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Supplementary information on the Northland and Hawke's Bay proposals

Date: 17 December 2013

The Local Government Commission wishes to advise that supplementary information is now available regarding its proposals for reorganisation in Northland and Hawke’s Bay.

The Commission has published additional background information on its website that is both technical and general in nature.

The technical information includes reports prepared by officials for the Commission before it made decisions on the draft proposals. The two reports amount to almost 400 pages and are only available in digital format on the website www.lgc.govt.nz

In addition, the Commission has produced a supplementary set of Questions and Answers about the reorganisation process (see below).

The Q&As are based on feedback and discussion over the past few weeks as the draft proposals have been studied by council staff and elected members, the public and other interested groups.

Contacts

Donald Riezebos

Chief Executive Officer

Local Government Commission

Phone +64 4 460 2228

info@lgc.govt.nz

Local Government Reorganisation in Northland and Hawke’s Bay

Supplementary Questions and Answers

17 December 2013

1. Is this forced amalgamation?

No. At each stage of the reorganisation process there are important tests of community support for change.

The Northland and Hawke’s Bay applications came from the local area. The first test is whether the applications have community support from the affected area. The Local Government Commission then consults widely before issuing a draft proposal.

The Commission has now called for public submissions. This is another opportunity to test community support. The Commission will conduct public hearings before deciding whether to issue a final proposal. Under the law, the Commission must be satisfied that a final proposal is likely to have demonstrable community support in each affected territorial authority.

A final proposal can be put to a binding poll, if ten percent of voters in one council area sign a petition. The reorganisation must be approved by 50% plus-one of those who vote.

The 50% plus-one test is a comparatively high threshold for approval and is known as an absolute majority. It is higher than the threshold required for election of mayors, councillors and Members of Parliament. They are required to gain just one vote more than their nearest rival.

In addition, the outcome of the vote is binding. It carries greater weight than citizens initiated referenda, where the results are indicative only.

2. Are there lessons from international experience, particularly in Australia?

Direct comparisons are not straightforward but the Commission is aware of current thinking and reforms in a number of overseas jurisdictions.

The Australian experience is mixed. For example, the Commission knows of the work of Professor Dollery who produced a report on Hawke’s Bay. It is also aware of differing views of other academics and local government specialists who put more weight on factors such as leadership, economic development and communities of interest existing at different levels.

There are currently three Australian states where significant local government reform is underway.

In Queensland the state government oversaw amalgamations in 2008 where the number of councils was reduced from 157 to 73. The amalgamations were not put to a referendum. After a change of government in 2012 the new Local Government Minister asked the Boundaries Commission whether any areas could break away. The Commission recommended polls be held in four areas in 2013.

As a result of the polls, four shire councils are to be re-established. In January 2014 they will break away from four regional councils, which continue to exist. The shire councils bear the cost of transition. The shires each have a mayor and councillors and maximum council staff numbers range from 165 to 450. See the Queensland Government website: www.dsdip.qld.gov.au/bc/

Changes are occurring in a different direction in New South Wales and Western Australia. In NSW, the Independent Local Government Review Panel concluded the current system of local government is “simply not up to the task”. It found nearly half of all councils will have “weak” or “distressed” financial ratings in the next few years and that structural reform of some sort is needed.

The NSW Panel proposed voluntary amalgamations and the use of local boards in small communities to preserve their identities. See page 5 of “Future Directions” paper, April 2013. www.localgovernmentreview.nsw.gov.au

In Western Australia, the state government wants to reduce the number of local authorities in Perth from 30 to 15 in order to cope with social, environmental and economic pressures over the next 50 years. See the WA Government website: http://metroreform.dlg.wa.gov.au/

Australian local authorities have at least one major difference to New Zealand councils – they operate within a system of federal and state government. The state governments are actively involved in some functions that in New Zealand would be the responsibility of local authorities.

New Zealand local authorities tend to focus on infrastructural services such as roading, waste water, drinking water and sports, cultural and recreation facilities. There are likely to be efficiencies in delivering at least some of these services by some form of collaboration between councils. They also undertake regulatory functions such as building consents, dog control, liquor licensing and environmental protection.

3. Why is a vote taken over the whole region and not broken down by council areas?

In Northland and Hawke’s Bay, the whole region is the affected area. A change to the structure of one or two councils would affect other councils. The draft proposals are for one unitary authority for a region. In a poll, voters are encouraged to express a regional view on the proposal.

There are a wide variety of views throughout Northland and Hawke’s Bay on local government reorganisation. In communities visited by the Commission there was no evidence that voters in one area intend to vote in unison as a “bloc”.

4. Does the Auckland experience show reorganisation has resulted in rates and staffing “blowouts”?

No. In the move to a single rates system in Auckland, 122,000 ratepayers had increases and 220,000 had decreases. The average rates increase for the year from July 2013 is 2.9 percent. Auckland Council capped increases at 10% during transition to the new system.

Auckland Council has 1,350 fewer staff (full time equivalents or FTEs) than under the previous legacy councils. At June 2013 it had 8,074 FTE staff, compared to 9,430 FTE under previous arrangements. At the same time it has also shifted from using contractors to making greater use of in-house staff.

The new Auckland Council is regarded by some experts as still a ‘work in progress’. It focused on the major regional issues in its first term, such as planning and transport and embedding the new structure. Auckland Council is also addressing significant historical under-investment in infrastructure.

The reorganisation models in Northland and Hawke’s Bay are closer to the unitary authorities in Nelson, Tasman, Marlborough and Gisborne than to the Auckland model.

5. What evidence did the LGC rely on and what consultation was undertaken?

The Commission used publicly available material produced by the councils themselves. It commissioned specialist reports. It sought verbal briefings from stakeholders and interested parties in each region. It hosted nineteen public meetings throughout both regions.

The publicly available material included annual plans, annual reports, pre-election reports and the 2012-22 long-term plans of the respective councils.

Specialist financial, service delivery and analytical advice was sought from Pricewaterhouse Coopers, Brian Smith Advisory Services and others, and is available on the Commission website. The full list of meetings and briefings is documented in each draft proposal.

6. How will the ring-fencing of debt work?

Debt will be ring-fenced to the areas where it was incurred for six years. This is achieved through a system of targeted rates.

The debt is usually attached to major assets or services such as a water treatment plant or sports and cultural facilities and so the benefits accruing from those assets will also be ring-fenced for six years.

After six years the new council has the power to review arrangements. Depending on the wishes of the community, the new council may decide to adjust the funding arrangements for the major assets and services. It may also decide to leave the ring-fencing provisions in place.