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PSA NATIONAL DELEGATES CONFERENCE

PSA NATIONAL DELEGATES CONFERENCE. 17 JULY 2012. ASSESSEMENT OF PROPOSED LOCAL GOVERNMENT REFORM Peter Harris. The “evidence”. Local body rates have outstripped inflation Local government spending as a percentage of GDP has increased Debt has increased

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PSA NATIONAL DELEGATES CONFERENCE

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  1. PSA NATIONAL DELEGATES CONFERENCE 17 JULY 2012. ASSESSEMENT OF PROPOSED LOCAL GOVERNMENT REFORM Peter Harris

  2. The “evidence” • Local body rates have outstripped inflation • Local government spending as a percentage of GDP has increased • Debt has increased • Some activities seem to be outside the proper scope of local government • Amalgamation processes are slow and cumbersome

  3. Rates versus CPI Five reasons why the comparison says nothing about whether rates are too “high” 1. The CPI is an average of price movements. With any average, something has to be above it! 2. Local councils and private households spend money on different things. 3. There are large variations in the size of rate increases between local bodies. 4. The methodology that Statistics NZ uses to calculate rates rises in the CPI introduces an upward bias in the reported rate of increase. 5. A number of additional functions have been shifted onto local government.

  4. Debt • Large variations between local authorities • Those with higher debt appear to be those that moderated rate increases • Much of the problem was pre Auckland City • Relatively few authorities with problem debt levels • Debt related to timing of infrastructure upgrades • Intergenerational equity involved in assessing appropriate levels of debt.

  5. “Focus” of local government activity Evidence largely anecdotal • V8 supercars in Hamilton, Kaipara waste water treatment station, running Lotto shops, targets for NCEA pass rates, but no mention of • Rugby sevens, flower shows, festivals of the Arts, WoW etc No specification of what will be regarded as out of scope in the future. “There is no clear quantitative evidence to suggest that the LGA02 has resulted in a proliferation of new activities, or that local government is undertaking a wider group of functions. The Local Authority Funding Issues: 2006 Report of the Joint Central Government/Local Authority Funding Project team found that “no evidence to date has been produced to suggest that local government as a whole is undertaking a wider group of functions than it had prior to 2003. In cases where councils have taken on additional responsibilities these have proved to be quite small in scale and operational in nature”. (RIS)

  6. Limited analysis: weak consultation “The timeframe for development of these proposals has precluded any assessment of evidence or analysis to confirm the impact of these features of the legislation on the fiscal or governance performance of the local government sector.” “The local government sector was not consulted about the policy proposals, principally due to a lack of time.” “The Department has been unable to carry out detailed identification and analysis of unintended consequences for some aspects of the proposal. There has been limited engagement with other government agencies to identify what impact there may be in other portfolios beyond those identified above. There has also been no engagement with the local government sector or representative bodies to gauge their concerns”

  7. What will happen next? Either • No major change (interventions rare) or • Paralysis of local government for fear of being “second guessed” Major threat to authority of local government “The principal risk is that making it easier for the Government to get involved in council affairs will lead to the Government getting more involved. This could threaten democratic control of councils, and undermine important principles of government, such as local autonomy and local choice, diffusion of power, and the sharing of the administrative load between tiers”.(RIS) “we plan it in a different way. Government does the governing, local authorities deliver the services”. (M Barry MP)

  8. Avoiding unintended consequences The legislation should make it clear that: • there is a presumption that local bodies are authorised to act • challenges to their authority would only be valid in exceptional circumstances • interventions only after being justified before some independent review authority; • interventions would be time bound, and would expire no later than the next scheduled local government election; • fiscal responsibility “targets” (on rates rises, spending limits and debt targets) should be set by each local authority itself, with perhaps some assistance from guidelines that central government and/or LGNZ publishes

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