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Tremain: Local Government New Zealand annual conference

Hon Chris Tremain
Minister of Local Government

23 July 2013 Speech
Speech to Local Government New Zealand annual conference – Update on Phase 2 of the Better Local Government reforms

Good afternoon and thank you for inviting me to speak to you today.

It’s both a privilege and a pleasure to be here with you at my first Local Government New Zealand Conference. I’m here for a full day and a half so I can engage with as many of you as possible and discuss the issues facing Local Government.

When I first took up the Local Government portfolio, I was very clear that the relationship between myself as your Minister and local government needed to be strong if we were to take the country forward together.

Over the last six months I have travelled around the country attending zone meetings, meeting with councils from the big to the small, and working closely with both LGNZ and SOLGM. In saying this I understand that a strong relationship is not built by just visiting and having meetings. Fundamentally it’s built by ensuring that we are on the same page with our core goals and objectives or at the very least we understand what each other is trying to achieve, even if we disagree on some issues.

In this regard I think we did not initially sell the benefits of our reform agenda to Local Government as well as we could have. We painted wider local government with a sometimes negative broad brush when in fact there are outstanding examples of excellence in your sector.

I think we’ve moved both the discussion and the relationship forward.

In his speech this morning the Prime Minister reflected on the Government’s four key priorities for this term. I believe that these objectives are actually shared by local government.

• To return the government books to surplus;
• To build a stronger more competitive economy;
• To build better public services; and,
• To rebuild Christchurch.

The first goal, having the books in surplus, is about good financial management. It’ssimple economics: spend less than you earn, and keep your borrowing under control. In this regard central and local government should be on the same page.

Both taxpayers and ratepayers expect us to be sound economic managers of their investment in us. Cost control is critical in both central and local government. To this end we are well on track to be back in surplus by 2014/15.
And in the same breath I am pleased to see one of the lowest average annual rate rises across local Government in recent years. Well done.

The second goal, building a stronger more competitive economy, should be fundamental to us all.

A growing economy creates more jobs, lifts wages and improves the quality of life for New Zealanders. The Government has recently released a series of reports entitled the Business Growth Agenda, which clearly lay out the framework for growing New Zealand.

Hand in hand with the Business Growth Agenda is the recent release of sectoral and regional data which allows us to compare and contrast what is working well. Local and central government should be joined at the hip in our desire for economic growth across the country.

The third goal, to build better public services, is crucial to our success both in central and local government. Both taxpayers and ratepayers expect that their investment will return ongoing and better services for the same or similar funding. Unless we can demonstrate significant service improvements they will not (and should not) stomach significant cost increases.

At the core of the Government’s drive to improve services have been our Better Public Services targets. From child welfare, to education, to crime and to online services, government agencies have been challenged to deliver more with less.

This has forced prioritisation, some tough decisions to stop some services to free up resources, strong benchmarking, and harnessing the power of ICT to deliver better public services.

As a result of this I believe we have seen a transformation in the public service, and a new attitude of constant and improving services in tight fiscal times. No doubt many of you in the room today have faced the same challenges as you too seek to deliver better public services to ratepayers while at the same time limiting rate increases.

The Better Local Government reforms, initiated by my predecessors and carried on by me, are focused very much on helping to deliver Better Public Services. I will talk more about the progress of these reforms later in my speech.

The Government’s fourth goal, to rebuild the beautiful city of Christchurch, is also one that I am sure we all share.

While this goal sits more broadly as a partnership between Canterbury and central government I know that many of you in the room have provided direct support to Christchurch and will continue to do so in the future. Thank you for that support.

I would also like to acknowledge the earthquakes in Wellington over the last five days, and the responsiveness and leadership shown by local government during this time.

A culture change

Fundamental to the achievement of all these goals is a culture of constant and never-ending improvement.

That culture requires us to benchmark ourselves against others, to compare and contrast, to identify excellence and to replicate it where we can. At a national level we are benchmarked as a nation by the IMF, by the World Bank, by the OECD and by literally hundreds of other non-government organisations and think tanks.

Whether it is GDP, poverty, transparency, ease of starting businesses, education or health we are benchmarked. This increases the transparency of our performance, holds us more accountable to taxpayers, and allows us to improve our own performance in a positive way.

Some might argue New Zealand is much smaller, geographically disadvantaged and has a different economy to other countries, and as a result we can’t be benchmarked against other nations.

I hear the same arguments from some in local government who say it is not fair to compare small councils with large, or rural with provincial. But rather than put up defences, let’s measure, compare, and put our performance into context to see where we stand, and look at ways of doing things better.

In my time as your Minister I want to help champion this discussion. I want to work with you to enable a culture of continuous improvement in local government. I think the future offers some real opportunities for shared thinking and best practice.

Centre of Excellence

In this regard I am excited by the idea framed by your President, Lawrence Yule, about a Centre of Excellence for Local Government.

I think this is a superb opportunity to collaborate towards lifting the bar across the Local Government sector.

A Centre of Excellence is one way to bring together existing performance improvement tools and approaches, and to develop and deliver new ones in a coordinated way across local government.

A Centre of Excellence would showcase local government projects of best practice, both from within New Zealand and from outside. The aim would be to encourage the adoption of best practice for the benefit of ratepayers around the country.

I am keen to work closely with LGNZ to find ways that we can partner and contribute towards projects that will help to lift the performance of the local government sector.

Financial Prudence Requirements

Helping towards this is one of the reforms the Government introduced in last year’s Local Government Amendment Act. That enabled us to implement financial prudence measures to compare and contrast the performance of local government in New Zealand.

I see the financial prudence regulations as part of our commitment to help promote excellence in local government financial management. I think the benchmarks will be useful to you.

They will provide elected members with early warning signals of risks, which will help to avoid the need for central government intervention in the way that happened in Kaipara. They also have the potential to shape a better public debate about local government finance as opposed to allowing others from outside the sector to shape the debate, as is currently the case.

I am committed to collaborating with you in establishing these financial benchmarks. This work is being done now with LGNZ and officials are working through the steps necessary to have the benchmarks ready to be used for the 2013/14 annual reports.

Can I take this opportunity to thank councils who have contributed data for this project. Thanks to Taupo, Palmerston North, Tauranga, and Kaikoura for providing data to make our trials more practical and realistic.

Performance Improvement Framework

Hand in hand with the Centre of Excellence and the financial prudence measures I am keen to work towards a Performance Improvement Framework specifically designed for local government in New Zealand.

Government departments have all been through this process with a specially designed framework. The process has helped to lift performance across the state sector. I want to work closely with LGNZ to establish a framework that works for local government.

Regardless of how it is rolled out, we will be looking for volunteer councils to trial the framework to ensure that it does deliver for local government before we roll it out on a wider basis.

Better Local Government Reforms

I’d now like to take some time to discuss some of the other Better Local Government reforms which go to the heart of assisting with the goals I discussed earlier: fiscal prudence, stronger local economies, and better public services.

Phase one of the reform programme was completed with the passage of the Local Government Amendment Act in December last year.

The new legislation provided for a new purpose statement, the new financial prudence requirements I just discussed, a new assistance and intervention framework, and changes to the reorganisation procedure.

The new assistance and intervention framework has proven to be very effective. A case in point is the recent issues with Christchurch City’s building consenting functions. Without the wider intervention options now available under the amended Act we would have been far more limited with sensible options to address the situation. The option of a Crown Manager we were able to utilise in this instance is to the benefit of all the parties involved.

Phase two of Better Local Government

Phase two of the Better Local Government initiatives aims to squarely assist councils to reduce red tape, and, at the same time, better enable your ratepayers and communities to understand what you do on their behalf. This goes to the heart of improving public services.

My aim is that a further Local Government Amendment Bill will have a first reading before the end of this year.

The ideas for many of these reforms have come directly from you in the room. As a result I have worked closely with LGNZ and SOLGM on the next phase of reform. I genuinely see this as an opportunity for the sector to reduce your compliance costs and to provide elected members with the ability to get on with the job more efficiently and effectively.

One of the clear messages I’ve heard is that community engagement is important to councils. You value local input and would consult your communities even if the legal requirements were removed from the Act.

What would be beneficial, however, is more flexibility about how you consult, and for how long. You’ve told me that the Special Consultative Procedure can be useful for some matters, but is unnecessarily onerous for others.

As a result the new Bill would remove requirements to use the Special Consultative Procedure, except in relation to long-term plans and new or significant changes to bylaws. This will enable councils to consult in ways that are appropriate to different matters and local circumstances.

The Efficiency Taskforce commented on how the Special Consultative Procedure is old fashioned and doesn’t enable the use of technology. The Bill will therefore include changes to accommodate new technology for communicating and consulting with the public, and a variety of alternative ways for hearing submissions.

Some councils, such as the Far North District Council, have been asking whether elected members can use technology to participate in meetings without being physically present. The law isn’t clear about this matter, so we’re going to address that in the Bill. This will mean councils that want their elected members to participate remotely will have this flexibility – subject to appropriate limits, and to any local arrangements they put in their standing orders.

Consultative Document

I’ve also heard concerns that long-term plans are often not useful to the public, and aren’t an effective basis for consultation. They tend to be very long documents, with a lot of complex technical information. This limits their use for many ratepayers.

To improve this situation, we’re proposing a new consultative document. Councils would use this to consult on matters in the long-term plan, instead of publishing a full draft and a summary of that plan.

The consultative document would tell a simple story, and focus only on explaining the key issues and choices the council and its communities are facing. It wouldn’t contain complicated technical or financial information. The final version of the plan would, however, still need to contain these details to maintain transparency to ratepayers.

We need to work together not only through the development of these proposals, but also through their implementation. The Government can streamline legislation but it’s up to you to put these changes into practice.

Two-tier governance

A further area of reform, which will be delivered in this year’s Bill, is enhanced two-tier governance across New Zealand. Once again this initiative delivers on a request from local government and it provides the ability for local boards to be established more widely as councils are reorganised or amalgamated.

Last year’s Local Government Act allowed for the Auckland two-tier model of governance to be copied in some circumstances – that is, where a proposed metropolitan unitary authority has a population of more than 400,000 – but it did not enable this for smaller populations.

Auckland’s local boards are working well. They are contributing effectively to the governance of the whole region and the communities within it.

Local boards have a genuine statutory role in the governance of a local authority, and cannot be disestablished unilaterally by the parent council. However, it is also important to note that they are not proposed to replace community boards – both options should be available.

The sector has asked for the ability for local boards to be available to smaller regions. We will deliver this in the upcoming Bill.

It will be up to the Local Government Commission in consultation with communities to determine when the addition of local boards is justified and desirable. It may be the case that local boards exist in only part of a district. In rural areas other arrangements, such as community boards or less formal bodies, like area sub-committees, might provide a local voice.

Economies of scale

Amalgamation will not be for everyone. The Government, to date, has been clear that amalgamation is a community decision. In saying this I can personally see huge benefits for ratepayers when councils collaborate, share services and expertise.

I’m aware of many positive examples of this happening already, and want to encourage it further. The Auckland amalgamation has delivered genuine savings for ratepayers. The BOPLAS shared services model is an excellent example of savings without amalgamation.

The Efficiency Taskforce and the Infrastructure Expert Advisory Group noted the potential for efficiency gains by changing the scale at which services are planned, funded or delivered.

This can be achieved by:

• The reorganisation of councils
• Collaboration between councils
• Transferring responsibilities from territorial authorities to regional councils

The new Bill will improve on the provisions that currently deal with these matters.

Development Contributions

Another issue which is at the forefront of both central and local government is housing affordability. As part of our work in this area we are reviewing the framework within which Development Contributions are set.

I am keen to see development contributions made more transparent and more tightly confined to infrastructure used in the development.

I want to thank everyone here who responded to the discussion document released earlier this year.

There was strong support for the need to update and enhance guidance and training to councils on development contributions, and for consolidating and clarifying the current legislation.

I am currently working with officials on options for development contributions. Let me make it clear today that we are not proposing to abolish development contributions altogether.

Legislative decisions from these work streams will be implemented in the second reform bill later this year.

Productivity Commission

Many of you will also be aware that the Productivity Commission has recently reported on its inquiry into local government regulation. The report focused on the need to improve the interaction between central and local government over the regulatory framework.

I agree that it’s important that powers are exercised at the appropriate level. As evidence of this last month the Government gave councils greater powers over how you manage more than seven thousand reserves around New Zealand.
This is a positive change which recognises that councils are better placed to make decisions on local reserves than central government. Working together we will get the best outcomes for the community.

Lotteries Significant Community Projects Fund

So I’d like to think this latest round of reforms indicates that we are listening with the aim of delivering reforms that will genuinely assist Local Government.

In that regard one of the things that I have repeatedly heard from Mayors around the country is the importance of funding for significant community projects. Many of you have commented that the Lotteries Significant Community Projects Fund had provided a pool of funding for large-scale projects in the past.
As a result the Lottery Grants Board has recently relaunched the fund with a $30 million investment available for significant projects. While an independent committee decides which projects get funded I know that this fund will significantly assist many local communities around New Zealand over the next year.

While I am discussing Lotteries, please don’t forget the $17 million World War One commemoration fund. $10 million of this is for projects of national significance, and $7 million for restoration, commemoration, and education. Make sure your communities know about this fund so they have the opportunity to apply for funding for local commemoration projects.

e-Voting

Finally I know that many of you are interested in online voting at future local elections. Can I acknowledge Mayor Leggett from Porirua for his leadership in this area.

I am very keen to make this happen and the Department of Internal Affairs has now started initial work on voting methods for local authority elections.

International best practice is to introduce online voting gradually, allowing time for creating a robust framework, evaluating the system, building public trust and confidence, and testing and mitigating its vulnerabilities. Trials are part of the development process.

I hope to be able to announce a plan for implementing online voting shortly.

Conclusion

In closing, I would like to emphasise again the similar goals between elected members of New Zealand’s two arms of government. We all care about financial prudence, we all want to grow our local economies, we all want to deliver better services for our communities. We are here because we care about making New Zealand the best place it can be, and, while this can be very hard work, it can also be deeply satisfying.

Ladies and gentlemen, I am excited about the future of this wonderful little country.

Can I thank you all for the huge role that you play in our local communities. It is hugely appreciated.

Enjoy your conference and thank you for the opportunity to address you.

ENDS

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