Auditor General (OAG) Lynn Provost has just released her office’s report (Matters arising from the 2012-22 local authority long-term plans) on its overview and scrutiny of local government’s long term plans (LTPs) and their financial strategy.
The OAG report is evidence that councils are responding to their communities’ needs in a responsible manner. Its conclusions show up the eccentric and ideologically driven nature of National’s changes to the Local Government Act 2002 which Government pushed through Parliament recently.
Councils prepare long term plans every three years to outline their spending priorities over the next 10 years. These are audited by the Office of the Auditor General. The OAG’s expectation is that, “local authorities should be planning for the delivery of important community services in prudent and sustainable ways.”
The OAG report is pretty positive about how councils are doing, saying that they are generally reducing or deferring spending and stabilising or reducing overall debt. As the report notes:
“Overall, local authorities are planning to live within their means, and they are not raising rates to unreasonable levels to do this. They are planning to raise more debt during the next 10 years to fund capital expenditure. This capital expenditure is often associated with the need to upgrade systems to meet new standards (for example, for water quality and the development of public transport systems). However, many local authorities are also expecting to repay some or all of this debt during the 10-year period of the LTPs. Net income almost always stays positive, and local authorities stay well within the golden rule of fiscal policy that governments should borrow only to invest.
“Local authorities have a diverse range of circumstances and community requirements, each with its own demands. Local circumstances have led to arrangements that might appear unusual (for example, levels of debt). However, on closer examination, these arrangements are generally fit for purpose rather than imprudent.”
National’s changes to the Local Government Act 2002 removed the promotion of community social, environmental, economic and community wellbeing as one the two purposes of local government and replaced it with a much narrower purpose. This restricts councils’ ability to prioritise according to community needs. Former Minister Dr Nick Smith claimed councils’ poor spending decisions were driving up rates. The OAG report underscores the flimsiness of National’s arguments.
We are now turning our focus to the next tranche of attacks on local government to be introduced next year.