Fight for local democracy

The battle lines are being drawn as a fight for the future of local democracy heats up across New Zealand. But, as some mayors vow to take to the street, others say change is overdue. Chris Morris reports.

Bryan Cadogan puts 80 hours a week into being Clutha’s mayor.

His civic duties take him from one side of the 6700sq km district to the other, from the paved streets of Balclutha to the farming paddocks and dirt roads of West Otago.

It is a job he loves and one he appears to be good at, if his unopposed re-election for another three-year term is anything to go by.

But Mr Cadogan is also a worried man.

He fears new rules being drawn up in Wellington could force big changes on small communities like his.

Big changes like allowing the imposition of new council-controlled organisations from afar, even against the will of the people he represents.

And big changes like transferring his community’s assets into the ownership of the new corporate entities, without the public even having a final say.

For Mr Cadogan, the ideas go against every principle of local government he understands, and he is prepared to fight for them.

"I believe in democracy. My grandfather fought, and was gassed, in his belief for democracy.

"Where the heck does that legislation take us? ...  Is that communism or dictatorship? It’s not democracy, that’s for sure," he told the Otago Daily Times.

But Mr Cadogan is not alone — his concerns are being echoed across the South, and the rest of the country, as mayors and councils react to the Better Local Services reforms.

The reforms, the latest in a series emanating from Wellington, were first unveiled in March and remained before a parliamentary select committee.

Reaction has been swift, as an local government sector in uproar declares the proposals "amalgamation by stealth" and an attack on local democracy.

The opposition was apparent at last month’s Local Government New Zealand conference in Dunedin, when 97% of councils voted to vigorously resist any loss of local input or control.

It was the kind of concern that prompted Invercargill Mayor Tim Shadbolt and his councillors to take out out a full-page newspaper advertisement, vowing to fight the changes and urging the rest of Southland to do the same.

Other southern mayors were also prepared to join the struggle, including Central Otago Mayor Tony Lepper.

He told the ODT the reforms threatened local democracy, but predicted "people would be out on the streets" if changes were not made.

Otago Regional Council chairman Stephen Woodhead agreed, saying the reforms  attacked "some of the core principles of local government" and were "a recipe for outrage".

Dunedin Mayor Dave Cull said the changes could strip communities of control of their assets without giving people a say.

"It’s an extraordinary breach of democratic process," he said.

It was all a far cry from the upbeat message delivered by Local Government Minister Peseta Sam Lotu-Iiga when he announced the reforms in March.

The changes, he said at the time, were designed to give councils new ways to manage their finances, improve their efficiency and "create value for ratepayers".

Councils were collectively responsible for $134 billion in assets, but had a host of challenges to tackle in the future — from rising rates and service costs, to infrastructure renewal and the demographic and climate change hurdles that loomed.

"Local government must respond and adapt to an increasing range of challenges if it is to deliver modern, cost-effective services that meet the evolving needs and expectations of New Zealanders."

At their heart, the reforms sought to promote greater efficiency through the use of council-controlled organisations (CCOs).

Such companies, like Delta or City Forests in Dunedin, would operate along more corporate lines and at arm’s length from the councils that owned them.

But, worryingly for some councils, the Local Government Commission would have the power to create and impose "multi-council" regional CCOs that operated across traditional council boundaries.

That could include "pre-approved" regional water and transport CCOs, responsible for everything from local roads and public transport to water delivery, such as Auckland’s Watercare.

The commission would also have the power to transfer existing council assets — in some cases built up over generations — to the ownership and control of the new entities.

That could happen without a public poll, if less than 50% of a key asset — such as water infrastructure — was involved in any change.

Councils would also be required to fund the new CCOs, but councillors would be specifically prohibited from becoming directors on their boards.

The reforms also handed the commission new power to be "proactive" in initiating the reorganisation of local councils, including by amalgamation.

Public polls would be mandatory in any commission-led amalgamation, but not in a council-led amalgamation if all sides agreed and the public was consulted.

Mr Lotu-Iiga, in an interview with the ODT, said the changes were about "enabling" councils, by giving them new options to deliver services more efficiently.

Regional growth required high-quality infrastructure, but some smaller councils, in particular, did not have the resources to cope with that demand, he argued.

"Where they’re not able to do that, there should be provisions to allow councils to better share services across regions."

It was an approach that rang alarm bells for southern mayors, even as some acknowledged the need to change.

Mr Cull said the "objectionable" part was not the Government’s desire for greater efficiency, which councils supported, but "the process that’s proposed".

"This gives the power to the Local Government Commission to set up CCOs with ratepayers’ assets, without asking the ratepayers’ opinion," Mr Cull said.

"That’s hugely significant."

Local Government New Zealand — the body tasked with representing councils’ interests on the national stage — agreed.

In a submission on the reform proposals, it warned the "significant and potentially far-reaching" changes could have a "damaging impact on the quality of our local democracy".

That included disempowering councils by diminishing the role of local representatives, leaving them answerable to the public for large parts of council expenditure  they no longer controlled.

That would lead to declining public interest in local democracy, including any willingness to stand for office or vote, it warned.

"We must be careful and watchful that [local government’s] democratic role, including its role to encourage participation of citizens, is not lost without a clear public debate.

"That we have to state this shows a deep misunderstanding of the role of local government in the minds of the Government and its advisers."

The changes also appeared to have surprised the sector, leaving councils just weeks to make a submission as the Government tried to push through the changes and introduce them after October’s local body elections.

LGNZ had criticised the consultation process, while the Society of Local Government Managers (SOLGM) had been overlooked completely, it said.

The result was a "hostile" reception for Mr Lotu-Iiga when he spoke at LGNZ’s Dunedin conference, Mr Lepper, of Central Otago, said.

"That was the most hostile I’ve seen a bunch of mayors ...  every one one of them stood up and said ‘How could you possibly throw this at us without telling us it was coming?"

Mr Lotu-Iiga had responded with a promise to listen, but Mr Cull said the damage had been done.

"I think it’s set the relationship back," he said.

But while some mayors said the case for CCOs had not been made, others said their fight to retain local input did not mean they were opposed to the search for efficiencies.

Many southern councils already used CCOs, including in Dunedin, while others were open to the idea if it was backed by evidence and public support.

But many also believed the latest reforms were premature, as councils across Otago and elsewhere were already searching for new ways to collaborate and reduce costs.

That requirement — known as Section 17A reviews — was introduced with the previous round of local government reforms in 2014, and was not yet finished, mayors said.

Otago’s councils had formed a joint working group to progress the reviews together, and ORC chairman Stephen Woodhead said options being considered included outsourcing, corporatising, CCOs and shared services.

Some councils already shared some services, but there appeared to be a case for greater change,  potentially including regional water and transport CCOs spanning parts of Otago, he believed.

Exactly what form those entities could take was yet to be determined, but would be as part of the 17A reviews, he said.

But Mr Lepper was not convinced by the Government’s "journey" towards a more corporate, commercial model.

"I dislike that, full stop. No-one’s ever shown me the benefits — the economic returns on how a CCO runs anything more efficiently that we do.

"It just adds cost and I see very little benefit."

Instead, the focus should remain on the 17A reviews, he believed.

"We don’t need to be bullied by this Government to do that, because we’re doing it ourselves," he said.

Mr Cull said there was no doubt some smaller councils lacked the resources to tackle infrastructure renewal and other challenges.

There was also "nothing wrong" with trying to find efficiencies, and shared services, new CCOs or amalgamations could help, he believed.

"There’s nothing wrong with exploring it, and I think we should."

But, as well as the loss of local control, a new CCO would not always be the answer, he said.

"It might very well work in some places and be a complete disaster in others."

Instead, nearly 30 years after 1989’s radical local government shake-up, which resulted in the number of local bodies in New Zealand being cut from 850 to 86, it could be time for another fundamental rethink, he said.

"Some things need to change."

Mr Lotu-Iiga said he was open to any suggestion, but denied the Government was intent on rolling out Auckland’s model of a unitary council and CCOs across the country.

"This isn’t one-size-fits-all. What will work in Southland will be different to what will work in the Waikato," he said.

Some councils already saw the benefit of a regional approach to water, transport and other challenges, but public input would be protected, he insisted.

Even without public polls in some cases, the commission was required to "take into account" a range of factors  from costs and benefits to the public’s mood for change in any reorganisation it led, he said.

"It doesn’t require a public poll to be democratic."

The impact on local democracy was "the biggest issue that’s been put to me", and changes would be considered before the reforms became law, he said.

But protecting local democracy came with a "caveat" — councils had to deliver services "with an efficiency that ratepayers expect".

"Where they’re not able to do that, there should be provisions to allow councils to better share services across regions."

Mr Lepper said he would wait to see if changes to the reforms were made, but if they were not, "we go to the streets and go marching against them".

"We have to listen to what our ratepayers say, and they’re telling us ‘keep it close, democracy rules, we want a say on things’."


Might the Ratepayer Lobby, always vocal on Council spending, have something to say on the appropriation of Rates money by Central government?

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