Local Government: time to think the unthinkable

This article argues New Zealand could be on the cusp of a major shift in governance resulting in the end of councils as democratically elected and accountable institutions. If this happens, it will be the result of two underlying causes which will be the central focus of this paper. The first is a major shift in the way the present government is approaching governing. The second is the failure, over many years, of local government to build strong relationships with its communities.

Governments come and governments go. Councils twist and turn as the policy pendulum swings. In with community outcomes and the four well-beings with the Helen Clark led labour alliance coalition government. Out with the four well-beings and in with core services and then good quality local infrastructure, local public services and performance of regulatory functions under the John Key led national government. Out with that change and back to the four well-beings under the Jacinda Arden led labour government.

Along with swinging the policy pendulum successive governments have also kept fine tuning compliance requirements and increasing central government’s power to intervene.

During most of this time, despite the twists and turns of policy, some things have remained consistent. For all of the often cavalier way in which central government has treated local government, it has never really challenged the concept of democratically elected and accountable councils. For its part, the local government sector has remained consistent in arguing central government is failing to support local government, offloading too much unfunded activity and failing to address local government’s funding needs.

Arguably this reflects a long-standing pattern of three-year parliamentary and local government terms; for central government, the focus has always seemed more or less to be on incremental management, doing a bit better than the last lot and trying to deliver something for your base. No great strategic direction, no basic questioning of the separate roles of central and local government, and no serious discussion of the purpose of governance. Even the last labour government’s flirtation with well-being which seemed initially to promise quite a major rethink of the role of government more or less collapsed back to the same old same old.

For local government this established a pattern which by and large left to individual councils decisions on dealing with their most significant challenges; how to manage major infrastructure and services in the areas of three waters and transport, including local roading, and how to manage for future growth.

Growing concerns about housing and infrastructure started to shift the balance under the most recent labour led government. Its interventions such as the National policy statement on urban development, and importantly its proposed three waters reforms, represented a shift in the locus of decision-making on major local government activity.

Recognition of the continuing importance of councils as local democratic institutions was reflected in the establishment of the Future for Local Government Review Panel (although a cynic might say that government support for this was more in the nature of a somewhat empty gesture).

Now move to the current government. It is quite easy for the media to poke fun at a lot of what it is doing or worry over the impact of many of its seemingly petty spending cuts. What do many see? First, a hydra headed monster of three parties coalescing under MMP. Next, a Prime Minister apparently obsessed with ticking off three monthly lists of miscellaneous achievements.

It’s easy to miss what’s really going on. Yes there may be a series of short term and highly variable performance targets. Look more carefully and this is a Prime Minister who whether you like it or not has a very clear sense of what he believes needs to be done, and a commitment to doing it.

His approach is deeply embedded in a sense the public sector, both central and local, has been seriously underperforming, inefficient and paying far too little attention to value for money. It’s an impression which is reinforced both by coalition partners, and by National’s own base.

The immediate manifestation of this for local government is the way in which local water done well is being rolled out. The PR is about returning local ownership and control to local government. The reality is central government intends to assert well-nigh total control over the basic direction and implementation of three waters initiatives whilst ensuring that the cost is borne by ratepayers and water users.

Look at the wider context; the proposed national infrastructure agency, and the development of a 30 year national infrastructure pipeline, signal strong central direction. The government’s argument is this is necessary to shift from our current uncoordinated and highly costly approach to investment in infrastructure. It believes this approach has not only resulted in delay and high cost but also seriously undermined the attractiveness of New Zealand as a location for leading international infrastructure companies and the professional expertise needed to deliver top quality outcomes.

The discussions the Prime Minister and senior ministers have recently had with major participants in and regulatory/policy entities for infrastructure in New South Wales reinforce the view government expects to see what amounts to a revolution in the way the New Zealand public sector goes about investment in and management of infrastructure, a revolution led and curated by central government.

The government is clearly acting in the belief it has a mandate for change with an emphasis on doing whatever is needed to lift New Zealand’s performance and ensure that every dollar of public money spent whether on capital or operating expenditure produces value for money. For the moment it is a belief public opinion polls suggest has widespread support.

Back to local water done well. There is a clear expectation the local government sector as a whole will settle on arrangements for the delivery and funding of water services which do produce economies of scale, attract best in class infrastructure providers, and ensure the costs of developing and running three waters services does not include any taxpayer funding.

Looking through the bill which is about to be enacted (Local Government (Water Services Preliminary Arrangements) Bill) it’s obvious the government anticipates there may be some difficulty in delivering, hence a series of provisions for intervention to ensure the completion and implementation of an acceptable water services delivery plan up to and including the power to appoint a Commissioner.

It is also clear the government’s expectation is for the most part a smooth highly coordinated rollout including the formation of a series of preferably multi-Council water CCOs (scale matters) and resolution within the sector of the question of how to deal with councils which are unable to stand alone.

There is likely to be a major difference between expectation and reality. Initial public comments from the sector suggest a general acceptance of working through multi-Council CCOs and some progress in putting them together. Off the record discussions with participants from different parts of the country suggest a different scenario; much initial collaboration but very real difficulty in getting to a point at which there is sufficient agreement. Indeed it is not unlikely much of the sector will simply be unable to meet central government’s requirements.

This would have major implications for the government’s ambition to develop a single 30 year infrastructure pipeline bringing together all major public sector infrastructure investment. Three waters infrastructure will be an important element of the pipeline. Maintaining and developing local roading networks will be another important element. Failure of local government’s part to deliver on government’s expectations for local water done well would strongly suggest a similar failure in the management of local roading infrastructure within a national infrastructure pipeline framework.

Widespread failure to meet central government’s requirements for local water done well is not something which could be readily addressed by any of the interventions being provided for in legislation. Government could certainly appoint commissioners to one or two councils. It is certain to recognise, however, that resorting to commissioners on a routine basis would not be acceptable. First it would look like a failure on the government’s part itself. Secondly the role of commissioners is inevitably controversial with potential political risk for the government.

This is not a government which would give up at that stage. Instead it is a government which has shown it has a very strong commitment to bringing about major all of system change and believes it has the mandate to do so. Confronted with a partial system failure it is much more likely to do what it thinks is necessary to deal with failure than it is to walk away. An emerging example is a suggestion the current role of Auckland Transport should be taken over by the New Zealand transport agency given ongoing concerns government clearly has about the way in which AT has performed. The Minister of local government is obviously unconcerned that this may set Mayor Brown on the war path. He clearly believes the coalition government has a mandate on infrastructure sufficient to override any local government objections.

With local water done well it seems certain any significant shortfall in implementation would be put down to issues such as poor governance and the lack of people with the requisite capacity, capability and experience on councils. It’s a short step from reaching that conclusion to deciding what needs to be done is to deal with the governance of councils themselves by ensuring council governance includes an acceptable proportion of people whose skills, experience et cetera were fit for purpose.

The simplest way to do this, and one consistent with the direction the government has been signalling, would be to legislate a change in the structure of councils so that a significant, possibly majority, proportion of members were appointed rather than elected. This could even be made to appear consistent with improving democratic accountability by setting minimum requirements for consultation with and involvement of communities. The government could certainly pitch this as one of working in the interests of communities so as to deliver on its mandate to sort out problems with infrastructure.

So much for the first cause; a major shift in the way government is approaching the task of governing. Now to the second cause, the failure of local government to build strong relationships with its communities.

A modern Westminster jurisdiction should see a move to bring democratically elected and accountable councils substantially under the control of appointed members as completely unacceptable. Central government politicians normally understand there are limits on the exercise of theoretically untrammelled power. Act too far outside the limits of acceptability and you are likely to suffer the electoral consequences.

This government, if it were considering replacing most elected members with appointed members, would be bound to assess the likely response of local government’s communities. The evidence now and from recent years suggests low levels of trust in councils and confidence in their ability to perform. It’s almost an open invitation to central government to act. Working with a sector governed largely by people appointed on the basis of requisite skills, experience and capability through a process controlled (directly or indirectly) by government could be made to appear much more attractive than working with current arrangements and performance.

The best counter to this type of initiative is demonstrated evidence councils do have the trust and confidence of their communities. There is really only one way to build this; active empowerment of an support for communities so that communities experience the relationship as one of councils doing things with them not to them. As the Carnegie UK trust expresses it in its description of democratic well-being “we all have a voice in decisions which affect us.”

For reasons I’ve traversed elsewhere (see my LinkedIn article A Damning Report), New Zealand local government has generally failed to understand both the importance of working with not on communities, and what it actually involves. It is thus extremely vulnerable to the type of intervention this article suggests should now be seen as a quite likely scenario.

What could be done to avert the possibility this article suggests of central government imposing a part appointed member structure (which in practice would over time almost certainly become fully appointed)? First, it’s really important to understand what the government’s agenda is. There seems to be no realisation yet at what could be termed the sector level of local government of the implications of this government’s commitment to being an infrastructure government. Specifically therr seems to be little or no awareness in this context local government is simply an instrument which, in its current state, may or may not be of value for central government’s infrastructure ambitions. Add value and survive; subtract value (as looks likely) and expect that to be dealt with both clinically and thoroughly.

Conclusion

First, this is a government unlike any New Zealand has seen previously. Behind the distractions created by coalition capers, there is a clear determination to overcome New Zealand’s underperformance in infrastructure and to do whatever is required to achieve that outcome.

Next, local government as currently positioned has no effective leverage with which to push back against any changes central government may wish to impose on it. For the moment central government has the mandate for change and local government lacks the trust and confidence of its communities needed for any effective pushback should it want to resist change.

There remains a possibility that local government could, perhaps using the local water done well process, start engaging with and empowering its communities so as to become a credible voice. It would require the sector to overturn years of doing things to communities and start doing things with communities. That’s about culture change, it’s about understanding what communities actually are, it’s about recognising localism is not devolution from central government; it’s about voice, choice and control for communities over decisions that affect their place.

Finally, a note of optimism. The trend internationally is for a rebalancing of influence between the centre and the local recognising that so many of the issues we are trying to deal with in modern democracies (declining social cohesion, demographic change, the social determinants of health…) demand strong community buy-in. Now is the time for local government to understand what this could mean, and step up to become the effective respected voice of its communities.