27 July 2005 Speech
Investing in New Zealand's grassroots
Speech to Local Government Conference 2005, Christchurch
Ladies and Gentlemen,
Thank you for inviting me to join you today.
It is a pleasure to be here to conclude your conference; one that I hope has been as productive as the last five and a
half years have been for local government.
It is one of the quirks of human nature that when things have been good for a while, we tend to forget that they once
weren't, once they were very, very different.
You've had a reminder this morning of the past – Don Brash.
I'm here to remind you of the present.
I'm here to remind you that there was once a time when there was no partnership, co-operation or relationship between
local and central government, just mutual contempt.
I'm here to remind you that there was once a time when councils operated under hopelessly outdated legislation, which
needlessly restricted decision-making and drove up costs.
I'm here to remind you that there was once a time when central government completely reneged on its responsibilities to
assist struggling communities with basic infrastructure.
I'm here to remind you that there was once a time when there was no regional economic development, no sewerage subsidy
scheme, no drinking water subsidy fund, very little roading assistance, and definitely no help with the side-effects of
tourism.
That time was just five and a half years ago, the last time the National Government was in power.
What a difference a Labour government has made.
Today, the relationship between central and local government is transformed, and so is New Zealand.
We meet regularly, we talk, we agree and we disagree. Above all, we work together for the betterment of our nation. As
we learned in the 1990s, if the two arms of New Zealand's government are dislocated the country doesn’t function
properly.
The sheer amount of progress that has been made in a short time is testament to the strength of the partnership we have
formed.
Together we have rewritten the entire legislative framework for local government. We have created a more modern and
sensible legal environment in which councils can work, and most importantly, in which local people can make local
decisions.
For decades councils have played a far broader role in their community than just being providers of essential
infrastructure. The ideologues of the right might regret that trend but it has occurred, and sensible law needs to
reflect reality not ideology.
If a body like a democratically elected council is not permitted to play a role in promoting the social, economic,
environmental or cultural development of its community, even if the community wants it too, then who is permitted?
Someone far away in Wellington? A politician who has never set foot in your community? That might have been acceptable
in the nineteenth century. It isn't today.
Labour believes the people of New Zealand like to make their own decisions about their local community, and Labour has
sought to enshrine the freedom and opportunity to do so in local government law.
In addition to empowering communities, Labour has also sought to reach out and assist people at the coalface with
problems stemming from National's abject failure to do anything to help local authorities with infrastructure in the
1990s.
The spectacular economic growth we have seen in New Zealand in the past few years has brutally exposed the condition of
city and rural roads built in the 1950s and 60s, which are nearing the end of their useful life.
Growth pressures, changing demographics, and tourism have placed mounting pressures on struggling drinking water and
sewerage systems around the country.
When confronted with the need to upgrade these systems, past governments have shrugged their shoulders and said to
councils– 'it's your problem, your responsibility.'
Past governments have let quality standards for community infrastructure slip lower and lower as political imperatives
to keep rates down bit deep at a council level.
The Labour government has done neither.
We have recognised the magnitude of the problem you face. We have recognised that to ignore local government's
infrastructure issues is to create a brake on New Zealand's wider social and economic development. We have recognised
that what happens at a local level affects what we can achieve at a national level.
So we have acted.
First, we have set some basic national standards for key infrastructure, such as drinking water systems. We've drawn a
line in the sand and said it is not acceptable in a developed nation to have high rates of preventable waterborne
illness.
Second, we have sat down and listened to what you were saying about the costs of upgrading infrastructure, and the
unsustainable effect it would have on rates in many communities, particularly small rural ones.
Then we have come to the party.
In 2002 we established the Sanitary Works Subsidy Scheme, which made $150m over ten years available to local communities
for upgrading their sewerage systems.
To date applications for assistance from the scheme have been received from local authorities for over 100 communities
throughout New Zealand. Of these, 57 communities have received provisional or final approval of assistance totalling
$50.432m.
As the Prime Minister announced on Monday, the maximum subsidy a community can receive from this fund is to rise from 50
per cent of a new scheme's cost to 90 per cent.
I'm sure this will be a welcome development for many of you.
In this year's Budget, we established a companion fund to Sanitary Works Scheme – the Drinking Water Subsidy Fund. This
makes available $136m over ten years from which communities can ask for help with upgrading drinking water systems.
In Budget 2003, we set up a $9.8m Tourism Demand Subsidy Scheme, which seeks to assist small communities with
infrastructure demands from mounting tourism.
We have also made one off grants to assist island communities where there are special needs and costs are particularly
high. The recent $2.5m grant to Stewart Island through the Department of Conservation is a good example, as is the $5m
of assistance given to the Chatham Islands.
But by far the largest area of central government support to local authorities has come in transport.
In the past two years, we have given $1.1bn to councils around the country to assist with transport infrastructure. On
top of this the government has also recently committed an additional $3.22b over 10 years to the National Land Transport
Programme, money that will be available to both local authorities and Transit.
Statistics New Zealand tells us that overall funding from central government to local government has increased 45 per
cent from 1999 to 2004. Growth in this assistance has outstripped growth in rates and the operating revenue of local
authorities.
It is a sobering to ponder what pressures local authorities would be facing if Labour had not invested in communities in
this way. It is all money that local households would have had to pay through rates.
As I indicated earlier, the Labour government's approach to local government has been about knitting together our
respective functions in a way that results in a more efficient system of governance over all.
We've made amazing progress compared with the pitiful record of our predecessors. But that is not say there are not
other outstanding issues, and long-term problems that need to be resolved.
My commitment to you today is that the Labour government will not rest on its laurels but continue to confront and deal
with these issues in an open and honest way.
As you know, we have initiated a project to examine the extent of any affordability problems councils face as we move
into the future. Part of this project will also examine whether rates are sufficient as a funding mechanism to deal
problems
To date that project has found that although most councils are under some degree of fiscal pressure, most are also in a
position to manage with existing financial tools and resources.
There are, however, a small number of councils that have relatively high levels of rates and debt, and we need to look
at them more closely. Labour will do so in its next term of government.
Our project has also identified another sharp corner - some households and communities that have difficulty affording
their rates. Once again Labour will assist you in dealing with this issue.
In 2006 we will introduce a revamped Rates Rebate Scheme under which up to 300,000 New Zealanders will be eligible for a
rebate on their rates of up to $500 a year.
This should make life a lot easier for the elderly in particular, and also for councils which have been struggling to
accommodate the plight of single income and low-income people in their rating policies.
Wearing my Building Issues hat, I can for see a number of challenges for the sector in the immediate future.
There are some worrying deficiencies in the way local authorities have been fulfilling their building regulatory
functions, and we will need to improve those. Building is quite simply too important to do otherwise.
I note these deficiencies not because I blame councils for them. Yes, some are due to poor management and poor
performance, but there is a common factor to all the problems – staff shortages.
Councils have run building services in a highly dynamic environment, in the midst of a building boom, without enough
people to do it, and this has made it difficult to maintain the necessary skill levels.
National's meddling in the building sector in the 1990s, and its dismantling of the traditional apprenticeships
programmes, have, I'm sure, contributed at least in part to this staffing problem. I hope one day that party is called
to account for its botch-ups.
However, as Minister of Local Government and Building Issues, I am keen to explore whether central government can do
anything further to assist with your staffing difficulties in building services.
I'm happy to open a discussion with you about that, particularly as we work to implement the new Building Act, which
requires a more consistent level of performance from local government.
I note in your manifesto for the election, Empowering Local Roles, that you are seeking funding assistance with the
implementation of the Building Act.
The on-going issue of the cost of new and changing regulatory responsibilities on local authorities is something we are
looking at together in a working party that is progressing alongside the one considering affordability issues.
The impact of regulatory responsibilities is something that is vigorously debated, and one that is sadly often
accentuated for political reasons. Nevertheless, there is real merit in looking at the true extent of the problem.
Labour is committed to doing so.
With regards to the Building Act, the government has established an implementation programme for it, funded to the tune
of $4.3m in 2004/05, and $4.9m in 2005/06. Significant elements of this programme are specifically targeted to provide
councils with guidance and support.
Flicking through Empowering Local Roles, I noticed another interesting reference to a desire among local government for
a programme of citizenship and civics education to increase young people's understanding of New Zealand's constitutional
framework and systems of government.
I'm personally attracted to this idea, and agree with you about the need to consider it. I'm currently awaiting the
report of the Justice and Electoral Select Committee into the recent local government elections, which may provide more
fodder for the argument.
I was heartened to see that Christchurch City Council has already taken its own initiative and produced some education
material on this topic for schools in its area. Well done, Christchurch.
In summary then, what do I hope will happen in the local government sector over the next few years?
The short answer is - consolidation.
The sector has been through a period of considerable change, which has resulted in some terrific improvements. What we
need now is a period of political stability to bed in the change that has occurred, capitalise on the investments that
have been made in communities, and iron out a few remaining wrinkles.
The last thing the sector needs is more change, and more upheaval.
Let's look forward to 2007 when we will be able to demonstrate the strength and vitality of our communities to the
world.
At that time, New Zealand will play host to the Commonwealth Local Government Conference, and the hundreds of ministers
and mayors that attend.
I've been delighted by the response from councils all over the country keen to host delegates to this conference and
show case their local area.
It is a fitting testament to a spectacular period of progress we achieved in New Zealand's local democracy, and I look
forward to welcoming you all to that conference as your minister again after this general election.
ENDS