The Government is set to introduce sweeping reforms to curb local council powers and get soaring debt levels down.
Troubled by escalating rates and in line with National's public sector reforms, Local Government Minister Nick Smith wants to make elected representatives take more responsibility for wage bills and the generous packages offered to chief executives.
And he will pare back the scope of local government functions so they will only have control of essential local services such as waste, water, roads, libraries and consents.
The reforms will also require authorities to be more "prudent" in event management. It follows David Beckham's 2009 football game which lost Auckland Regional Council $1.79 million and the saga of the V8 Supercar races which cost Hamilton ratepayers more than $40m.
Dr Smith is concerned that local government debt has burgeoned from $1.5 billion to well over $8b in the past decade. At the same time, rates have climbed 6.85 per cent.
He believes the blowout stems from 2002 legislation which introduced the "power of general competence", widening the scope of council responsibilities. Dr Smith said he was "fundamentally re-evaluating that structure".
"[Councils] can do anything they like. In the Auckland plan, they have set targets for NCEA pass rates by 2020 ... nothing to do with the council.
"Councils have got targets around improvements in child abuse – a really important issue – but the proper agency is one that we all pay for as taxpayers through Child, Youth and Family.
"So the package of reform that I'm looking at is one that narrows the scope of local government back to its core function."
However, he did not want to "micro-manage" local authorities.
"Councils have a really critical role in providing good quality infrastructure," he said. "Water, roads, footpaths, libraries, local regulatory services – where you go to get your building consent, resource [consent], food safety, the dog control role."
The local government wage bill was also in his sights, which he believed was contributing to soaring debt. Councils set chief executives' pay based on private-sector levels.
Last month it emerged that Kapiti Coast chief executive Pat Dougherty pocketed a $44,000 pay rise – an 18.2 per cent increase. There are nine chief executives in the Wellington region earning about $2.5 million.
Christchurch city chief executive Tony Marryatt netted an extra $68,000 bump to $538,529 despite a steady decline in his performance reviews.
Rather than cap rates or staff numbers or regulate pay bands, Dr Smith will instead offer incentives to councils to keep their bills – and the burden on the ratepayer – down.
"The line [the Government] needs to walk is between allowing local democracy to work and to let people make those local choices without that undermining the core Government's goal of ... trying to control overall public debt."
He said providing more tools for elected representatives to better control costs was just one of several initiatives that he was considering.
Local Government New Zealand president Lawrence Yule said his organisation would work constructively with the minister but councils were "uncomfortable" with some of the proposals.
The sector did not believe debt was a problem, he said.
"The debt servicing costs sits at about 5.8 per cent of the income level of councils. The world best-practice model says it should be under 10 per cent. Most of that debt is in infrastructure. It's not frilly things, it's in water systems, wastewater systems and some big roading projects that are going to last 50 years."
- © Fairfax NZ News
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