New Local Government Minister Rodney Hide launched  an all-out attack on city and district councils. Scroll down this page to view the NewsWire team’s reports from the fray. 

Part I: Backgrounder – Hide’s Changes Get a Hiding

Part II: Editorial – Compromise Solution is a Winner

Part III: Backgrounder – A New, Super Auckland, and What’s Next for Wellington

Part IV: Perspective - Businesses Riled by Rates Burden

Hide’s council sea-changes watered down

CATHERINE McGREGOR surveys the rugged landscape that is local government in New Zealand this year. The looming solutions to ratepayer complaints about rising rates, however, won’t be as radical as first thought.

WHEN LOCAL GOVERNMENT Minister Rodney Hide is not deciding how New Zealand’s towns and regions should best be served by councils, pruning bureaucracy (as Minister for Regulatory Reform) or supporting business (as Associate Minister of Commerce), he has his own political party to run.

The ACT party – originally the Association of Consumers and Taxpayers – was founded by free-market evangelist Roger Douglas, and continues to espouse the principles of deregulation and privatisation that in the 1980s came to be widely known as Rogernomics.

On entering government alongside National, Mr Hide wasted little time asserting his position on the role of local government.

Under the previous Labour government, he said, councils had steadily expanded their role well beyond core “public good” activities such as street lighting, roading and civil defence – at ratepayers’ expense.

Here was an opportunity for Mr Hide to advance ACT’s “small government” philosophy on a local level.

In April he got Cabinet’s approval for a wide-ranging review of council activities and spending, with three main targets: making council decision-making more clear, transparent and accountable, confining local government to a defined “fiscal envelope” (ie, capping council rates) and, most controversially, pruning spending back to so-called core activities.

The vagueness of the phrase “core activities” encouraged a wide variety of interpretations.

Many on the left were convinced Mr Hide’s ultimate plan was to slash council spending on cultural and social services to such an extent that they became unviable. Councils would be forced to hire private companies to take on those services, thus privatising them forever.

Unsurprisingly, the business community reacted a lot more positively. The Local Government Forum, a lobby group promoting efficiency in local government and consisting of business organisations such as Federated Farmers and the Chambers of Commerce, warmly welcomed the proposed reforms.

The forum claimed local government’s failure to stick to its knitting – providing services only where the private sector could not offer a cost-effective alternative – had resulted in a rates “explosion” that was crippling business growth.

What, exactly, were these council activities that Mr Hide and his supporters found so objectionable? Local government investment in airports, ports and car parks were frequently mentioned, but there were also more attention-grabbing examples.

The Local Government Forum made a scathing attack on the Auckland Regional Council’s disastrous foray into international football – last year’s David Beckham exhibition match that left the city $1.8 million out of pocket.

The forum concluded its comments: “This fiasco followed others such as the Wellington City Council’s loss-making sponsorship of Tiger Woods, the Hamilton City Council’s loss on a Warriors event, Tauranga City Council’s contribution to an artificial reef for surfing that hardly works, the Buller District Council’s failed sock factory and the Westland District Council’s failed plastics factory.”

While the right attacked councils’ misguided business ventures and the left fretted that council housing sell-offs and paid-for library books were just around the corner, Prime Minister John Key appeared far less agitated about the issue.

Councils played a vital role in the delivery of social policy, he said. While it was possible to point to isolated examples of over-spending, local government responsibilities would continue to be many and varied.

Mr Hide faced an uphill battle convincing his colleagues to proscribe the kind of activities councils could perform, but he hoped to have more luck with another of his ideas for cutting spending: allowing those ultimately footing the bills to have more say.

The issue of public consultation has long been a bone of contention within local government, with many councillors complaining their obligation to consider ratepayer opinion is too onerous, given the low level of public participation. 

Mr Hide argued the problem was not lack of interest, but rather councils’ failure to provide the clear and transparent reporting necessary for the public to accurately judge performance.

A government requirement that councils produce plain-English financial disclosures was the solution, he said.

Public consultation was especially vital when it came to making financial decisions that were likely to be irreversible, he said. New legislation obliging councils to hold citizen referenda in such cases would act as a restraint on local government’s growing culture of reckless spending.

Labour pounced on the suggestion, accusing National of hypocrisy: the Government had repeatedly rejected calls for a referendum on the proposed Auckland Super City, but when it came to restricting council spending, the Government suddenly seemed much keener on direct democracy.

The pros and cons of public consultation were again in the spotlight in July, when Labour’s Auckland issues spokesman Phil Twyford launched his Local Government (Protection of Auckland Assets) bill, and accompanying “Not Yours to Sell” campaign.

Mr Twyford pointed to the “indecent haste” with which the Super City legislation had been rushed through and Mr Hide’s proposal that councils be more free to contract with the private sector. These were encouraging suspicions about the Government’s real plans for Auckland’s $28 billion in assets, Mr Twyford said.

Under his bill, a referendum would have to be held before any of the city’s major assets could be sold. The motion was voted down in the House, but some on the left remained uneasy about the Government’s real local government agenda.

As the year progressed, such fears seemed unfounded. Mr Key made clear his lack of appetite for sweeping reform, and it was obvious Mr Hide’s controversial “core activities” proposal did not have the government support to become law.

His boast that he could get anything through Cabinet because “they are too busy with their own stuff [so] they’re not bothered” – as revealed by The Press  – was ringing increasingly hollow.

Then, in July, Mr Hide experienced what one onlooker, Waitakere deputy mayor Penny Hulse, described to the NZ Herald as “a road to Damascus moment”.

A visit to the council-administered City of Manukau Education Trust adult literacy programme had opened his eyes to local government’s “crucial role” in facilitating social development and education initiative, he said.

The reform programme finally released by Cabinet at the end of October was a noticeably watered-down version of Mr Hide’s earlier proposals. Gone was all mention of government-controlled rate caps and citizen referenda.

Contrary to fears, councils would face no restrictions on spending beyond being required to have particular regard to the importance of core activities, including recreation, heritage and culture services.

The bulk of the reforms related to financial planning and reporting. Cabinet agreed council planning should be simplified by merging the community outcomes process into long-term council community plans. Financial reports should be in plain English, and councils would have to produce pre-election reports to stimulate debate and increase democratic participation.

As local government enters the next decade, most of New Zealand’s 85 local authorities will see little change in their day-to-day operations.

In Auckland, however, 2010 will be a year of historic upheaval, as the region’s four city councils, three regional councils and one district council merge into one “super city”.

Debates under way regarding the ratio of councillors to electors, water privatisation and the provision of Maori seats are sure to rumble on.

Local government councillors in Wellington will be looking with interest at the Auckland experience.

Like Auckland, the Wellington region boasts eight local authorities, but it serves only about 450,000 people against Auckland’s 1.3 million.

According to the Dominion Post, Wellington mayor Kerry Prendergast thinks changes to Wellington governance are inevitable, but unlikely to go as far as in Auckland.

But, as deputy mayor Ian McKinnon told bFM’s The Wire, if Wellington is to resist what will soon be “a very powerful Auckland in terms of claims on resources and political attention”, unification will be key.

Let the battle of the Super Cities commence. 

New laws will root out sloppy council practices  

A seeming defeat for Rodney Hide will actually produce law changes to sharpen up transparency in local government, writes ADAM GOSNEY.

IDEAS for reform to the Local Government Act 2002, presented in three papers titled Local Government Transparency, Accountability and Financial Management, will aid the voting public as much as business and have the potential to restrain further rate increases.

This is reasssuring.

What is surprising is that it was Rodney Hide who wrote them. While it may be disconcerting to some that he has turned his back on his right-wing business buddies, it makes sense that New Zealand’s political pig dog is the one rooting out councillors’ sloppy practices.

The fallen perk-buster has never missed an opportunity to put others’ political misadventure in the spotlight and as minister of regulatory reform is a stickler for cutting back bureaucratic spending.

He is not getting it all his own way. As Local Government Minister, his original plans were to cut councillors’ powers back to a rigid list of “core services”, forcing them to hold public referenda if they wished to stray from it.

This would have suited business as it would mean lower rates along with privatisation of services not considered core.

These ideas were controversial from the start because of the vagueness of what core services should be and the massive cost that comes with referenda.

Unfortunately for Rodney Hide, whose own use of MP perks has been in the headlines, he is not the most popular man at the Beehive.

Prime Minister John Key’s popularity remains watertight while he manages to sit safely on the fence on many issues. In keeping with this neither-here-nor-there theme, Key is not interested in sweeping local government reforms.

Hide has been reined in from the far right, and is playing the diligent lackey to the National government which is for the moment situated slightly right of centre.

Minister Hide has had to put ACT’s “small government” – AKA privatisation plans – on the backburner.

The result of this political tussle is democratic compromise. The minister’s plan now slots in well between saving ratepayer dollars and allowing local authorities freedom to change with an evolving society on one condition: that they are accountable to the public, and they cannot hide from this. 

Hide says it is not lack of caring that keeps voters from taking a deeper interest in how their councils do business, but the way information is presented.

He plans to make this more straightforward, cut back on rates and make local authorities more accountable by streamlining long term council community plans, encouraging councils to focus on core services, improving disclosure of asset management and setting up pre-election reports for councils. This is good news for ratepayers and the political left are not arguing either.

Those who have encountered long-term community plans will know they are jargon-filled tomes, most helpful to councils who may have half-baked politics to hide at the bottom of the tin.

Minister Hide’s plans include standardising council financial reporting and putting it into plain English, establishing inter-council evaluation systems and mandatory council pre-election reports.

These ideas do not guarantee the public will take more interest in local government politics, but it is not a wild notion that making it easier to interpret will encourage debate and steer voters away from the trap of being taken in by a candidate’s personality rather than their political views.

With a touch of irony, it is business, in the form of the Local Government Forum, that is not happy with the right-wing minister’s proposals.

Business lobbyists want a defined list of core services for councils, limited only to services which they believe the private sector cannot provide efficiently, and for referenda to be held when councils want to start projects outside these services.

The Local Government Forum will keep pushing for changes before the government drafts the legislation and puts it through the select committee process.

Despite arguing that business pays over 50% of rates and deserves more say, it is not likely they will get far, as Hide’s proposals sit well with the National government.

Of course, Hide did come out with a hiss and a roar for councils to be limited to core services and to hold referenda, and has been forced into an ungraceful flip, followed by a flop. It would not be prudent to think he backed down through lack of trying.

While the current proposals do seem like a political loss for Hide, they still straddle the middle ground, as he intended, between the right wing Local Government Forum and the local government sector that would prefer no change at all.

While core services remain undefined – allowing for social and business involvement – as a result of recent pressure some councils may decide to privatise assets rather than risk get their hands dirty. 

This would suit Hide and the pro-privatisation lobby. In a paper titled Local Government Transparency, Accountability and Financial Management: Improving Transparency and Accountability (paper 1), he cites Canterbury Regional Council’s Target Pest Enterprises going into liquidation and losses incurred by Wanganui Gas as examples of risky business activities which the councils did not give enough attention to.

If information on these kinds of investments was more readily available to ratepayers, there is potential for embarrassment and a loss of public confidence in their local authorities.

On the surface the left wins, with councils free to take part in business ventures of their choosing and big money not having it all their way. But this could be better described as an improvement on what Hide originally proposed as a blatantly right-wing shot at privatisation.  

While most will be happy that the new reforms have potential to save on rates and make local government more efficient, remember this stems from their open-ended nature, with the main change being one that encourages democracy. It still requires observant voters and reporters to keep track of their councils.

The end result will be to refine how we run our democracy, steering local government cautiously between the left and right. Local authorities could go either way, but that will come down to the voters.

Super-size my city 

AMANDA KIRBY asks where to now for a Super Auckland and how the capital city might be reformed – whether it’s willing or not.

 IS WELLINGTON over-governed?

The capital’s population is around a third of the City of Sails’ but, after local government elections in October, the capital will have eight councils more than Auckland, the soon-to-be “Super City”.

Victoria University’s senior lecturer in Samoan language and culture, Galumalemana Afeleti Hunkin, says the National-led government is taking a “gigantic step backward” by turning Auckland into a Super City.

Auckland has seven territorial authorities (councils) and a regional council. All are set to disappear.

From November, Auckland Council will be the sole council for the Auckland region, and Mr Hunkin is concerned Wellington could follow its lead.

Mayor Kerry Prendergast doesn’t believe Wellington would benefit from having only one unitary council, but says amalgamation is inevitable saying “eight territorial authorities and a regional council is too many for a population of half a million”.

“A 1.2 million [people] authority is going to be pretty powerful and a pretty big lobbying force. The result is, if you are the mayor of Carterton, do you really think you are going to have the same access to the Prime Minister and Cabinet ministers as the mayor of Auckland will have?” she told the Dominion Post last October.

Charles Finny, chair of the Local Government Forum, holds a similar view, saying “to remain politically relevant and get our share of the national pie, it is essential that we consider amalgamation”. He also believes it will inevitably happen.

The new governance structure for Auckland is based on the sole Auckland Council with the powers of both a regional council and a city council.

Green MP Sue Kedgley (left) says the Super Council is “a pathetic joke” and represents the “slashing and gutting of democracy”.

“The super city will disenfranchise whole Auckland communities. There will be a backlash against the super city, and it will not solve any of the so-called problems of Auckland.

“The people of Auckland are going to wake up and find that they have this huge, bloated, remote, inaccessible super city, which will be a bit like a super-tanker, and they will not be able to access or influence it.”

Voting will be First Past the Post (FPP), with the mayor being elected by the whole Auckland region. Twenty councillors will be elected from wards.

The Local Government Commission is proposing 12 wards, comprised of eight wards with two councillors each, and four wards with one councillor each.

The commission hasn’t yet decided on boundaries of wards and local boards. Draft proposals have been released for consultation with the outcomes to be announced on March 1.

Mr Hunkin says this transformation will see Auckland returning to the policies of the 1970s with assimilation of minority representation groups that would effectively “remove their voices”.

Ohariu MP Peter Dunne believes amalgamation of councils is in Wellington’s best interests, and the capital would be left behind if it did not move towards greater unity.

However, he says the Government would at some point have to take the lead.

“If we can do it through the mayors and get an agreed position, that would be great, but I’m just a wee bit sceptical because I think at some point it’s inevitable people will start to see it from a parochial interest. You need to be able to stand above that.”

In Porirua, city council strategy and planning general manager Moira Lawler says it is too early to say – even in Auckland – what impact amalgamation may have on funding and services to community organisations. 

MP Grant Robertson, Wellington Labour Party spokesperson, says: “The big concern about the changes in Auckland are in a big environment like that [a Super City] community groups could get lost.”

Under the new structure, local boards will have an advisory role, responsible for representation at council level on issues relevant to the community.

The Local Government Commission is proposing 19 local boards, with up to 150 members in total. 

But there are concerns that the boards are “tokenistic” and “toothless” as the unitary council has no obligation to heed any input for the local community boards.

Ms Kedgley says the local board members will be expected to carry huge responsibility with very limited resources. 

“The board members will be paid $10,000 each. These people will represent about 70,000 people,” she says.

“And what will these local boards do? They will have absolutely no resources and no power. The local boards will not be able to hire staff. They will not be able to own anything. They will not be able to levy rates, borrow money, make by-laws, or develop plans.”

Concerns about minority groups being disconnected from their local authority also raise the question of the role of local iwi.

Maori in Auckland fought hard for reserved seats on the unitary council but were rejected by the government, despite the Royal Commission on Auckland Governance being in favour of reserved seats.

Peter Tashkoff, ACT New Zealand Maori issues spokesperson, says requesting Maori seats is similar to “flogging the horse for guaranteed privilege”.

Instead of campaigning for a guaranteed privilege, Maori groups seeking representation would be better advised to be demanding some form of proportional representation, he says.

“Maori need to remember that at the end of the day, it has been the privilege structures in this country that have kept Maori down,” he says.

“The whole foreshore and seabed fight for instance was about privileged access. When people talk about institutionalised racism, what are they talking about, if not privilege?”

Morrie Love, Te Atiawa spokesperson and director of Te Wai Maori Trust, says a unitary council for Wellington would put strain on the relationship between local iwi the local authority.

“We currently have a very effective relationship with Wellington [and Hutt] City Council but a bigger entity would make it difficult to get that intimacy of relationship.”

* The Wellington region is governed by: Wellington Regional Council, Wellington City Council, Hutt City Council, Upper Hutt City Council, Porirua City Council, Kapiti Coast District Council, South Wairarapa District Council, Carterton District Council and Masterton District Council.

 

Councils inflict rates pain on business at their peril

By Lee Stace

BUSINESSES are unhappy with the proposed local government reforms and fear they will be the ones carrying the cost if more is not done to control reckless council spending, says Local Government Forum chairperson Charles Finny.

And that could have a detrimental effect on communities, as higher rates could see businesses forced to increases prices, layoff staff or shut up shop.

His warnings come after Local Government Minister Rodney Hide unveiled plans  to limit council spending to six core services – infrastructure, waste, hazard and disaster management, libraries, recreation and culture and heritage – and require them to produce streamlined long-term community plans and pre-election financial reports.

But Mr Finny, who lobbies Government on behalf of groups like Federated Farmers and the New Zealand Retailers Association, feels the reforms do not go far enough to alleviate the concerns of businesses “dissatisfied with the quality and size of spend from local governments”.

“The changes were not as comprehensive as we had been arguing for,” he says.

“We think that local government is a very significant part of the economy and is in desperate need of reform.

“We see a lot of waste occurring and we believe it can be made more efficient.”

 He says too many councils are venturing into activities outside their core services, citing Wellington Mayor Kerry Prendergast’s attendance at climate-change talks in Copenhagen as an example.

That’s a concern, because businesses pay more in rates to cover the cost, he says.

Rates have risen on average by about 5% from last year, more than double the rate of inflation.

Businesses have borne a larger share of increases as they pay a larger share of the rate take than do householders, he points out.

The pressure will be on businesses to charge higher prices, lay off staff or close down if things continue in this vein – with a big impact on the public, according to Mr Finny.

“You can’t have a vibrant community without a vibrant business community,” he says.

“It’s business which provides the employment upon which everyone depends on for their prosperity.

“Businesses are going to leave areas that rate too highly and go to those areas that rate less highly. So you will see whole centres and cities destroyed if you are not careful.”

Mr Finny wants referenda for big-ticket items like stadiums; rate rises capped to inflation; and spending on social services slashed.

These provisions featured in Mr Hide’s original proposal, which the Cabinet rejected by in October.

“[They] would have been a much better outcome for New Zealand than the actual policies [now likely to] be introduced,” says Mr Finny.

He also wants non-binding referenda to give people a greater say on how money is spent.

“Business pays over 50% of rates, yet we don’t get 50% of the say on how those rates are spent…

“If local government wants to do anything that is not on that list, they need permission from ratepayers who are going to fund it.”  

He says streamlined long-term plans are a good idea as they will no longer cover operational policies, and non-financial reporting will focus on major issues.

That would make it easier for people to understand what councils are doing.

Mr Finny also likes the proposal that councils produce financial reports before going to the polls. 

The move would mirror Treasury’s pre-election fiscal update for central Government, with council chief executives required to open up the books to the public.

Simpler long-term plans and financial reporting would provide greater transparency and make councils more accountable.

“[Currently councils] can get away with whatever they want and claim that they’ve consulted and given all this information.”