Local Government Magazine

Reform – Make it wider

Infrastructure New Zealand CEO, Stephen Selwood says the recent Building Nations Symposium demonstrates the need for a deep rethink on the role, purpose and structure of local government. Stephen spoke with NZ Local Government Magazine after the symposium.

About the numbers

Infrastructure New Zealand CEO, Stephen Selwood (pictured) says over 700 people attended the recent Building Nations Symposium in Auckland. “They’re a very strong representation of the who’s who of the infrastructure sector.”
He notes, however, that the number of delegates who completed individual Slido poll questions at the symposium ranged from just 40 to 150.
“That’s largely because of time constraints allowed for each poll,” he says, “and to people getting around to using their phone.
“But you’ve got an audience that has had detailed presentations and discussions on the topics before they are asked the questions. So, you’ve not only got an informed audience but an audience that has been informed, if you like. Then they’re asked to express their view.”
He adds that some questions – such as question nine which focused on local government reform – were put to smaller groups of people attending breakout sessions.
“The conference is quite a significant shaper of our policy direction and we take the Slido polls seriously.”

Once again, Infrastructure New Zealand took the opportunity to ask some pointed questions at its annual Building Nations Symposium. While many of the 11 questions in this year’s Slido poll focused on Auckland’s infrastructure, one drove to the heart of an ongoing debate about the future of local government.

Infrastructure New Zealand CEO, Stephen Selwood says the Slido poll results make a “significant contribution” to the organisation’s policy development programme. “So, we take them seriously.”

Talking with NZ Local Government Magazine afterwards, he was keen to stress that the poll results are not, by any stretch, the total stream of knowledge that informs the organisation’s policy positions. Delegations, research and discussion papers, and ongoing consultation are all part of the process.

Stephen and Infrastructure New Zealand’s policy group devised this year’s questions. They were canvassed through Beca which sponsored the Slido poll.

Among other questions, the poll asked: “Can we reform planning and local government funding without reforming local government itself?” What was the thinking behind that question?

The general discussion is that the laws are at fault. The [argument goes that statutes such as the] Resource Management Act and the Land Transport Management Act are behind many of the issues that we face, such as rising house prices and failure to build infrastructure in a timely way.

Infrastructure NZ’s view is that it’s the combination of the statutes, plus the funding mechanisms that local government has, plus size, capability and scale issues which go to decision-making rights which takes you into the structural form of local government.

So, if you want to fix the system you have to look at all the components: not just the laws and not just the money. You should also look at institutions.

To be clear: is Infrastructure NZ advocating for local government reform?

Yes, we are. We’re advocating for a review of governance and institutions. What that might look like, will be the result of a review process. We’ve been advocating for this for the best part of five years. This is a big change so, obviously, there needs to be a national discussion. Moreover, whilst we have views, so will other players in other sectors. All of those views should be heard, considered and weighed.

Are you getting traction on that?

You can see traction on the legislative side of the argument, and on the funding and water governance structure sides of the argument, which takes you, in our view, to ‘well, if you’re going to be talking about all those things then you really need to be talking about institutional arrangements’.

What exactly do you mean by that?

How many councils should we have? How should they be funded? What’s the role of local government? It’s pretty clear the system is not working at the moment, and if you limit a discussion to only laws and funding, you’re cutting yourself short in considering all your options.

Have you been talking with the current Minister of Local Government on institutional reform, and, if so, what has been her response?

We haven’t engaged pro-actively with the current minister.

Do you plan to do so?

Yes, we do.

What kind of timeframe would that take place within?

We’ve been fighting for a first-principles review of the laws, funding and institutions. What the government has said so far is they’re up for a conversation about the resource management system in 2019: that’s from David Parker. Minister Twyford has a very active urban growth agenda which also talks about institutions, funding and laws. So, there is a certain demonstration of a desire – or an intention – to at least review, if not effect change, and, of course, in parallel with that you’ve got the Local Government Minister reviewing the water system.

In our view, this is all building momentum for a much more substantive discussion, and we intend to engage with that
in 2019.

If the government decided to create just one water service provider for the whole country, that could have large implications for the ongoing role of local authorities. Do you agree with that statement? And, if so, does that make your call for a review more timely?

I agree. It inevitably drives that question. It’s fair and reasonable to ask that question. It’s appropriate that, from time to time, any country looks at its – I use the term ‘institutional arrangements’ because I don’t really want to talk about amalgamation. That may be part of it but it’s a wider question about what the right structure may be to be able to give effect to the roles that local government has. Moreover, that makes you ask, ‘what is the role of local government?’ Then, you start to have a much more sophisticated discussion about what the right structures may be to give effect to that role.

Have you been talking with LGNZ about this?

Over several years, although we haven’t engaged specifically in recent times, LGNZ seems to be very open to have a conversation around the funding of local government and that’s where the conversation stops. We agree that we need a discussion about the funding of local government but that takes you into a wider discussion about what its role is. What are you funding in the first place? That’s a good question. The purpose of the local government sector needs to evolve from that higher-level discussion.

We’re talking about, potentially, quite a significant change. We recently led a delegation to the US [see article Infrastructure NZ report suggests changes for local authorities in the July 2018 issue of NZ Local Government Magazine]. Local government over there is largely incentivised to go for growth because they have a direct kind of consumer/price relationship. The more residents they have, the more income they have.

On the other hand, in New Zealand, the way we fund local government: the more residents we have, the more people there are to share costs amongst, but it doesn’t actually incentivise growth. Growth is a nuisance.

So, the incentives are quite different.

How do you see the Swiss model tying into that? They take a localist perspective and build in incentives for local authorities to grow their areas economically.

It’s a very consistent idea. If councils are incentivised to go for growth, they will. Then you have a discussion about at what level. Because not only do the Swiss have many very small local authorities – reflecting quite small communities – but they also have some quite significant Canton structures, that are more like a regional structure in our context.

My personal view, and this has been a stated policy of Infrastructure NZ, is that some things should be scaled up – those are the things to do with pipes in the ground, the hard infrastructure where scale makes a big difference. That’s some of the momentum behind the review of water.

However, other things would be better scaled down to a community level. They tend to be more at the placemaking and the people side of the role of local government.

There’s a much more important role for local government in local democracy – having a say about what your community is like and holding infrastructure providers to account to deliver those sorts of outcomes – rather than having to manage the pipes and the rubbish collection, and all those sorts of things that are quite utilitarian functions. They would probably be better corporatised because they are utilities. Then enhancing the role of local government and build in placemaking; a much more people-oriented role for local government.

That’s the kind of conversation we think would be valuable to have.

Grant Hodges (EY).Shane Ellison (Auckland Transport).Dave Cull (LGNZ).

That could call into question the role of local boards, local councils, regional councils and the whole of the local government structure. Is that what you’re saying?

Yes. It could, and should, in our view. So, you promote the role of local government in local democracy and community, and placemaking. But you probably remove the utilitarian aspects of what local government is about – which is the roads, the waste, the water – because, effectively, for those sorts of services, scale really does make a big difference so you might as well scale those up.

Are you aware of any current local authorities that would be on board with such an idea?

No. I think it’s far too early in the conversation to suggest that. But I do think there’s a growing understanding across the local government sector that the current system is not really delivering great outcomes.

What would trigger such a conversation?

It ties in with the Local Government Funding Review that the Productivity Commission is doing. It’s going to the Water Services Review that Minister Mahuta is leading. It’s going to the Urban Growth Agenda that Phil Twyford is leading, and it’s going to the RMA System Review that David Parker is talking about next year.

Those are all separate reviews. What would trigger a co-ordinated discussion? One that would pull together all those different components and others?

That’s what we’re advocating needs to happen. I think that will be the result of these various processes, because, inevitably, people will come to the conclusion that you can’t look at these issues in isolation. They are inter-related.

There were 11 questions in this year’s poll. What do the overall results mean for local government?

The overall message is that change is on the horizon and there’s an opportunity for local government to positively embrace that change to achieve many of the things that it wants to achieve.

You said that about last year’s poll too.

If you look back to the 1989 / 1991 reforms, there was a very long lead-up time. [There was a lot of] consensus-building over time that we needed to change the system. That’s the process we’re going through now.

It’s not appropriate for someone to come in over the top and say, ‘this is how it should be’. It is appropriate that we have a process in place where everyone can sit around the table, discuss problems and opportunities and, hopefully, come up with solutions.

Infrastructure NZ was pushing the idea of having a Royal Commission kind of approach. Others haven’t supported that idea. That begs the question, if you don’t like that, are you just going to keep on doing what you’re doing? Or by what other process do we enable things to progress?

Are you still advocating for a Royal Commission?

We’re still open to that idea.

Any surprises from this year’s Slido poll?

I had thought views on some of those big questions would have been more divided than they were. Some of the poll results were very definitive. In fact, the majority were very definitive. That just builds the case for change.

• Note: Text has been redacted.

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

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