Wednesday, December 11, 2013

Steve Baron: City Councilor Accountability

Part of obtaining a University Economics degree is to understand a concept called ‘Moral Hazard’. A moral hazard occurs when the actions of one party change to the detriment of another, after a financial transaction has taken place. Another aspect of moral hazard is the ‘Principal-Agent Problem’. This is where one party, called an Agent, acts on behalf of another party, called the Principal. These concepts highlight a dilemma—how to motivate an Agent to act in the best interests of the Principal, rather than in their own best interests.

It’s a dilemma we face throughout New Zealand when we Principals (Voters) attempt to get our Agents (Councillor’s) to turn up to Council meetings—something we expect of them, given we remunerate them accordingly, in the hope  our city will be managed in the most effective way possible. The problem is that when one or more of these Councillors don’t take full responsibility for the consequences of their actions (or inactions in this instance), this leaves other Councillors’ to take on more responsibility for the decisions that are made. It may also mean that there is less diverse thought and scrutinizing involved in the decision making process. It also means that voters feel ‘screwed’, to put it in colloquial terms.

In the business world various mechanisms have been designed to align the interests of Agents and Principals, such as commissions, profit sharing, performance measurement and the threat of termination. In the political world we need to find other alternatives to ensure prime performance. For a start, we certainly need to monitor our elected representatives better than we do at present. While the fourth estate is partly responsible for making politicians accountable, it’s also the responsibility of the District Council itself, to monitor all Councillors’.

One option could be to regularly publish attendance records, and make them easily accessible, through a Council’s website. This practice is becoming more common in City Councils around the world. Many are also providing access to ePetitions as an easy method for citizens to convey important issues to the attention of the Mayor and Council—both of these propositions are sadly missing from most Council websites throughout New Zealand.

While some are suggesting meeting allowances as an obvious answer to the problem of non-attendance, most local authorities in New Zealand have moved away from paying meeting allowances because it is very difficult to predict exactly how many meetings will be held. Another aspect to consider is that not every Councillor can turn up to every meeting, even if they wanted to. Often Council work requires them to be out of town, for example, or to attend other important meetings, and genuine illness can also prevent them from attending. In these instances it would be unfair to reduce a Councillor’s pay.

New Zealand could also adopt a political tool commonly used in the USA and Switzerland, to keep representatives in line—the Recall referendum. This political tool allows voters to sack a Mayor or Councillor in-between elections, when voters are dissatisfied with the performance of their elected representative. Think of Governor Gray, who was replaced by Arnold Schwarzenegger in a Californian Recall referendum in 2003. Once the required numbers of signatures have been collected to trigger the Recall referendum, the whole electorate then gets the opportunity to decide the outcome.

The political theory behind the Recall referendum is that voters should retain the right to control their elected representatives, even after they have been elected. Perhaps the threat of losing their jobs before their three year term is up is just the motivation some Councillor’s might need to fully perform their duties. Imagine the embarrassment to a Mayor or Councillor if they were thrown out of office before the end of their term, along with the humiliation that would follow them for the rest of their careers.

How often has it been used? In the USA, between January 1996 and the end of 2001, Recall referendums were initiated against the Mayor of 4% of US cities, and against Councillors’ in 5% of US cities, with the Mayor being recalled in 17% of the Recall referendums and the Councillor in 29%. Perhaps voters might also be prepared to offer a bonus to our elected officials if they ever manage to balance the budget without increasing debt? A performance incentive… now there’s food for thought.
[Steve Baron is a Wanganui based political scientist, co-editor of the book ‘People Power’ and the Founder of Better Democracy NZ.]


Chuck Bird said...

Steve, I think your idea could extended to judges although they are not elected. I cannot think of a NZ example as bad as this one from Canada but I can think of a few here who should be recalled.

Porn photo judge Lori Douglas just won’t go away
Manitoba judge who was in explicit photos won't quit, and no one can make her go. Meanwhile she’s getting paid hundreds of thousands a year to stay home.

Anonymous said...

I believe that there is another level of governance that should be examined. Our parliament. Our MPs are our agents. Not appointed, but elected agents. And they are there to do a job. And they are paid a reasonable remuneration for this. But hold on, have a look at the TV parliamentary broadcasts. Count the numbers in the chamber. 120? Sometimes you'd be lucky to see 10% of that number listening or contributing to the debates. So where are the rest? It's not as if parliament sits 365 days per year. Yes, they have other duties and select committees etc, but if we're paying them, they should be on the job. if they're not listening to the debates, how can they know about the differing views of the parliamentarians? If I was the Speaker of the House, MPs would need to have jolly good reason to be absent from any sitting. it's their workplace, darn it.

Brian said...

Anonymous, Yes MP's are our representatives in Parliament, but a large section of them due to MMP are APPOINTED. Crudely put they are Party Hacks with allegiance to their Party and themselves.
This is the crux of the matter...political appointments signal an entry into dictatorships.
Also elected MP's have an allegiance to their Party, first and foremost. Otherwise it is "Goodbye" at the next election.

To see how Parliament and democracy should work, visit on Sky the Australian Parliament, and note the control the Speaker has over members and outbursts. Admittedly he has the luxury of not having to toe the racial line!
Across the Tasman seems to be the last vestige of our Parliamentary democracy. Not perfect by any means, but who would want perfection in a Parliament?

Anonymous said...

I agree with Brian. Many things show 90% of MP's(included Prime Minister) are not in this government race to achieve the best for the country of New Zealand and ALL its inhabitants. No, as long as it nurious their own pockets(at least in the hidden areas) and confirm for them a seat in parliament; it does not matter which way they have to go!