Speech by Hon Rodney Hide to Meeting of LGNZ Zone One Representatives
Council Chamber, Ground floor, Auckland Town Hall, 301 Queen Street, Auckland.
Friday 12 March 2010

Good morning and my thanks to Local Government New Zealand for the invitation to speak to your Zone One representatives today. Zone One is very important to me as Minister at the moment!

You have invited me to talk about the Governments reform of Auckland’s local governance – a topic that I know is very dear to all your hearts – and my work on improving the transparency, accountability and financial management of local government

I’m not going to bore you with a lot of detail that you already know about, being so closely involved in all the Auckland changes. I will speak for a short time and then am very happy to take questions.

Before I begin - special greetings to Mike Cohen and Eugene Bowen, and to Grant Taylor representing the ATA.

And, I would very much like to thank all Zone One Mayors and Chief Executives for your open engagement with the ATA and hard work to support the changes underway in Auckland.

I know it’s an enormous undertaking for you, and I appreciate the personal and professional effect it must be having for you.

As you know, successive Government have attempted different arrangements for Auckland’s local governance in an effort to assist the Auckland region to speak with one voice, and to become the marvellous city/region that I know it can be.

Auckland is New Zealand’s only city/region that is positioned to take on the global connections NZ needs to succeed and prosper.

Auckland already exhibits a number of characteristics of a strong international city. We can be proud of Auckland with its natural beauty, a jewel of a harbour and its wonderful diversity. But in my view there is a huge untapped potential. It could be so much better.

Recent evidence shows that Auckland has a productivity premium of around 50 per cent higher than that outside Auckland. Although Auckland is a strong performer in the national context, we believe it has potential to significantly improve its productivity.

That is why the Government is determined to set up a regional governance structure that both enhances productivity and ensures that Auckland continues to be a great place to live and work.

Auckland's future depends on critical decisions being taken at a regional level. Effective region-wide decision-making must have region-wide governance arrangements to overcome the competing interests, parochialism and factionalism that held Auckland back for so long.

The Government’s changes will provide a better environment for Auckland citizens and businesses to interact with their local authority.

I’m excited about the potential we can unleash through these changes, and I’m getting more excited as the final pieces of the new picture start to fall into place.

Some of these final pieces are:

• The Local Government (Auckland Law Reform) Bill - the third and final Bill to effect the Auckland Governance changes, which as you know is currently before the select committee;

• The Local Government Commission’s final determination as to Local Boards and their members;

• The ATA’s discussion documents on Local Boards and CCOs – which I hope you are providing feedback on.

I will just briefly touch on these now

Third Bill
As you know, the third Bill develops and enhances the two earlier Auckland Acts and amends other pieces of legislation.

It will give the new Auckland Council the tools to be up and running effectively in November this year, following the election of new representatives in the October 2010 local government elections.

The Auckland Governance Legislation Committee received over 800 submissions on the bill, and has recently finished its hearings. They will report back to the House in early May and the Bill needs to be passed shortly afterwards so that arrangements are in place for the elections.

Local Boards and the Council
As you know the new Auckland council is going to have two complementary levels of decision-making in the new Council – the governing body made up of the Mayor and councillors, and the local boards which have specific decision-making responsibilities in their own right.

One of the most difficult issues facing us in designing these new arrangements is how to effectively provide for the local voice in regional decisions, and the regional impact of local decisions. We have tried to do this in several ways.

The governing body is responsible for decisions on the regulatory functions of the Council as a local authority, although it has the power to delegate many of these to local boards.

The governing body is also responsible for financial management, and ensuring the Council as a whole has the capacity to provide, or ensure the provision of, services and facilities, including local activities, across the region.

In meeting these responsibilities, the governing body must consider any views and preferences expressed by a local board, if the decision may affect the local board or the well-being of communities within its local board area.

The Council’s local boards are responsible for identifying and communicating the interests and preferences of the people in their local board areas. It will consider the content of the strategies, policies, plans, and bylaws of the Council, and developing bylaws for their local board areas and proposing them to the governing body.

Responsibility for the Council’s non-regulatory activities has been specifically designed to reflect and support the different roles that the governing body and the local boards have in the Council structure.

As you know the Local Government Commission has made its final determination and has made a few changes as a result of submissions on the draft determination.

The proposed two member Orakei–Maungakiekie has been split into two single member wards (Orakei Ward and Maungakiekie-Tāmaki Ward);

Two of the largest proposed Local Boards have both been split into two new boards. The Hibiscus, Albany, East Coast Bays board is now split into the Hibiscus and Bays Local Board and the Upper Harbour Local Board.

The proposed Waitakere Board has been split into two separate boards (Waitakere Ranges Local Board and the Henderson-Massey Local Board).

A number of other ward and local board boundary have been made to ensure communities of interest are not split and to provide for fair representation across Auckland (i.e. within plus/minus 10 percent). For example, all of Mt Eden community is now in one ward

I hope that many of you here today are thinking of standing for the council or a local board.

CCOs
There are currently over 300 council-owned entities with some form of corporate or business-like structure, spread across the existing eight councils in Auckland.

The Government asked the ATA to review and rationalise the council-owned entities prior to 1 November 2010, and to develop proposals for a consolidated structure for the new Auckland Council.

The proposals need to meet certain criteria before the Government will agree to them. They need to:

• address inconsistencies in service delivery methods across the existing local authorities to achieve a consistent approach for the new Auckland Council; and

• eliminate multiple CCOs with the same purpose, to provide the Auckland Council with a consolidation of the entities.

The Government has already approved three CCOs for Auckland – these are Auckland Transport, Watercare Services Limited and the Waterfront Development Agency.

We expect that the stocktake and review of council-owned entities that the ATA is undertaking will result in the establishment of a small number of new CCOs, primarily based on the rationalisation of like activities that presently operate independently from local authorities through CCOs, trusts or business units.

Any of the existing 300 council entities that are not affected by the new CCO structure will simply transfer, as is, to the Auckland Council on 1 November 2010.

The CCO structure, once fully developed by the ATA and approved by the Government, will remain in place from 1 November 2010 until the new Auckland Council has completed consultation with Aucklanders, along with LTCCP consultation, on any proposed changes.

The Government is looking for effectiveness and efficiency in service delivery while also providing for the Auckland Council to remain democratically accountable for the delivery of those services.

We expect the new unified Auckland Council to bring many benefits to its residents and ratepayers, and serve as a positive example for other regions to follow in the future.

Further down the track, we will consider the implications of the review of Auckland’s governance for local government in general.

TAFM
I’d like to briefly touch on the government’s work on improving transparency, accountability and financial management in local government.

The local government sector has provided valuable input into this work through Local Government New Zealand and the Society of Local Government Managers. In fact, many of the changes I’m proposing had their genesis in work done by one of these organisations.

I started this work because it very quickly became clear to me, from letters I received and the public meetings I attended, that very many ratepayers are concerned about increasing rates, and many are struggling to pay these increases.

These concerns are well founded.

Recent analysis by the Department of Internal Affairs of data from 2009 to 2019 long-term council community plans (LTCCPs) shows 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 ratepayers, including commercial ratepayers, who are expected to pay for most of the increases.

More effective and responsive local government and a brighter future for ratepayers are most easily achieved by improving certain aspects of the Local Government Act 2002.

The three underlying principles guiding this work are:

• local government should operate within a defined fiscal envelope

• councils should focus on core activities

• council decision-making should be clear, transparent and accountable.

In general the changes agreed to by Cabinet will help ratepayers and residents to understand council costs, rates and activities a whole lot better so they can exert greater influence and control during planning and decision-making.

Long-term council community plans will be simpler and more strategic in focus, financial disclosures will be in plain English, and councils will have more flexibility in choosing effective and efficient delivery methods for water services.

Council reporting will be consistent so that residents and ratepayers will be able to make comparisons between different councils.

As from 2013, every council will produce a pre-election financial report to allow voters to make informed choices. And the return in focus to core services will mean that processes are simplified and streamlined.

I believe councils’ consultation processes are unnecessarily onerous and complex. Worst of all, they are largely meaningless to the average ratepayer.

Most LTCCPs are bulky documents running to hundred of pages and often more than one volume. This makes it difficult for residents to identify the things that really matter to their communities, and can also deter them from taking part in decision-making processes.

It is possible to remove a lot of the more descriptive, highly technical and non-strategic material from LTCCPs to produce a document people can more easily understand.

The community outcomes process will be merged into the long-term council community plan. LTCCPs will be renamed “long-term plan” and will have a more strategic focus. This will eliminate the costs and inefficiencies of running two separate long-term planning processes.

Other benefits of the changes include greater attention to the prioritisation and affordability of proposals, allowing communities to decide the issues they want their council to consider, and clearer links between a council’s outcomes and how it proposes to achieve them.

Essentially, there will be greater flexibility for councils in responding to community needs and clearer information for the public by integrating community outcomes into strategic planning.

It is important that decisions about the role of councils continue to be made locally, rather than by central government. And council activities and decisions should match the priorities of ratepayers who foot the bill.

Water Services
The present law restricts councils from structuring their water services in ways that best meet the needs and preferences of ratepayers and residents. Current restrictions reduce councils’ flexibility to choose effective and efficient delivery methods for water services.

The Government has agreed on changes to allow greater use of public-private partnerships in the construction and operation of water and wastewater treatment plants. Build – Own – Operate – Transfer (BOOT) schemes will become more feasible. However, ownership of assets would revert to councils at the end of any agreement to ensure public ownership is retained.

We are proposing legislative changes to extend the 15 year limit on water services contracts and joint arrangements with the private sector to 35 years to make these arrangements more workable.

The changes will repeal provisions that require councils entering into a contract or joint arrangement with the private sector to retain control over the management of water services, with control over pricing and policy to be retained by councils.

These changes will be provided for in the Local Government Amendment Bill, which I plan to introduce to the House this year. There will, of course be a chance for public input through the Select Committee process, and I encourage people to make their views known.

Ok, that’s enough from me – I’m happy to take your questions now, and I’m sure you’ve got a few.