New Zealand has one of the most centralised political systems in the OECD. Functions and finance are concentrated in the highest level of the two-tier state system, central government, with local government roles allocated at the discretion of legislation determined by central government ideologies, perceptions and preferences.
Because local government’s focus is strongly mandated by central government, it has ‘swung in pendulum fashion’ between a restricted ‘core service’ delivery role with a focus on efficiency and effectiveness, to one with community well-being in the centre, and back again depending on the inclinations of the party in power at the time.
When crises arise, or central government politicians feel frustrated with what they see as slow progress in implementing their desired agendas, local government is at the mercy of central government intervention and change. Thus, in the past decade, central government disestablished democratic representation in Christchurch to fast-track its own water management objectives, intervened strongly to accelerate reconstruction after the Canterbury earthquakes, imposed representation limits and reforms, and decreed housing solutions outside normal planning processes in Auckland. Meanwhile, the Local Government Act, (LGA) which specifies council roles and responsibilities continues its swings.
The election of a new coalition government in 2017, foreshadowed hope for a swing back to the permissive and community focused legislative mandate for local government in New Zealand. The Government’s announcement of well-being reporting for Treasury’s budget recognised that Government’s functions extend beyond service delivery, that it has a meaningful impact on the quality of peoples’ lives, in qualitative outcomes, not just inputs.
The expectation that the new government would review and revert local government’s mandate to community outcomes in the Local Government Act was not unreasonable. A previous Labour-led coalition government (1999-2008), mandated ‘powers of general competence’ for local government, beyond the ‘New Public Management’ managerial paradigm, a community well-being, participatory, and localised / subsidiarity model through the Local Government Act 2002. This was overturned by a subsequent minimalist National-led government (2008-2017), reinstating emphasis on efficiency and effectiveness and ‘core services’ in Local Government Act amendments in 2010 and 2012.
There are indications that the new government is prepared to delegate a more active role for councils in local affairs, “not as service providers but as enablers, facilitators and advocates” (p. 6). Local government official Mike Reid suggests this government has a unique opportunity to create a more localist local government system that again brings citizen participation into the public realm in a meaningful way (p. 21). He and other local government experts hope the more expansive role will be defined, and constitutionally enshrined, once and for all (p. 18).
Indeed, local government reform has been identified as an urgent ministerial priority, with the Local Government (Community Well-being) Amendment Bill already tabled in Parliament. The agreement establishing a ruling coalition between the Labour and New Zealand First parties also instructs the government to hold an inquiry into local government’s revenue base and costs. The Productivity Commission will undertake this review, looking at ‘the adequacy and efficiency of existing local government financing frameworks, including what changes are needed in central government’s approach to form, function and funding of local government’. Ironically while the ‘well-being’ legislation proceeds, this inquiry will investigate the drivers of local authority cost pressures and provide recommendations for how councils can maintain and deliver services and infrastructure in cost-effective ways into the future. The final report is expected in 2019-20.
Meanwhile, the proposed ‘Community Well-being Bill’ aims to provide clarity on the Government’s intended direction for local government, reinstating the LGA 2002 well-being mandate, including a broad empowering approach away from the focus of National’s LGA core services and cost-effectiveness prescriptions.
Treasury’s Regulatory Impact Assessment of the bill says local government’s role is to meet the needs and aspirations of its communities. This role sits within a range of other Acts such as the Resource Management Act and the Biosecurity Act that also go beyond core services, so the legal description of core services is ‘unnecessary, incoherent, confusing and inconsistent’.
According to Treasury, the focus on core services stifles innovative responsiveness, and fails to account for local government’s broader role in community development, placemaking, service provision and regulatory and planning functions. Treasury expects no ‘vast expansion’ of functions and services, or a reduction in prudence because of the broader focus on community well-being, as there are other mechanisms to ensure cost-effectiveness, such as ratepayers’ scrutiny. But, Treasury argues, the compliance burden will be reduced, legislative coherence and the future relationship between central and local government will be improved. Other proposals in the bill include reinstatement of council powers to charge development contributions for community infrastructure and reserves, not ‘core services’, or appropriate for developer funding according to the previous government.
Treasury expects support on the ‘Well-being bill’ from local councils and peak bodies Local Government New Zealand (LGNZ) and the Society of Local Government Managers. However, Council and Local Board views are varied. In Auckland, the Council’s Governing Body supported the well-being changes, as did many urban Local Boards, but rural Local Boards such as Rodney and Franklin opposed the change, expressing concern about inefficiency, demands exceeding resources and reporting costs.
Other bills to improve local government participation and remove bias have failed. The Green Party’s Local Electoral (Equitable Process For Establishing Māori Wards And Māori Constituencies) Amendment Bill sought to remove a referendum veto on proposals to establish Māori wards but was defeated this year in its first reading, meaning majority non-Māori ratepayers can override proposals for Māori wards. Local government mandates defined and enshrined in the NZ constitution as suggested by constitutional and local government experts, could recognise the bi-cultural nature of this country and protect provisions for Māori representation, so these are no longer at the mercy of majoritarian European political views at local level.
Local Government New Zealand launched its ‘Localism Project’ proposal at its July conference, reaffirming its support for subsidiarity – maximum decision-making closest to where those decisions are impacted. With forces of change such as increasingly complex population growth, climate change, housing pressures and tourism impacts, local government offers a way of engaging citizens, of sharing power, risks and solutions across sectors of government. Localism recognises that central government alone doesn’t have all the tools and answers to problems that are felt differently across the country. Today’s issues are too complex for a “top-down, ‘one size fits all’ approach” and councils should be able to govern and administer responsibly within a clear and stable set of rules without arbitrary interference from central government.
The Minister of Local Government, Nanaia Mahuta, says in principle localism is not incompatible with central government’s objectives, but it’s “not all about decentralisation”. Central government is now reviewing challenges in local government’s ‘three waters’ services (drinking water, waste water and storm water). When the Minister of Transport and Housing perceives Auckland Council is too slow to address the region’s housing shortage, he threatens to intervene.
So far, despite incremental changes which propose to reinstate important well-being considerations into the Local Government Act, there’s little evidence of central government willingness to devolve power and to define and enshrine functions and funding to local government, through constitutional protections, once and for all.