Speech to Local Government New Zealand Zone 1 Meeting

Good morning.  It's great to have the opportunity to join you here today to talk about the work we've got underway in Auckland and across the country to enable local government to better serve New Zealanders. 

I believe in local government.  Wherever possible, I believe that decisions are best left with individuals. 

Where government is involved, it's best to have a government as local and as close to the people affected as possible.

My job is not to tell councils what to do.  My job is to provide the best environment for you to get on and do your job, reflecting the wish and desire of your communities and their willingness to pay.
 
Since taking on the local government portfolio, I have been up and down the country listening to people like you working in the sector.  You have made it clear to me that the processes and procedures set out in the Local Government Act are imposing unnecessary costs, making your jobs harder, and slowing down growth in your regions. 

That's why I asked officials to look at the Act, with a view to improving transparency, accountability and financial management. 

The review is being guided by three principles:
- local government should operate within a defined fiscal envelope;
- councils should focus on core activities; and
- council decision-making should be clear, transparent and accountable.

We are looking at:
- simplifying long-term council community plans;
- developing 'plain English' financial disclosures;
- the effectiveness of the community outcomes process;
- developing a less costly service performance reporting system; and
- identifying circumstances in which polls or referenda could be required for decisions.

This work has three related workstreams, which I would like to talk to you about today:
- long-term planning and financial management;
- management of service performance; and
- accountability and decision-making.

Officials are looking at ways to make long-term planning processes less complex and costly, as well as ways for councils' financial reporting to be improved to provide better and more easily understood information. 
 
Long-term community plans are often long and complex documents.  Ratepayers and citizens need readily understandable information so that they can know what their money is being spent on.  That way they are able to hold their councils accountable.

Experience shows that when good summary information is available to ratepayers and voters, they get involved in consultation.  I want to build on those successes across the whole sector.

Officials are also looking at mechanisms for ‘plain English' financial disclosure, and for developing comparisons between councils.  This could include, for example, standardised financial reporting so that ratepayers can more easily compare councils' performance.

We're also examining the merits of councils preparing financial strategies to set limits on rates, debt and expenditure, and to prioritise spending.  Under this approach councils first place limits on rates, expenditure and debt, and then set priorities within those limits.
 
I want to be very clear that requiring a financial strategy is not the same as central government introducing rate-capping or rate-setting - I am not proposing such measures. 

I want councils to develop, and consult on a transparent fiscal strategy.   Proposed spending could then be assessed against the policy. 

A good financial strategy could help councils, ratepayers and voters make better decisions about trade-offs.  It could provide a basis to measure a council's financial management record, and help to identify future financial management issues.

Pre-election financial updates are another option for enhancing transparency and accountability.  These could identify particular issues and options confronting each council before an election, and provide a record of the current council's performance.
 
This information would provide a basis for voters to judge the performance of the current council, and encourage good debate about the choices available to voters.
 
We're also considering whether or not changes are needed to the current requirements around community outcomes.  It's debatable whether the current 'one size fits all' processes around community outcomes are cost-effective for all councils.

Officials will be considering if there are any options for a more focused and less costly service performance reporting system.  

The third workstream is about enhancing councils' accountability to their ratepayers and citizens.

The problem with current mechanisms, such as complaints to the Ombudsmen or voting out councils, is that they're retrospective.
    
We're aiming to give ratepayers a greater say on council decisions before they are made.  For example, councils could be required to use polls or referenda to get ratepayers' views on proposed expenditure or levels of rates.

There should be a consultation process, so that the community is very clear what they have agreed to, and can hold the council accountable to those decisions.

We are consulting Local Government New Zealand and the Society of Local Government Managers, and I thank LGNZ for its assistance to date.

The public will have an opportunity to comment on any draft legislation that arises out of this initiative. 

As you know, the improvements to council transparency, accountability and financial management are guided by the principle that councils focus on core services.

Councils should ensure that their core activities are properly identified and funded before spending money on more discretionary activities.

Of course, there will be some regional variances of core activities between councils. A priority core service for the Auckland Council may well differ to a priority core service for Environment Southland. 

However, the principal of identifying and funding core services, before spending on discretionary activities, remains the same no matter where you are.

There is currently no formal definition of local authority core services.  Officials are working on how to define core services, as this is linked to the review of local government transparency, accountability, and financial management.

I'm not suggesting that the Government will stop councils from undertaking activities.

What I am proposing is that councils focus on core services and seek a citizen mandate (probably through referenda) for activities that are clearly not core services.

Reform of Auckland governance is a top priority at present and obviously of great interest to all of you.  As you will all know, we want arrangements in place in time for the 2010 local body elections and I am confident that we will achieve that goal. 

The new unitary council we are proposing will represent the interests of Auckland and foster a common purpose. 

It will result in better infrastructure decisions, including more integrated decisions on roading and land use. 

And the unitary council will ensure better value from rates and central government funding, by reducing duplication and delays in previously intractable problems such as transport issues.

In short, we are confident that the changes will lead to more cohesive and effective governance of Auckland, and, in the longer-term, better results for Aucklanders and the whole of New Zealand.

One Act - the Local Government (Tamaki Makaurau Reorganisation) Act - has already been passed.  This established the Auckland Council and the Auckland Transition Agency.

The second Bill - the Local Government (Auckland Council) Bill - has been going through the select committee process in recent months. 

This Bill introduces a high-level framework for the structure of the Auckland Council, including 20-30 local boards; empowers the Local Government Commission to determine the boundaries of the Council and wards, and the number, membership and boundaries of local boards; and provides for the integration of Auckland's water infrastructure. 

The public engagement with the select committee has been great, with around 2,500 submissions received.  The Committee heard the submissions through July, and will report back to the House in a week's time.

A third Bill will be introduced later this year, and is expected to be enacted in mid 2010. 

The third bill will provide for the ongoing governance structure, functions, roles and powers of councils and local boards, and a detailed legislative framework for governance arrangements.

At this stage of the process, it's too early to say what implications the Auckland governance work might have for other local authorities.

There are no proposals at present to take similar steps in other regions, as we acknowledge Auckland has a unique set of circumstances that have needed to be addressed for a great many years.

Improvements in the effectiveness of local government will always be sought. 
If, during the course of implementing changes in Auckland, we identify opportunities to bring about greater efficiencies, then these will be encouraged elsewhere.
 
My colleague, Dr Nick Smith, Minister for the Environment, is responsible for the Resource Management Act 1991 (RMA).  RMA reforms are being progressed through Parliament in two phases.
 
The first reform phase, the Resource Management (Simplifying and Streamlining) Amendment Bill, is about addressing the excessive bureaucracy, costs and delays of the RMA.  It includes provisions to improve plan development and plan change processes, improve resource consent processes, and streamline decision-making.
 
The Government recognises that the efficient processing of resource consents is critical to lifting productivity and the creation of new jobs. 

The recently released Resource Management Act Survey of Local Authorities report for the two years ending July 2008 shows that 69 per cent of resource consent applications were processed within the statutory timeframes. 

The Bill simplifies the consent process and provides incentives for Councils to improve their consenting timeframes.

The Bill is currently being considered by select committee, which is scheduled to report back to Parliament shortly.

The second reform phase is more complex and includes work to:
- improve management of aquaculture, infrastructure, urban design and water;
- develop the scope, functions and structure of the proposed Environmental Protection Agency; and
- better align RMA processes with those of the Building, Conservation, Forests, and Historic Places Acts. 

Due to the complex nature of the second phase of the RMA reform programme, work will progress at a more modest pace.  It will involve a number of advisory groups and significant opportunities for public consultation and engagement. 

These various workstreams will result in a more efficient local government and less red tape for ratepayers and councils.

Reforms in the local government sector will mean less bureaucracy for regional councils.  It will also mean more streamlined processes and consultation requirements.

Thank you again for the opportunity to join you this morning.  I'm happy to hear your comments and take your questions.