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John Key: Speech to Local Government New Zealand

Rt Hon John Key
Prime Minister

22 July 2014

Speech to Local Government New Zealand,

Rutherford Hotel, Nelson

Thank you for inviting me to the Local Government New Zealand conference. It’s great to be here in Nelson, and it’s great to see all the local mayors, chief executives and elected members.

Ladies and Gentlemen.

The relationship between central government and local government is one of partnership.

We rely on each other to make good choices for our fellow New Zealanders.

Our legislating to ban psychoactive substances earlier this year was in no small part due to your advocacy on this issue. You saw the misery these drugs were causing in your communities. And you made it clear to us that you didn’t want them being sold on your streets.

We listened and we acted.

So it’s important we work together.

Decisions we make in Wellington are often implemented at the local government level. You – the mayors, councillors and officials – are the first to hear from the public if something doesn’t work as well as it should.

Likewise, decisions made at a local level – such as the supply side of new housing – affect the whole economy and the whole country, and I’ll be talking more about this later on.

Things work best when we’re pulling in the same direction, which is why we put so much effort into our relationship with local government, especially by Paula Bennett and Sam Lotu-Iiga, who is here today.

As you know, a key priority for the Government is to responsibly manage the country’s finances, and make sure our decisions don’t put pressure on inflation and interest rates.

Because that simply hits people in the pocket.

So it’s great to see that a lot of councils are keeping proposed rates increases for 2014-15 below even those predicted in their long-term plans.

But this can be tough, as you well know, and it means making hard choices about what things ratepayers need, and what are the nice-to-haves.

We face similar choices in central government all the time.

And we’ve got to keep making those hard choices, even when New Zealand’s economy is growing at a decent rate.

Budget forecasts show that wages will keep growing, more jobs will be created and living standards will improve right across the country.

But we still have to be smarter with taxpayers’ money.

We are working to deliver better public services for New Zealanders – through the Police, courts, public hospitals, schools, tertiary training and the many other ways that people and businesses deal with government.

That’s good for the people who receive those services, and it’s also good for the Government’s books.

We are also continuing to support Cantabrians through the aftermath of the earthquakes and the rebuilding of their city.

We made a commitment to the people of Canterbury on day one and we will not waver from it.

Ladies and Gentlemen.

The Government will produce a Budget surplus next year, when most other countries will be in deficit and racking up debt.

Earlier this month, Fitch Ratings revised our AA sovereign rating outlook from stable to positive, which is a vote of confidence in the economy.

It’s taken the Government nearly six years to turn the country’s finances around, by making careful savings and by being disciplined with spending.

However, running a country well is not just about the government’s books. It’s about encouraging jobs and growth, and not just for a couple of years, but well into the future.

And that means encouraging new investment in business opportunities around the country.

Our Business Growth Agenda has hundreds of initiatives to improve the productivity and competitiveness of our economy so we boost investment and jobs right around New Zealand.

These range from speeding up investment in water storage and irrigation, to negotiating free trade agreements, to investing in research and development, and rolling out ultra-fast broadband.

Those things all have a positive impact on regional New Zealand. Whangarei, for example, is now New Zealand’s first fully-fibred city.

And it’s important that the regions are right up the front.

They supply a lot of the exports that pay our way in the world. It is the regions that led New Zealand’s economic recovery.

Most of our regions have a lower unemployment rate than Auckland.

Some of the specific things we are doing in the Business Growth Agenda to encourage regional development include NZTE’s new regional investment attraction profiles, which promote regional investment opportunities to investors; and the new entrepreneur work visa, which encourages business migrants to settle and set up businesses in regional New Zealand.

We’re also investing in regional roads, so you get more efficient freight movement and faster, safer journeys.

Transport investment is a big part of our plan to build for future growth.

When we became government we designated seven Roads of National Significance in, or around, our largest population centres.

Of these important projects, we’ve already completed one – the Victoria Park Tunnel in Auckland – and the other roads are progressing well.

The Transport Agency uses the National Land Transport Fund to pay all the costs of building and maintaining state highways, and co-funds some of the costs of local roads, local public transport services, and walking and cycling.

In the 2013-14 financial year, the Government spent just over $3 billion from the Fund.

This was made up of $2 billion for state highways and other central government responsibilities, and just over $1 billion for local roads and other co-funded activities.

Over the same period, local government put in $913 million into local roads and co-funded activities.

So it’s roughly a 50:50 split when it comes to local projects, and 100 per cent taxpayers’ money on all highway improvements and maintenance.

We’re looking to spend more.

The draft Government Policy Statement on Land Transport is currently out for consultation, and recognises the importance of local and regional roads by increasing the money available – an extra $130 million for local road improvements and maintenance over the first three years.

We know how important good roads are outside the big cities.

We’ve built the Kopu Bridge on the way to the Coromandel, and the Kurow bridges in North Otago.

We’ve extended the Hawkes Bay Expressway and Dunedin’s Southern Motorway.

But there are more regional projects that need to get underway.

That is why last month I announced a $212 million package of 14 regional roading projects that we are going to accelerate.

Five of the projects are ready enough that construction can begin next year.

We are committed to funding a further six projects and – subject to the usual investigations – construction will start within three years.

The other three projects will be further investigated and designed to the point of consenting – ready for construction to begin.

Each project is important because it makes the road safer, helps the region be more productive or improves the way the roading network operates.

They include replacements for antiquated bridges at Kawarau Falls near Queenstown, over the Motu River between Gisborne and Opotiki, and across the Opawa River in Blenheim.

There are state highway improvements in Arthur’s Pass, Northland and on the East Coast.

Until the Government made the decision to accelerate funding, there was no guarantee these projects would be funded in the foreseeable future.

We are now providing that certainty.

Another important area of work in the Business Growth Agenda is getting the right balance between economic growth and environmental outcomes.

Most of our regional economies are based on our abundant natural resources, and there have been some tremendous success stories in recent times.

Southland has had a good run as a result of dairy conversions, mid-Canterbury and South Canterbury are doing well because of irrigation, and 5000 people in Taranaki either directly or indirectly earn their incomes from the oil and gas industry.

In Northland, it’s forestry and dairy, in the Hawke’s Bay vineyards and horticulture, while the Bay of Plenty is growing with the recovery in the kiwifruit industry.

Other industries, like ICT, hi-tech manufacturing and tourism are part of every regional success story but it is the natural resources sectors that drive most job growth in our regional economies.

Our challenge therefore is to keep growing our regional economies and the jobs that go with them, while also improving our environmental outcomes.

That’s why this Government has tackled some difficult issues which, for too long, have been sidelined.

Earlier this year, Environment Minister Amy Adams introduced the Environmental Reporting Bill.

This represents a step-change in the way we monitor and report to New Zealanders on the condition of our natural environment.

Amy Adams and Nathan Guy have also announced the introduction of national standards for freshwater. This means councils and communities will have a robust and scientific framework to use when making decisions about water bodies, rather than wasting time and money debating the science.

These environmental standards aim to safeguard freshwater for future generations. And they are a hallmark of this government.

And you have my commitment that, if we are re-elected, we will continue to progress improvements to our environmental standards, while not damaging regional economies in the process.

I want to turn now to the issue of housing.

The cost of housing has long been an issue and the Government is working with councils to remove blockages to the supply of more housing, to help keep costs down.

Last year we passed the Housing Accords and Special Housing Areas Act, and since then Nick Smith has been working hard with councils to get accords up and running in different parts of the country.

This is in effect a joint initiative between central and local government to fast-track Special Housing Areas for new developments.

A process that could take seven years under the existing RMA can now take seven weeks.

Auckland Council has signed an accord to deliver 39,000 new homes and sections over the next three years.

Christchurch City is working with central government to address issues related to the supply of affordable and social housing following the earthquakes.

Last month Nick Smith signed an accord with Wellington City to deliver 7,000 new homes and sections over the next three years.

And Queenstown Lakes, Western Bay of Plenty and Tauranga City are also negotiating accords.

I think you’ll agree this represents good progress.

But there are other ways we are addressing the cost of housing as well.

We are implementing a number of recommendations from the Productivity Commission’s inquiry into housing affordability.

For example, one of the commission’s recommendations related to the cost of building products, so we have moved to introduce legislation suspending tariffs and removing anti-dumping duties on hundreds of building products.

Legislation is also before Parliament to change the requirements around development contributions. The legislation is due to be passed before the end of the month.

This legislation amends the Local Government Act, and provides new principles that give direction to councils about what development contributions can be used for and how they should be applied.

It ensures that developers are only charged contributions for infrastructure that’s needed to service their particular development.

It also provides a process that allows developers who believe they are being charged incorrectly to challenge the charge and have the outcome determined by an independent commissioner.

There are other changes as well, but broadly, the aim of the changes is to reduce costs to developers, which in turn reduces the cost of housing.

Also, if we have the privilege of returning to Government after the election, one of our top priorities will be to progress the Resource Management Act amendments that we’ve had to park for the time being.

Our changes to the RMA will tackle housing affordability by freeing-up land supply and making it easier to build, extend, and renovate houses.

Consenting will be sped up and simplified.

And we will continue to be guided by balance and pragmatism as we reform planning law for the benefit of New Zealanders.

I want to touch briefly on earthquake-prone buildings.

We’ve introduced the Earthquake-Prone Buildings Amendment Bill to strike the right balance between protecting people from harm in an earthquake, and the costs of strengthening or removing buildings.

I know this is an issue which has vexed local councils.

No one wants to see councils or communities shoulder unnecessarily heavy financial burdens.

So I’m also pleased that Building and Construction Minister Nick Smith has been working with mayors and LGNZ to work through the impacts of new legislation, particularly in regions where the risk of an earthquake is low.

You will have seen the announcement earlier this month that farm buildings will be exempt from earthquake risk assessment requirements. Nick Smith is also looking at keeping other low-risk buildings out of the regime, as we seek to minimise costs.

Ladies and Gentlemen.

The Government agrees wholeheartedly with the point made in LGNZ’s Election Manifesto that central and local government need regulations that are effective and that do not place onerous costs on communities.

Too often regulations are confusing, change from region to region unnecessarily, and suck up councils’ precious resources in administration.

So today I am pleased to announce Local Government Minister Paula Bennett will establish a Central Government and Local Government review group known as the Rules Reduction Taskforce.

This Taskforce will listen to local concerns and find opportunities to reduce and improve local regulation.

It’s part of our response to the Productivity Commission’s report on Better Local Regulation, which Paula and Bill English released this morning.

The Taskforce, which will comprise people from both central and local government, along with tradespeople, will root out local regulation that could be improved.

Some things on the face of it don’t make much sense, like making it compulsory for a homeowner to install windows in a room that already lets in a lot of light through the ranch slider doors.

That’s the sort of thing this Taskforce will be looking at.

They will want to know about regulations that throw up needless bureaucratic hurdles for property owners, or that do not deliver what they are intended to.

We already know there are property owners up and down the country who are frustrated with the regulatory requirements they must meet, and the time and money it takes to complete transactions.

The decisions that councils make on regulation affect the whole country.

When local government sets requirements for building standards, for example, they can increase the cost of building, which affects house price inflation and potentially the track for interest rates and the exchange rate.

Central government grapples with regulatory issues as well.

So let’s work together to make life easier for ratepayers and pool our resources to tackle this issue together.

It is my intention that we invite ratepayers and home-owners around the country to contribute their thoughts on removing unnecessary rules and regulations via email and social media.

If you like, we’ll be crowd-sourcing ways to reduce the rules and regulations that stop people doing sensible things with their own properties.

Subject to finalising the terms of reference, we expect to have the taskforce up and running by October, and reporting back to the Local Government Minister by the middle of next year.

Ladies and Gentlemen.

While central and local government have different core functions, we both face the same challenges.

We have to be prudent as we operate within tight financial constraints

We have to be smarter with the resources we have got.

And the needs of New Zealanders should be at the heart of what we do.

Thank you.


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