Local Government Magazine

Infrastructure: Thanks for your thoughts

What would you change in local and central government if you had a magic wand and the power to use it? How would you realign the roles and responsibilities of both sectors on infrastructure and its funding?

Earlier this year Local Government Magazine posed a series of such questions. We know there are already a lot of initiatives underway in the sector. We wanted to add our own anecdotal take. So we’ve been feeling the pulse of a broad group of interested parties.

Discussions around the questions went much wider than their original intent, providing interesting table talk at business forums, dinner parties and coffee chats.

It’s clear that if we all decided to go and populate one of those earth-like planets in the next solar system, you can sure bet we wouldn’t choose to start with the same distribution, or overlap, of responsibilities between local and central government.

So the big question remains. How would we revamp the intersect between central and local government if we could start again from scratch? And that, of course, ties in with infrastructure funding.

Meanwhile, Jeremy Sole has collated and paraphrased the underlying themes in responses to date.

There appears to be a real sense of anticipation about the work of the Government’s Rules Reduction Task Force.

There’s also a strong focus on regional economic development and a seemingly greater understanding of the linkages between council policies and decisions at the interface of commerce and council and how these affect, or more to the point effect, regional development outcomes.

As expected, water infrastructure came in for plenty of debate. The 2012 Local Government Infrastructure Efficiency Expert Advisory Group made several recommendations in this area including a rationalisation of legislative requirements and requirement for greater transparency in the reporting of performance.

While that group stopped short of recommending the adoption of regional entities to operate and manage potable and wastewater networks, it was clear this would be a desirable outcome given the success the model has enjoyed overseas.

Some people lament this conversation hasn’t gained traction given the acknowledged issues from the projected continuing decline in rural populations and the subsequent deficit in rates revenues.

The questions that seem to come out of this is ‘who is the community of interest when it comes to water and roading infrastructure?’ and ‘why does it have to be overseen by a plethora of small local offices rather than at an economically-sized efficient scale?

Some commentators ask why we adopt a completely different philosophy when we talk about police, education or health. The provision model for these infrastructures assumes there is an overarching national community of interest but acknowledges regional differences, through accommodating subsidiary principles. So, why do we look at other nationally essential services such as water through different lenses?

This issue is thrown into sharp relief in areas such as prime tourist destinations where the normally resident population doesn’t have any hope of sustainably coping with the infrastructure requirements necessary for the peak seasons. Some might argue the region benefits so the region pays. However, it would be an interesting to see if the general ratepayer in the region benefits any more or less than the average New Zealand taxpayer from this activity compared to any other economic activity that rate- and taxpayers undertake in other areas.

Some would say the answer to this question often lies in the political expediency and desire for, or political need for, control generated by the way the local democratic systems function. W Edwards Deming, the father of quality management, pointed out that 95 percent of the issues are usually due to the systems and environment – but we usually blame the people. An acknowledgement that both central and local government are also caught in the same dynamic –apparently with little ability to effect significant systemic change – might be a good starting point for discussion.

The messaging about the positive aspects of Auckland’s changes doesn’t seem to get out into the consciousness of the ratepayer population or the media – which has been evidenced in the amalgamation debate in Wellington and Hawke’s Bay where those vocal against the integration often seemed to quote the failure in Auckland as reason not to do the same in their areas.

We were told that another contributing factor to the often voracious Auckland debate seems to be that many of the community board members are used to being councillors in charge of their patch and some are councillors used to controlling those who control operations, and no longer have direct influence or control over the utilities. Does this suggest the issues are more to do with taking time to fully transition to new roles and responsibilities or are there real issues to be addressed?

Local government seems to need some positive PR. But that appears to be difficult while so many are focused on the negative aspects. And it is unlikely to happen until central and local government find a way to work together in developing a model that dovetails responsibilities and mitigates negative downstream consequences from each others’ actions.

A couple of contributors also lamented the council spend on sports stadia – perhaps a hangover from the Rugby World Cup spend? Of course, councils have a core mandate to provide for sport and recreation and no-one questioned that. However, the legacy of the cost of construction and ongoing provision of such assets ultimately falls on all the local or regional ratepayers, the significant majority of whom will likely never use the stadium or benefit from patronage or the local spend or from visitors using accommodation in the vicinity.

As was pointed out, the prime beneficiary of economic activity from such assets is central government – which collects the GST and company tax that ensues – not the local council or the local ratepayers. So a question also hangs over who should really be paying for these things.

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