Frank Newman: Well-beings and oil wells

It's been a big week in politics. Last week saw the first reading in Parliament of the Local Government (Community Well-being) Amendment Bill. The purpose of the Bill is to reverse changes made to the Local Government Act in 2012 by the then National government.

The 2012 change redefined the purpose of local government as,

"(a) to enable democratic local decision-making and action by, and on behalf of, communities; and

(b) to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses."

The Labour lead troika intends removing the requirement for local councils to act in a way that is the most cost-effective for households and businesses, and reinstate the purpose of promoting the social, economic, environmental and cultural well-being of communities (the four well-beings).

The Bill also reinstates the powers of Council to collect development levies for a much wider range of purposes, rather than the limited applications required by National's amendment.

While the well-being change may seem like a return to the past, Labour's motivation is more likely to be to enable local government to advance their transformation social change agenda. For example removing the need for local authorities to function in a cost effective way will open the door to council's introducing a "living wage" policy into their workplace.  

Another consequence may be that councils adopt a "buy local" policy, even though the cost of buying local may not be the most cost-effective way of spending ratepayers’ money. This is more likely given Labour's direct influence in local councils - particularly in Auckland, Christchurch, and Rotorua, where former Labour MPs hold the mayoralty. 

Local councils are of course over the moon about the changes. They can now return to the status that existed between 2001 and 2012 where they could be all things to all people and pretty much spend whatever amount on whatever they wished.

Local Government NZ President Dave Cull said, "Local government around New Zealand has been seeking reinstatement of the four well-beings in legislation to once again recognise the work to deliver social, economic, environmental and cultural outcomes for communities…These importantly acknowledge that local authorities have a broader role in fostering liveable communities, than simply providing ‘core services’."

Local Government NZ is also lobbying the new government for a law change to give them the exclusive right to create Maori seats on councils. As the law currently stands, a council decision to create Maori wards can be challenged if more than 5% of the electorate petition their council to hold a binding referendum. The principle behind this right is that everyone should have a say on the composition of their elected Council. This right has been exercised on a number of occasions and in almost all cases has resulted in the public overwhelmingly voting against Maori wards.

Local councils however want to remove the public's right of veto. They and they alone want to make the decision about Maori wards without the risk of having that decision being challenged by voters. It seems they support democracy - but only when they have the final say!

Those who follow these issues will know that this is part of a co-governance agenda that is now targeting local councils. The objective is to have half of all elected Councillors  elected from the Maori electoral roll.

The other big announcement is the coalition government’s decision to end offshore oil exploration and put a stop to any new onshore permits - with the exception of Taranaki which has a three year reprieve. All existing mining and exploration permits will remain in place.

In effect it is a wind-down of the oil and gas industry in New Zealand. The Greens and the anti-oil sector are jubilant, and NZ First is red faced trying to justify supporting a proposal that is anti-regional development.

The loquacious NZ First leader-in-waiting, Shane Jones, will have a hard job convincing the good folk of Taranaki that the decision was the right one. Mr Jones has promoted himself as the people's champion for the regions. Rather than explain their support as a reality of MMP, he should put some courage behind the bluster and front up to community leaders in Taranaki, and in particular the 11,000 people who rely on the industry for their livelihood.  He needs to tell them how he intends creating the new "clean" jobs in their region that they will apparently transition into. Another native tree nursery perhaps?

Unfortunately for New Plymouth it will now be seen as a city with an uncertain future. That will be too big a risk for many investors with long-term capital available to invest. The effect on its economy will be immediate. 

NZ First will now be portrayed as the party that promises one thing while touting for votes, and doing another when in government. Banning new oil exploration is an ideology that is short-sighted and by going along with it NZ First has shown itself to be the Green Party's poodle.

Frank Newman, an investment analyst and former councillor on the Whangarei District Council, writes a weekly article for Property Plus.