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Hide: Illuminating local government

Rodney Hide
21 October, 2009
Illuminating local government - a brighter future for commercial ratepayers
Good morning and thank you for the invitation to speak on the topic "Illuminating local government - a brighter future for commercial ratepayers".

As Minister of Local Government I can assure you I am working hard to achieve a brighter future for all ratepayers. Ratepayers are long overdue for a brighter future!

I want to talk to you today about the review we have underway of aspects of the Local Government Act 2002.

And I want to talk to you about the reform of Auckland governance, and the impact of regulatory reform on local government.

I am very proud of the Government's work programme in local government, especially tackling the long overdue task of Auckland governance.

Some great work is being done in paving the way for a brighter future for commercial and residential ratepayers, citizens, businesses and local communities. It's a real privilege to be leading this important work.

We are on track to ensuring Auckland's new governance arrangements are in place for next year's local body elections. And we have already done much to remove inefficient regulation, and to reduce the costs and constraints imposed by regulation.

After I was appointed Minister of Local Government it quickly became clear to me - from letters I received and the public meetings I attended - that a lot of people had a lot of concerns about the burden of ever-increasing rates.

I understand and sympathise with those concerns.

Recent analysis by the Department of Internal Affairs of data from 2009 to 2019 long-term council community plans (LTCCPs) indicates that rates income will continue to rise faster than council costs.

Even more concerning is that the cumulative increase in rates per head over the next 10 years is 49 per cent, and that rates funding will increase as a proportion of councils' operating receipts.

At the same time, public debt for the sector is forecast to increase by 97 per cent and interest expenses by 91 per cent. And it is commercial and residential ratepayers who are expected to meet the increases.

Something must be done. These trends must be stopped.

We are working to achieve more effective and responsive local government, and a brighter future for ratepayers, by improving aspects of the Local Government Act 2002.

The three underlying principles of the review are that:
- local government should operate within a defined fiscal envelope,
- councils should focus on core activities, and
- council decision-making should be clear, transparent and accountable.

I am looking at key measures such as simplified LTCCPs, plain English financial disclosures, a less costly service performance reporting system, greater use of polls or referenda, and more effective use of the community outcomes process. And we need to improve decision-making processes.

I believe councils' consultation processes are unnecessarily onerous and complex. Worst of all, they are largely meaningless to the average ratepayer. That's why I've got my officials looking into making the LTCCP process simpler, and ensuring consultation is more effective.

Most LTCCPs are bulky documents, running to hundred of pages and often more than one volume. This not only makes it difficult for ratepayers to identify the things that really matter to them, it can also deter them from taking part in decision-making processes.

It must surely be possible to remove a lot of the more descriptive, highly technical and non-strategic material from LTCCPs to produce a document people can actually understand!

Councils vary hugely in their presentation of financial and performance information.
I've found that even something as simple as rates income is being reported in three different ways in council plans and reports.

Good quality comparative data is essential if we are to achieve accountable and transparent local government.

We're looking at how financial disclosures can be written in plain English, so that you don't need to be an accountant to understand them, and so that ratepayers can more easily compare how their council is performing against others.

Another thing we're looking at is how councils can prepare clear financial strategies to manage issues like rates, debt and expenditure levels a whole lot better, and then set priorities for expenditure.

I am convinced that a good financial strategy will help councils, in consultation with ratepayers and residents, to make better decisions about trade-offs. It will provide a basis to measure a council's financial management record and help identify future financial management issues.

Included in the review is a proposal for pre-election financial reports. These would give an account of activities over the previous three years, and list items of expenditure for the next three years.

This would give ratepayers and residents up-to-date information about the performance of the current council and the state of the books, and a clear understanding of the issues the incoming council will need to consider.

This would help promote well informed local debate about expenditure priorities, and enable electors to put the hard questions to candidates about past and proposed expenditure.

Local elections have not had a high turnout in recent years. Access to clear information on issues facing a council and the sorts of decisions that need to be made should help to stimulate greater interest in local government amongst voters, businesses and the media.

The question of the core business of local government has been the subject of much publicity over recent months.

I am definitely not proposing that central government prohibit local councils from undertaking certain activities.

The review is about enabling councils to do a better job prioritising local expenditure and staying focussed on providing essential services.

They need to engage more effectively with their residents, and think carefully before taking on risky or novel ventures that might best be left to the private sector.

All New Zealanders share some expectations of what their councils will provide. I would like to see local authorities planning for and funding the services that have traditionally been council funded, rather than indulging in more financially risky or novel activities.

The use of referenda is another aspect of the review of the Local Government Act 2002.

I strongly believe that referenda can be a vital tool for strategic decision-making.

A clear citizen mandate will overcome the division often accompanying proposals for significant expenditure.

The review work is going well. Any proposals to amend current legislation will go through the usual select committee process so that the public, and organisations like the New Zealand Property
Council, can make submissions.

As you will be aware, reform of Auckland governance in time for the 2010 local body elections is a top priority for the Government. It is important for all New Zealanders because Auckland is home to more than a third of our population, and is the engine for the country's economic growth.

Auckland's current local governance has been hampering the region's growth and prosperity, and adversely affecting residents. That's something everyone agrees on.

The reforms will reduce local government inefficiencies and weak, fragmented regional governance.

Two bills have been passed this year.

The Local Government (Tamaki Makaurau Reorganisation) Act passed into law in May, establishing the Auckland Council and Auckland Transition Agency.

The Local Government (Auckland Council) Act, which was passed in September, covers the Auckland Council's representation arrangements, including local boards, and Auckland's boundaries.

A third Bill will be introduced in December to fill in the detail of the governance structure, and the functions, roles and power of the Auckland Council. It will also deal with water, transport, spatial planning and resource management issues.

The new governance structure for Auckland is based on a unitary Auckland Council with the powers of both a regional council and a local authority.

There will be one Mayor with enhanced governance powers, who is elected at large by the region's resident and ratepayers.

There will be 20 councillors elected from wards, who with the Mayor will form the governing body of the Council.

Twenty to thirty local boards will complete the Council.

The new structure will mean improved and better integrated infrastructure decisions, and reduced duplication and delays in crucial areas like transport. It will also mean Aucklanders get better value from their rates and from central government funding.

This structure balances the ability to coordinate regional decisions on big challenges such as transport and infrastructure with the provision of strong community representation.

The Mayor will lead the development of plans, policies and budgets for consideration by the Council, and ensure effective engagement between the Auckland Council and the people of Auckland.

The Mayor's powers include the appointment of the deputy mayor and the chairperson of each committee, as well as establishing and maintaining an appropriately staffed office of the mayor within the budget set.

The local boards will provide effective local representation with the power, status and funding to serve their communities well.

The exact number of boards, board members, and the boundaries and names of these boards, will be determined by the Local Government Commission by 1 March 2010.

The Government wants to ensure local boards are empowered to represent, advocate for and make decisions on behalf of their communities.

There are no Government plans for similar amalgamation in other regions, but the Local Government Act 2002 provides for the reorganisation and amalgamation of local and regional government.

My role as Minister for Regulatory Reform also impacts on local government.

I am committed to better and less regulation, which is essential to boost New Zealand's productivity growth, international competitiveness, living standards and potential.

The Government is firmly committed to looking closely at the impacts of any proposed future regulation.

With Finance Minister Bill English I recently announced the Government's commitments to cutting red tape to create a better and smarter economy.

For far too long central government has burdened local government with regulatory requirements and compliance costs, which ratepayers and business owners have to pay. The price is often high, both in terms of time and money.

We are committed to addressing the high compliance costs hampering the efforts of businesses to create jobs and support our economic growth. And we are making good progress with this.

The Government has already begun a programme of reviews of the effectiveness of important regulatory regimes, particularly those with a significant impact on productivity. And we've established an independent, expert Regulatory Taskforce.

We are committed to the introduction of an annual Regulatory Reform Bill to make it quicker and easier to remove or simplify unnecessary, ineffective or excessively costly requirements in primary legislation.

A very strong case will have to be made for any regulatory proposals likely to impose additional costs on business, and impair private property rights, market competition or incentives for businesses to innovate and invest.

The Resource Management Act 1991 has, since its inception, caused uncertainty and delays that affect New Zealand's economic growth and productivity. As you will be aware, it has created huge frustration for applicants and councils alike.

Environment Minister Nick Smith and I see RMA reform as an important part of the Government's work programme, and we are making good progress on this.

The Government recently passed the Resource Management (Simplifying and Streamlining) Amendment Act, which will reduce unnecessary red tape without compromising environment protection.

Phase two of the RMA reform will include issues such as aligning legislation, aquaculture legislation reform, urban development and water allocation.

Building issues also needed addressing, and we've already passed the Building Amendment Act 2009 to speed up the building consent process and reduce costs.

The Act also introduces multiple-use building approvals, to reduce duplication and fast track the consent process for builders who construct homes on sites across the country using the same, or similar, designs.

The Act also defines a new, streamlined process to manage minor variations to building plans after the consent is issued, saving time for both applicants and councils, and making project information memoranda voluntary.

The Government is also looking at removing unnecessary building control regulation, ensuring consents better reflect the risk and complexity of the construction, and streamlining consent functions.

Proposals from this further work reviewing the 2004 Act will go before a select committee for public input. We are aiming to have the reforms ready for implementation in the middle of next year.

While I am spending a lot of time on legislative reform, I am very aware that it's not the only change needed to improve our local government.

I will continue to encourage councils to streamline their procedures and, wherever possible, minimise bureaucratic processes. I will constantly remind them that it is ratepayers' money they are spending!

You can all contribute to this reform by seeking assurances from your council and continuing to hold it to account for its operational performance and decisions.

Thank you again for the opportunity to join you here today. I look forward to hearing your comments and answering any questions you have.


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