The call for change at Infrastructure New Zealand’s recent Building Nations Symposium in Wellington was loud and clear. Poll after poll showed a hearty appetite for a major rethink of how councils are structured, funded and mandated.
In part three of this three-part series we look at Wellington City Council CEO Kevin Lavery’s repeated call for a city deal that would give Wellington far more autonomy to create its own destiny.
See part one: ‘Shaken and stirred: Infrastructure challenges provoke thirst for a cocktail of changes‘, where we look at the polls in more detail.
And part two: ‘Moving mountains…. Wanted: A major rethink on disaster risk management‘, where we mull over a warning note from Elizabeth Longworth that our country must switch from building back infrastructure after an event – think earthquakes, storms and floods – to making it more resilient in the first place.
Wellington City Council CEO Kevin Lavery has said the timing is perfect to do a “city deal” with central government. Speaking at the Infrastructure New Zealand Building Nations Symposium in Wellington recently, he said he was not talking about grants and hand outs. “We’re not going cap-in-hand to government with a shopping list. What we want are freedoms and flexibilities, and the opportunity to use existing monies more effectively and to generate more growth.”
Kevin hails from the UK where such city deals have already been brokered between local and central government. Manchester, which scored a city region deal with the UK government in 2012, is often seen as the poster child for such arrangements which give local authorities much greater say over their own destiny.
Such deals are in marked contrast to the usual parent-child relationship that prevails in central / local government dealings in New Zealand.
Kevin says Wellington City and its neighbours are looking to negotiate a city region deal with the new government “to help deliver smart and sustainable growth for New Zealand Inc”.
“We have an ambitious long-term plan in Wellington to transform the city, and a new mayor who wants to see Wellington flourish on a global scale and who understands what it will take to get there.”
He notes that the new government had been talking in the run up to the election about local authorities being able to access GST receipts and re-energising the provinces.
“Our calculations demonstrate that with the existing plans we’ll create an additional tax revenue for the government in the region of up to $3 billion over the next 20 years. Without the deal that just becomes a one-off.
“So our proposal will be to ask for a proportion of that additional revenue back so we can reinvest it through a revolving infrastructure fund which will lead to even greater growth and consequential additional tax revenue for New Zealand Inc.
“Basically, the council is taking all the risk and all we’re asking for is a share of the upside that we help to create.”
He says that is “not a big ask”.
“We want to co-design the deal with government so that we’re both, if you like, designing the house we’re both going to live in.”
This “earn back” idea is just one part of the proposal. Council also wants an urban development agency to be set up to help overcome Wellington’s challenge of limited and fragmented land to provide housing and development for growth.
Kevin says council also wants to look at property holdings around the port and the railyards.
“There’s no question that the property area of CentrePort needs reinvention following the Kaikoura earthquake. This is an opportunity for Wellington, not a problem.”
He says Wellington City Council is already working with the Wellington Regional Council and the government on a “Let’s get Wellington moving” project.
“This will take a broad approach to solving today’s and tomorrow’s transport challenges in the city. It will involve huge investment in public transport and roading. Buses need roads too.
“It will mean a huge urban regeneration programme to complement transport changes. We want to unlock the CBD by reducing the number of commuter cars there and growing the city with more houses and commercial developments – particularly in the central area.
“We will also look at value capture options such as special levies and even congestion pricing to generate monies to help pay for all the investment.
“And, as we build for an expanded population, we’ll need a streamlined resource consent system so we’ll be interested to extend the housing accord approach going forward but we’d like to see much more emphasis on affordable housing, not just any housing.”
ON THE BOIL
Wellington City Council is understood to have been looking at a city deal option for some time now. It spoke with several government departments last year.
Newsroom writer Shane Cowlishaw reported in mid-October this year that details of the council’s plans were revealed in an April briefing from the Ministry of Business, Innovation and Employment (MBIE) to then Minister for Economic Development Simon Bridges. The details were released under the Official Information Act.
Shane wrote that, besides the earn-back mechanism, other ideas were special economic zones that could be exempted from national regulation, and land assembly changes that would give the council more power to acquire land.
New Zealand Initiative executive Oliver Hartwich mooted the notion of special economic zones in an interview with NZ Local Government Magazine recently.
His comments came as part of a broader discussion on the Swiss model of government which devolves far more incentives, power and money to local authorities and locks in ways for communities to manage their own destiny.
While this flies in the face of New Zealand’s centrist approach to government, Switzerland produces national GDP figures that, year after year, far outstrip those of New Zealand.
(See the article “Localism the Swiss way” in the November 2017 issue of NZ Local Government Magazine or search on our website: www.localgovernmentmag.co.nz.)
Kevin Lavery told delegates at the Building Nations Symposium that when Greater Manchester signed a city region deal with the UK government in 2012 it was the start of a new part of the Manchester renaissance.
The city’s “devolution revolution” deal included a revolving infrastructure fund that allowed Manchester to earn back millions of pounds a year of extra tax received by the government as a result of growth delivered in Manchester. “It was, essentially, payment by results for economic growth.”
The deal also included an investment framework allowing Manchester to prioritise that “earn back” money, with a single pot of European community money and central government money all coming together.
“One of the most exciting developments that occurred, and potentially the most rewarding, happened immediately after the failed referendum for Scottish independence,” he said.
When the cities of Manchester and the government signed the historic ‘Devo Manc’ devolution settlement, the local authorities gained hugely expanded powers over transport, planning, housing, social care, economic development and even health.
Kevin says the deal was a “massive” shift for a centralised country like the UK and helped Manchester take much more control over its own destiny.
“Devo Manc demonstrated how important timing can be and how we have to be bold and take risks.”
Timing was “politically perfect” in that case, he said. Now, in the lead up to Brexit, the provincial parts of the UK are working to make sure they gain greater local autonomy and control, and that power doesn’t simply return to reside in Whitehall.
He adds that it will be a lot easier to do a city regional deal in Wellington than Manchester.
“Manchester’s problems were far bigger and more complex than Wellington’s and our opportunities are far greater.”
Kevin says a city deal will not be the “be-all and end-all” for Wellington but it will allow local authorities to take their vision that next step.
“It’s exciting and we’re looking forward to the conversations with the new government.”
This article was first published in the December 2017 issue of NZ Local Government Magazine.