The final Future for Local Government Review report was released this month (June) with 17 recommendations for the Government. Reactions are mixed.

It is the first in-depth look at the relationship between our central and local government sectors since the reforms of 1989 that ended up with the 2002 Local Government Act, and is the work of an ‘independent’ panel chaired by Jim Palmer set up in April 2021 to advise the government on a new local government system for the future.

Basically, the review claims local communities aren’t properly served by the current relationship between local and central government and a reset is required, starting with a ‘reform’ of The Local Government Act, and a new Local Government Crown entity.

It recommends a new Crown department to clarify roles, allocate resources and “together deliver greater value for communities”, and the Local Government Act is “updated to embed intergenerational wellbeing [well-being] as a core function of councils and to recognise local government as a Tiriti partner [historic 1840 Treaty of Waitangi as interpreted by some political parties in the 21st century].”

The review also suggests a pay increase for councillors to entice candidates, four year terms, lowering the voting age to 16, and consolidating some of the country’s 78 councils, or have them share regional utilities and roles.

The report’s 17 recommendations are designed to be implemented together, along with a roadmap with suggestions on the first steps forward, and is supported by an 800-page technical report.

“Advancing the recommendations is critical to making sure local government can deliver the services and infrastructure needed for healthy, thriving and resilient communities for years to come,” says Palmer.

“This will require strong commitment from both local and central government to re-examine how our institutions work together.”

The recommendations, he adds, also provide an opportunity to align many of the current reforms affecting local communities, including water reforms and the Resource Management Act reforms, which are all happening in parallel. 

The current Government plans to consider this final report after the elections. Local Government Minister Kieran McAnulty says at this stage new policy work could distract resources away from supporting communities through tough times at the moment. “Reforming local government is important, but ‘bread-and-butter’ issues and recovery from recent disasters take precedence in the short term.”

Sector reaction to the report has varies between lukewarm and cynical.

Waipa mayor Susan O’Regan says the report feels like a ‘rinse and repeat’ of some proposals she has seen before.

“It’s clear the panel believes something must fundamentally change if local government is to do the job it needs to do, and I agree with that. It is blindingly obvious there is a funding crisis within the sector that ratepayers cannot be expected to solve,” she says.

“Given that, it’s good to see a proposal that $1 billion come back to councils although that will be a drop in the bucket given the massive infrastructure challenges around New Zealand. I’m also pleased to see the recommendation made – again – that central government should pay rates on Crown land. We’ve seen that before and the government should just get on with it.”

The Mayor, speaking personally, is not convinced that creating another Crown department to work with local government is the best way forward; doesn’t support lowering the voting age to 16; nor supports councils being forced to adopt the Single Transferable Vote (STV) electoral system. 

“I think that’s a community conversation to have, not something that should be forced upon us.”

O’Regan notes the report is only a set of recommendations to go to the Government. “It’s not Government policy and neither of the major parties have any detailed policy that aligns with the recommendations. So if there’s going to be change my pick is that it’s a way off yet.”

ACT’s Local Government spokesperson Simon Court says the last thing the local government community needs is another “word salad” from the Government.

“Our communities want their councils to get back to the basics. Water, rubbish, housing and roads is what councils should be focussed on. 

“Taxpayers have shelled out for a report that gives them a word salad on ‘wellbeing’, a copy and paste from He Puapua on co-governance and the suggestion of un-elected Maori representation on elected councils, plus the tired debate of lowering the voting age.

“The report makes no reference to the biggest changes in local government in history, like stripping councils of water assets and environmental management and urban planning.

“All it shows is a bureaucracy hopelessly out of touch. Our cities remain congested. Auckland beaches are frequently closed to swimming because of sewage leaks, the pipes in Wellington are broken, we have a drastic shortage of services and consented sections for the next generation to build their homes on. Where is the emphasis on these real world, practical concerns?

“It’s a make work scheme for pontificating bureaucrats. What we really want is councils who can direct sewage to sewerage treatment plants instead of the beach … the role of local government should be to provide services that neither central government nor private enterprise can provide. This report endorses Local Government to keep failing hard at essential services, while pursuing a range
of tiresome woke agendas.”

Infrastructure chief executive, Nick Leggett says; “Unquestionably, Local Government needs change and renewal, but the answer isn’t more centralisation. Democracy must be at the heart of change, along with a drive towards localism, especially given New Zealand is the most centralised country in the OECD – bar none.”

An opportunity for more localism

Local Government needs change and renewal, but the answer isn’t more centralisation, says Infrastructure NZ chief executive, Nick Leggett.

Commenting on the Review into the Future for Local Government’s final report he says; “Democracy must be at the heart of change, along with a drive towards localism, especially given New Zealand is the most centralised country in the OECD.”

To build effective infrastructure projects we need local leadership to develop financial partnerships through better shared funding models, he says, and in the past, much of our infrastructure building success has been locally, not centrally driven, including bridges, roads and the Auckland Harbour Bridge.

“Sadly, we have lost the nation-building spirit, along with the funding mechanisms for local and regional entities to drive and partner with central Government and the private sector on their projects. It’s time to restore that by building strength in regional and local communities.”

The next Government, irrespective of political stripes, should enact key parts of the review in its first 100 days of office, he adds.

“We know Local Government has been hampered by narrow revenue streams like rates – and unfunded mandates handed down from Central Government. It’s time to rebalance that and rebuild New Zealand. For instance, having GST on rates refunded to councils and linked to local infrastructure, could be game changing.”

A chance to change our LG spectrum

Linda O’Reilly, LG magazine contributor and special council at Tompkins Wake, points out that, for the first time in a long time, real change across the whole spectrum of local government now seems possible with the final report of the Review into the Future for Local Government.

The report envisages a staged process of reorganisation occurring in tranches, taking about five years to be fully completed with a series of recommendations that may or may not be implemented by the Government, says Linda, and we are unlikely to know the answer to that question before the election in October.

“Let’s see what the leading political parties make of the report in the lead up to the elections and hope that voters appreciate what is at stake,” says Linda.

“New Minister of Local Government Kieran McAnulty may well be rueing his predecessor’s enthusiasm for the task of local government reform as he contemplates the Panel’s recommendations but, at last, it seems the need to address fundamental issues has been taken seriously.”

Key points as written by Linda.

• “Rating should remain the main funding mechanism, but central government should pay rates on its property, and an amount equivalent to the GST on rates should be fed back to local government.
• “Central government to develop an intergenerational fund for climate change and Cabinet is required to consider the funding impact of its proposed policy decisions on local government.
• “Double entrenchment of the purpose of the LGA to embed inter-generational well-beings that are not subject to political whim as it has been in the past.
• “Recognise local government as a Tiriti [Treaty of Waitangi 1840] partner and weave the exercise of kawanatanga [goverance], te ao Maori [Maori World] matauranga Maori [knowledge], and tikanga [customs] into its fabric ⁽¹⁾.
• “New citizen-led democracy tools to enable a wider democratic reach, including a four-year electoral term, universal adoption of STV voting, reducing the threshold for Maori wards and Treaty-based appointments to councils and lowering the voting age to 16.
• “New approaches to leadership.
• “A reorganisation of local government to address increasing challenges and opportunities and a more complex future that extends to the types of council structure, the roles and functions they will carry out, and their governance arrangements.
• “New Crown department to manage the relationship between central and local government and coordinate and align resources – seen as a ‘reset’ of current relationships which does not currently have good mechanisms for alignment on place-based priorities and co-investment in mutually agreed outcomes.
• “Establish a new local government stewardship institution to strengthen the health and fitness of the system.”

⁽¹⁾ How you identify and apply these cultural perceptions after 200 years of acculturation in a multi-cultural society such as New Zealand is a question that remains unanswered, as is the question of ‘why’ among opposing political parties.

LG report focuses on the wrong issues

Taxpayers’ Union Campaigns Manager, Callum Purves, shares the view of many other industry observers and says the Local Government Review report in front of the Government focusses on the wrong issues.

“New Zealand is one of the most highly centralised countries in the world. Just around a tenth of government expenditure is delivered through our councils,” says Purves.

“And those councils are extremely large by international comparisons. The Auckland Super City is a prime example of bigger not being better where a merger has simply led to more managers, more layers of bureaucracy, and higher rates.

“This Review presented a great opportunity to fix this and put power closer to the people, but instead it has focussed on identity politics and public sector gimmicks like citizens’ assemblies and participatory budgeting. And the only structural reforms it proposes would likely see more centralisations and a further undermining of democratic accountability.

“New Zealanders aren’t interested in nebulous concepts like embedding a well-being focus in local government – they want to see high quality services delivered at a local level for the lowest rates possible.

“That means small, democratically accountable, powerful local councils where local people have the opportunity every three years to kick out politicians who aren’t performing.”

 

Local government – needs more central funding

The Local Government NZ association says the report into the future of local government released this month takes a common-sense approach to funding.

“Local government in other parts of the developed world is responsible for almost half of public spending, but in New Zealand, it’s less than 10 percent,” says LGNZ President Stuart Crosby who claims we are out of step with the rest of the world.

“The panel has spent two years talking to local government and the communities they serve, looking at best practice and considering all the trade-offs. They have made it clear, in no uncertain terms, that while there is a real need to transfer resources and level up funding between central and local government, it must come with a commitment to do things differently and change the system to be more responsive to local needs,” says Crosby.

“Central government cannot solve the issues communities face on its own. If we look at the big issues such as climate change, dealing with regional inequalities, building social cohesion, and planning for growth, local government is best placed to take a leadership role.

“Many of the recommendations made by the panel have been in the mix in the past. Not every single council will agree with every recommendation, but local government is united in the need for change.”

LGNZ National Council Member and mayor Alex Walker urges politicians not to take the easy road and play politics with the report.

“Local government matters too much to our communities. Let’s look at the recommendations through a localism lens.

“Every recommendation needs thoughtful consideration; we need to focus on what communities need to build a stronger New Zealand. Talk about structural change is challenging for local government. We will be talking to the wider membership about their views on the pathways suggested in the report around structure.

“Ultimately, this is a conversation that councils, along with their communities, need to drive rather than letting central government take the wheel.”

He adds that the association’s National Council is steadfast in its determination to “put this firmly on the agenda of the government elected in October.”