Speech to meeting of LGNZ’s Regional Affairs Committee

Good afternoon and thank you to Local Government New Zealand for the invitation to speak with you today.  I wish, in particular, to acknowledge Mr Stephen Cairns, Chair of the Regional Affairs Committee, Mr Lawrence Yule, President of LGNZ and Mr Eugene Bowen, Chief Executive. 

I have been asked to discuss current significant developments in the local government portfolio, namely the reform of the Local Government Act 2002 (LGA02) and current issues for local councils, such as the Environment Canterbury (ECan) report and Treaty of Waitangi settlements.  I will be happy to hear your views and take your questions on these issues. 

First of all, I would like to touch on the Government's work on improving transparency, accountability and financial management in local government.  In-house we refer to that as "TAFM". 

Very early in this process I received a lot of feedback. The letters that came in and the comments from the public meetings I attended made it very clear that many ratepayers are concerned about increasing rates, and do not feel satisfied by the services provided to them by their council.  

Recent analysis by the Department of Internal Affairs on data from 2009 to 2019 long-term council community plans (LTCCPs) shows that rates income will continue to rise faster than council costs.   

Even more concerning is that 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.   

The TAFM work has been guided by three underlying principles.  These are:

• 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.

Cabinet is proposing a number of amendments to the LGA to help ratepayers and residents to better understand council costs, rates and activities a whole lot better so they can exert greater influence and control during Council planning and decision-making.  

The proposals, amongst other things, will require councils' long-term council community plans to be simpler and more strategic in focus and include plain English financial disclosures.  

Councils will be encouraged to focus on core services (for example flood protection in the case of regional councils), and they will have more flexibility in choosing effective and efficient delivery methods for water services. 

The LGA02 requires councils to report their activities in groups.  Councils, however, are free to group these as they like.  The lack of standardisation makes it difficult for ratepayers to compare major council services, thus reducing transparency. 

I propose that the amendments to the LGA02 prescribe separate disclosure of some activities.   

The activities proposed are those with high costs and high asset bases, as these have the greatest impact on councils' long-term financial sustainability.  I propose that the following services be disclosed by councils as separate activities:

• water supply;


• sewage treatment and disposal;


• stormwater drainage;


• roading; and


• flood protection, which I appreciate is an important area of focus for regional councils.

We also plan to amend the LGA02 to provide for a standard measurement system for local authority services. 

It is proposed that the development of performance measurement systems would be mandatory for water supply, sewage treatment and disposal, storm water drainage, roading, and flood protection for regional councils.  

Performance targets for mandatory measures would be included in long-term council community plans, annual plans and annual reports.  Quality assurance on the reporting of actual performance would be achieved by the auditing of the annual report.  We propose that these measurement systems will be in place by 2014/15.   

These changes will be provided for in an amendment Bill, which I plan to introduce this year. There will, of course be a chance for public input through the Select Committee process, and I encourage you to make your views known when that process begins.   

I'll talk now about the review of ECan. 

As all of you are no doubt aware, the Government recently commissioned a review of ECan, as a result of concerns about its performance in processing resource consents and the effectiveness of the Council's broader governance and management.  

The Minister for the Environment, Dr Nick Smith, decided to investigate the performance of ECan, under section 24A of the Resource Management Act 1991 (RMA), following poor performance in the 2007/2008 RMA Survey of Local Authorities.  With Dr Smith, I decided to broaden the review to include local government issues.  This was in response to a joint delegation of Canterbury mayors seeking wider government intervention.

The review of ECan was conducted by the Review Group, which was comprised of independent investigators and consultants, and lead by former Deputy Prime Minister, Wyatt Creech.  This group's role was to assess the overall performance of ECan in discharging its responsibilities under the RMA, the LGA02 and other related legislation.   

As part of the review, the Review Group carried out interviews with ECan staff and external stakeholders.  External stakeholders included environmental groups, territorial authorities, transport and energy providers, law firms and representatives of Ngāi Tahu.   

The Review Group's findings were released on 19 February 2010.  The conclusions reached by the Review Group are concerning and challenging, with implications that are potentially nationally significant. The concerns cut across the RMA and LGA02, but cannot easily be remedied through either piece of legislation.   

The review identified significant failings in the way that ECan is managing fresh water in Canterbury and long-running institutional problems.  One particular concern is that Canterbury does not have a fully operative overarching planning and policy framework for the region's natural resources, despite it being 19 years since the RMA was enacted.  This has resulted in a fragmented and inefficient approach to the management of fresh water.

The Review Group did note that there have been recent improvements with Ecan's performance, but concluded that these improvements, even if continued, would not be sufficient to ensure effective management of fresh water in the region.  The Government is aware that action is needed to ensure effective freshwater management, develop the resource management planning and policy framework, and improve performance.   

On 24 February, Dr Smith and I travelled to Christchurch and held a series of meetings with ECan councillors and managers, mayors and chief executives of Canterbury's territorial authorities, Ngāi Tahu, and a number of other stakeholders.  The purpose of these meetings was to hear their views about the findings and recommendations of the report. 

We left these meetings with the impression that there was broad consensus in support of the review groups findings and almost unanimous support for strong central government leadership on this issue. 

There are a range of options that could be considered, including the Review Group's recommendations and using powers under existing legislation.  At present, the Government is carefully considering all recommendations made by the review group and hopes to come to a solution that will be of benefit for ECan and the Canterbury region. 

Nick Smith and I would like to see the following outcomes achieved for resource management in the Canterbury region that:

• Canterbury's natural resources are managed in a comprehensive manner, which results in resilient outcomes that effectively balance social, cultural, economic and environmental outcomes;


• the institutional framework for managing natural resources in the Canterbury region is integrated, effective and transparent; and


• there is an efficient and enduring resource management planning framework in Canterbury, which facilitates good-quality, cost-effective and timely decisions.

Over the next few weeks, Minister Smith and I will continue to listen to the views of those affected in Canterbury.  We will also be seeking advice from relevant government departments and consulting with Ministerial colleagues.  

Now, a few words about Treaty issues. 

As you are aware, Chris Finlayson, the Minister for Treaty of Waitangi Negotiations, and I have been working for sometime on the issue of local government and historical Treaty of Waitangi settlements.  It is fair to say this topic is not an easy one.  Minister Finlayson will give you a more detailed update in his speech to you this afternoon. 

The main issue we are considering is what impact, if any, should Treaty of Waitangi settlements have on the local government legislative framework.  This issue is becoming increasingly important, given the Waikato-Tainui settlement and the Government's desire to resolve all historical Treaty Settlements by 2014. 

We have sought the views of Local Government New Zealand on this issue, and have appreciated your feedback as we have gone through this process.     

The Minister for Treaty Negotiations and I support the desire for early and ongoing involvement of local government in the Treaty settlement process.  We also agree that:

• the principles guiding treaty settlements need to be clear so that all parties, including Crown negotiators, know the parameters within which they operate;


• it is the Crown's responsibility to lead discussions about the implications of the settlement process, and how this may impact on local decision-making;


• local authorities should not be put in the position of having to justify decisions made by the Crown that may not be supported or understood by local constituents;


• and it is important that the Crown, as the Treaty partner, promotes a greater understanding of the implications of settlement outcomes, in particular any implications for the democratic rights of New Zealanders.  

I, like many of you, am keen to see clear and unequivocal principles that provide us with:

• certainty of effect so that the implications of Treaty settlement redress for local authorities is clear and unambiguous;


• early and ongoing engagement;


• a fair consideration of your views;


• and minimal costs for your involvement in any negotiations and to implement any Treaty settlement outcomes.

Once these discussions are finalised, the Minister of Treaty Negotiations and I, or our officials, would be happy to come and present the principles, and any implications, back to this forum.   

I appreciate your strong interest in this topic and your ongoing support as we work through the final stages of this important work.