Speech to Local Government Chief Officers Group

Good morning and my thanks to the Local Government Chief Officers Group for the invitation to speak to you today. 

The theme of this meeting "Economic Development: the Role of Government and Infrastructure" fits well with the topics you have asked me to speak about today.  

I'll be talking about the reform of Auckland's local government , and my work on improving the transparency, accountability and financial management of local government.

I'm looking forward to hearing the views of the large Australian contingent in our midst, and answering some no doubt curly questions on these issues when I have finished my speech. 

A special welcome to all of you.   I trust you have a great stay in Dunedin and New Zealand.

I would like to share with those here from across the Tasman that the governance of the Auckland region has been a cause of concern to successive Governments for at least the past 50 years.  

Over that time, we have seen duplication of services, competing leadership, complex and fragmented decision-making processes, factionalism and weak accountability.   

This has impacted adversely on business and Auckland's diverse communities. Auckland lacked a vision which united the whole region and brought out the best from it. Auckland's voice was not being heard where it mattered most - in Wellington.

Auckland's future, and to a large extent, NZ's future depended on the Government making critical decisions about Auckland's regional governance.  

The Government firmly believes that the new Auckland Council - a unitary authority- will be able to make the critical regional decisions to move the region forward and  foster common regional identity and purpose.  

Auckland is one region, so the simple solution was to have one council, one mayor and one plan. 

All previous attempts at reform have failed to provide enduring solutions. These problems, and the lack of workable solutions, were made all too apparent in the Report of the Royal Commission on Auckland Governance made just one year ago.  

To succeed, the governance of Auckland must manage and resolve the tension between regional and local issues. 

When different councils manage these competing interests within the region, the result is increased tension and slow resolution of problems as they grow in complexity. These problems are of course exacerbated as the Auckland population continues to increase.

This Government has moved quickly to address the urgent need for change expressed in the Royal Commission's report. 

The two Acts passed last year and the proposals of the Local Government (Auckland Law Reform) Bill, will deliver a united Auckland governance structure.   

They will put in place strong regional governance, integrated decision-making, great community engagement and improved value for money. 

We are committed to making these decisions swiftly so that Auckland, and New Zealand, can start reaping the rewards of the reforms without delay.

The first two Acts [the Local Government (Tamaki Makaurau Reorganisation) Act 2009 and the Local Government (Auckland Council) Act 2009] set out the Government's key ideas for Auckland. 

They provided for the creation of one Auckland Council and the disestablishment of the existing local authorities on 1 November 2010.

The Auckland Transition Agency was established to effect the transition to the new Auckland council. 

These Acts also provide for the high level framework for the Auckland Council; the establishment of a new type of local government entity - local boards - to ensure better local participation in Council decision making; and give direction and powers for the Local Government Commission to determine the final boundaries and wards of the Auckland Council, and the number, boundaries and numbers of members for the local boards and their membership. 

The third Bill develops and enhances the two earlier Auckland Acts and amends many other pieces of legislation. It will give the new Auckland Council the tools to be up and running effectively in November after the October local government elections. 

The scope of change will be significant and complex, as many organisations are disestablished and their staff and assets moved into new or different organisations.  

The Bill makes further provision for the Auckland Transition Agency to establish new local governance arrangements, manage the transition of staff and assets to the new structures, and prepare for the October elections. 

It provides the detail for the Auckland Council to operate effectively from its establishment on 1st November. As well, it gives a structure and governance framework for council-controlled organisations which are essential to achieve the regionally effective operation that underpins the governance reforms.

The Bill will also establish Auckland Transport and make further provision for Watercare Services Ltd, as well as providing further details of the relationship between the Council's governing body and its local boards.  

The Bill provides mechanisms to enhance Maori, Pacific and ethnic participation in Council processes through the establishment of advisory boards. It also provides transitional planning, funding and rating arrangements through to July 2012, and makes amendments to other legislation arising from the Government's decisions on the nature and scope of the new Auckland governance arrangements.

While the Government is committed to the enactment of the Bill as soon as practicable, we wanted to ensure that Aucklanders and other interested parties could give their views on the Government's proposals through the  Select Committee process. I understand that over 800 submissions have been received on the 3^rd bill.  

As the Bill will make changes to existing councils' planning decisions in June 2010, it must be passed by the end of May. The Auckland Governance Legislation Committee will report back to the House by 3 May.

I would like now to discuss decision-making responsibilities in the new Council. 

The Local Government (Auckland Council) Act 2009 provides for two decision-making groups in the new Council:

The first tier is the governing body made up of the Mayor and 20 councillors.

The governing body is responsible for decisions on the regulatory functions of the Council as a local authority, although it has the power to delegate many of these to local boards. 

It is also responsible for financial management, and ensuring the Council as a whole has the capacity to provide services and facilities, including local activities, across the region.  

In meeting these responsibilities, the governing body must consider the views of any local board whose community is affected by that decision. 

The second tier is the Local Boards. They are responsible for identifying and communicating the interests and preferences of their communities about Council strategies, policies, plans and bylaws. They are also responsible for proposing local bylaws to the governing body. 

The Act provides that decision making for non-regulatory activities is shared between the governing body and local boards. The governing body allocates responsibility for a decision by applying a set of principles set out in the Act. 

These principles are that non-regulatory decisions be allocated to local boards unless they promote the well-being of communities across Auckland.  

The governing body must, of course, consider the views and preferences of each local board as part of the allocation process.  

The Council must publish in its long-term plan and in each annual plan the decision-making responsibilities allocated to local boards, so that the people of Auckland know where the responsibility for different activities lies.

The Auckland Transition Agency has been asked to define the initial allocation of decision making responsibilities between the governing body and local boards so that both bodies can be operational from 1 November this year.  

The ATA have recently released their proposals for the roles and functions of local boards and are seeking feedback on them.

As well as considering specific activities, the ATA has looked at the support, local boards will need to fulfil their role. It has begun to examine funding issues and the budgets to be allocated to local boards. 

There's no doubt about it. Council Controlled Organisations are a hot topic right now. There has been a great deal of public discussion, some of it informative and accurate, some of it not.  

So I will provide some background. There are now more than 300 council-owned or council-funded entities with some form of corporate or business-like structure spread across the existing eight councils in Auckland.

The Government has asked ATA to review and rationalise the council-owned entities before 1 November 2010, and to develop proposals for a consolidated structure for the new Council.  

These proposals are required to achieve a consistent approach for the new Council and to eliminate a multiplicity of CCOs with the same or similar purposes.  

The result will be a streamlined CCO structure and a smaller number of new CCOs, based on shared purpose and activities. 

Any of the existing council entities not affected by the new CCO structure will simply be transferred to the Auckland Council on 1 November.  

The Government has already approved three CCOs for Auckland - the Regional Transport Authority, Watercare Services Limited and the Waterfront Development Agency. 

The CCO structure developed by ATA will remain in place from 1 November until the Auckland Council has completed consultation with Aucklanders on any proposed changes to the entities structure, together with the development of its 2012 long-term plan.

The object of the exercise is to group and integrate organisations with similar aims and activities so that they can operate more effectively at a regional level. 

If these organisations do not already have a corporate structure, it is unlikely they will do so under the new Council. And council assets and activities will not be privatised.

The Government is looking for efficient and effective service delivery, and for the Auckland Council to remain democratically accountable for the delivery of those services.

The ATA has released its proposals for CCOs and is seeking feedback on them.   

We expect the new unified Auckland Council to bring many benefits to its residents and ratepayers, and serve as a positive example for other regions to follow in the future. 

Further down the track, we will consider the implications of the review of Auckland's governance for local government in general.

I am also encouraging local authorities to work efficiently and effectively for their ratepayers and citizens. One of the ways in which councils can operate more effectively is by streamlining bureaucracy and working cooperatively on joint ventures.

I would now like to briefly touch on the government's work on improving transparency, accountability and financial management in local government. 

The local government sector has provided valuable input into this work through Local Government New Zealand and the Society of Local Government Managers. In fact, many of the changes I'm proposing had their origins in work done by one of these organisations. Recommendations from SOLGM in its report Tuning the Engine, for example, inspired some of the proposed changes to reduce compliance costs.

You can be sure that I and the central government officials working on the review are most appreciative of the help and advice we have received from the local government sector.

I started this work because it very quickly became clear to me, from letters I received and the public meetings I attended, that very many ratepayers are concerned about increasing rates, and many are struggling to pay these increases. 

These concerns are well founded. 

Recent analysis by the Department of Internal Affairs of data from 2009 to 2019 long-term council community plans (LTCCPs) shows the cumulative increase in rates per head over the next 10 years is 49 per cent, and that rates funding will increase as a proportion of councils' operating receipts.

At the same time, public debt for the sector is forecast to increase by 97 per cent and interest expenses by 91 per cent. And it is the long suffering ratepayers, including commercial ratepayers, who are expected to constantly foot the bill.

It is my passionate belief that more effective and responsive local government and a brighter future for ratepayers are most easily achieved by improving certain aspects of the Local Government Act 2002.

The three underlying principles guiding this work are that:

• local government should operate within a defined fiscal envelope


• councils should focus on core activities


• council decision-making should be clear, transparent and accountable.

The decisions recently made by Cabinet will help ratepayers and residents understand council costs, rates and activities a whole lot better so they can exert greater influence and control during planning and decision-making.   

This move will strengthen democracy in local government and I think that's a good thing. 

As a result, long-term council community plans will be simpler and more strategic in focus, financial disclosures will be in plain English, and councils will have more flexibility in choosing effective and efficient delivery methods for water services.

Council reporting will be consistent so that residents and ratepayers will be able to make comparisons between different councils.  

As from 2013, every council will produce a pre-election financial report to allow voters to make informed choices. And the return in focus to core services will mean that processes are simplified and streamlined. 

I believe councils' consultation processes are unnecessarily onerous and complex. Worst of all, they are largely meaningless to the average ratepayer.  

Most LTCCPs are bulky documents running to hundreds of pages and often more than one volume.

This makes it difficult for residents to identify the things that really matter to their communities, and can also deter them from taking part in decision-making processes. 

It is possible to remove a lot of the more descriptive, highly technical and non-strategic material from LTCCPs to produce a document people can more easily understand.  

The community outcomes process will be merged into the long-term council community plan. LTCCPs will be renamed "long-term plan" and will have a more strategic focus. This will eliminate the costs and inefficiencies of running two separate long-term planning processes.

Other benefits of the changes include greater attention to the prioritisation and affordability of proposals, allowing communities to decide the issues they want their council to consider, and clearer links between a council's outcomes and how it proposes to achieve them. 

This is not about telling councils what they can and cannot do. Essentially it is about flexibility for councils in responding to community needs and clearer information for the public by integrating community outcomes into strategic planning. 

It is important that decisions about the role of councils continue to be made locally, rather than by central government. And council activities and decisions should match the priorities of ratepayers who foot the bill.  

Councils vary hugely in their presentation of financial and performance information. Even something as simple as rates income is reported in three different ways in council plans and reports. 

It is imperative we have good quality comparative data for accountable and transparent local government.  We can then see which councils are using best practice and getting value for money, and which are not.

 I think ratepayers deserve to have that information. 

Pre-election financial reports will compile existing information, giving an account of activities over the previous three years, and identify proposed items of expenditure for the next three years.  

Ratepayers and residents will thus have up-to-date information about the performance of the current council and the status of the books, and a clear understanding of the issues the incoming council will need to consider.

As a result, there will be well informed local debate about expenditure priorities, and electors will have a chance to put the hard questions to candidates about past and proposed expenditure.  

Local elections have not had a high turnout in recent years. Access to clear information on issues facing a council and the sorts of decisions that need to be made will do a great deal to stimulate greater interest in local government amongst voters, businesses and the media. 

As Minister of Local Government I would love to see increased participation in the democratic process of local government.  

These reforms are about giving councils, in consultation with ratepayers and citizens, the ability to do a better job by prioritising expenditure and staying focussed on the provision of essential services.  

All New Zealanders share expectations of the services their councils will provide.  I would like to see local authorities more focussed on planning for and funding essential services, rather than more financially risky or novel activities.  

I am going to briefly mention the Government's proposal to amend the limits on local government's water services contracts and joint arrangements with the private sector.  

The present law restricts councils from structuring their water services in ways that best meet the needs and preferences of ratepayers and residents. Current restrictions reduce councils' flexibility to choose effective and efficient delivery methods for water services. 

The Government has agreed to allow greater use of public-private partnerships in the construction,  operation and management of water and wastewater treatment plants. 

These changes will mean that Build - Own - Operate - Transfer (BOOT) schemes will become more feasible.

Ownership of assets would revert to councils at the end of any agreement to ensure public ownership is retained. 

Councils will retain control over pricing and water policy.  

These changes will be provided for in the Local Government Amendment Bill, which I plan to introduce to the House this year. There will, of course be a chance for public input through the Select Committee process, and I encourage people to make their views known. 

And finally I want to end by mentioning another initiative where local and central government are doing a great job working together.

One of the work streams to come out of last year's Job Summit was an undertaking by local and central government to identify and implement good practice in regulatory administration. 

This project, for which I have Ministerial responsibility, is led by Local Government New Zealand (LGNZ). 

While its public profile is low compared to Auckland governance or TAFM, it will play an important part in ensuring a strong legislative framework for the work undertaken by local government.  

As a Government, we have to do our best to ensure that any legislation and regulation is genuinely needed, soundly based and as clear as possible. 

But this is only part of the story. The other part is implementation of the legislation, and this is where initiatives like the Best Practice project can play an important role.

I understand the working group, who are focussing on the Building Act and the Resource Management Act, have identified a number of good practice examples from around New Zealand.  

But they have also found barriers to taking up some of these practices, including a lack of systematic means of sharing such initiatives between councils as well as overly prescriptive legislative requirements.

Local Government New Zealand, the Department of Building and Housing and the Ministry for the Environment, are looking at options for a more coordinated and systematic mechanism to record and share good practice.

I'm looking forward to hearing their suggestions on how we can make it easier for councils to gain access to information on what other councils are doing to provide more effective processes for their ratepayers and citizens. 

The Government has recognised the burden that complex and unnecessary regulation places on councils. That's why we've instituted reform of legislation such as the Resource Management Act and the Building Act. We have already made good progress, and the further reforms of these Acts that are under way will bring significant benefits in terms of simplified and more efficient council processes.  

The Regulatory Responsibility Bill, which I anticipate will be discussed by Cabinet in April, will result in even greater long-term benefits. 

Too much red tape leads to high compliance costs and lower productivity. 

My aim is to make law-making more transparent and governments more accountable. 

The creation of an environment of essential and high quality regulation will benefit local authorities, ratepayers and New Zealand as a whole. 

Thank you for the opportunity to talk to you today. I will now turn the floor over to you for any questions.

ends