Back in 2002 the Clark government made local councils responsible for the “social, economic, environmental, and cultural wellbeing” in their areas and characterised that as a “power of general competence”. One mayor enthused that the “horse can now gallop round the paddock”.
Whoa. Oats for the horse stayed on short ration. The central government wouldn’t let councils raise extra money in new ways.
So for the past 20 years local, including regional, government has been in charge of just 3 1/2 per cent of gross domestic product (GDP), or 9-10 per cent of spending by all governments, down from local entities’ half share in 1930.
In 1985 councils and other local entities spent 5 1/2 per cent of GDP but then came Labour’s deregulation, a huge reorganisation by Labour’s Michael Basset (now an ACT sympathiser), reform of financial controls to force transparency and 10-year plans plus proper asset management plans to fix a huge infrastructure deficit.
Rodney Hide and National want to cut back the 3 1/2 per cent even more because of what they see as “out-of-control” spending — which actually is driven mainly by infrastructure plans and actually is still a smaller share of GDP than 30 years ago.
Instead of advancing the principle of “subsidiarity” — the notion, fashionable in the 1990s, that decisions are best taken and acted on at the level closest to those affected — central governments for two decades have been wary of too much local power.
Hide wants councils confined to a “core” (which, however, has expanded as he has learnt what councils do). Mandating the corporatisation of three-quarters of services into council-controlled organisations in the super-Auckland bill — even though they must conform to council-defined plans and meet detailed reporting requirements and the council appoints the boards — sharply limits the scope of matters over which the council has direct decision-making power.
Keeping the super-mayor’s wings thus clipped is an ingenious way of curbing the influence super-Auckland will exert on central governments because of its sheer size. Such influence would amount to de facto constitutional change.
But the way the bill has framed the corporatisation has upset Local Government New Zealand, the Auckland Chamber of Commerce, John Banks and the New Zealand Herald, none dismissible as soft left. The corporatisation also does not fit a notion of where practicable locating decision-making power at a lower level of government.
Expect changes to the bill as John Key fields flak. The lesson he is being taught: central government jangles local government boundaries and prejudices at its peril.
After Bassett’s reforms, Labour had no stomach for reorganisation, even of Auckland which it complained, with cause, was dysfunctional and impossible to deal with. Helen Clark kicked the matter off to a royal commission. Had she stayed in office, she would likely have been much more circumspect about action than Key.
Labour’s way of dealing with fragmented local government was to hope councils would cooperate. And they have, in a wide variety of ways. For example, Wairarapa’s three small councils cooperate in many activities, including a rural fire service, climate protection, social cohesion policies and arts and culture, and have a single district plan under a joint committee. Nine councils stretching from Tauranga to Taupo and Gisborne share a council-controlled organisation which delivers a wide range of services, with a “regional network IT platform” next up and maybe expansion to the south.
So there is organic reform, which is usually the most durable sort.
But there has not been much organic reform in Auckland. Auckland has shown no prospect of becoming the “world-class city” which is central to Key’s hope of lifting productivity growth and getting us as wealthy as Australians.
To fix Auckland he made rotweiler Hide Local Government Minister. One result was a very low National vote in the Mt Albert by-election. So he unconstitutionally plugged Associate Local Government Minister John Carter in as chair of the select committee on Auckland’s legislation. Carter has tried to smooth feathers but sometimes promises — or is believed by his interlocutors to have promised — what he cannot deliver.
It’s not good political management. Any previous Prime Minister bar David Lange would have kept his hands tightly on the process. Key is now squelching suggestions other regions might copy-cat super-Auckland to counterweight its influence.
But there’s more to come. The long-term logic of Nick Smith’s Environmental Protection Agency is that it takes over the environmental aspects of regional councils’ work as it pushes for more national consistency in process (even though, of course, there will be need for regional variations in substance). If that happens, why still have regional councils?
That would be a big change. It might have to await another shiny new Prime Minister with popularity to burn.