I applaud ministers Bishop and Watts trying to strengthen local government to better serve its communities. They are addressing:
• High-profile council service failures, through lack of maintenance and reinvestment (water).
• Claims that councils don’t listen, owing to consenting experience, ‘‘vanity’’ projects and regular rates increases often multiple times that of inflation (rates caps).
• Regulation and enforcement, often triggered by individual’s inappropriate actions, constraining those who never intended to take those inappropriate actions, adding cost to all (abolish regional councils).
The word on the street is saying ‘‘something needs to be done, but I’m not sure getting bigger, more distant units is the answer.’’ This fear of bigger units is a reasonable concern.
To assess this, it helpful to understand this is a New Zealand-wide problem, and whenever something is widespread it happens by design.
So design needs to change if performance is to improve.
But are rates caps and structural reform the right redesigns?
The real problems to be solved are:
• A failure to understand the needs of the local community — delivering the wrong things, proof to the community they aren’t being listened to;
• Doing the right things the wrong way: e.g. growing repair bills, as maintenance is done poorly or not at all to adhere to budget, driving up cost;
• Inflexible regulation, restricting citizens’ ability to live and work, causing the need for more regulation as frustrated citizens and resource users then ‘‘behave badly’’.
These are the problems citizens have with their councils. Changing the size and scope of councils won’t address the real problems and will lead to greater cost.
Any reform should start with clarity of a system’s purpose. Local government’s purpose is to help citizens to live their best life:
the legislation governing councils works against doing this.
For example, the long-term planning system required by legislation sets up a ‘‘DAD’’ approach — Decide, Advise, Defend. There is no real knowledge of what we as citizens need to live our best life.
But through legislation (and audit) councils are steered to start with internal review, then consult.
Inside this process performance targets must be set. All councils I have worked with in the past 20 years in New Zealand and Australia own up to manipulating these targets to protect reputation.
Hence the tool to help councils understand and improve performance is useless, because the cost of reporting failure is too high. The Audit Office and media have some responsibility to play, as both lack real understanding of the work, so question things they understand rather than what is important.
This expensive, resource-hungry, prescribed process requires so much time, but councils feel obliged to follow it through, despite it not satisfying community needs or driving improvement. Listening to citizens on top would just create too much work in their minds.
Yet even the smallest council has thousands of interactions with citizens each year that could be used to understand what is valued at no extra cost.
The proposed reforms will make this worse. I’ll address a few misconceptions.
• Budgets (and rates capping): Evidence overseas tells us performance worsens with rates caps and costs are contained by doing less. This ignores cost reduction by reducing waste if better things are done. Elected members are not able to ask ‘‘are we delivering value and if so, can we do that better?’’ because the data doesn’t exist.
• Amalgamations: The thinking is bigger will create scale which will deliver savings. Economies of scale are no more than a theoretical economic concept that has morphed into an assumed economic truth.
There is no evidence that economies of scale can be gained. The evidence is that diseconomies of scale offset any gains for bigger units.
Think of Fonterra’s performance in the 2010s when it pushed for growth — it made loss after loss. Stripping back scale in 2020s led to healthy profits.
Cadbury left Dunedin because it wanted to reduce scale to become more profitable.
Economies of scale if sought in a ‘‘big is better’’ way lead to cost increases, so mandating this will push up costs.
• Regulation: The perception is current regulation isn’t sensible; compliance costs are too high. When this is studied, one can see current legislation causes regulators to act this way.
There are some useful developments locally and abroad. Regulators can give up conventional paths of regulation, plans and rules, and enforcing compliance.
Alternatively, a body of practice is developing the aim of defining outcomes communities want, while allowing resource users freedom to shape their organisation to operate successfully, e.g. the Pomahaka Water Care Group.
The new work of regulators is to help define these outcomes, and communicate examples of what works.
Some would argue this is pie in the sky — yet it has worked, while the current system has overseen environmental decline.
This approach requires councils to work at a local level. While larger authorities can achieve this, it’s harder for them to stay as connected locally.
The reality is councils’ current performance is driving reorganisation. However, a significant influence on that below-par performance is compliance with government legislation and Audit Office review.
Just adding scale to a non-performing system will not make things better. Combining small messes just makes bigger messes.
Communities have three months to examine the causes of swelling rates bills, services that don’t satisfy citizens and the unpopularity of council regulation and influence change.
Understanding what’s behind this may give us half a chance of getting solutions that protect and enhance our communities.
Based on decades of studying councils in New Zealand and Australia, my suggestion is the reforms need to start from and include:
• Learning how to understand community needs to determine value from the citizens’ perspectives.
• Transforming councils’ work to only do things that delivers value to the citizens.
• Maintaining assets for use, not habitually repairing them when they fail.
• Facilitating outcomes and partnering with resource users, allowing them to come up with how they operate to enhance those outcomes.
• Rewriting local government legislation to support the first two reforms so councils can do the right things for their community.
Better services at a lower cost will result, renewing trust in councils.
The size of the council doesn’t matter. Making changes that don’t solve problems will only make things worse.
• John Cooney is a former Central Otago District Council chief executive.
