Friday, July 31, 2015

Brian Arrandale: The Future Structure of Local Government Needs Radical Change



The future of Local Government is destined to change due to the Government empowering the Local Government Commission to push for fewer local bodies - using the pretext that amalgamation will bring the desired changes. But will it? 

Certainly it brought forth changes in Auckland that have been extremely costly, and have resulted in an increase in the governing bureaucracy of that Super City. It is however a global trend in our present “Cosmetic Age”, as opposed to previous ones such as the Age of Enlightenment, and the Age of Reason which have contributed to real progress and the advancement of mankind.

Let us not be befuddled with the idea that amalgamation is a remedy as it pertains to our Local Government. It is not. In reality, it is just another form of nationalisation - the “Bigger is Better” syndrome, of which the Auckland Council is a supreme example, merely BIGGER in every sense, and concerned mainly with the problems of inner Auckland!  The outer fringes being still somewhat similar to provincial New Zealand!

When the concept of Local Government came into being it formed the basis of people being elected from the town or district they resided in to serve as leaders, ensuring the orderly organisation and development of local services. They acted as an accelerator and a brake on the expenditure that the ratepayers could afford. 

It was a relatively simple process that evolved into what, up to a few decades ago, served us well on a local basis. But since then Local Government has evolved and entered into areas such the ownership or part ownership of airports, port facilities, transport etc. As local public bodies, this brings these councils into direct competition with private business and industry – an alien concept to the founders of Local Government.  The fact that councils actually compete gives them a decided added advantage over private business in that they are backed financially by an endless, ever increasing levy of rates.  This goes some way to covering up any mistakes, financial or otherwise, made by those councillors and council employees, who cannot be subjected, unlike those in private companies, to the Companies Act.  It is in layman’s language, “A Sacred Cash Cow” that can be milked without much regard to any consequences.

50 years ago Central Government concerned itself mainly in the field of Government; however more and more duties have been transferred from Central Government onto Local Government, with the expectation that councils should fulfil more of the traditional roles that are the province of Central Government.  Local Government has become a slave of its own bureaucracy. One has only to recall the staff numbers in local councils a few decades ago, compared with the huge levels of staff employed now, complete with vehicles - along with the extra development charges above rate demands in our present period - to realise the extent of this ever increasing bureaucracy.

There have been sinister moves by certain Local Councils in New Zealand to circumvent the present electoral system and institute councillors and others, onto various Boards by the appointment process. When one looks at this decision, it is in reality just an extension of the MMP electoral system in Central Government. Nearly half of our representatives in Parliament are not elected by any democratic process, but installed as List Members. Appointments to any Public Office are by their very nature, a non-democratic way of avoiding elections which strikes at the very heart of democracy. They are a prelude into a state of dictatorship whereby the election process will become an obsolete way of obtaining representation.

The main problem with our Local Government is its increasing mushrooming effect, not only in staff levels but in the adoption of excessive regulation – including unnecessary committees, whose extra demands create further costs on services, which again is placed upon ratepayers.  Also are our paid elected councillors actually “competent”? Have they enough business acumen and foresight, to know and question what their CEO places before them?   Obviously some are, but with the almost daily increase of new rules and regulations, fostered by the RMA and Regional Councils, it becomes probably an impossible task to differentiate between the “wheat and the chaff”.

The time has arrived for Local Bodies to become Private Companies in their own right - again retaining the democratic right of ratepayers to elect Directors instead of Councillors, but at the same time with consideration given to having advisory professionals on the “Board”.  The second advantage is that, as a private company, the obligations that Directors have in making crucial decisions and assessing their impact, will be far greater than under the present system in that they will be subject to Company Law.

What functions should the new Business/Councils undertake?

Firstly this entails reducing the ever widening scope of our present councils, by returning to the old concept of “Ultra Vires”[1] on any activities these new Business/Councils may wish to pursue outside of the normal “core” services.  This in itself would reduce the present staffing levels on Local Government Councils, which over the past decades has increased at an alarming rate.

At the same time Central Government has to take back those decisions and activities which it has thrust upon Local Government which are the province of Central Government.

How should any shareholder resident/ratepayer system work?  A simple answer would be to classify all ratepayers whether domiciled in cities, town or districts as equal shareholders. There would be no expensive or unnecessary transfer of fees, as ALL shareholder ratepayers would rate equally whether they owned one or several properties.

This is only a prototype proposal, aimed mainly at reducing council powers and demands upon ratepayers - and initially curbing excessive expenditure principally on non core activities. At the same time giving back shareholder ratepayers more control by curbing this inherent bureaucracy that has been a dominant feature of Local Government since the 1980’s.

The concept needs input, criticism, and advice, and most of all it needs the attention of us all. Some have suggested that this system has flaws, and that it would be impossible to implement.  I hope it does have flaws, as these can be ironed out, and as for impossible: “We put a man on the Moon some decades ago, we have controlled and in some cases eliminated disease, and in 1492 Columbus did not sail off the edge of the world, he found America”!

Brian Arrandale is a keen scholar and writer with a background in farming and management.


[1] ‘Ultra Vires’ is Latin - Beyond the powers: The doctrine in the law of corporations that holds that if a corporation enters into a contract that is beyond the scope of its corporate powers, the contract is illegal. The doctrine of ultra vires played an important role in the development of corporate powers. Though largely obsolete in modern private corporation law, the doctrine remains in full force for government entities. An ultra vires act is one beyond the purposes or powers of a corporation. The earliest legal view was that such acts were void. Under this approach a corporation was formed only for limited purposes and could do only what it was authorized to do in its corporate charter.

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