Councils Told to Work Together and Reduce Spending

28 Jul 15

Mayors, councillors and senior council staff recently met in Rotorua where they were addressed by Hon Paula Bennett, the Minister for Local Government. Two substantive issues were addressed by the Minister, being amalgamations and funding sources.

Amalgamation

Since the creation of the Auckland super city there has been a lot of discussion on where the next amalgamation of councils might be. This discussion has caused a great deal of interest in the local government sector. The Minister has now called time “on what has been a relentless focus on how many mayors we have”. She is explicit that she will not legislate for large amalgamation. Instead councils need to “go beyond close relationships” and look to structural change. The Local Government Commission, now chaired by Sir Wira Gardiner in addition to Janie Annear and Leigh Auton, is to assist to work out the right structural change. The focus will be regional.

The Minister gave examples of her frustration such as an area with a population of 43,000 having five independently run wastewater treatment plants. Options she canvassed included new CCOs jointly owned by a number of councils. Councils were challenged to work out what structural changes would deliver better services across their region. In considering these changes councils were told they should think beyond the limits of current legislation because the Minister will legislate for regional solutions where requested by the Local Government Commission and councils.

This part of the Minister’s address ended with “But let me be clear – there will be change”. This address was clearly a call to action yet few examples and details were included. No timeframes were given. There will need to be many more conversations about the particular opportunities the Minister considers councils should focus on and the extent of change that the Minister expects. In the meantime councils are on notice to develop proposals for more efficient and enduring regional structures.

Funding

Before the Minister’s address LGNZ launched a Funding Review document that questioned the suitability of the current property based rate as the primary method of funding for councils. The Minister largely dismissed this piece of work. She acknowledged that a conversation would be useful “but first and foremost local government needs to demonstrate that it can live within its means”. Wage and salary increases of 2.3% across the sector were used as an example of councils wasting ratepayer money. The Minister’s clear focus is on reducing costs rather than changing the mechanisms for funding local authorities.

If you have any legal questions about the local government sector, call our local government specialists – Michael Garbett and Rachel Brooking.

Link to Hon Paula Bennett’s address – http://www.beehive.govt.nz/speech/speech-lgnz-annual-conference

Link to LGNZ Funding Review – http://www.lgnz.co.nz/assets/Uploads/Our-work/Local-Government-Funding-Review.pdf

PDF version: Councils told to work together and reduce spending

For more information contact:

Richard Greenaway

richard.greenaway@al.nz