Ability to influence development seen as under threat

The fight for local democracy is a clash of competing visions for New Zealand. But, as defenders of grass-roots governance take on advocates of a "bigger is better" mentality, warning bells are sounding.

Jinty MacTavish is prepared to get her hands dirty for democracy.

The two-term Dunedin city councillor, who stands down next month, is a firm believer in the grass-roots foundation of local government.

Cr MacTavish first stood for office in 2010, aged just 25, seeking to help shape the future of the community she cares about.

She has spent the past six years in office pushing the council to listen and consult more, reflect community concerns and prepare the city for future challenges.

But success depended on a councillor’s ability to influence the direction community development was taking.

And it was that ability to influence that was under attack by Government reforms designed to turn local government into a leaner, more corporate entity, she said.

"I think it’s scary."

"I think it’s fundamentally anti-democratic and very troubling that a government of the people, by the people, for the people, would suggest such things."

Her concerns came as the Government promoted its Better Local Services reforms, introduced to Parliament as the Local Government Act 2002 Amendment Bill (No 2) 2016 earlier this year.

The Bill, which remains before a select committee, would hand the Local Government Commission new powers to impose council-controlled organisations (CCOs) on councils and communities.

The companies could span regions and take direct control of community assets, including water and transport infrastructure, in some cases without a public poll.

The result would be a more corporate approach to service delivery that was designed to be efficient, but which also kept councils and communities being served at arm’s length.

It is a proposal that has outraged mayors and councils across the country, and also Cr MacTavish, who said the changes threatened to erode the public’s appetite for local democracy altogether.

"It’s about removing decision-making capacity from democratic entities and putting it in the hands of unelected officials, which seems to be completely counter to the principles of democracy.

"It’s undercutting, undermining, democratic process. I think it is tantamount to an attack on democracy."

The councillor’s warning comes as two opposing views of the future of local government collide in New Zealand.

On one side, advocates of a more centralised approach argue some councils are struggling to cope, with rising rates, new funding demands and inadequate resources fuelling the need to find efficiencies.

The push to amalgamate dates back decades, to even before Labour’s radical 1989 shake-up, which slashed the number of local bodies across New Zealand from 850 to 86.

But reforms have found new impetus under National, including the birth of the Auckland Council "super city" in 2010 and, more recently, the introduction of  reforms designed to refocus councils on core business.

On the other side, the defence of grass-roots democracy has come from councils themselves, which maintain they are already delivering results, including savings, for their communities.

But the argument against "bigger is better" is now also coming from a surprising new source — the New Zealand Initiative, formed from the ashes of the Business Roundtable.

The group has studied events overseas and concluded the case for centralisation is far from proven, as promises of efficiency have failed to materialise and amalgamations of the past were rolled back.

• One of those pushing for change is the New Zealand Council for Infrastructure Development (NZCID).

The Auckland-based lobby group has powerful friends, including the banks, financiers, construction companies and other interests that occupy its boardroom.

It aims to promote "best practice" in infrastructure development, including closer ties between the public and private sectors.

And it is a group pushing for big change in local government — from greater use of council-owned companies to a royal commission on the future of the entire sector.

Just one of the group’s ideas would slash the existing mix of 78 local authorities to "between 10 and 20".

NZCID chief executive Stephen Selwood told the Otago Daily Times his group wanted a "major public discussion" on the future shape of local government.

The sector’s existing mix of large and small councils reflected "150 years of incremental decision-making", but was no longer "fit for purpose", he said.

Instead, a two-tier system was needed, where local councils delivered "inherently local" needs, such as community facilities and consultation, and new regional entities provided others, such as roading and water services, that benefited from economies of scale.

However, such change would "absolutely not" come at the expense of local democracy, he claimed.

"Currently, we have a range of councils professing to serve local interests but with very little capability to deliver on those interests.

"This is not democratic."

It was a vision that Dunedin Mayor Dave Cull said focused only on infrastructure, while overlooking the other vital roles councils played.

"Local government does an immense amount more than that," he said.

Others went further, including Napier Mayor Bill Dalton.

He has repeatedly criticised the local government reforms, and the NZCID’s influence, in letters to other mayors, ministers and even Prime Minister John Key.

Mr Dalton said an NZCID report, published last year, spelling out the changes it wanted,  appeared to have become "the Bible" for National’s local government reforms.

And, in one of his letters, Mr Dalton suggested that was exactly what the NZCID wanted.

"NZCID appears to be a group set up to further its own interests," he wrote.

"They want big infrastructure projects to finance. They want big infrastructure projects to undertake and they want to be able to control the process.

"Where does that leave councillors? Where does it leave democracy? Where does this leave the community?"

And, contacted by the ODT, Mr Dalton said his concerns were only growing.

"The Government is very carefully, basically, trying to hand over control of local government to private financial interests. That’s not an exaggeration. It’s absolutely clear what they’re doing.

"This is a grand plan of the Government’s to de-power councils and eventually, when they become de-powered and useless, to form them into a very much reduced number of councils."

Mr Selwood dismissed such suggestions, saying more of his group’s members missed out than benefited from any one local government reform.

"The inference that we are proposing reforms to promote vested interests is frankly ridiculous."

The suggestion was also rejected by Local Government Minister Peseta Sam Lotu-Iiga, who said Mr Dalton’s views were "at the extreme end" of the debate.

Mr Lotu-Iiga said he had met NZCID representatives, as he had a range of sector groups, but had not read the NZCID report "in any detail".

The Government’s reforms aimed to improve efficiency, not dramatically reduce the number of councils, he said.

But asked repeatedly if he felt New Zealand had too many councils, Mr Lotu-Iiga demurred.

"These reforms aren’t about whether we’ve got too many councils."

Eventually, after being asked a third time, he conceded further amalgamations could be warranted.

"If councils are delivering on the expectations of their ratepayers, then that’s a good thing.

"If they’re not, then they should look at ways to improve those services, and one of those ways is definitely amalgamations."

That only fuelled concern in the South, where Invercargill Mayor Tim Shadbolt said "gossip" among local government leaders was of a government plan to slash council numbers.

"Their aim, we’ve heard, is to reduce it to seven councils for the whole of New Zealand.

"Under the present changes, they’d be able to do that."

Such change would only add to the long history of expansion, and then contraction, of  local government in New Zealand.

The introduction of the first local bodies in 1842 was followed by a period of proliferation until, by 1912, the country boasted almost 4000 counties, boroughs and town, hospital and other single-issue boards.

Reforms over the following decades cut the number steadily, before sweeping changes introduced by Labour in 1989 resulted in amalgamations that reduced the country’s 850 local bodies to just 86, including in Dunedin.

The creation of the unitary Auckland Council "super city" followed in 2010, but further attempted amalgamations were foiled or fell flat in Wellington, Tasman and Hawke’s Bay.

The failures appeared to have prompted the Government to switch tactics, by encouraging CCOs to achieve closer ties by other means, southern mayors suspected.

While New Zealand continued its push to centralise, the tide was ebbing in other parts of the world, Jason Krupp, of the New Zealand Initiative, said.

He studied the approach to local government in other countries, including Switzerland, and told the ODT the evidence was clear — bigger was not better.

In Switzerland — a country the size of Canterbury that is home to 8 million people — a federal system co-existed with 26 state-like "cantons" and nearly 2400 council-like political "communes" underneath.

One canton alone, Bern, which had a population of 1 million people, was split between almost 400 communes.

But rather than being "a recipe for inefficiency", the system worked by encouraging competition and cost-effective services, he said.

The results saw Switzerland consistently top the World Economic Forum’s Global Competitiveness Index, well above New Zealand’s 17th place in 2014.

The opposite was true in Montreal, where citywide amalgamation had been rolled back after the promise of efficiencies proved "illusionary", he said.

The "cautionary example" had seen the City of Montreal absorb 28 surrounding municipalities in the search for efficiency, but the cost of running the city had actually increased by $C473million ($NZ497million) per year, he said.

In Australia, amalgamations had been ‘‘an outright failure’’ and were set to be reviewed, while in Auckland, costs were rising and North Rodney and Waiheke Island were seeking to break away.

• Despite the evidence, New Zealand’s approach under National still appeared "strongly influenced" by business thinking and the promise of economies of scale, Mr Krupp said.

"We’ve got 170 years of amalgamation, and quite radical amalgamation, and we still haven’t reached this efficiency nirvana that central government hopes for.

"I would raise the question of whether we should still continue to pursue the same strategy if it hasn’t delivered results yet."

Mr Lotu-Iiga insisted the Government was "moving in the right direction" by encouraging councils to collaborate, share services and, in some cases, amalgamate.

He agreed services should be controlled locally where possible, but only where they could be managed and delivered efficiently.

"Sometimes smaller, more nimble local bodies can deliver the types of services that local people would like. But sometimes they are better sharing those services across regions.

"It’s not actually the size that matters."

The Government’s reforms were not a one-way journey, Mr Lotu-Iiga said.

There were other examples of responsibility being devolved to councils, including freedom camping and fluoridation, he said.

It was "interesting" some councils were complaining about a loss of control in some areas, while also complaining about being given more responsibility in other areas, he said.

There would always be ‘‘an inherent tension’’ between central and local government, but the two sides needed to work together, he said.

"Because at the end of the day ... we all serve the people of New Zealand," he said.

chris.morris@odt.co.nz