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Super-mayors, cities encouraged in local govt role reforms

BUSINESSDESK: Reforms to roll back to expansion of local government activities and to encourage amalgamations like the Auckland “super-city” aim to end 10 years of high annual rates increases and wind back expanding local government debt levels.

The reforms, dubbed “Better Local Government” effectively remove what has been widely known as the “power of general competence” granted to local councils in the 2002 reform of the Local Government Act, which made them responsible for “social, economic, environmental and cultural well-being.”

Instead, councils will be given legal responsibility to provide “good quality local infrastructure, public services and regulatory functions at the least possible cost to households and business.”

For councils in trouble, there will be a new escalating scale of central government intervention available, ranging from “providing information” to appointment of Crown review teams, observers, and managers. For the most serious situations, commissioners will be able to be appointed, and early elections called, with thresholds linked to the new fiscal responsibility requirements.

After the 2013 local body elections, the reforms will also give mayors far greater powers to appoint deputy mayors, establish council committees and approve their chairs. They will also restore the ability of elected councils to set policies on staff and salaries, rather than the current hands-off approach that gives that responsibility to council chief executives.

The reforms will also make it easier for citizens to propose amalgamations.

While the government was not seeking to impose outcomes on communities, Local Government Minister Nick Smith said there was a clear preference for “unitary authorities” in areas where efficiencies could be gained by scrapping multiple local councils overseen by regional councils in favour of a single body, such as had occurred in Auckland.

Savings from the Auckland super-city merger are estimated by the government to be worth around $140 million a year.

“The reforms will help keep rates affordable and debt at prudent levels by focusing councils on their core roles, setting clear fiscal responsibility requirements and giving councils more tool to better manage costs,” said Smith.

The package aimed to rebalance the 2002 reforms, which he blamed for an average annual increase in rates of 7 percent a year and a quadrupling in council debt to $8 billion in the last decade.

However, Smith made it clear the change to councils’ statutory role would not necessarily mean an end to such council-backed ventures as local arts festivals, fireworks displays, and business development agencies.

Rather, the reforms were intended to sharpen councils’ focus on what they provide, rather than the catch-all responsibilities of the 2002 legislation.

Councils’ environmental responsibilities were also clear through the provisions of the Resource Management Act.

Other amendments will seek to align councils’ fiscal responsibilities with the intention to restrict increases in central government spending to no more than was justified by the rate of inflation and population growth, except in extraordinary situations such as disaster recovery.

The necessary law changes will follow consultations with Local Government New Zealand, the central body representing councils’ interests, and a Productivity Commission report on the appropriate split between local and central government regulation would inform further decisions. The report is due in April next year.

Also among the eight main initiatives announced today is establishment of a local government efficiency taskforce, an investigation into the efficiency of local government infrastructure provision, and a review of the use of development contributions.

“A balance is needed between ensuring developments do not unfairly impose costs on the rest of the community and ensuring that new jobs and investments are not discouraged,” the policy document says.

Annual development contribution levies had risen from around $100 million to as high as $300 million before the heat went out of the property market from 2008 onwards.

Comments and questions
10

Typical Smith - rather weak.

The reality is that Local Government, particularly in the major metros are a huge mess.

And amalgamating the Auckland Councils is a massive disaster. Look what 20 years of it has done to Christchurch.

For obvious risk management reasons (again look at Christchurch) it is a disaster to amalgamate metro Councils.

Some people seem to blindly adhere to the notion a bigger council means cheaper rates. This is nonsense - the easiest & cheapest method to amalgamate is through management, as soon as you start with IT, buildings, staffing, logistics etc expect huge bills just ask Auckland. SHOW US THE MONEY JOHN et al.!

Auckland city council is the most dysfunctional outfit I have ever had to deal with. All decisions are referred upwards , nobody knows anything, few people have answers, it is full of gutless bureaucrats and call centre staff are just plain ignorant and ill-informed.
In a word: Disaster!

Mergers in a business environment very rarely work (savings are not made etc) so why do we expect them to work in local or central government.

Answer is simple tell councils they cannot increase rates by more than say inflation less 2%. Why less than inflation, if you look in the past the inflation rate is forced higher by higher local council and central government costs. If they drive rates down that will in fact reduce overall inflation.

I suspect we have 10-20 years to catch up.

Then also look at Auckland and force them to realize the savings that were supposed to come out of the merger.

You are right. The two main drivers of inflation are !. Central Government. and 2. Local government.
Amalgamation will only work if rates are struck according to ones income and not according to the value of ones property.

We dont want no stinking amalgamation here in Nelson/Tasman. Bigger organizations are always less democratic and more cumbersome.

Yes -about time J Key - a good start but only that. It needs to be a lot stronger. Local Governments should have to slash their budgets by 10% and pass on savings to ratepayers.

Some accountability for the least accountable part of the NZ economy.

It is time ratepayers are given a holiday from non-infrastructrure events and issues. Things like the RWC, fireworks displays, sister-city nonsense and underwriting sports and cultural events add to the Council budgets and are a big draw on ratepayers.
Councils must stick to their knitting!

The reforms moderate Auckland City becoming a defacto government as it could become with continuing growth containing the bulk of the NZ population and that probably worries some people.

As to costs, Rates in Auckland were on a growth path since the first round of amalgamations many years ago when One Tree Hill Borough had cheap Rates as did Auckland City however there is a case to say bigger organisations cost more to run than small ones and employ more people.

Is Auckland Council really amalgamated? I don't think so, still so many CEOs and big salary managers. Stop wasting money in amalgamation, spend the same on our health system. John Key, go and ask a resident what benefit he/she got from this amalgamation.