Power imbalances in local vs central government

Christine Rose

Local government in New Zealand is a creature of statute, so it’s subservient to powers bestowed upon it by central government. From the creation of its mandate and structure, to the reforms imposed through time, local councils are, and will remain, at the mercy and discretion of the senior agent. This has had implications for the form and function of local government, and therefore its responsiveness to social and physical infrastructure issues, particularly in Auckland, New Zealand’s preeminent centre of population, trade, transport, economic activity and growth.

As New Zealand’s only city-region of international scale, Auckland sits as an important recipient of effects of central government policies. Statutes mandating local government activities shape the realm of political action, the scope of the possible. But other government policies such as national standards, regulations, and even immigration settings, have a large bearing on the issues effecting Auckland and therefore requiring response.

The power imbalance between central and local government can be a cause for frustration, misunderstanding, and misalignment. It is a potential source of distrust, imposes limits to local government’s responsiveness and accountability, and can lead to unilateral decisions at central government level that don’t match local government’s plans, funding capacity, needs, or aspirations.

Despite attempts to align central and local government views on transport and social infrastructure, consensus about solutions to those problems is usually lacking. Tension and checks and balances are appropriate between central and local government, but often, central government is seen to load problems onto New Zealand’s biggest city-region, without the commensurate tools and liberties to address them. There’s no evidence that these challenges will be resolved any time soon.

Local Government activities can generally be categorised into three areas: Prohibited activities are those where policy is set and implemented nationally and where local government has no authorised role. Mandatory functions are those where policy is set nationally and implemented locally, often requiring higher levels of service than local voters would otherwise support; and discretionary functions are those where local councils can determine themselves, whether to undertake a role or not.

More generally in New Zealand, the scope of local government intervention is fairly limited, focused mainly on ‘services to property’. New Zealand local government has the lowest proportional share of expenditure relative to central government in the OECD. It has very little involvement in addressing social issues such as inequality, unemployment or public health. That immediately poses challenges to councils’ abilities to address complex problems where potential responsibility for solutions are shared, especially in Auckland where persistent structural inequality concentrates poverty, infrastructure deficits, and socio-economic deprivation in particular ethnic and demographic communities.

Under pressure from rapid growth and demographic change, arguably not well understood by central government, and ‘crumbling’ and deficient infrastructure, Auckland Council seeks a greater range of funding tools to meet its needs. Central government is resistant to ‘special case’ pleading from Auckland, averse to lobbying from ‘just another interest group’, and seems sceptical about the merit of Auckland Council’s demands for greater financial autonomy to meet its infrastructure needs.

In forming the unitary Auckland Council, central government established a more coherent, unified Auckland voice than the fragmented, conflicting views from the previous seven local councils and one regional authority. However, as shown by The Policy Observatory’s review of the Auckland Council five years on, that’s no guarantee that the government would be receptive to that voice, or that engagement would be constructive or aligned.

Even where high level agreement is reached, as in the case of the Auckland Transport Alignment Project, or the Auckland Housing Accord, the asymmetrical power and knowledge between local and central government means there’s no necessary guarantee of timely results or agreement on appropriate tools. Sometimes it’s just a matter of difference in political perception and knowledge. As a case in point, the Housing Accord in 2013, between central government and Auckland Council (under some duress), led to the identification and agreement on Special Housing Areas (SHAs), to accelerate the release of land, to address the region’s housing shortfall. When Auckland Council accepted 84 of the proposals put forward by landowners for fast-tracking, but rejected three in rural west Auckland due to a lack of transport infrastructure, Nick Smith, Minister of Housing at the time, warned “government could override its powers and approve the areas itself”. Subsequently the government created a $1billion Housing Infrastructure Fund to address transport needs in the otherwise unplanned SHA and other developments, and criticised the council for not making use of it, despite limitations on the council’s ability to prudently borrow more without negatively impacting on its credit rating.

Thus sometimes well-founded local government responses to central government pressures are still not seen as adequate, and meet threats of more unilateral action from government, regardless. Ultimately, central government retains the power to define both the problems and the solutions to issues facing local government in Auckland.

While regulations, instructions and edicts from central government create demands on Auckland Council, constraints such as limited funding and funding tools mean challenges remain unmet. The council in good faith develops transport and spatial development plans which are rejected by the government. When the Auckland Transport Alignment Plan was signed by central government and the Auckland mayor of the time, Len Brown, heralded this as an “historic milestone”, “a new dawn” in the relationship between the council and the government. He said the agreement ended “decades of disagreement and timewasting”. However good the agreement was though, opportunities for subversion of promised harmony remain. The council can agree with central government on high level transport plans as much as it likes. But appeasement is no guarantee of real power to deliver on ‘mutual’ aspirations. The government latterly ‘got on board’ with the plans for rapid transit services between central Auckland and the airport for example. But they set a timeframe thirty years hence and deny the council tools such as a regional fuel tax to fund it.

Recent transport policy announcements from the National Party show that Auckland’s importance in the forthcoming election is leading to concessions to the region’s transport aspirations, but distortions in priorities as well. The Labour Party announced an election promise to fast track light rail to the airport, and inner city light rail within four years, and the party supports a regional fuel tax. That the future direction and provision of critical transport services and funding tools hinge on which party is in Government, highlights the vulnerability of Auckland’s future to central government policy.

The Policy Observatory’s review suggests central government’s short term approach to infrastructure investment is the challenge. Others such as James Bews-Hair, former advisor to Mayor Len Brown, quoted in the Spinoff, say agreements are based on an expectation from central government that the council ‘will step up to the mark’. The council is expected to address effects that have causes beyond its making, with funding and other tools limited by government. Central government determines priorities, provides limited subsidy inducements, controls financial operating parameters and pays no rates on significant government land holdings.

Reporting to the States Service Commission, former Auckland Council Chief Executive Doug McKay said the most important relationship the Council has, is with central government. But it’s not an equal relationship. Current Mayor Phil Goff says he’s kept awake at night by the challenges of housing and transport for Auckland people. “You can’t build infrastructure overnight, and you can’t build it at all unless government gives you the ability to raise revenue”. Add statutory and political limitations, and it seems Phil Goff will continue to lose sleep; fundamental housing and transport problems, and the power imbalance between central and local government will remain.

Christine Rose
About the author

Christine Rose

Advocate, Artist & Writer
Christine Rose is a community and environmental advocate, an artist and a writer. She has First Class Honours in Political Studies from the University of Auckland, and a double major Arts degree in Politics and Philosophy. She also researched local government politics for five years at post graduate level. She served in local and regional government for 15 years, and was Deputy Mayor of Rodney District Council and Deputy Chair of the Auckland Regional Council. She also chaired the Region’s Land Transport Committee. She maintains an interest in local government, public policy and political philosophy as an observer and commentator. The opinions expressed in this article are Christine’s own and should not be construed as the views of any other organisation or institution.