Govt backs council reforms

03:19, Mar 20 2012
REFORMER: Local Government Minister Nick Smith.
REFORMER: Local Government Minister Nick Smith.

The Government is today trying to hose down local government concerns over the effects of planned reforms, after mayors questioned whether they would be able to back sports events like the Rugby World Cup or provide social services such as CCTV cameras or security patrols.

Local Government Minister Nick Smith yesterday said under the changes councils should provide "public services" and not try to replicate those provided by central government or the private sector.

But he clarified that today saying: "The key legal test for the councils to meet in terms of spending ratepayers money is that the there is a public good."

Prime Minister John Key said the "public good test" was still extremely broad.

"There can easily be a public good in hosting an event like the Volvo Ocean Race, and there's clearly a public good for Auckland, it'll bring tourists in," he said.

The cycle way, which he had promoted, could also be a public good, he said.

It was a good thing to focus councils' minds on the provision of core services, such as infrastructure and very important services.

"What we're saying is here's the demarcation line, it's a little narrower than what it was in the past but there's still plenty of scope."

The public good test would be defined in legislation.

"You'll just have to look at the legislation when you ultimately see it," he said when asked to define it.

Councils often felt pressure to do things that were outside their scope, Key said.

"In the end they end up spending taxpayers money on what can often be a duplication."

Councils would also have to rethink the future purchase of assets, but it would not affect current assets and would not force a sell-down of stakes in airports or ports.

Smith said the change would not prevent concils from supplying servcies their communties wanted.

"In my view there is a lot of room for councils in the way they define those public local services and in the way they define that local infrastructure to provide all of the things our communities would want our councils to provide," he said.

"We are wanting to pull back from that very broad purpose statement currently in the act that effectively let council do everything from buying farms to buying freezing works in fact the current constraints are basically negligible, they can do anything."

The current broad statement had contributed to the rise in debts and rates in the last decade, he said.


Wellington councils are furious over rate increase figures provided by the Government in support of its announced reforms, claiming they are "completely wrong".
Wellington City Council rates increased by 7 per cent from 2002 to 2010 - the national average - with rates reaching $1081 per capita in 2010, according to figures released in a local government reform plan, Better Local Government.

Other lower North Island councils showed rates at much the same increase, although Upper Hutt City rates made double figures with an 11 per cent average increase.

Smith said the reforms would help keep rates affordable following a rise of 7 per cent a year since 2002.

However, a Wellington City Council spokesman said council staff were confused at the numbers provided by the Government.

They believed that overall rates had only risen by an average of 3.75 per cent during the period and they had contacted the minister's office to check their figures.

Upper Hutt Mayor Wayne Guppy said council staff had worked out that the actual number was about half of what had been put forward in the report and he would be demanding answers during a meeting with Smith later today.

"I want to know how they arrived at this figure because they're completely wrong."

The Government was obviously unhappy with how councils were being run and change was fine, but it needed to be made with the right information, he said.

Local Government New Zealand president Lawrence Yule understood concern over the level of rates and debt increases, but said that was mainly spent on infrastructure.

"We've got to have a conversation in New Zealand about what standards we want for things whether it's water, wastewater, roads etc."

Many things councils did were not core services, but they had stepped in where the private sector and central government had failed.

That included the Mayors' Taskforce for Jobs, security patrols and CCTV cameras.


"One could argue that if the police were fully resourced and doing their job then the council shouldn't have to invest in that type of thing."

Millions of dollars had also been put into stadiums or the Rugby World Cup, by councils.

"If that wasn't a core role of ours then who was going to do it? And we wouldn't have had the Rugby World Cup."


Sweeping local government reforms will pave the way for amalgamations ahead of council elections in 18 months, Smith said.

Rules for triggering an amalgamation vote would be changed, and the requirement for a majority in each of the areas considering a merger would be dumped, in favour of a majority across the whole area.

But there would have to be "significant community support" in each area to prevent a larger council simply taking over a smaller one.

Smith said councils saw advantages in amalgamations, but many felt it was "so damn difficult that it's a waste of time trying".

He was aware of debates about amalgamations in Wellington, Hawke's Bay and the Far North.

Changes in Auckland had saved $140 million in the first year and cut 2000 jobs, but it was not known how many jobs were likely to go under the planned reforms.

Councils would be steered away from spending on social and cultural activities in favour of "core" activities such as key infrastructure, regulations and public services.

Smith said the Local Government Act gave councils responsibility over social, economic, cultural, and environmental wellbeing of a community, which created "false expectations".

The proposed changes would require councils to provide "good quality local infrastructure, public services and regulatory functions at the least possible cost to households and business".

The aim was to limit expenditure growth to "no faster than inflation and population growth, except in extraordinary events".

Benchmarks would be set for income, expenditure and debt levels and councillors would be able to set employment and remuneration policy, including limits on the number of staff.

This follows widespread criticism of pay rises, including a 14 per cent wage increase for Christchurch City Council chief executive Tony Marryatt.


There are 78 councils nationwide.

They make up 4 per cent of GDP and spend $7.5 billion a year and manage $100b in assets.

Local government debt had risen four-fold from $2b to $8b since 2002 and rates have risen 7 per cent a year.

The Dominion Post