Q+A: Greg Boyed Interviews David Carter
Q+A: Greg Boyed Interviews David
Carter
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
CARTER
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
Good
morning.
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.
ENDS