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Clark: Local Government NZ Conference

Rt Hon Helen Clark
Prime Minister

Address to the

At the
Christchurch Convention Centre

Monday 25 July 2005

Thank you for the invitation to open the annual conference of Local Government New Zealand.

This is the sixth time I have attended this conference as Prime Minister, and that does indicate the high priority our government gives to our relationship with local government.

I am proud of the strong and collaborative relationship our government has developed with local government. I believe that has not only been good for central and local government, but it’s also good for New Zealand when our different levels of government can work together in the public interest.

I have had the opportunity to read Local Government New Zealand’s document, Empowering Local Roles, which sets out the key policies which local government wants to see followed after the general election.

What I find heartening is that the whole document is premised on a continuation of the collaborative approach which we have developed together over the past six years.

The most fundamental undertaking Local Government New Zealand is seeking is a continuation of that approach and the willingness of central government to engage in an open and constructive manner on a wide range of policy with local government.

I give you my commitment today that I and my government intend to carry on as we have begun: taking local government into our confidence, involving local government at an early stage in policy development, and being open to submissions and suggestions from local government on how policy can be improved.

We are looking for no radical change in local government nor in our relationship with it. We do not support either forced amalgamation of local authorities, nor policy ambushes hostile to local government which seek to radically rewrite the law under which local government operates.

What we promise is a stable policy environment and relationship within which we can tackle our common challenges together. We live in a fast changing global environment in which we are constantly challenged to innovate and adapt. We will meet those challenges best if we work on them together.

The Local Government Act 2002 was passed with strong support from local government to empower the sector to govern in the best interests of local communities. Local Government New Zealand’s election policy statement acknowledges this, noting that the Act has ‘strengthened the roles and responsibilities of local government, and councils across New Zealand have constructively and responsively taken up their new roles’. I totally agree – and I could not disagree more profoundly with the attack on the Act’s purpose by the National Party’s local government spokesperson. He describes it as ‘flawed and idealistic nonsense’, and seems to be stuck in an age where local government was confined to roads and bridges – a remarkably nineteenth century notion, and one which is totally inappropriate for the 21st century.

At the core of the relationship we have developed over these past six years are the central government-local government forums. Jointly chaired by me as Prime Minister and Basil Morrison as Chair of Local Government New Zealand, we are able to:

- Identify key issues of significance to either or both of us;

- Agree on priorities for addressing those issues; and

- Monitor progress towards their resolution.

Through these forums, we have mandated our officials to work closely together on many issues.

The result is that we are each better informed about the other’s priorities and needs, and New Zealand gets better legislation and policy as a result.

Two-and-a-half weeks ago we were together with the executive of Local Government New Zealand at our tenth joint forum.

A top issue on the agenda was the local authority funding project, established in response to concern raised by local bodies about their ability to meet the cost of their functions.

The key conclusions of the first phase of the project were that:

- While local authorities are under some degree of fiscal pressure, most are also in a position to manage with existing financial tools and resources;

- A small number of councils do have relatively high levels of rates and debt;

- There are households and communities which have difficulty affording their rates.

At the forum, the government and Local Government New Zealand agreed to a second phase of work on the project to:

- conduct a series of case studies of local authorities to identify any further common factors which drive fiscal pressures; and

- generate policy options for consideration at the next meeting of the forum later this year.
Terms of reference for the second phase are now being prepared.

The government has, however, made two significant funding decisions with positive implications for local authority funding in recent months.

The first of these, which I announced in April, was that Labour in its third term will make big improvements to the rates rebate scheme. From 1 July next year, we have budgeted for up to 300,000 low-income households to be eligible to have up to $500 deducted from their annual rates bill.

The rates rebate scheme has existed in New Zealand since 1973, but its effectiveness has been dramatically eroded by inflation. Use of the scheme has shrunk from 102,244 households in 1977 to 3,529 in 2004.

From 1 July next year under Labour, the income threshold under which people will be eligible for a full rebate is to increase from $7,400 to $20,000. The additional income allowance for dependants is also to increase from $156 to $500 per dependant.

These improvements will make a big difference to many older New Zealanders and to others on low-incomes. For example, a single person receiving $16,645 in superannuation a year in 2006 will be eligible for a full rebate of $500 if their rates bill is over $1,000. These much bigger rebates will also ease pressure on councils which have struggled to accommodate the plight of low income households when setting their rates.

We estimate this policy will cost around $50 million per annum.

There is a second decision, which I and Associate Health Minister Pete Hodgson are announcing today. It involves changes to the Sanitary Works Subsidy Scheme which local government has been seeking.

This scheme was introduced by our government in 2003 to support improved sewage treatment and disposal works for small and largely rural communities which can’t fund the upgrades required to meet health and environmental standards.

Under the scheme, councils have been able to apply for up to fifty per cent of the cost of new capital assets for communities of 2000 people or less, with the rate of subsidy declining in a straight line to ten per cent for communities of 10,000 people.

Even with a fifty per cent government subsidy, however, there are small communities with a high deprivation index which can’t afford to implement reticulated sewerage systems.

An example is Moerewa, a Far North community of more than 1800 residents, with a deprivation index of ten. Moerewa has serious drainage problems and numerous failing septic tanks. Even though provisional approval for a fifty per cent subsidy for a reticulated sewerage system had been given, Moerewa voted not to proceed because the community cannot afford to fund the fifty per cent local share.

Under the new rules I am announcing today, the maximum subsidy level under the scheme will rise to ninety per cent. For those communities which have a deprivation index greater than seven and are within a territorial authority which also has an average deprivation index greater than seven, the rate of subsidy will be related to the average of those two ratings. For all other eligible communities, the rate of subsidy will remain unchanged. Moerewa itself would receive the ninety per cent subsidy.

This decision is retrospective. For example, close to Moerewa is Kawakawa, with a high deprivation index. It had received final approval for a fifty per cent subsidy worth $1.45 million for a new reticulated sewerage system. It will now receive a ninety per cent subsidy worth $2.62 million. Instead of the community being faced with a bill for $1.45 million, it will now only need to contribute around $280,000.

From a review earlier this year, we estimate that rather more than eighty small communities with high deprivation levels around New Zealand will be able to benefit from the increased subsidy rate.

The aim is to help reduce the incidence of water-borne disease, contamination of water supplies, and environmental degradation caused by poor sewage systems.

The Sanitary Works Subsidy Scheme is one of three schemes with funding totalling $276.4 million established by our government to ease the burden of basic infrastructure demands on New Zealand communities and ratepayers.

In this year’s Budget, we announced the establishment of a $136.9 million Drinking Water Subsidy Fund to help improve drinking water in New Zealand communities. This Fund will assist councils and other water suppliers with technical advice and direct capital assistance for upgrading water systems. This is funding that would otherwise have had to come from rates or water charges, and it will be of particular help to many small communities.

Last year we established the $9.8 million Tourism Demand Subsidy Scheme to help communities develop infrastructure to cope with and position themselves for rising tourist numbers.

In all three areas, the government has accepted that it has a role to play in helping local government meet critical infrastructure needs.

But these schemes are just three of many initiatives on what has been a huge agenda for our government working alongside local government.

- Major legislation includes the Local Government Act, the Rating Act, and the Local Electoral Act.

- New dog control laws empowering local government have been passed.

- We have vastly increased central government’s investment in land transport, across road and rail, and public transport. In 1999/00, the funding available through the National Land Transport Fund was $930 million. In 2005/06, the funding available through the National Land Transport Fund is over eighty per cent higher at $1.7 billion, and that does not include any of the extra $500 million announced by the Minister of Finance last month, nor the funding package for Wellington, nor any packages being worked on for the Bay of Plenty or the Waikato.

- We have passed the new Building Act to repair the damage caused by the deregulation of the 1990s, and we are working with local government to improve its implementation.

- Resource Management Act amendments are due to pass shortly, and we have worked with local government to improve the Act’s implementation.

- We have worked with local government to address the damage caused by significant flood events in the lower North Island and the eastern Bay of Plenty; and we are reviewing policy settings on total catchment management, acknowledging that more erratic and extreme weather patterns require a rethink of existing frameworks.

- When specific issues arise - such as water quality in the Taupo and Rotorua lakes; the sale of council housing in Auckland; the difficult and complex issues over the foreshore and seabed; and water allocation issues – we have a track record of working co-operatively and closely with our partners in local government to resolve them.

- We have invested heavily in regional economic development. Since 2001, New Zealand Trade and Enterprise and its predecessor organisation, Industry New Zealand, have invested more than $44 million into regional economic development through the Regional Partnerships Programme. This includes the establishment of seventeen Major Regional Initiatives in fifteen regions, ranging from Food Hawkes Bay, to the Manawatu Bio Commerce Centre, the Marlborough Aviation Heritage Centre and Park, and the Southland Broadband Initiative.

Our government, like local government, is committed to sustainable development. I acknowledge the spirit in which local government has embraced sustainable development, especially since the Earth Summit in Rio de Janeiro in 1992, and your support for our Sustainable Development Plan of Action.

During our two terms in office, New Zealand’s economic growth has averaged close to four per cent per annum. The unemployment rate has halved to become the second lowest among OECD nations.

This steady improvement in New Zealand’s fortunes has enabled us to invest back into our communities in many ways, and there is still much to do as Local Government New Zealand’s election policy statement makes clear.

My desire is to continue in office to carry on the work and build on the many positive initiatives underway with local government. Together we are making a difference on behalf of New Zealand.

It is now my pleasure to declare the 2005 annual conference of Local Government New Zealand officially open.


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