by Eugenie Sage
Local government has a vital role in providing the services that can strengthen communities and make places that people want to live in.
National’s Local Government Act Amendment Bill (the bill) will potentially cause the most significant changes to local government since the amalgamations and restructuring of 1989. Government uses the language of fiscal responsibility and “streamlining” and claims it has a reform agenda which will benefit ratepayers.
The reality is very different. The changes are the result of an ideological agenda rather than evidence based. As the Government’s own Regulatory Impact Statement from the Department of Internal Affairs says, “There is limited evidence to inform the development of these proposals, and the timeframes within which the proposals have been developed have restricted the ability to assess multiple options.” Local Government New Zealand have also released a discussion document on the bill, which raises concerns about the scale of the changes and the lack of consultation on the bill.
The debt figures the Government uses to claim that Council debt is spiralling are three years out of date. The Long Term Plans (LTPs) for 2012-22 show that Councils plan to borrow less during this period than 2009 LTPs indicated.
The bill is constitutionally inept and anti-democratic. It muddles the separation between central and local government by giving the Minister substantial power to interfere with and direct councils. The bill gives the Minister new powers to require information from councils, appoint a Crown Review Team, Crown Observer, or Crown Manager or replace councillors with Commissioners and postpone any election. Ratepayers and the council have to pay for these Ministerial appointees even though they report to Wellington not local people.
Every three years councillors are accountable to their communities through the ballot box for their decisions on resource planning and the rates they collect and spend. The bill will have a potentially chilling effect on local government if councils are always looking over their shoulder and worrying about the Minister’s view of their operations and financial management, rather than the local community.
The current purpose of local government includes “to promote the social, economic, environmental, and cultural wellbeing of communities.” The bill would replace this with the more restrictive purpose that councils “play a broad role” in meeting community needs for “good-quality local infrastructure, local public services, and performance of regulatory functions.” This provides scope for central government to promote more contracting out and private provision of council services and infrastructure.
New Zealand’s councils are already large by international standards in the number of people they represent and the geographic area they serve. National’s pro-amalgamation agenda promotes bigger unitary councils. These are likely to be more remote from and less responsive to the communities they purport to represent.
The bill will make it more difficult for the public to have their say on any re-organisation or amalgamation proposal. It truncates the current several step process involving councils consulting electors and then the Local Government Commission notifying a draft scheme and communities voting on this.
For there to be a poll, at least 10 % of eligible voters must sign a petition seeking such a poll within 40 days. Under current law such a referendum is automatic and happens in each affected council district, rather than the whole area.
Everyone wants efficient and effective local government. This should not be at the cost of local democracy and elected councillors listening to local communities and making decisions which represent their communities’ aspirations and views.
Conclusion
The Local Government Act was significantly overhauled and changed in 2002 with the intention of empowering local communities and making local authorities the instruments of local democracy through which communities achieved the outcomes they aspired to. The changes that the Government would introduce wind back that philosophy and put councils under the thumb of Wellington.
Submissions on the Local Government Act 2002 Amendment Bill close on the 26th of July.
Published in Justice & Democracy by Eugenie Sage on Fri, July 6th, 2012
Tags: community, councils, LGNZ, local government, Local Government Reforms
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on the trolls and those who are unable to keep on topic
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Quoting myself from 28th March 2011:
Seems we’re still on target. Local government is next.
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Here in Kapiti, we are watching in amazement as the local mayor, after playing a leading role in several decisions that were clearly opposed by the majority of local people, is now telling us our local democracy is in danger. A lot of people here could no longer give a toss about ‘local democracy’, which has been weighed in the balances and found wanting. Consequently many feel that having the Medes and the Persians come in and take over would be no bad thing.
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The purpose of amalgamation is to create contract units of such a scale as to attract international investment.
This means growing the amount of local assets that can be on-sold by locals (those who might get the initial contracts) to international utilities companies.
The amalgamation process is designed to reduce competition for contracted work – once a region contracts out a service in one amount, the company winning the contract will face little local competition afterwards (and thus become profitable in the future). Eventually a small group of companies will control the nationwide supply of contract services and then will get the attention of international investors.
This will result in higher costs for locals for their services – but good profits for the corporates controlling the delivery nationwide.
And the government seems to be in rush to do this before we have a CGT (so some people make serious money out of this seeling to international corporations).
The government reies to sell this as reducing cost to people as measured in rates, well only if they utilities charge directly to the consumer … .
So who are the business interests pushing this amalgamation drive? Who intends to bid for local government work contracts and make the money? Who are their lobbyists and who are the politicans that work for them?
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Sam, here in the Hutt Valley there is near complete opposition to amalgamation with Wellington. There is already good co-operation in service delivery, and both councils have low debt.
There is nothing to be gained by association with higher debt areas to the west and south.
So getting those of the Valley to gather the 10% required (even 10% of the entire region) is to be expected. This in itself would show overwhelming local opposition and any block vote by the City area to impose it on the Valley would look like the attempt to offload debt onto Valley ratepayers – a reverse form of asset stripping.
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SPC, I think a while ago, amalgamation proposals would have resulted in strong opposition in Kapiti too, it’s just the recent years of mismanagement that have cut into that. I don’t really know how strong public opinion on the issue is overall – just that there’s been a noticeable shift.
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Our local council is now in debt
- to the tune of $13,000 per ratepayer
- a 700% debt increase in as many years
- spending hundreds of millions on projects most people didn’t want.
- went way over their own maximum debt limit years ago
And you’re trying to tell us debt is not a problem and regulation of out of control councils like ours isn’t necessary.
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You said this was the Dunedin Council debt here –
http://blog.greens.org.nz/2012/03/30/national-and-act%E2%80%99s-local-government-agenda-is-anti-%E2%80%93democratic/
The only figures I can find – Statistics New Zealand 2010 say the Dunedin Council debt is under $2000 per person – 6 people per ratepayer household is the average? Must be all those landlords paying rates on all those student flats A.
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In Dunedin, debt has been the cause of debate since the council embarked on upgrades of water, sewerage, the Dunedin Centre and town hall, spending more than $100 million on the Tahuna sewerage upgrade and more than $140 million on the Forsyth Barr Stadium.
In a recent article in the Sunday Star Times, Dunedin came in the top third – 14th in a list of 69 councils, with a figure of $1920 debt per capita.
Council finance and resources general manager Athol Stephens said those figures were based on the councils’ finances in 2010.
At that time, Dunedin’s debt – not including company debt – was $240 million.
Where on the “per capita” table Dunedin stood in 2012 was anyone’s guess, but it was likely all councils had increased their debt since then.
If the other councils had stayed the same, Dunedin would have moved to seventh spot of the 69.
Mr Stephens made his per capita estimate by dividing the maximum council gross debt of $344 million by 126,000, the latest estimate from Statistics New Zealand of Dunedin’s population.
On the level of debt ratepayers really owe, Mr Stephens said they were responsible for paying the $344 million through rates, though that was backed up by company dividends, revenues from commercial properties like Wall Street, and user charges.
The company borrowings were the responsibility of the companies. Lines company Aurora, for instance, paid its loans by selling electricity, City Forests by selling logs, and Delta by completing the contracts it won.
If people wanted to be “pedantic”, it could be said they paid for Aurora though lines charges, he said.
Dunedin City Holdings Ltd chairman Denham Shale said no problems had been identified in terms of debt since he took over late last year. No companies were in arrears or showing they were in difficulty.
But a review of the “health” of the companies was still under way, and debt would be a part of what was being considered.
“We haven’t finished that yet,” Mr Shale said.
City debt is forecast to drop below $150 million by 2020.
Every man, woman and child in Dunedin will owe $2732 when Dunedin City Council debt peaks at a gross figure of $344 million.
If council company debt is added, the figure rises to $602 million, and the figure per capita to $4778.
http://www.odt.co.nz/news/dunedin/201787/council-debt-load-presages-reform
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SPC – The DCC shift most of their debt to the council owned companies (i.e. the debt for the stadium isn’t even on council books as it was shifted to a council owned company – but ratepayers are still fully responsible for paying it off).
Another way they do this is in recent years the council have demanded millions more each year in dividends from their companies, than the companies actually made in profit – hence the companies have to borrow more and more each year to pay the unsustainable annual dividend to council – and again, ultimately ratepayers are responsible for that out of control debt.
And to borrow the figure from your story of $602 million (was under $100m just a few years ago), with 43,000 ratepayers (just under 3 people per house), that’s $14,000 debt per ratepayer.
Or to use the figure at the end of your story, $4778 per person is $14,334 per household (of three).
Or using your figures for council only debt, at $2732 per person and 3 people per house, it is still over $8000 per house before council owned company debt over 1/4 billion is added.
Whichever way you look at it, the council debt is out of control and it’s doing everything it can to hide the mess.
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Main way they do this is in recent years the council have demanded millions more each year in dividends from their companies, than the companies actually made in profit – hence the companies have to borrow more and more each year to pay the unsustainable annual dividend to council – and again, ultimately ratepayers are responsible for that out of control debt
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