Local Government Magazine
Infrastructure

Infrastructure: the state of play – One man’s view

Lawyer Adam Feeley is well known for his staunch views and career spanning the Serious Fraud Office, Queenstown Lakes District Council and, now, independent advisory firm Rationale. He pulled no punches at the IPWEA NZ Conference in his reality check on the state of play of local government infrastructure.

Adam Feeley is principal advisor for Rationale and one of nine independent assessors behind LGNZ’s CouncilMARK Local Government Excellence Programme (LGEP). Launched in August 2016, the programme aims to help lift the performance of local government. Independent reports on participating councils shed a warts-and-all light on how well they are carrying out their role.

CouncilMARK Independent Assessment Board chair Toby Stevenson told media at a briefing earlier this year that:

• 40 percent of councils are now participating in the programme;

• 19 reports have been released, including three this year;

• two more reports were due to be released in the next quarter; and

• 12 new councils have registered interest for 2018/19.

Caveat

Speaking at the IPWEA NZ Conference in Rotorua earlier this year, Adam homed in on the infrastructure aspects of the LGEP “at least as one person sees it”.

Joking that lawyers like to employ caveats, he stressed that these are his personal opinions, and not the views of Local Government New Zealand (LGNZ). “I had to make that quite clear in getting LGNZ to agree to me doing this presentation.”

He added that Rationale obtains a lot of information in the course of its assessments of councils for the CouncilMARK Local Government Excellence Programme. “Some of that we do not put out into the public arena but nothing I talk about today is anything other than public.”

Background

Under the LGEP, councils are assessed on four main areas of expertise:

• What Adam termed a ‘fairly logical’ grouping of governance, leadership and strategy;

• Financial decision-making;

• Service delivery and asset management; and

• Communication and engagement.

“It would be fair to say that although each of those four areas receive a grading, they’re not necessarily weighted equally,” Adam told conference delegates. “Local government tends to do community engagement really well. It communicates a lot. I think it’s arguable whether that’s as important as good financial management.”

Observations

Adam acknowledged there has been a lot of media criticism about the programme. He pointed out, however, that the councils reviewed more recently are, in general, performing better than those reviewed earlier. “People are thinking about how well they’re planning, how well they’re documenting decisions and responding to what were initially some lower results around the country.”

Financial management

Adam said that, although the public “probably wouldn’t believe it”, generally he finds financial management in the public sector – and in local government specifically – very good. “It is very prudent. Some may say it’s a little too conservative but that is certainly better than being a finance company.”

Operations

Results for the operational side of local authorities’ work are mixed. Adam reported that there are “very few, if any,” councils with strengths across the board.

“I don’t know the reason for that,” he said, “but there tended to be strengths and weaknesses in most councils. Infrastructure, invariably, was a huge issue for all councils. They either had growth issues or lack of growth, affordability, capacity and / or capability issues.”

While communication and engagement in general is good in local government, many councils are not good at communicating about infrastructure.

Governance

Adam said there is “a hell of a lot” of interference by elected members in operational infrastructure issues. “Not just infrastructure: in fact, pretty much across the board. If you ask the average elected member what governance is, they struggle. The irony is that their interest in the strategic side of the business is fairly limited.”

Community conversations

When it comes to talking with their communities about the long-term viability of infrastructure, there is a “real reluctance” to have difficult conversations, noted Adam. “You read infrastructure strategies which say, ‘we don’t think the current level of service is viable and we will have to make some hard decisions’. That does not flow through into long-term plans or into actual decisions being made.”

He described local government’s weakness in communicating about the complexities of infrastructure, and how it impacts on day-to-day life, as a “real missed opportunity”.

Reading between the gradings

The CouncilMARK Local Government Excellence Programme (LGEP) helps individual councils identify their own strengths and weaknesses. The numbers in brackets below show overall gradings for a selection of councils. AAA is the highest possible grade and C the lowest.
Adam Feeley is principal advisor for Rationale and engaged as an independent assessor on the LGEP. He told delegates at the IPWEA NZ Conference that while gradings vary considerably this was only part of the story.
“There were councils who did not necessarily have a terrific result but they are no less doing some good things. That was a really important part of the process for us. I didn’t find a complete basket case anywhere in the councils I reviewed. They always had some strengths.”

Waimakariri District Council (AA)

This council has experienced huge growth as large numbers of people moved into the area after the Christchurch earthquakes. According to Adam, Waimakariri District Council recognises the scale of growth and the need to take long-term decisions around its infrastructure. It has a 100-year view of its infrastructure.
Adam said that, while that might be “a little ambitious” it showed the council was not making short-term decisions. He noted Waimakariri’s strong financial planning, and good infrastructure and finance teams who talked to each other.
“For anyone who knows the Waimakariri council and its relationship to the likes of NZTA in the Canterbury region, they play really nicely with people. It makes such a difference to getting results.”

Ruapehu District Council (BB)

In terms of social challenges and deprivation, Ruapehu District Council sits at the other end of the scale to Waimakariri. Adam describes it as a good example of a council “doing a brilliant job on the smell of an oily rag”. Council, he said, “works incredibly well” with local people on infrastructure issues to prioritise where spending will be done.
“Like a lot of rural councils, they have a major issue with forestry trucks demolishing roads. They came up with what I thought was a very creative way of dealing with that by going to NZTA and saying, ‘if we can incentivise, through a differentiated user charge, for people to get on the state highways earlier would you do that for us? Otherwise, you’re only going to end up funding a hell of a lot more on our local roads’. NZTA agreed to that. It’s a really good example of collaboration.”

Matamata-Piako District Council (BBB)

This council bases a lot of its water investment around the decisions and priorities of local business.

Rangitikei District Council (BB)

“One of the best finance teams I saw,” said Adam. With 90 percent of council’s capital – and 80 percent of its OPEX – being spent on infrastructure, a strong finance team and good integration with the infrastructure team, is essential.
Without that key ingredient, Rangitikei District Council would be facing even bigger challenges than it already does, said Adam.
He also praised council for being “really honest” about its discharge consent issues with Horizons Regional Council.

Far North District Council (B)

“If there were an LGNZ award for honesty in local government, the Far North District Council wins it every time, in my books,” said Adam. He described council’s infrastructure strategy as a depressing but honest read.
“They are not trying to pull the wool over anyone’s eyes. They are really up front about their problems and that deserves a lot of credit because you can’t deal with a problem until you acknowledge it in the first place.”

Management

Adam said a lot of chief executives, and general managers outside councils’ infrastructure teams, are ‘not taking the level of interest they should’.

“A consequence of that is the silos which exist amongst planning, finance and infrastructure teams. The other thing is – and I understand why – elected members, politicians generally, are very quick to haul staff over the coals when things go wrong but there is a real risk aversion to take some brave decisions around infrastructure.”

Infrastructure strategies

He described the ‘really interesting’ mismatch between the starting assumptions behind many infrastructure strategies and following conclusions. Many reports stated ‘we assume levels of service will remain the same over the next 30 years. There will be no major events and no major regulatory change’.

“When I typically ask those people whether they had had any [such events or changes] in the past 30 years they’d say, ‘Yes, of course’. So, what suggests it’s going to not happen in the next 30 years?”

He described this practice as ‘pretty lazy’. “There are some real disconnections between long-term plans, finance strategies and infrastructure strategies. For example, on the one hand – and I saw this a lot – they’d be saying it’s business as usual. And then I saw a long-term plan which had all these big projects.”

Data

Adam said many asset management plans contained caveats on either the completeness of, or council’s confidence in,
its data. “I have to ask why you are making these big capital decisions when you have such low data confidence and you don’t have good data as one of your first priorities.”

Business models

There are concerns around how councils are making decisions. Adam said only three or so councils he visited were using business cases well. “Some had an approximation of one and most didn’t have anything at all other than a technical assessment.

“This is not so much the fault of infrastructure but the fact that ‘nice-to-have’ community projects so often were getting in the way of major infrastructure capital spends.”

Shared services

Adam said he wasn’t sure why shared services work so well with some councils and not so well with others.
“I suspect a lot of it comes down to personalities. There are a few councils really doing good jobs and working with
each other. But there were more councils reluctant to share ideas and reluctant to give up a little bit of control than there were those that were open to different ways of doing business.”

Capital projects & accountability

There is “a real accountability issue” around capital projects. “I could find nothing in long-term plans which wrapped up at the end of a major project and said, ‘this is how much it cost relative to what we said it would cost, this is when it was delivered and this is the scope we did, or didn’t, stay within’.”

Burning platform

According to Adam, one of the biggest issues is the inability of many councils to see the burning platform on which our country’s infrastructure is based.

“A lot of councils were just one major disruptive event away from having a significant financial problem. The fact that you can’t see a burning platform doesn’t mean there isn’t some smouldering going on.”

Future focus

Speaking to different groupings of people in local government, he said elected members really need to focus on infrastructure strategies and holding infrastructure teams to account. “What are the measures, what’s being delivered and when?”

Chief executives, he said, need to work on improving organisational cultures. Engineers should more readily acknowledge that infrastructure is not solely an engineering issue but also involves economic, financial and other considerations.

“And for us people who are not engineers, we have to acknowledge that infrastructure is the most important part of local government financially, because unless you get infrastructure right you haven’t got a lot of money to spend on other things.”

Finally, he said, “for those of you who have heard bad press about the Excellence Programme, probably some of it is true. But, at the very least, it has started a good debate. There are some councils doing a good job and they’re worth talking to.”


This article was first published in the September 2018 issue of NZ Local Government Magazine.

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