Q+A: Greg Boyed Interviews David Carter
Q+A: Greg Boyed Interviews David
Local Government Minister “would support” council asset sales to maintain funding as rates cap introduced.
“…if they had shares in an airport or shares in a port company, they may well decide they could sell down some of those shares to help them provide the infrastructure which their community’s demanding of them.”
With rates limits, the Minister says more user charges could also be introduced.
Insists councils will still get to decide rates and spending levels, denying power grab by government. “It is still the responsibility of the council to engage with its community and find out what services that community wants.”
But adds: “…if a council was proposing to put up its rates by 2% or 3% or 4% above inflation, we want to know why they’re doing that in central government so we have the ability to intervene.” And, “We want to put some financial tests and thresholds on to local government so that they must justify their rate increases, justify their debt increases.”
As a minister and ratepayer, Carter says Christchurch City Council “needs to think carefully about rationalising some of those assets.”
Carter hopes to reform mayoral declarations in wake of Dotcom donation: “I think when you look at local government, there’s no reason to me why the rules should be different [from central government].”
Hopes to introduce law change this year to bring more transparency to local-government campaign donations.
“We’re certainly going to get local government to be far more focused on what activities it undertakes.”
Minister defines core ‘public services’ as: “rates and rubbish and water, et cetera”.
Tells Auckland mayor Len Brown he may want to prioritise fixing city drains over “some of the other… spending decisions”.
On one hand, Carter says “The [Christchurch City] council’s decision is to run the Ellerslie Flower Show, and that is a decision for the council to make.” On the other, he says, “I think Auckland is stepping too far when it’s starting to be involved in the NCEA levels and greenhouse gas emissions, et cetera. That is more a central government function…”
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Q + A
GREG BOYED INTERVIEWS DAVID
PAUL Well, now time to talk rates. What should they pay for, and are councils spending too much on pet projects? The government thinks so. New laws due to be introduced in a matter of weeks will make councils more accountable, they’ll limit their spending and they’ll cap rates rises, forcing councils to focus on core services. Sounds good, of course, but what are core services? Nick Smith announced what amounted to significant reforms just a couple of days before he was forced to resign, but the new Local Government Minister, Mr David Carter, has not spoken about how he plans to handle things until now. And David Carter is live with Greg Boyed.
GREG Paul, thank you so much. Good morning to you at home, and a very good morning too to Local Government Minister David Carter in Christchurch.
DAVID CARTER – Local Government Minister
GREG Exactly what are the proposed changes?
DAVID The changes are a suite of measures that are coming into Parliament in the next couple of weeks. The first one is to relook at the purpose statement of the legislation, which is the driving purpose for which local government has to act and to tighten that, because at the moment it’s very broad. We want to put some financial tests and thresholds on to local government so that they must justify their rate increases, justify their debt increases. We want to assist the mayors with some more powers so that the mayor has the ability to campaign on an agenda and more ability to deliver on that agenda and then be judged three years later at the election. And finally we want to assist streamlining, provided it’s driven from the community. There are still too many councils in New Zealand, but rather than impose from the top down, we’re going to enable the streamlining to occur so that communities that see the opportunity for amalgamation and rationalisation can drive it and get through the process more reasonably than they can at the moment.
GREG Okay, is this essentially the same proposal put forward by Nick Smith just before he stepped down?
DAVID Oh, it is absolutely the same proposal put forward by Nick Smith. The Prime Minister rang me and asked me to take on this portfolio and gave me a very clear instruction that what the Cabinet had passed on a week or so earlier was to be pushed through and put into Parliament, and I’m doing that. I’ve spent a lot of time talking to local-government people right around New Zealand over the last six weeks, and, frankly, most local-government politicians are very supportive of these reforms. At the moment, they get caught with requests from their ratepayers for them to be involved in all sorts of projects which are often difficult to turn down, because of the very wide purpose statement in the act passed in 2002. So local-government people tend to want these reforms.
GREG Okay, let’s talk dollars and cents. First and foremost, ratepayers – they’re paying too much in the way of rates. 6.85% has been the average increase every year for the last 10 years. It outstrips everything. Are you determined that is going to stop and you’re going to be able to keep rates at a more reasonable rate in line with inflation?
DAVID Yes. The central government itself has been very focused over four years in getting an agenda to drive a productive economy. We want the economy to perform better. When you look at local government, it is a significant part of the economy. And at the moment, some of the rate increases that have been pushed through are exceptionally high, so we want to make sure there are tests there by which the councils get the ability to control their own rate increases. There may on occasions be very good reasons for significant rate increases, but we certainly want some flashing lights there as councils debate rate increases so their communities understand the reason for any proposed rate increase, the councillors themselves understand, and if they’re stepping well and truly outside the line, we in central government want to be able to engage in a discussion to understand the reason for it.
GREG Okay, core services – what on earth are core services? Because there seems to be a lot of scope in what a core service is and what a council should be taking care of.
DAVID Well, it’s certainly clear what core services are, and they are rates and rubbish and water, et cetera. But this legislation’s not about saying to councils, ‘You can only embark on core services.’ It is still the responsibility of the council to engage with its community and find out what services that community wants. But we want that debate to be far more transparent than it has been in the past.
GREG Well, hold on. It sounds like the Government’s wanting a bob each way in this. They’re wanting to say they keep in touch with what’s happening with the rates, but they’re only to go and do core services at a local level or not. Which way is it to go?
DAVID We are not saying that councils can only do core services. If you take my Christchurch City Council, for example, and it runs the Ellerslie Flower Show in Hagley Park. You could argue that’s not a core service. The council has determined that there is value in delivering that show for the people of Christchurch, and, frankly, I meet a lot of people on planes who are travelling from all over New Zealand to come to that. The council’s decision is to run the Ellerslie Flower Show, and that is a decision for the council to make. It’s certainly not a decision for central government to make or for myself as minister.
GREG Okay, then from the central government point of view, where do you stand on things like greenhouse gas emissions, child welfare and NCEA levels in a region like Auckland, for example?
DAVID I think Auckland is stepping too far when it’s starting to be involved in the NCEA levels and greenhouse gas emissions, et cetera. That is more a central government function, and in discussions we’ve had with Len Brown, they can certainly have an aspiration to work with government around some of their social— southern initiatives around employment, et cetera, NCEA. But that is a fundamental core responsibility of central government, not local government.
GREG But Len Brown’s made the very very valid point, that I’m sure most mayors in the 78 councils would make, if they can’t do that, how are they going to make their city, their province, their region a place everyone wants to live. If that’s just up to local government— central government, how are they going to make it better?
DAVID You’re hitting on the essence of the relationship that should be between local government and central government. It has to be truly a partnership, but it’s not on for local government then to step into the space which is clearly central government’s role. And it is central government’s role to establish the education system in this country. It is central government’s role to establish parameters of measuring the success of that. We can then work with Len Brown and his council, particularly as he tries to develop solutions to some of the social problems in South Auckland, and we’re happy to work with him in a partnership. But the core responsibility still remains with central government.
GREG So you are limiting local government? They are going to be in charge of very basic things and numbers and keeping an eye on rates. You are limiting their scope quite a bit.
DAVID We’re certainly going to get local government to be far more focused on what activities it undertakes. In the past, some councils have stepped too far and undertaken activities, Hamilton city, for example, with the Grand Prix racing. I think that was an activity that went far beyond where local government should have gone. It cost local government in that area a lot of money. We’re not saying you cannot run race cars; we’re saying you need to think very very carefully before undertaking that activity. And by putting these financial management tests in place, I think councils will think more carefully about some of those longer-term extraneous activities they’re undertaking than they did in the past.
GREG I think a lot of people at this point at a local level are going to be thinking, ‘Why did I bother electing a local council at all?’ If I’ve elected, say, a very left type of local council, then a centre-right National government comes in and says, ‘No, you can’t do it this way. You’re going to do our way,’ why bother having local governments at all?
DAVID Well, I think you’ve hit on the very purpose for tightening the purpose statement of the act. At the moment, if you have a right-of-centre government that says, ‘No, we’re not going to fund that particular school in that area because there’s another one two or three kilometres away,’ under the current purpose statement of the legislation which councils operate today, they could actually make the decision to step in and run that school if they wanted to. That is where the purpose statement has become too wide, so we are changing the purpose statement, we’re making sure they’re far more focused on cost-effective delivery of services to their communities and to their business, and I think that way we’ll get the right relationship between a central government and a local government.
GREG Okay, let’s go back to rates. You’re putting a cap, albeit a soft cap, on what rate rises can be. That’s how councils get their money; that’s how they fund the schools, the roads, the whatever. If that’s nobbled – essentially that is what’s happening; it’s going to be nobbled by central government – where’s the money going to come from?
DAVID At the end of the day, it is still the responsibility of a particular territorial local authority to set rates, so they must now justify their rate increases—
GREG So, hold on. Hold on. We need to clear this up. Are you going to say that rates can only go at the same rate or thereabouts of inflation or not? This is what most ratepayers are wanting to know.
DAVID No, we’re not. No. No, we’re not doing that, because that would be a hard cap. For instance, rates can only go up by CPI plus 1%. We’re not putting in place a hard cap, because if we put in place a hard cap, there may be a particular council that has to bring its wastewater system up to scratch. If we restrict that council doing it, we’re eventually going to end up with an infrastructure deficit. So it is not a hard cap; it is a soft cap. But certainly if a council was proposing to put up its rates by 2% or 3% or 4% above inflation, we want to know why they’re doing that in central government so we have the ability to intervene and talk to that council. At the moment, the ability of central government to interfere with a local-government decision around rates is very very limited, and we want more ability for central government to work more closely so we can manage some of these very large rate increases that have occurred in the past.
GREG Again, though, you could then force local-body elections. You could force a change of who’s running local councils by your actions from Wellington.
DAVID We can do that now. We can step in there with what we call the nuclear option, and here in Canterbury, in my region, we did it a couple of years ago with the regional council. We came in and fired that council and replaced them with commissioners. That is a very heavy-handed intervention from central government. What I’m proposing in this legislation is a more graduated response, because in many cases the ability to work and put a Crown manager or observer in to work with a council may actually get the council acting more functionally, more responsibly than that nuclear option of simply firing a council, imposing commissioners or directing that they have fresh elections.
GREG Okay, how’s that going to work? You’ve got 78 councils, 78 mayors, you know, everything that goes with 78 different councils. Presumably, you’re not going to fly from one end of the country to the other all day and every day. Money’s going to have to be spent to keep some sort of a monitoring, some sort of a control in. Is that not defeating the purpose of what you’re trying to do in the first place?
DAVID Yeah, there is a number of people who work for the Department of Internal Affairs that focus on local government. Those people are advisors to me as the minister. They will be able to keep in touch with the decisions that the councils are making. I get a lot of correspondence from people all around New Zealand as ratepayers complaining about their council. We want to be in touch with some of those complaints. If there’s the ability to work with local councils so that they do make better decisions, so that they don’t impose unjustified rate increases on ratepayers, I think, frankly, we’ll get a better performing local-government sector, and that will help drive a more productive economy, which is a fundamental aim of this National Government.
GREG Okay, Rodney Hide when he was in your job didn’t rule out the possibility of selling bits of the waterfront and basically doing on a local level what the Government’s now planning to do on a national level. Is that something you’d rule out – local asset sales?
DAVID Well, I think if you look at my own city of Christchurch where we clearly have an extraordinary situation, the Christchurch balance sheet is strong with a number of assets, the council needs to make the decision. But from a ratepayer point of view, from a ministerial point of view, I think the Christchurch City Council needs to think carefully about rationalising some of those assets to help it meet its huge challenge with the rebuild of the city.
GREG Okay, Christchurch is an exception to the rule at the moment. I think everybody will agree on that. But broadly speaking, though, if the rates aren’t going at the rate needed by local councils, asset sales – is that going to be on the table?
DAVID Well, I think they’re in a very similar position to central government. If they find a way where they can sell down some of their assets to maintain the funding, to deliver some other infrastructure required within in their communities, in principle, I would support that. But having said that, Greg, it would still be a decision for local councils to make. This legislation—
GREG But surely at the end of the day—
DAVID It’s not about—
GREG if a council comes in, you’ve said, ‘No, you can’t put the rates up at this rate,’ they don’t have enough money and go, ‘Well, your museum would make a lovely block of apartments. Knock that off,’ you’re going to say that, aren’t you?
DAVID Well, I think if you take a museum, for example, they may decide that that is a fundamental asset that they need to keep for the benefits of their community. But if they had shares in an airport or shares in a port company, they may well decide they could sell down some of those shares to help them provide the infrastructure which their community’s demanding of them.
GREG What about user charges? In so many parts of Australia we see the toll roads. If they can’t get money out of rates, they’re going to start doing that type of thing, aren’t they?
DAVID Well, I personally think if we could move to more of a user-pays basis for roading that would be good. The ability for councils to set their rates remains the responsibility of council, so they can do that on a capital value charge. They can do it on a uniform annual charge They could move to do that on more of a user-pays. That is the sort of decision which councils still have the responsibility.
GREG All right, let’s move on from the local-government reforms. Let’s look at a couple of other things. ONE News last night – 375 kilometres of underground stormwater drain in Auckland needs replacing. Where is the money for that going to come?
DAVID Well, I didn’t get to see ONE News last night, but—
GREG Oh, you should have. It was very good.
DAVID that is a fundamental requirement of the Auckland city to address. So if they’ve decided that they have fundamental flaws in their infrastructure, they are going to have to find a way to address that, and I’d suggest to Mayor Len Brown that that would take priority over perhaps some of the other planning decisions and spending decisions they were thinking of.
GREG Mayoral donations, Kim Dotcom – do we just need the transparency we have at a central-government level on that?
DAVID Yes, I don’t think there’s any doubt that the two regimes should be far more similar. As a central-government politician, the rules for me collecting donations to help fund my campaign are very specific, very transparent. I think when you look at local government, there’s no reason to me why the rules should be different. And it would be of my interest to try and get another piece of legislation before Parliament at some stage looking to try and bring the two regimes together.
GREG When, possibly?
DAVID Well, at the moment, the legislative programme in Parliament is very busy. My first priority is the current better local-government reforms we’ve been talking about. But if there was an opportunity, with a legislative gap perhaps towards the end of the year, it would be good to try and bring another piece of legislation. It wouldn’t be a complicated piece of legislation, but trying to get the regime for central-government campaigns, local-government campaigns more or less aligned, giving transparency to all of us.
GREG We will have to leave it there. Local Government Minister David Carter, thank you for your time.
DAVID Thank you, Greg.