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Burton: Local Government New Zealand Conference

Hon Mark Burton
Minister of Local Government

2.30pm 18 July 2006, Wellington Town Hall Speech
Address to the Local Government New Zealand Conference

Thank you for the invitation to speak with you today.

It is a pleasure to be able to participate in your annual conference and I would like to note my support for your theme this week.

It has long been my view that many in local government do indeed strive to demonstrate excellence in community leadership.

Conference theme

Community leadership is about involving New Zealanders in decisions that affect them. We must understand our communities and work to balance their immediate needs against those of future communities.

Of pivotal importance is planning for the future – being ahead of the game, thinking smarter and being more innovative in what we do.

Community leadership so often also means having to make tough decisions about how to get the most out of scarce resources.

Today, it is also very much about partnerships – recognising that others share our challenges and goals, and finding ways of meeting them together.

The relationship between central and local government

As I have said before, and as the Prime Minister reiterated strongly in her opening address yesterday, this Government believes that a strong working relationship between our two arms of government is critical to the well-being of New Zealanders.

Yesterday the Prime Minister outlined the Government’s priorities for 2006-16: economic transformation, strong and healthy families (young and old) and building national identity.

My officials have recently spent time examining the key themes identified in the community outcomes of long-term council community plans for the same period.

I am sure you will not be surprised to hear that the most commonly mentioned themes were:

- the economy;

- urban and natural environments;

- the community; and

- arts, culture and recreation.

The similarities are striking.

So we will continue to strive for ensuring the well-being of New Zealanders. To best achieve that it is essential that we work co-operatively as indeed we now do.

In this regard, Local Government New Zealand provides a key mechanism through which the voice of local government continues to be articulated-to, and heard by, Central government.

As you may be aware, LGNZ has the opportunity to comment on and provide input to a wide range of Cabinet papers that affect the activities of local authorities.

The advisors at LGNZ work hard to accurately represent your needs and the needs of your communities.

I must thank LGNZ for the role that it plays, the ongoing dialogue is invaluable to the policy process, particularly on issues where we may not see eye to eye. As Basil Morrison noted yesterday – having access and the opportunity to be heard and taken seriously, is the key to having real influence

It is my view that the building of this strong and mature, mutually respectful working relationship, has been a critically important achievement for the sector over the last six years.

It is a relationship that we are committed to maintaining.

Changes for local government

It's fair to say that this Government recognised very early on that an effective partnership with local government is critical to achieving the goals of our communities.

That is why, in the last six years, we have worked with you to:

- modernise the three key local government statutes;

- establish a clear purpose for local government; and

- increase the flexibility, transparency and accountability of the sector.

It may seem a given, but it is only now that we have a legislative context that recognises that many local decisions are best made locally.

Local government knows the community (LTCCPs)

Local government is pivotal to this country's well being.

As many of you are aware, I am now in my ninth month as Minister of Local Government. However, my involvement with the sector actually dates well before October last year.

Twenty-five years ago I worked as a Community Development and Recreation Advisor at Palmerston North City Council.

So I know from that, and subsequent experience, that every day, through a range of formal and informal means, councils have their finger on the pulse of their communities.

An important current example is of course the first full, long-term council community plans that are now being adopted around the country.

I suggest to you that LTCCPs are significant for a number of reasons not least of which is that they represent a significant level of work by mayors, councillors, community board members and local authority staff.

At the outset I offered some reflections on your theme for the week.

LTCCPs are significant because they embody every one of the characteristics of outstanding community leadership. They:

- sum up the role of local government in a single document for the express purpose of involving communities in the big decisions that affect them;

- establish a clear plan for the future; and

- provide the basis for collaboration on the community’s key goals.

In these ways, LTCCPs are symbolic of a new era for local government in New Zealand.

Acknowledging the challenges of the LTCCP process

The changes are significant, and I do understand that the LTCCP process has placed some pressures on local government over recent months.

LTCCP audits

I have also take careful note of the debate about the audit process. However as community leaders, in local or central government, being accountable and transparent are facts of life for all of us.

New Zealanders increasingly expect to be involved in decisions that affect them, they have access to more information than ever before and they are certainly not afraid to question the actions of government.

Given the significance of the LTCCPs, it is important that communities can and do have full confidence in them.

An independent audit of the draft plans is one of the key ways in the community can be assured of the credibility of the documents.

I also note that the audit process actually produced some useful feedback for many councils, both in terms of where improvements could be made, and where things had been done very well.

Prioritising Outcomes

I recognise that the LTCCP process, and particularly the community outcomes process, has also raised some interesting questions for local government.

As you have asked your communities “What exactly is it that you want in terms of future services and facilities?” people have responded with a broad range of answers.

Some of these answers suggest business as usual for local government. Others have suggested new activities and areas of policy.

Regardless, every single one has a price tag attached.

A key challenge of the LTCCP planning process then, has been to prioritise community wishes and balance expectations against actual willingness and ability to pay for them. These are difficult decisions.

LTCCP process: good information for effective decision-making

It is all the more important then that the LTCCP process has also armed you with credible information upon which to base these decisions.

By consulting on LTCCPs, councils have developed some of the clearest pictures of what it is that their communities need, and of course what it is that they want.

I understand that some councils received very large numbers of submissions this year, in some cases record numbers.

As community leaders, the importance of making decisions that are based on good information about our communities cannot be over-estimated, and a high level of community involvement helps to ensure that you have this information.

Implementing LTCCPs

Looking ahead, of course the LTCCP process does not end here. These documents are certainly not an end in themselves. The next challenge lies in implementation.

The Local Government Act has given you greater freedom to get on with the job of achieving your community’s outcomes in ways that work for your community.

Of Course, this does not mean that you have to do it by yourselves.

In addition to central government, local business, the not-for-profit sector, community leaders and local citizens all want and need to be involved.

I know that many councils are already collaborating with one another on common goals. The Canterbury regional landfill, and the Waikato shared land information system are just two examples of this.

This approach holds particular merit in light of:

- increasing community expectations about service standards;

- the costs of keeping up with infrastructure needs; and

- the pressures that this puts on rates levels.

Collaboration brings challenges

I do understand, however, that working together is by no means a simple thing. My time in Parliament under an MMP system has certainly taught me that.

Priorities for local government

This Government will continue to work closely with your sector because the benefits accrued for our communities are significant.

I would now like to mention a few of the significant projects currently underway that demonstrate this commitment.

Funding Review

Although the cost of administering legislation is often blamed, the fact is that recent rates increases have been largely driven by the need to provide for upgraded or new infrastructure.

Draft long-term plans show that in the coming year around $2.974 billion is earmarked by councils for capital spending. This represents a significant increase in infrastructure investment by local authorities over previous years. For instance, in 1996 infrastructure spending was around $900 million in the twelve months to June.

Clearly a number of significant infrastructure projects were deferred until "better days ahead".

To breakdown the numbers further, around 70 per cent of this year’s capital spending will go on network infrastructure such as roads, drinking water, waste water and waste management. As the Prime Minster noted yesterday- essential services that our community expect and demand to an appropriate first world standard.

A further 18-20 per cent of capital spending will be spent on community infrastructure such as libraries, community centres, halls and sports amenities.

Further, I believe that a growing economy in recent years, and in turn more prosperous communities, have had an impact on public expectations for high quality and safe infrastructure. These should not be seen so much as problems to be addressed, but as contributors to improved social and economic outcomes for communities as a whole.

It's also worthwhile to look at central government funding for the sector in recent years. In 2004/05 councils received $661.4 million from central government or about 13 per cent of total local government expenditure, which represents a very significant increase over recent years.

Even these figures don't begin to tell the whole story. In addition to the $661.4 million received by local government there is other significant funding that should not be forgotten. Just some of these allocations include:

- $150 million over 10 years for drinking water schemes, provided for in the 2005 budget;

- $1.3 billion over five years in new transport funding – a significant share of this will go on to local projects;

- The increase to $50.6 million annually to the Rates Rebates Scheme provided for in the 2006 budget. This new allocation is up from $950,000 previously.

- Local authorities are also able to access funding from initiatives such as the Significant Community Based Projects Fund.

The fact is, between 1999-2004 central government funding has been the fastest growing source of revenue for local government. This government has recognised the positive impact that outcomes reached at the local level can have on communities across the country. Clearly, there is potential for appropriate future investments such as these.

That said there is an important caveat that we cannot loose sight of in terms of central government funding for local councils.

Although there are numerous examples where central government funding is being appropriately challenged for upgrading local infrastructure and facilities, the Government believes local services should be subject to local decision making and generally be locally funded.

The need for councils to set rates both annually and publicly is a key part of our system of local government.

Central government has its own specific accountability requirements for the use of taxpayer funds. This government would not welcome a situation where it was required to act as a constant over-seer of decisions made by local councils as a result of a significant increase in direct central government funding for local councils.

There are complex issues at stake though. And this is why central and local government officials have undertaken considerable work looking at the capacity of local authorities to meet community expectations and demands for services and infrastructure improvements.

This project was established in response to sector concerns about the ability of local authorities to meet the rising costs of undertaking their functions.

It is encouraging that findings to date indicate that the majority of councils are coping within existing resources and tools. The second phase of the funding project work due to be reported to the Central/Local Government Forum on September/October

Rates Rebates

You will all be well aware of the improvements that have been made to the Rates Rebate Scheme.

The upgrading of this scheme to benefit many thousands more lower income ratepayers represents a direct response to local government and community concerns regarding people's ability to meet rising expenses.

Up to 300,000 New Zealanders will be eligible for rates rebates of up to $500 and the income eligibility threshold for getting the full rebate has also significantly increased. As I mentioned earlier the increased funding for this scheme represents a fifty-fold increase on what was available previously.

The significance of these changes should not be underestimated - in the 2004/05 rating year less than 4000 people actually received a rebate. For older New Zealanders and others on lower incomes the changes will have a very real and positive impact on the household budget.

I note that prior to its implementation some of you had concerns about the administration of the Scheme. At this stage it appears the majority of councils have taken advantage of Government support to switch to more streamlined electronic administration of the scheme. It is early days yet, but as the process beds down, I will be taking careful note of your feedback on how things are going.

Partnerships approach to infrastructure

The Government is well aware of the infrastructure challenges of providing and maintaining robust drinking water supply, stormwater drainage, and wastewater systems.

In recent years, significant Government investment has been made into important infrastructure works including:

- Sanitary Works Subsidy Scheme;

- Drinking Water Assistance Programme; and the

- Tourism Demand Subsidy Scheme, which I introduced in my former capacity as Minister of Tourism.

Most importantly, these programmes emerged through joint policy processes between our arms of government for the express purpose of responding to the concerns of local government and its communities.

Policy development guidelines

More generally, we will continue to monitor legislation affecting the sector, and I am sure you are all aware that a review of the Local Government Act is already on the Local Government Commission’s work plan for after the 2007 local authority elections.

We will also continue to ensure that central government departments and agencies work closely with local government to meet the needs of communities.

A key initiative here is the “Policy Development Guidelines for Regulatory Function Involving Local Government”.

These Guidelines seek to improve understanding of local government amongst central government officials and, particularly, how sector input into policy processes can be enhanced.

Commonwealth Local Governance Government Conference

In closing, I note that Carl Wright, the Director of the Commonwealth Local Government Conference, is speaking next about next year’s CLSF conference but I too would like to note my enthusiasm for this international gathering.

It is a real tribute to the quality of local government in New Zealand that we have the opportunity to host the 2007 Commonwealth Local Government Conference, at Auckland's Aotea Centre.

I encourage you to reflect on how far the sector has come in recent years and on the possibilities the conference will offer for learning and sharing with our Commonwealth counterparts. I encourage your active participation in this prestigious international forum.

With your long-term planning processes, proximity to the communities you serve, and your connections to a variety of community groups and organisations, local government will always play a critical role in ensuring the well-being of New Zealanders.

I congratulate you all on your achievements to date.

Thank you and I wish you well for the balance of your conference and for what has I hope been an enjoyable visit to the capital.


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