Hon Sandra Lee
Minister of Local Government

Speech to
The Society of Local Government Managers'
Annual Conference
12.00 noon
Tuesday 5 September
Hotel Grand Chancellor
Cashel Street, Christchurch City

Thank you for the opportunity to address your conference.

It is very timely, as the message I most want to convey today, given recent publicity related to the local government sector, is that the Government is totally committed to working with you in partnership on what is undeniably a very ambitious work programme.

We cannot afford delays or distractions if we are to achieve what I believe we all want.

You will all be aware of the major legislative review programme agreed for the next two years covering in particular the Local Government Act, funding powers and local elections and polls. I will speak more about these in a moment.

To demonstrate its commitment to this work programme, the Government allocated in this year's Budget an additional million dollars of funding to the Department of Internal Affairs local government policy team.

While this is a significant boost in funding levels, it is not sufficient or indeed intended that it be sufficient for the department to conduct these reviews by itself, with consultation with the sector only as and when necessary.

No, the government is serious about genuine partnership in the conduct of these reviews, so we have factored into our work programme hands-on policy-making input from SOLGM and LGNZ .

Since some of you are actively involved in working parties, you will already be aware of the work underway by these joint central and local government working groups.

A good example of this co-operative approach was the SOLGM-led working party reviewing the Local Elections and Polls Act.

The working party has submitted a suggested bill to replace the present Act.

While the working party has acknowledged that there are gaps and some unresolved issues in the suggested bill, it is still a valuable contribution.

I commend and thank those involved in this process under the chairmanship of Warwick Bennett.

I would like to turn now to the main elements of the agreed work programme, to outline progress to date and to identify some future key milestones.

Local Government Act review

We all agree that the Local Government Act is well past its use-by date.

It is no longer internally consistent and coherent, resulting in legal uncertainty, frustration, administrative difficulties and costs for local authorities.

In its current form, the Act has the potential to hinder and frustrate our efforts to develop a strong working partnership between local and central government.

However, I am pleased to report that work on its replacement is now well under way, through a comprehensive review.

While the review of the Act is being led by the Department of Internal Affairs, it can only be achieved through the cooperative efforts of central government working with Local Government NewZealand, SOLGM, and councils.

The review is being undertaken through six working parties that will address issues relating to:

 Role/purpose/principles
 Form/instruments/functions
 Governance/mandate
 Accountability
 Reorganisation
 Regulatory powers/offences/intervention

The working parties will have both Central Government and Local Government New Zealand representatives.

SOLGM Executive Director, Dave Smith, was involved in the preliminary meetings on the process for the review and identifying the working parties.

The first group, role/purpose/principles has been meeting for some time and includes Mike Reid from Local Government New Zealand and Roger Matthews from the Auckland City Council.

Arrangements are being made, as I speak, to get the other working parties up and running.

The timeframe for the review is tight, with public consultation on the purpose and principles for local government due to be undertaken in November, in-principle decisions by cabinet due in April 2001, and final decisions due by October of next year.

The new Local Government Bill is scheduled to be available for introduction in December of 2001.

Local government funding decision processes and powers

On 18 August, Cabinet approved new terms of reference for the review of local government funding powers.

The previous review identified, through a consultation process, a number of issues and objectives.

The key themes of submissions received included:
 Linkages between financial provisions and funding powers
 The limited range of tools available for funding services
 Accountability and transparency to communities
 Crown exemptions, and
 How Maori land should be rated and valued.

These issues are still valid.

The Government has also been concerned that a perception has developed over time that Part VIIA of the current Local Government Act directs councils’ funding decisions on the basis of purely economic analysis, and therefore imposes limits on what would otherwise be legitimate political decisions for communities, based on a much wider range of relevant criteria.

The Government wants the review to ensure that we achieve a situation whereby the process provides for the selection of appropriate funding tools that recognise the long term social as well as economic needs, interests and aspirations of local communities, and that we have in place the range of funding mechanisms that this process may require.

The review will also address the issues of rates on Maori land and of Crown exemptions.

Again, the timetable is tight. We are aiming to release a discussion document at the beginning of November of this year, and to have Cabinet decisions made by April 2001.

Achievement of this timetable will depend very much on the level of involvement of the sector. I am advised that officials from my department have been working closely with the joint LGNZ-SOLGM funding powers working party in a real spirit of cooperation that bodes well for the overall programme to be achieved.

Local electoral review

Next week a Cabinet committee will consider papers on key policy issues for phase one of the local authority electoral review.

Phase one covers matters necessary for the conduct of the local authority elections in October 2001. This includes issues relating to multiple candidacy and membership of councils, and limits on candidates’ campaign expenditure.

It has been agreed that the current triennial review process be included in phase two of the review which will cover representation issues generally.

This acknowledges the fact that councils are now well down the path of their triennial reviews for the 2001 elections.

It also reflects the Government’s decision that STV should be available as an option for the 2004 elections, and the need to consider the impact of this electoral system in relation to the achievement of effective and fair representation.

The Bay of Plenty Regional Council (Maori Constituency Empowering) Bill will be examined by an appropriate Parliamentary select committee to which the public will be able to make submissions.

It should be emphasised that this is a local bill, and the Government itself has no position on the proposition of dedicated Maori seats.

Decisions on representation issues are due to be taken by August 2002, to allow them to inform council decisions on membership and the basis of elections for the 2004 local authority elections.

This phasing of the review allows, as a priority, focus on the issues which must be in place for the local authority elections next year.

The new Local Elections and Polls bill is scheduled to be introduced to Parliament before Christmas this year, and to be enacted by May 2001.

While this time line is still tight, it does provide for councils to consider the bill and make submissions through the select committee process in the early part of next year.

There is also time for these submissions to be considered and reported back, and the bill to be enacted in time for the necessary election processes to be carried out in time for the October 2001 local authority elections.

I am not able to announce today policy decisions relating to the conduct of local elections, as these won't be taken until later this month.

But given the cooperative process to date, I don't believe there will be any real surprises when these are announced.

Other issues

There are a number of other issues which either the sector has raised or have become apparent as needing consideration as part of the legislative reform programme.

We intend that those issues which can be quickly fixed and do not have implications for issues being addressed through the major legislative reviews, to be included in a Local Government Law Reform bill which we had hoped to introduce this year.

It has become apparent recently, however, that the pressure on House and select committee time arising from the 2000 legislative programme will mean that some previously approved bills may not now immediately proceed. I have to say that the proposed Local Government Law Reform Bill is in this category.

My officials and I are still trying to secure a spot in the Government's year 2000 legislative programme for this bill. Our success will hinge in part on the size and nature of the bill including the likely degree of contention associated with particular provisions.

Items identified to date for inclusion in the bill include:
 The system for determining elected members’ remuneration
 Funding for depreciation, and
 Social and environmental objectives for LATES.

You will be aware that Cabinet has approved elected members’ remuneration in future being determined by the Higher Salaries Commission.

I think this change away from ministerial determinations and council discretion as to actual levels of remuneration to pay themselves is a very sensible step, and I don't believe there will be too much disagreement about this proposal.

I think you will agree that the issue of the funding of depreciation is probably the most pressing of issues. I am sure I do not need to outline current concerns here.

A paper is about to go to Cabinet and there will be an announcement shortly on the proposed approach. I want the necessary legislation to be enacted this year if at all possible.

I also hope to amend the legislation on LATES—local authority trading enterprises—to clarify that parent councils can specify social and environmental objectives for their LATES, as well as commercial ones, where they consider this to be appropriate.

Arguably, Councils can already specify these objectives through the Statement of Corporation Intent but there is confusion and debate on this point, and the proposed amendments seek to address this. For LATEs to be an effective service delivery optionm it is essential that the ojectives and performance expectations of the council are clearly and transparently stated at the outset.
I turn now to an issue that I know is of concern to a number of you here: the provisions relating to the reappointment of chief executives.

While some of you may see it as a quick fix issue, I am concerned to ensure that the approach to the reappointment process is consistent with standard accountability and effectiveness objectives.

I believe it is also important to recognise that an effective and regular performance appraisal is a key component in healthy council chief executive relationships.

I hasten to add that this does not necessarily require heavy handed, prescriptive legislation.

It could, for example, be more easily achieved by widespread adoption of best practice guidelines.

I took the reappointment of chief executives issue to cabinet yesterday.

Cabinet decided that the reappointment provisions should be reviewed as part of the comprehensive legislative reviews now under way which include the general employment provisions for councils.

This was one of three options considered. The other two options were:
 Provision for one roll over of a contract beyond five years without public notification being required; and
 Council discretion on the reappointment process, based on council satisfaction with performance.

My concern here is to ensure that best practice as identified, for example by the Audit Office, relating to both reappointments and regular performance appraisal is universally acknowledged and applied, albeit with some local adaptation.

On the figures I have been supplied, it is not clear exactly how many councils are following or at least adapting what is seen as "best practice".

In these circumstances I believe some statutory guidance is required in terms of the principles to apply in relation to appointment, reappointment and performance appraisal processes.

Such principles could include:
 Identification of employer and employee expectations
 Negotiation of a performance agreement
 Appropriate advice on both appointment and performance appraisal processes

Consideration could also be given to principles relating to the qualities and skills required for the position including those currently set out in section 119c(3) of the Local Government Act, such as:
 Imbuing employees with a spirit of service to the community
 Being a responsible manager
 Maintaining appropriate standards of integrity and conduct among employees

I understand the sector’s concern that this issue should be addressed as quickly as possible.

However, given the uncertainty surrounding the timing of the introduction of this year’s Local Government Law Reform Bill, and also given the opportunity to consider the matter in the context of the review of the Local Government Act, I believe this is the most appropriate course of action.

Local Government managers in my experience more than probably any other sector have coped creatively and imaginatively with a mass of reforms, restructuring and transition over the last decade.

I am grateful for the valuable contribution SOLGM has made to date, not just to the policy formation processes currently under way but also to the resolution of one of the most difficult matters to confront local and central government for many years: the Rodney District Council situation.

We will not always agree on every issue, but I know your commitment to continue building a true partnership with central government matches our commitment to reciprocate with you. #

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