending at 2004 levels (as a percentage of GDP, not even real terms) the top personal and company rate of tax would now be 20 cents in the dollar. That would be a huge boost to investment, to entrepreneurship, to jobs and to wages.
The second area ACT is focussed on is cutting red tape. Our regulatory environment is extremely low quality, and a huge barrier to growth in New Zealand incomes.
Regulation overrides commercial solutions, creates huge cost and uncertainty for business, diverts energy into political lobbying instead of market performance, reduces the competition it pretends to promote, and deters badly needed foreign investment.
ACT’s ‘Regulatory Standards Bill’ serves to change the political dynamic when it comes to law-making. This Bill has three simple ingredients: it sets out the principles that all good regulation should comply with - that’s the benchmarking mechanism; it requires Ministers and officials to tell us if their legislation breaches these principles and, if so, to explain why - that’s the transparency mechanism; and it allows private citizens to seek a declaration of incompatibility from the Courts - that’s the incentive mechanism to ensure Ministers and officials behave.
We need this Bill, because politicians have next to no incentive to legislate with proper consideration and due regard to good principles. We face enormous pressure to regulate in haste, with little scrutiny of alternatives, and few tests against fundamental principles of good government.
Let me give just one practical example. National campaigned in the last three elections on a commitment to one law for all New Zealanders. Despite that, National with the Maori Party in November 2009, gave non-elected Maori voting rights on Auckland Council Committees dealing with natural and physical resources. There was a considerable outcry when people realised what had been done.
The ‘Regulatory Standards Bill’ wouldn’t stop a Government or a Parliament doing this. The Bill does not over-ride Parliament’s sovereignty. But it would require the Minister and officials to tell the public that is exactly what they are doing and why. The Bill does ensure transparency and accountability – long overdue in law-making.
The ‘rule of law’ principle in the Bill states that laws and regulations should ensure that “every person is equal before the law”. Clearly provisions that give some members of the community – especially unelected officials – specific control rights over resource management are not compatible with the principle of equality.
Any government proposing a Maori Statutory Board, or similar arrangements, in future would need to inform Parliament and the public that their laws would be incompatible with equality before the law. And that Government would have to clearly state why violating the principle was necessary and in the public interest. Voters and other MPs would be able to make their own judgements as to whether the Government’s justification was reasonable.
I believe that we would not have had the debacle that we had with the Maori Statutory Board on the new Auckland Council if we had had the simple transparency that ACT’s ‘Regulatory Standards Bill’ provides.
The ACT Party will be working hard on these two Bills this year. They are critical to New Zealand’s future economic success.
ACT’s wider plan through to the election and beyond is very straightforward.
Our mission statement in 2005 was to survive.
Our goal last election was to ensure a centre-right government and to nudge the Government to do the right thing. That is what we have done.
ACT’s success was crucial to a change of government in 2008. That’s the nature of MMP. If ACT hadn’t succeeded in Epsom, and secured five MPs, Helen Clark would still be Prime Minister. It was the people of Epsom who ensured the John Key-led Government. On election night I was able to pledge ACT’s support for National. The Maori Party’s choice was whether to join with National or be in Opposition.
If it wasn’t for the people of Epsom the Maori Party would have backed Labour. The best we could have had would be a John Key-led Government utterly dependent on the Maori Party. That would be a far different Government to the one we have now.
ACT in the last two years has built up experience and trust working with National in Government. We our proud of the policy difference we have made. The 2025 Taskforce, Three Strikes, the 90-day trial period for all firms, sorting out Auckland’s governance, the Productivity Commission, and the work to open ACC up to competition.
That’s all because of ACT. But it is not enough.
We have a National-led government because of ACT. And we have a better Government because of ACT. But the difference ACT has made is not enough to reverse New Zealand’s economic fortunes.
That’s what this year’s election is about. This election is about the future direction of the country. It’s about jobs and wages.
And ACT’s success is essential for our country’s success.
Please reflect on this. ACT has five MPs. If ACT had just three more, not a big ask, just a couple of percentage points in the vote, there would be no ETS, no foreshore and seabed legislation, no more racially divisive and separatist legislation, and the 2025 Don Brash Taskforce would in large part be implemented, not rejected out of hand.
That’s the crucial difference a party vote for ACT makes.
That’s ACT’s mission statement for the next four years: to reverse New Zealand’s economic decline. ACT has delivered on our mission statement for the previous three years.
It’s up to us in ACT to explain and to convince New Zealanders of the importance of a party vote for ACT and then it will be up to the people whether ACT delivers for the next four years. That’s the nature of our democracy. ACT needs eight or more MPs to deliver.
This country has a big job ahead. We need to rebuild Christchurch. We need to rebuild our economy.
Each and every one of us has to step up to the challenge. We all have a vital role now to play.
ACT is stepping up to the challenge. We are on the road this year challenging kiwis to do likewise. We know kiwis can do it. So do you.
Hon John Boscawen speech to the Penrose Rotary Club; Ellerslie Events Centre, Ellerslie Race Course, Ascot Avenue, Remuera, Auckland; Tuesday, March 1 2011
Good morning, ladies and gentlemen.
Thank you for your invitation to speak today and thank you, Angus [Fletcher], for your introduction. I also wish to acknowledge my Parliamentary colleague, good friend and member of your club Sam Lotu-Iiga.
As Angus said, I am the Minister for Consumer Affairs and the Associate Minister of Commerce. However, under the Confidence & Supply Agreement negotiated between ACT and National immediately after the last election, ACT Leader Rodney Hide – the Minister of Local Government – and I are free to comment critically on Government policy that falls outside of our immediate portfolios. It is only when we speak as Ministers on behalf of the Government that we are required to articulate and support Government policy. Today I speak clearly as the Deputy Leader of the ACT Party.
When I was first invited by Angus to speak at the end of January, my mind immediately turned to the Marine and Coastal Area (Takutai Moana) Bill currently before the House. This Bill repeals the Foreshore and Seabed Act and puts in place a regime for the granting of Customary Title over the foreshore and seabed – now renamed the common marine and coastal area. Those granted Customary Title by negotiation, or awarded it by the courts, will achieve rights akin to freehold title and potentially better – including an absolute right of veto on any resource management consent application over a Customary Title area.
ACT believes that this Bill will have huge constitutional significance, and that very few New Zealanders understand its far reaching significance. This will only become apparent once the Bill is passed in the same way that Aucklanders – and, indeed, all New Zealanders – only woke up to the significance of the Maori Statutory Board and its ability to appoint non-elected voting members to Auckland Council committees recently, despite the fact this was initially reported on by the ‘New Zealand Herald’ over a year ago in December 2009.
Over the past four months, my colleague Hilary Calvert and I have led ACT’s opposition to this Bill. However, I have decided to use this opportunity to talk about wider issues.
The past week is one that will remain in our national consciousness for generations to come. The Christchurch Earthquake will forever be a part of New Zealand history. Christchurch has changed. New Zealand will change – potentially forever.
But out of misery and destruction comes opportunity; an opportunity to rebuild, not just a city but, a country. It remains to be seen whether New Zealanders are prepared to take the bold and courageous steps that are needed to rebuild this country; a country that started to break many years before the earthquake.
To see this, one only has to realise that at the turn of the last century New Zealand was regarded as having the highest standard of living in the world. By the 1950s we had dropped to fourth. Today we are ranked about 25th of the 30-odd countries making up the OECD. New Zealand has indeed suffered a massive drop in its prosperity and its standard of living by comparison.
Had I been speaking to you this time last week, I would have told you that the economy is the key issue facing New Zealand today. I would have told you that the New Zealand Government is borrowing around $300 million a week – over $1 billion a month – and that this simply can’t continue.
Sooner or later, the countries lending to us will demand a higher rate of return to reflect the higher risk – or, worse still, will stop lending to us and demand repayment.
Notwithstanding the Government’s moves to restrict the growth in expenditure, it is still spending over $1 billion a month more than what it takes in taxes.
Few people appreciate that, in the year prior to 2005 – before Labour went on an election-winning spending spree on extensions to the interest-free student loan scheme and Working for Families, and other projects of dubious merit – government expenditure was 29 percent of GDP. Today it is 36 percent of GDP. If New Zealand could just simply reduce government expenditure back to where it was in 2005, at 29 percent, we could have an economy boosting flat tax regime of no more than 20 cents in the dollar. One only has to look at the booming Asian economies – such as Hong Kong and Singapore – to see the advantages of getting the incentives right and encouraging people to work and to save.
I would have also told you that we have a social welfare system currently supporting over 360,000 beneficiaries and their families on benefits – such as the Domestic Purposes Benefit, Sickness Benefit, and Unemployment Benefit. This excludes those on National Superannuation. ACT believes we can no longer afford a system that has entrenched an attitude of entitlement and intergenerational welfare; welfare that traps people, robbing them of their self-esteem, and disincentivises them against returning to work through high effective marginal tax rates and abatement rates.
I would have also told you that over the past 20 years we have seen a mass exodus of our citizens to Australia, where the opportunities and incomes are greater. Today, incomes in Australia are some 35 percent higher than in New Zealand.
At the last election ACT campaigned on ‘bringing our children home’ and laid out in our comprehensive 20-Point Plan policies to eliminate this income differential by 2020.
National also campaigned to reduce this income differential, and ACT was successful in getting National to agree to setting up a special task force to consider and recommend sound economic policies to achieve this. National’s aspirations were not as great as ours, so we compromised on a concrete date of 2025, and the 2025 Taskforce under the Chairmanship of the former Reserve Bank Governor and National Party Leader Don Brash was established. Sadly, a lot of what this group has recommended has been dismissed.
I would have also told you that we have an Emissions Trading Scheme (ETS) that effectively operates as a massive tax on electricity and fuel and raises around $500 million per annum which the Government is effectively giving to foresters.
ACT strongly opposed this scheme and I addressed over 45 public meetings throughout New Zealand – from Dargaville and Whangarei in the north, to Gore and Invercargill in the South. From those public meetings the most common question asked was: “where does the money go?” Because most simply didn’t know and were horrified when I told them.
You may be aware that Europe as a whole has an Emissions Trading Scheme. But you may not be aware that the scope of that scheme is much narrower and less comprehensive than New Zealand’s – even before we include agriculture, which is due to come into the ETS in 2015.
You may also have thought that New Zealand must be seen to be ‘doing its bit’ to protect our clean green image. What you may not have known is that our four largest trading partners – Australia, China, the US and Japan – don’t currently have an ETS and that, rather than being a fast follower as the Government promised when in Opposition, we are leading our major trading partners. I acknowledge, however, that Australia last week announced plans – albeit vague – to price carbon.
The Government is essentially taxing you and me an extra $500 million a year to give away as free forests.
You may be aware that foresters earn carbon credits, and that they have to surrender these credits when their trees are felled. But you may not be aware that not all credits are surrendered immediately when the trees are felled – and for a pine forest the scientists have calculated that for every hectare of trees, 300 of the 800 tonnes of carbon sequestered is released in the 10 years after the trees are felled as the roots rot and the twigs and branches on the forest floor decay.
But a forester who immediately replants his forest is able to offset the deferred repayment of credits against the gains from the new forest. This essentially means a forester gets a one off gain of around 230 tonnes of carbon or on current market valuation a one off subsidy of around $4500 per hectare. This is more than enough to meet planting costs of $2000 per hectare for a pine forest and the cost of hill country land. So while some people celebrate the fact that we lead the world with an ETS, few appreciate that the government is essentially giving away free forests to any smart business person who understands how the scheme works.
And the National Party response to this – they are proud of the fact that under Labour electricity would have gone up by 10percent rather than 5percent and that petrol would have gone up by 7 c per litre rather than 3.5 c per litre. In doing so, they have done nothing about the massive subsidies going to foresters.
I would also have told you that we have the most generous interest-free student loan scheme in the world, one which incentivises every student to borrow the most they can – irrespective of their circumstances. And then allows the value of this debt to erode in real terms over the many years it is paid back, if it is paid back at all. And we are prepared to allow this to continue, year after year, despite the fact that our foreign creditors are funding it.
My colleague Sir Roger Douglas is fond of telling the caucus you have to get the incentives right. If you incentivise people to borrow interest free and then repay those debts many years later in devalued dollars, don’t be surprised if that is what they do!
Over the last six years outstanding student debt has risen from $5 billion to $11 billion. The time has come to stop tinkering around the edges as the Minister for Tertiary Education has been doing.
I would also have told you, that following the previous Labour government’s move to abolish youth rates and require employers to offer 16 and 17 year olds the adult minimum wage of $12.75 per hour, soon to be $13 from 1 April, rather than their economic worth, youth unemployment has exploded. The Canterbury University economist Eric Crampton has calculated that there are approximately 12,000 more young people unemployed than there would have been had New Zealand retained youth rates.
In opposition the National Party strongly opposed this because they could see what has actually happened. Employers faced with paying an inexperienced younger worker or the same wage to someone older and more mature have simply chosen the latter. The youth then, have been left to languish on the scrap heap.
Parliament has legislated to prevent them from getting employment at $8, $10 an hour and has decreed they should be paid the unemployment benefit of $5 an hour instead. What might surprise you however is that the Minister of Employment, Kate Wilkinson, who so strongly opposed this in opposition voted with all her national colleagues against Sir Roger Douglas’s Private members Bill to reinstate youth rates and to give young 16 and 17 year olds an opportunity to reach the first rung on the employment ladder.
I would also have told you about the opportunity and indeed, the desperate need to better exploit our natural resources. While we are not as well-endowed as Australia in this regard there is much we can develop to increase our prosperity and raise our living standards.
During my time on the Commerce Select Committee I was privileged to hear from Dr Don Elder, CEO of the government owned Solid Energy. On the first occasion Dr Elder explained that New Zealand has literally billions and billions of dollars of high quality lignite in Southland – basically water-logged coal. Not only that, rather than sitting in a national park, these resources are lying under dairy farms in Southland and better still these dairy farms are owned by you and I the taxpayer. I was dumbfounded and completely unaware of this very valuable undeveloped resource.
Dr Elder also explained that this lignite is of a very high quality and has some 15 units of energy per tonne, compared with 5 units of energy for low quality lignite and 24 units for good quality export grade thermal coal.
Since that first meeting Solid Energy has continued to work on commercialising these resources. Three trials are currently underway to make synthetic diesel, urea and briquettes.
You might be surprised however, that late last year the Commissioner for the Environment released a report and recommended that these resources not be developed on the grounds of the carbon emissions that purportedly would be released. The Green Party has a similar view.
Solid Energy refutes these claims but regardless, we would be naïve to think that China won’t source the coal it needs for its thermal power stations from other countries. To my mind, we are not only stupid to think that we shouldn’t develop these resources, we have no choice.
We also have massive reserves of iron sands. Some of these, off the western coast of the North Island are currently being prospected by Fortescue Minerals of Australia. I am advised that the last Labour government accepted a royalty of the higher of just one percent of revenue, or five percent of the profit. We need to become far more commercially savvy in negotiating such agreements.
And, sadly, I would have also told you about a National-led Government that – in the eyes of the ACT Party and an increasing number of National supporters – is moving far too slowly in addressing the key economic issues that are facing our country.
Ladies and Gentlemen, that is what I would have said to you last week.
However, the problems facing New Zealand, and not just Christchurch, have just become a whole lot more serious, and the need for solutions far more pressing. We can no longer afford to continue to tinker around the edges.
Firstly over 200 lives have tragically been lost and the hopes and dreams of the whole city shattered. Cantabrians have lost loved ones, their homes, their jobs and their businesses. It is impossible to put a financial cost on this human loss and suffering.
Secondly there is a real cost in rebuilding the city. We face a very, very serious situation in Christchurch. Destruction in our second largest city is on a scale that few can simply comprehend – whole blocks of the CBD has been destroyed or will need to be demolished because they simply cannot be made safe.
Reconstruction will cost billions of dollars - funded in part from insurance companies, both domestic and international; secondly from central and local government; and thirdly private sources.
In the last week alone we have seen tens of thousands of Cantabrians leave Christchurch. While many of these people will be leaving only temporarily some will never return.
People who have lost jobs and businesses will need to search out other ways to support their families. While government will rightly come to the aid of the unemployed for many this will be but a fraction of what they earned before the earthquake.
We need to face the fact we are likely to have an even greater number take their skills to Australia and further a field and are likely to be a permanent loss to New Zealand.
The Government needs to come up with innovative ways to keep these people here and to attract other New Zealanders who are currently overseas to return.
Far from increasing taxes as some have proposed to pay for this tragedy now is the time to take a good hard look at government expenditure and cut taxes to ensure there is an even greater incentive for New Zealanders to stay in this country and others to return.
The fact is that this is an opportunity that we cannot afford to miss.
In 1984, ACT founder Sir Roger Douglas – then Labour Minister of Finance – was confronted with a closed, over-regulated and protective economy. An economy that subsidised farmers to raise sheep on marginal land that no one wanted and then paid for that with prohibitive marginal tax rates. New Zealanders were taxed at 66 cents in the dollar – which sapped the incentive to work. Looking around the room this morning I can see many who will remember losing $2 in every $3 of their marginal income.
In the face of an economy dominated by the so-called ‘Think Big’ projects, Sir Roger Douglas – backed by the likes of Richard Prebble, David Caygill, Mike Moore and others – set out clearly the problems we confronted and articulated what they believed to be the solutions and then showed immense political courage in implementing them. In doing so they saved New Zealand – from the sort of fate we see now in countries like Spain, Portugal, Ireland – and laid the foundation for strong recovery in New Zealand through the 1990s.
Sadly, however, he was interrupted. Following the now infamous ‘cup of tea’, Sir Roger’s reform programme was brought to a grinding halt – only briefly being resurrected years later under the stewardship of former Finance Minister Ruth Richardson.
Sir Roger’s reforms changed our lives. And, this week, so too did the Christchurch Earthquake. New Zealand will struggle to grapple in the aftermath of this national tragedy and our lives have changed in ways that we cannot yet even begin to comprehend.
Now is the time for John Key and the National Party to show the same political courage ACT’s co - founder displayed over 20 years ago.
Now is the time to explain to New Zealanders why we have no alternative but to reform our economy and to first save and then transform this country.
John Key has previously gone on record as saying he didn’t want to take the “big bang” approach in the same way that Sir Roger Douglas did in the 1980s. Instead he preferred a slower, more incremental approach. Obviously with National polling so well, many people agree with him.
However ACT believes the time for that has come and gone.
If we were borrowing $300 million a week before the earthquake, one can only guess what we will be borrowing after it, clearly income tax revenues from Canterbury businesses and indeed the whole country will fall and social welfare payments will necessarily rise.
The time to act is now.
Thank you for the opportunity to speak to you today.
Hon Rodney Hide speech to the First Reading of the Regulatory Reform (Repeals) Bill; Parliament; Thursday, February 17 2011.
Mr Speaker I move that the Regulatory Reform (Repeals) Bill 2010 be now read a first time. At the appropriate time I intend to move that the Bill be considered by the Commerce Select Committee.
Today I present to the House the Regulatory Reform (Repeals) Bill. The bill repeals 31 Acts that have been identified as no longer required, obsolete, redundant or spent.
The bill forms part of the commitment made by this Government to improving the regulatory environment in New Zealand outlined in the Government Statement on Regulation. This sets out the Government’s commitment to:
- Introduce new regulation only when satisfied that it is required, reasonable and robust; and
- Review existing regulation in order to identify and remove requirements that are unnecessary, ineffective or excessively costly.
Ensuring that the statute books contain regulation that is easy to use, up to date and fit for purpose is key to a quality regulatory environment. The Regulatory Reform (Repeals) Bill will help achieve this by clearing the statute books of some unnecessary and spent Acts without having to proceed with a repeal act for each of the 31 separate pieces of legislation.
The use of a singular repeal act to repeal multiple acts is not unique to New Zealand. The United Kingdom has utilised legislation to repeal and amend a number of Acts and the Commonwealth Government of Australia has a regular Statute Law Revision Act.
Each of the Acts put forward for repeal via this bill has remained within the stock of regulation for New Zealand even though each item is, for all intents and purposes no longer live. None of the Acts are currently in use and their removal will not affect any party.
The bill contains four clauses. The first two clauses cover off the title and commencement of the legislation. Clause three repeals the Acts specified in the schedule to the bill. Clause four provides for the Regulatory Reform (Repeals) Bill to itself be repealed 28 days after the date on which it comes into force. It thereby removes the need for future Repeals Bills to have to repeal their predecessors.
The Regulatory Reform (Repeals) Bill provides a timely and cost effective method of collectively repealing spent Acts without having to proceed with a repeal act for each of the 31 separate pieces of legislation. Without this bill, the spent Acts may continue to sit in the statute book which creates unnecessary clutter and may potentially create confusion for users of legislation.
The Acts put forward for repeal have been identified by Ministers from seven portfolios and have been identified by through a number of avenues including through the regulatory scanning exercise. The Government asked agencies to undertake scanning of their legislation as part of the commitment this Government has to the Government Statement on Regulation: Better Regulation Less Regulation.
Many of the Acts contained within the bill are Acts that agencies have known they had on their books but had not yet had the opportunity to repeal. The Acts put forward for repeal in the bill range in dates from 1884 to 2003 indicating that time is not necessarily a factor in identifying when an Act will become obsolete.
I do not think that our work in getting rid of the regulatory burden will be finished with the passage of this Repeals Bill. I intend that an omnibus bill of this nature be proposed as and when necessary to ensure Acts that are no longer required are removed from the statute books using this highly efficient method.
I would like to thank my colleagues who have responsibility for the Acts put forward for repeal in this bill. Their decisions to put these Acts into the bill show the commitment they have to improving the stock of regulation.
The Regulatory Reform (Repeals) Bill is part of a broader agenda of work designed to improve the body of regulation in New Zealand. Other work in this area has led to the introduction of the Regulatory Reform Bill which contains legislative amendments that reduce compliance costs to business, and I have prepared a Revocation Order which proposes the revocation of spent and obsolete regulations.
This set of legislative vehicles is designed to improve the stock of regulation in New Zealand and will make sure New Zealand has an evolving regulatory environment that is relevant, up to date and best placed to meet the needs of a dynamic economy that will help New Zealand grow.
This is a good day because here we are in Parliament removing 31 statutes.
Hon Rodney Hide speech to the First Reading of the Regulatory Reform Bill; Parliament; Tuesday, February 15 2011.
I move that the Regulatory Reform Bill be now read a first time. At the appropriate time I intend to move that the bill be referred to the Commerce Select Committee.
Today I present to the House the Regulatory Reform Bill. The Regulatory Reform Bill amends 13 Acts and is designed to reduce compliance costs and the regulatory burden on business. It is intended that the bill be divided into separate bills at the Committee of the whole House stage.
The Acts put forward for amendment by Ministers from eight portfolios have been identified through a number of avenues including through the regulatory scanning exercise undertaken by government departments. Agencies have been asked to undertake scanning of their legislation as part of the commitment this Government has to the Government Statement on Regulation: Better Regulation Less Regulation. The Statement was announced in August 2009 and sets out the Government’s commitment to:
- Introduce new regulation only when satisfied that it is required, reasonable and robust; and
- Review existing regulation in order to identify and remove requirements that are unnecessary, ineffective or excessively costly.
This is the second of what I intend will become an annual bill in this House. It forms a key part of the Government’s commitment to an on-going process for amending legislation to remove requirements that are unnecessary, ineffective or excessively costly. Such an omnibus bill will ensure that smaller regulatory fixes do not fall off the legislative agenda and are able to be progressed in a timely fashion to deliver the flow-on benefits to business and the economy.
A key benefit of this bill is the efficient, cost effective method of collectively amending the 13 Acts through a single omnibus bill without having to proceed with 13 separate pieces of legislation.
The maintenance of a quality regulatory environment in New Zealand requires a body of legislation that is easy to use, up to date, and fit for purpose. The changes proposed in this bill cover a diverse range of policy areas and legislation, but they are all aimed at the same objective - reducing the compliance burden on business. This objective is the unifying theme of the clauses in the Regulatory Reform Bill, which I am introducing to the House today.
In October 2009, I wrote to all Ministers requesting suggestions for amendments to discrete pieces of legislation that would reduce the compliance burden upon business, and were suitable for inclusion in an omnibus bill. I would like to thank my colleagues who have responsibility for the Acts put forward for amendment in this bill: Hon Simon Power, Minister of Commerce; Hon Steven Joyce, Minister for Communications and Information Technology; Hon Phil Heatley Minister for Fisheries and Aquaculture; Hon Kate Wilkinson, Minister for Food Safety and Minister of Conservation; Hon Maurice Williamson, Minister for Building and Construction and Minister of Statistics; Hon Nathan Guy, Associate Minister of Justice and Minister of Internal Affairs. Your prioritisation of these amendments will contribute to businesses being better able to reach their full potential and greatest opportunity for growth.
Some of the changes are aimed at removing requirements and streamlining processes. These include:
- amending the Companies Act 1993 to allow companies to choose whether or not to use electronic shareholder participation. It is estimated this change could save New Zealand companies a total $1.5 million each year.
- Amending the Agricultural Compounds and Veterinary Medicines Act 1997, the Animal Products Act 1999 and the Wine Act 2003 to align and streamline the procedures for recognition under these three food safety related Acts will save businesses from potential compliance costs of approximately $100,000 per year. People or agencies wanting recognition for functions such as sampling, testing, analysing, evaluating and verifying compliance under these Acts should find the process simplified and being recognised under more that one Act significantly less complicated.
- Amending the Fisheries Act 1996 to allow for consolidation of Gazette notices to make it easier for commercial fishers to find what restrictions apply to particular stocks. Consolidation of Gazette notices will mean that there could be one notice for example that will cover all quota management stocks and set the total allowable catch and the total allowable commercial catch for all stocks. This will reduce the time and resources needed by business to determine compliance.
Several changes are aimed at increasing flexibility. These include:
- Changes to the Films, Videos and Publications Classification Act 1993 to modernise labelling requirements by allowing rating and classification labels to be printed. Currently distributors must arrange for the imported DVD or computer game to be unwrapped, the printed slick (the leaflet or notice containing information about the DVD or computer game that is inserted inside any sleeve or display case) removed from the case, a label placed over the printed foreign classification label on the front, and then the slick put back in the packaging. This bill will mean that labels can, in addition to being physically attached, be printed directly on to slicks. Giving businesses flexibility as to whether they print on or fix an adhesive label allows choices to be made about the most cost effective method for supplying the rating or classification label. This will reduce compliance costs by an estimated $2.4 million in the first year and $3.1 million in year five.
- amending the Unit Trusts Act 1960 so financial statements and accounts can be distributed electronically. This will result in savings for printing and postage costs.
The Regulatory Reform Bill is just one of the essential measures needed to implement improvements to regulation in New Zealand. It forms part of the broader regulatory reform agenda that will improve the body of regulation in New Zealand.
Last November I introduced the Regulatory Reform (Repeals) Bill proposing the repeal of 31 spent Acts. I am also preparing a Regulatory Reform (Revocations) Order which proposes the revocation of spent and obsolete regulations. This set of legislative vehicles is designed to improve the stock of regulation in New Zealand and will make sure New Zealand has an evolving regulatory environment that is relevant, up to date and best placed to meet the dynamic economy that will help New Zealand grow.
I move that the Commerce Select Committee consider the Regulatory Reform Bill.
Hon Rodney Hide opening address to SOLGM Shared Services in Local Government Conference; Brentwood Hotel, Kilbirnie, Wellington; Monday, February 14 2011.
Thank you for the opportunity to speak to you this morning at your Shared Services in Local Government conference. I would like to thank SOLGM for organising this event and, in particular, Western Bay of Plenty District Council Chief Executive and Conference Chair Glenn Snelgrove for bringing us all together. It is great to be here.
Public servants which include, of course, council officers are a vitally important component of democracy. The better the public servant, the stronger and more effective the democracy.
In this regard SOLGM provides valuable support to its members through professional development, networking opportunities, and events such as this conference.
The great benefit of this conference is that you have the chance to meet people from other councils and share your experiences. Putting a face to a name will make it so much easier to contact your council colleagues for their advice when you are faced with new situations. And sharing ideas and experiences will be invaluable in enabling you to do your work more efficiently and in ensuring that shared service opportunities are created and continue to work effectively.
This conference provides a fantastic opportunity for you to hear from speakers who understand the challenges you face, and to learn some practical solutions to these challenges. It also provides me with another chance to talk to you about my vision for local government and the work programme that I have planned, and to also hear what you have to say.
We all know the efficiency and effectiveness of local government impacts on the performance of New Zealand nationally. Yet, all too often it can be taken for granted by the general public, and sometimes by central government.
Local authorities can help facilitate economic development at the municipal level by providing good infrastructure, cooperating with businesses where appropriate and applying less and better regulation when it comes to building and resource consents. We also can’t underestimate the importance of working together to keep costs down through the use of shared services.
The Local Government Act 2002 provides the freedom for local authorities to work together in the interests of their ratepayers. This means prudent management by providing ratepayers with necessary services in the most cost effective and efficient way possible.
There are numerous benefits to such arrangements, including reduced costs, greater access to skills and expertise, the exchange of best practice between councils and procurement savings from economies of scale. This can be achieved through the collective purchasing and provision of services, while still keeping the decisions at a local level.
There are some good examples of innovative, more efficient ways to deliver services. I am aware that cross boundary arrangements to share services and facilities are not uncommon between territorial authorities.
For example, we will be hearing later today about the work of BoPLASS Ltd, which is a council-controlled organisation set up by the councils that operate within the Bay of Plenty region.
As you will know, BoPLASS Ltd was set up to investigate, develop and deliver back-office services and communications where and when it can be done more efficiently for the councils in the region.
Its Statement of Intent for 2010 – 2011 outlines clearly the benefits that can be achieved through shared services. These include:
- improved levels of quality and service;
- reductions in costs of administration services; and
- the savings created by having an organisation representing many councils.
On top of all its current shared services arrangements I see BoPLASS is also aiming to introduce at least one new shared service a year. I commend the company for this goal which will ensure the benefits for ratepayers will continue to grow into the future.
There are a number of other councils around the country working to provide shared services.
Palmerston North City Council provides an award winning after-hours phone service to the local government market. The centre is able to deliver high quality service to over 25 councils across the country.
This work has enabled other councils to deliver higher levels of customer service and reduce costs on their phone services while Palmerston North increases revenue for the benefit of its citizens.
The Manawatu-Wanganui Local Authority Shared Services Ltd is working to pull together its region’s archives.
Five councils will join their archives together on one database which already includes the archives of both the Wanganui District Council and Palmerston North City Council.
Shared service initiatives are not a new phenomenon, either. Institutions such as Civic Assurance have been providing shared financial services for years to local government.
I encourage councils to continue to look at ways to increase efficiency, contain or reduce costs, and, where appropriate, improve service delivery through shared service arrangements.
I appreciate that smaller local authorities have limited capacity and investigating new ways of doing things takes time and money. Those first few steps can be expensive and difficult but over time the benefits will be potentially significant.
This conference is a great opportunity to make those first few steps a little easier. You are going to hear from people talking about their experiences and best practice which should help you avoid some of the major obstacles in your way.
You may be aware of the Department of Internal Affairs’ report ‘A Review of Collaboration Among Councils’ which was released in December 2009.
The report noted that key drivers of inter-council collaboration are fiscal constraints (the requirement to achieve more with fewer resources) and higher expectations of citizens, customers and the councils themselves relating to council services.
The top two barriers to council collaboration were perceived to be ‘council leadership not supporting or promoting collaboration’ (93 per cent) and ‘councils operating in an insular way and taking a parochial approach’ (90 per cent).
It also identified that the top four areas that respondent councils saw as potential areas for some or more collaboration were: geospatial information (53 per cent), procurement processes (50 per cent), field services (47 per cent) and management of water (45 per cent).
I appreciate that the sector is well aware of the challenges of creating effective shared service arrangements and you’ll be working through such issues today. The Government is keen to help where it can. Currently, for example, the Department of Building and Housing contributes funds and resources to support shared services arrangements and operational activities.
There are a range of other examples of good teamwork between central and local government. These include the Ministry for the Environment facilitating information exchange and networking between local authorities and central government, and the Department of Internal Affairs collecting and sharing information about good practice with local and central government. The Ministry of Health also offers drinking water assessors to provide technical assistance on the development of drinking water systems.
A further way in which central government is currently working with local government is through its investigation into setting up a single local government debt vehicle. The proposed fund will potentially help councils finance up to $30 billion of planned infrastructure over the next decade.
The establishment of the local government debt vehicle to reduce the cost of borrowing was one of the Job Summit initiatives and was also recommended by the Capital Markets Development Task Force.
The Government recognises that councils may face an increase in costs over the next decade to provide improved water and waste water systems and it is also sympathetic to any arrangement that can lower the cost of local authority borrowing.
The model involves a single organisation that would issue bonds to wholesale and retail investors. The funds raised would support participating councils to meet their infrastructural and capital investment requirements. It is envisioned the fund would be voluntary based; however, it would need the backing of a sufficient number of councils for it to be effective.
This is an example of how local councils, in this case with the assistance of central government, can provide better and more cost effective ways of providing services to their community. This could be a very valuable shared service indeed.
As many of you may know, work is underway on a project entitled ‘Smarter Government, Stronger Communities’ which will review local government in New Zealand; specifically, its structures, functions, funding, and relationship with central government.
I believe that local government faces a number of challenges and there is a need to identify these and develop ideas for resolving them.
More clarity also needs to be created around local government’s relationship with central government. While local government is accountable to its communities, it must also answer to central government, which confuses local government’s role.
The Auckland governance reforms may also have implications for local government as a whole. The effects of these need to be addressed.
It is important to allow time for the scoping of this work. The next step will be to seek the views of a range of interested stakeholders.
The information we receive will help us identify the key issues and challenges for local government and further focus the review.
As part of this, the Government needs to work closely with our key partners in the local government sector including Local Government New Zealand and SOLGM.
Why there is need for the review?
Since 1989 there have been major reforms of aspects of local government, without reviewing the system as a whole. These include the democratic and community-focussed reforms of the Local Government Act 2002 and the establishment of the Auckland Council in 2010.
Longstanding institutions and processes help ensure stable and accountable community-based governance. However, legacies such as smaller councils with limited revenue, and aging infrastructure may have left local government operating less effectively than it could be.
Councils used to deal with smaller, more localised issues; however, with larger and more diverse communities, councils must deal with wide ranging and varied issues. Councils must also deal with far more difficult issues such as New Zealand’s aging demographic, and population growth.
These challenges require councils to work in collaborative ways. Councils will need to attract expertise in a range of specialities. While larger councils may be able to achieve this, smaller councils may struggle.
This project gives the Government an opportunity to think about these challenges, and help offer solutions and put local government in a position where it will be able to respond effectively.
I have no preconceptions about the outcomes of the project. We may conclude that nothing significant needs to change. We may find that the system could be improved through minor adjustments. Or we may decide that significant reform is needed.
The review is timely. This Government has a strategic economic policy agenda of significantly lifting growth and living standards, improving efficiency throughout the economy, and reducing the income gap with Australia. I believe that efficient and effective local government has a positive impact on New Zealand’s performance nationally, and is essential for us to thrive.
With local government assets totalling just under $99 billion, we simply cannot afford to underestimate the importance of having effective and efficient local government.
There are practical day-to-day challenges that council staff must deal with. In addition, councils are also faced with the challenges of prioritising multiple conflicting desires into coherent, well-planned decisions that promote the social, economic, environmental and cultural well-being of communities in the present and for the future.
I trust that the work I’ve discussed has given you an overview of where I hope to go in the coming year and beyond.
I am very much looking forward to working with SOLGM, and individual councils, on the goals that I have planned for local government and I trust that future work will help you as chief executives and managers to meet the practical and high-level challenges of working in local government.
Thank you for listening to me. I’m looking forward to your questions and comments.
Hon John Boscawen speech to launch Consumer Rights Day; Pataka Museum of Arts and Cultures, Norrie Street, Porirua; Tuesday, November 30 2010.
Good morning ladies and gentlemen, it's great to be here. I'd like to begin by extending a warm welcome to everyone who was made the effort to be here today - it's great to see how many agencies are represented here today to demonstrate what they can do for the community.
I'm very pleased to be here today to formally open this Consumer Rights Day. In fact, I believe this to be such a worthwhile event that I have encouraged the Ministry of Consumer Affairs to consider holding more days like this around the country.
The Ministry of Consumer Affairs aims to ensure that consumers can have confidence in the marketplace, and my Ministry appreciates the support and networks you provide in your communities.
In order to have confidence in the marketplace, consumers need to be able to access enough quality information to enable them to make the decisions that are right for them. They also need to know that there are ways to resolve any disputes they might have should a problem arise.
I'm pleased to say that we're not doing too badly on that front. Last year's National Consumer Survey found that New Zealanders generally have a fairly good understanding of their consumer rights and that many are aware of their right to have faulty goods repaired, replaced or refunded.
The was commissioned by the Ministry of Consumer Affairs and also indicated a generally strong level of consumer confidence throughout New Zealand - with most consumers believing that the current law will protect them if they encounter a problem with a transaction.
That same survey, however, also showed that 16 percent of respondents couldn't name a single organisation or service that could help them when things went wrong. Clearly, there is still work to do if we are to ensure that people know where to turn for assistance or advice.
It is on these people that I want to focus; the people who don't get their problems resolved for the simple reason that they're either unaware of the protections exist for them, or they don't know where to turn to for help.
In fact, it is the latter - the knowing where to turn for assistance - that can prove the biggest stumbling block for people trying to get their problem sorted.
Around the room today I see representatives from agencies and organisations that listen to consumers and help them with their complaints. Even better, many of these services are free for the consumer.
But there are around 20 statutory, Government and self-regulatory entities that have disputes resolution and/or investigation and enforcement roles - and it isn't always easy for people to find the one that is suitable for their specific complaint.
Not only that, but having to explain their complaint or understand the process they must follow, can be very daunting for consumers. After all, while some people are confident enough to negotiate the process themselves, there are others who need support to get their complaint and heard.
These are the people who often fall through the gaps, and that's why the role of community groups and agencies are so vital - you fill the gaps by guiding people through the processes and procedures, encouraging them to get their evidence together, so they can get their problem solved.
As you do this important work, the Government is working to make our consumer laws easier to use and understand. Seven consumer laws are currently being reviewed - the objective being to have principles-based consumer law, and simplification and consolidation of existing laws.
The Ministry of Consumer Affairs released a discussion document on Consumer Law Reform earlier this year. Submissions on this document are currently being considered with the aim of ensuring the law is relevant today and will continue to be relevant into the future.
We are also making progress on the review of the Credit Contracts and Consumer Finance Act (CCCFA). This looks at addressing issues around hardship, fees, unsolicited credit, disclosure, repossession and pawn-broking.
From tomorrow, new laws for financial service providers mean there are dispute resolution schemes that people can go to if they have a problem with creditors and other financial service providers.
But making sure that consumer laws are effective, and that complaints processes work properly, means little if consumers do not first know about them or understand how to use them properly - because complaints can't be investigated or dealt with if they don't reach the right people or agency.
The Government wants to make it easier for consumers to complain, and to find the appropriate avenue and organisation to help them. But we also admit that it can sometimes be difficult to reach every person who is in need of help.
And that's what Consumer Rights Day is all about - it's about Government working with community groups and agencies to help consumers to know their rights and where to turn if things go wrong.
We here in this room have a common goal: to ensure that consumers are able to find out about the rights that protect them, and the services and channels they can use to solve a problem. We all want to create and empower confident consumers in New Zealand.
I have no doubt that, together, we can achieve that goal. I'd like to thank all the agencies here for their ongoing supporting, and for the fantastic work you have done and continue to do. My staff and I look forward to working with you all in the future so that, together, we can help your communities.
It is with deep sadness that I rise today, on behalf of the ACT Party, to join with all Members of this House to offer our heartfelt sympathy and support to the families and loved ones of the Pike River Coal Miners whose lives have been so tragically taken away.
Words cannot even begin to express the sorrow we feel at the profound loss of 29 good men who were loved by their community and families.
We are also well aware that the sorrow we feel now can only be a fraction of that being experienced now on the West Coast.
The people of Greymouth possess an immense strength of character. We have seen your courage and determination time and again, and have seen you face adversity head-on. The days to come will be incredibly difficult, both emotionally and physically, but you will come through this and your community will become stronger.
All New Zealanders are united in grief today, and will never forget the loss of these 29 miners. These men were part of the backbone of New Zealand society – family men, working men. Men who kissed their wives, parents, children goodbye as they left for work on Friday – never once imagining they wouldn’t be coming home.
I cannot even begin to comprehend how those families must be feeling right now.
I also wish to thank the entire Rescue team and all those who offered assistance, advice, support and expertise. We know there is still much more work to be done, but your efforts will be of invaluable assistance and comfort in this time of need.
To Peter Whittall, Chief Executive of Pike River Coal, thank you for your leadership, courage, honesty and humanity. I know that all New Zealanders will continue to support you and all your staff in the days and weeks ahead.
I know that the job and decisions you have ahead of you to ensure that Pike River Coal remains on the West Coast, and ensure the employment of miners and staff, will be difficult – but it is of critical importance.
As Minister of Local Government I pay tribute to Councillor Milton John Osborne, 54, of Ngahere, who was one of the 29 men in the mine at the time of Friday’s explosion.
Milton was serving his second term on the Grey District Council, as a representative for the Eastern Ward, where he was elected unopposed. He was also a contractor at the Pike River Mine.
Grey District Council Chief Executive, Paul Pretorious, said Milton was highly respected for his council work. He took a wide interest in council issues. The area he represented was very close to him.
Milton had special concern for the farming issues in Ngahere, and he represented the farmers with conviction.
Milton always looked at the merits of each case, and carefully considered things, coming very well prepared to council meetings. His input was thoughtful; he also included the lighter side, while always making perfect sense.
Milton was a big, friendly guy with a great sense of humour. He could come up with a joke at the most appropriate – and the most inappropriate – times. He lived his life without apology.
He was a caring father and a good husband; he and his wife were great friends.
He was respected, valued, and loved as a member of the Council.
I would like to quote Paul’s final comment verbatim: “Milton epitomises the West Coast saying, ‘a good bastard.’”
I also wish to acknowledge and thank Greymouth Mayor Tony Kokshoorn, who has been the face of the community during this difficult and gut-wrenching time. Tony’s courage, support and leadership gave strength to the families and friends who live in this close-knit community. I offer you my support and strength.
As Associate Minister of Education I would also like to recognise the work of the Ministry of Education's Traumatic Incident team. The team has worked tirelessly to support staff in schools and early childhood education services in the area, so that children can maintain the rhythm of their lives during a time of great uncertainty.
Mining is a way of life on the West Coast, and in Greymouth especially. For many families mining is more than just a livelihood; it is a tradition – one could say it’s in their blood. It is for this reason that we cannot allow mining to cease on the West Coast. Rather, we must find out how this happened and we must see what lessons we can learn from it.
Although it’s difficult today to see beyond the sorrow, may looking back in memory help comfort you tomorrow.
Minister of Local Government Rodney Hide Speech To Federated Farmers National Council Meeting 2010; Westpac Stadium, Wellington; Thursday, November 18 2010
Federated Farmers President Don Nicholson, Vice-President Donald Aubrey, CEO Conor English, National Council Members, Provincial Presidents, Ladies and Gentlemen. Good morning and thank you for inviting me to join you here today.
Too often, the cost of inefficient processes and unnecessary spending is passed onto the ratepayer through increased rates.
It is clear from the correspondence I have received and the meetings I have attended that many farmers are unhappy with the amount of rates they are paying.
Since becoming Minister of Local Government, I have come to understand that the legislative framework for local government is unwieldy in places, imposing unnecessary bureaucracy and regulatory burden on councils and ratepayers.
With these concerns in mind, a more efficient and effective local government has been my vision since becoming Minister.
To achieve this vision, I’ve identified some goals for local government.
• to improve local government accountability and transparency – allowing ratepayers to be more informed and therefore able to exert greater influence on council decision-making;
• to streamline the legislative framework within which councils work – by removing unnecessary process and red tape; and
• to have a local government system that is more fit for purpose, and that will allow local government to work better with central government.
These goals are why the review of the Local Government Act 2002, and in particular, the planning, decision-making and accountability aspects are such a priority for me.
The Local Government Act 2002 Amendment Bill is now before the Committee of the Whole House, and I’d like to give you a brief update on it.
The Bill’s main aims are to improve financial management, transparency and accountability in local government, and to encourage local authorities to focus on core services.
The proposed amendments will enhance ratepayers' and residents' ability to participate in local government decision-making processes. It makes it possible for ratepayers to learn more about the work of their councils, and provide informed feedback in a timely manner.
The Act currently requires consultation in a number of different circumstances, but consultation is meaningless if people do not understand what they are being consulted about and the impact proposals will have on rates, debt, and service levels.
The Bill requires that councils produce plain English financial reporting, so that ratepayers can understand what they are paying for, and how they are paying for it.
The amendments propose that council reporting is made consistent so that ratepayers will be able to make comparisons between different councils. This would include, for example, a consistent approach to the disclosure of rates income.
From 2013, every council will produce a pre-election financial report to enable voters to make a more informed choice about candidates and which projects they are likely to support and spend ratepayer money on.
As a part of the pre-election financial reporting, a financial strategy will be introduced with limits on rates and debt, and targets for returns on council investments.
A financial strategy will help councils and ratepayers to prioritise existing and proposed expenditure, by making clear the effect of proposals on services, rates, debt and investments.
The Bill will encourage councils to focus on core services, requiring each council to have particular regard to the contribution the services make to its communities. Services such as infrastructure, public transport, rubbish collection and recreational facilities.
It is important to note that councils must have “particular regard” to the contribution those services make to their communities; it does not say councils have to provide them, or provide only these services.
Decisions about councils’ activities and expenditure will continue to be made locally, rather than by central government.
The aim is to ensure that councils undertake these core activities, before seeking a mandate for spending outside of these areas.
The Bill will encourage councils to concentrate spending on core services that should benefit farmers and the rural community such as basic infrastructure needs.
The Bill proposes that councils must disclose information about network infrastructure services separately in their long-term plans, annual plans and annual reports. This would allow the public to more easily identify information about the services that make up a substantial part of council budgets, and, compare this information with other councils.
Standardised disclosure about infrastructure services would allow people to identify and ask questions about how much is being spent on particular services and how much it would cost to meet additional demand for the service, improve the level of service provided and replace existing assets.
I would like to thank Federated Farmers for making a submission on this Bill. Your suggestion about tables of benchmark properties was included in the Bill that was reported back by the Select Committee.
This means that councils’ long-term and annual plans will have to include examples of the impact of rating proposals on the rates of different types and values of property across the district. This information will be particularly helpful where councils make extensive use of targeted rates.
Your submission also recommended requirements for itemised rates assessments. However, this could not be considered as it would have required changes to the Local Government Rating Act, which was outside the scope of the Bill.
These changes are meaningful to the day-to-day operations of councils. But we cannot stop there. I believe both local and central government can do much better.
Looking to the future, I am planning to review New Zealand’s system of local government.
As part of this review, I want us to ask and answer some fundamental questions:
• What is local government?
• Why do we have it?
• What does it do?
• What do we want it to do?
• What does local government need to do its work efficiently and effectively?
• How is that work funded?
Since becoming Minister, I’ve noticed first-hand that the nature of the relationship between the two tiers of government, and how their relative responsibilities, powers and status is not clearly defined.
There is a tension between local government’s role of serving communities, and the statutory requirements that central government imposes on local authorities.
Some people consider that central government sometimes treats local government as a service delivery arm of central government. This situation limits the scope in which councils can act for the benefit of ratepayers.
There are also issues and tensions in the local government system, and external challenges that may be problematic in the long-term. This includes local government’s capacity to deal with large, complex, multifaceted and interlinked economic, demographic, environmental and social problems.
New Zealand’s local government system is rooted in governance arrangements established during the colonial period of the mid to late 19th century.
Over the last two decades there have been several reforms of local government, including the recent Auckland reforms, which sought to modernise aspects of the local government system, but did not consider it in full.
As New Zealand continues to undergo change, and the local government sector grapples with challenges arising from that change, I want to see if the local government system is ‘fit for purpose’ for the next 50 years.
Central government has a strategic economic policy agenda of significantly lifting growth and living standards, improving efficiency throughout the economy, and reducing the income gap with Australia and other comparable economies.
Related policy agendas, such as regulatory reform, are a crucial part of the broad policy goal of lifting our economic performance.
It is imperative to consider where local government, and the regulatory regime for the sector, fits with these national policy approaches, and how it could better contribute to enhancing prosperity for all New Zealanders.
Internationally, there are new and different ideas and ways of thinking about local and community governance, and the relationship between local and central government. It would be useful to consider whether these ideas are relevant to New Zealand’s circumstances, now and in the future.
Although the Auckland governance reforms were the Government’s specific response to a unique set of circumstances, aspects of the reforms will have implications for local government and central government in New Zealand.
We need to think through what those implications are likely to be, and what aspects of the Auckland reforms could be useful for local government elsewhere in New Zealand.
We also need to consider how we can more clearly define the relationship between central and local government, including allocation of functions and costs, and how we can improve the ways in which central and local government work.
I will be releasing a discussion document in mid 2011 which will set out the strategic issues facing local government in New Zealand. It will put forward questions to spark a debate among all New Zealanders about “where to” for local government.
The discussion document, and the responses that we get from New Zealanders, will provide the Government with a basis for further work after the 2011 general election.
This is a big project, in a sector that plays a vital role in New Zealand society and economy. I expect that the project will run over several years, possibly out to 2014. We’re not going to rush it.
I have no preconceptions about the outcomes of the project. We may conclude that no changes are needed. We may find that the system could be improved through minor adjustments. Or we may determine that significant reform is needed.
The Government will not make any decisions without the contribution of the local government sector and other stakeholders.
I note that Federated Farmers is advocating for reforms of local government funding, such as moving away from property-based rates to a greater focus on matching costs to benefits. You have also expressed concerns about development and financial contributions. This review provides an opportunity for you to raise these concerns and I look forward to hearing your ideas.
I trust that the work I’ve discussed has given you an overview of what has already been achieved in the local government portfolio in the past year or so, and where I hope to go in the future.
Thank you for listening to me. I’m looking forward to your questions and comments.