RATES, ROADS AND RUBBISH - WHERE DO SISTER CITIES FIT IN? Presentation to Sister Cities NZ Conference 14 March 2013 Malcolm Alexander Chief Executive

OUTLINE What has changed? Why has it changed? What does it mean for local government? Sister cities?

“BETTER LOCAL GOVERNMENT” Systematic attack on local government fiscal performance But poor evidential base for allegations Elimination of the “four well-beings” Social Economic Environmental Cultural Replaced by legally uncertain new “purpose” test

GOVERNMENT’S POSITION Second Reading Speech - 15 November 2012 “.. I firmly believe a more focused mandate for local government is necessary.” “The intention is not to prescribe what local authorities can and cannot do, but rather to better define the appropriate scope of their activities.” “The new purpose statement will encourage local authorities to take a fresh look at what they are doing and why – and to seek their communities’ guidance as to what their current and future needs are.” “…this Bill is an important milestone that will improve the efficiency and effectiveness of local government; it will provide the right settings for the local government sector to play its part in growing New Zealand’s economy.”

POINTS OF VIEW - OAG Local authorities are planning to live within their means Rates are not increasing to unreasonable levels More debt is being raised but funds needed capital expenditure Many local authorities expect to repay some or all of this debt during the 10-year period of the LTPs Net income almost always stays positive Local authorities stay well within the golden rule of fiscal policy that governments should borrow only to invest.

POINTS OF VIEW – BUSINESS NZ Business NZ considers the proposed purpose statement is a giant leap forward towards providing Local Government with a more clearly defined focus…”

POINTS OF VIEW – LOCAL GOVERNMENT FORUM “The…changes arise from the government’s concern that the current law does not adequately focus local authorities on operating efficiently, or on delivering those services that only councils can provide or performing those roles only councils can perform. The Forum has made the same point many times…”

POINTS OF VIEW – PRODUCTIVITY COMMISSION Growing tension between central and local government Primarily arising from differing understandings of the role of local government in NZ A number of shortcomings in the way regulations are made at central government level: Lack of implementation analysis Poor consultation Weak lines of accountability

“PURPOSE” (1) The purpose of local government is— (a)to enable democratic local decision-making and action by, and on behalf of, communities; and (b)to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses. (2)In this Act, good-quality, in relation to local infrastructure, local public services, and performance of regulatory functions, means infrastructure, services, and performance that are— (a)efficient; and (b)effective; and (c)appropriate to present and anticipated future circumstances.

LGNZ LEGAL ADVICE Change is significant and complex - actual legal effect of the changes will depend on judicial interpretation “Purpose” clause not just an interpretation aid –Linked to ss 11 (role) and 12 (status and powers) –Purpose defines lawfulness There is scope for interpretation around meaning of – “local public services” – term not defined –“most cost effective for households and businesses” Courts less likely to intervene if councils have applied their minds to the change and this is evidenced Councils should positively identify why a particular item of expenditure is e.g. a local public service and why that expenditure is of “good quality” (Efficient, effective, appropriate to present and anticipated future circumstances)

IMPLICATIONS? We’re just not sure … but Government says it supports economic development initiatives No litigation as yet Councils must risk manage and document their consideration processes Key issues Local public service Most cost effective for households and businesses Good quality

Local Democracy Powering Community and National Success