If one council becomes too slow or expensive, investment can cross the boundary without leaving the local economy. That nearby choice is one of the few checks businesses have on council performance. The Government’s Head Start programme could weaken it.
Sunday was the main deadline for councils to send Wellington their merger plans. The Government’s ‘Head Start’ project favours larger ‘unitary authorities’, with one council doing the work now split between city or district councils and regional councils. Areas not covered by an accepted plan face a compulsory process after 2028.
The two ministers behind the reform stress different benefits. RMA Reform Minister Chris Bishop says new council structures should help deliver the new planning system. Local Government Minister Simon Watts says larger councils should cut duplication, save money and improve services. Better coordination of planning may be a fair goal. It does not prove that a bigger council will be cheaper, faster or better for business.
I made that case in the Herald in June. The plans now on ministers’ desks do not answer it.
Start with the Government’s own Infrastructure Commission. In 2022, it examined road maintenance, building consents and council overheads. Together, these make up more than half of council operating costs. It found no clear link between a council’s population and how efficiently it delivered those services.
Auckland does not settle the argument either. Auckland Council says it has saved billions in operating costs since eight councils merged in 2010. Yet the promised review of the merger was never completed. We do not know how Auckland’s costs compare with what the former councils would have spent. Auckland’s operating spending has risen at roughly the same pace as that of other councils.
Measured against other councils, Auckland is not a disaster. It offers little support, however, for the claim that bigger councils are cheaper.
The immediate costs are easier to see. Every merger plan must resolve what happens to computer systems, staff contracts, rates, debt and service levels. Some differences may be kept for a time, but transition is not free. The outline estimates use no common basis for transition costs, debt, assets or service levels. Cabinet cannot yet compare them fairly.
Mergers also remove a useful check on poor performance: the council next door. Selwyn and Waimakariri have grown quickly while remaining separate from Christchurch City. Their councils still face weak rewards for accepting growth because they pay much of the cost of new roads and pipes while central government receives most of the extra tax. Even so, their presence gives households and firms another option within the same regional economy.
If one council makes housing difficult, development can cross the boundary. If its rates climb or its consent office slows down, people can compare it with a neighbour. Councillors cannot easily dismiss a poor result when another council nearby is doing the same job for less.
Many councils charge a business property two or three times the general-rate amount charged on a home of the same value. Nearby councils provide a ready comparison and, sometimes, a realistic place to move. A large merger can make that move harder and the comparison less useful.
The same point applies to regulation. Christchurch City Council, the country’s second-largest council, lost its official approval to issue building consents in 2013 after failing quality and timing checks. It was then dealing with a huge post-earthquake workload, and it has since rebuilt the service. Its 2013 failure is still a useful warning that size alone is no safeguard. Several consent departments let us compare performance and work around a failure. One large department can spread the same failure across a whole region.
Existing councils plainly have problems of their own. Too many take too long to issue consents. Some resist housing and business investment. Mayors and councillors often lack the information and authority to hold council managers to account.
Those problems need direct fixes. Give councils a share of the GST generated by new building, so welcoming development helps pay for the roads and pipes it needs. Publish comparable consent times, fees and infrastructure results. Give elected members better access to independent advice and more power to hold council managers to account. Those steps can improve performance whether or not boundaries change.
In September, Cabinet will decide which plans move to detailed design. Some mergers may make sense. But Cabinet should move one forward only after its promoters have shown in public what it will cost and why services will improve. That work has not yet been done.
Nick is a Senior Fellow at The New Zealand Initiative, focusing on local government, resource management, and economic policy. This article was first published HERE
The two ministers behind the reform stress different benefits. RMA Reform Minister Chris Bishop says new council structures should help deliver the new planning system. Local Government Minister Simon Watts says larger councils should cut duplication, save money and improve services. Better coordination of planning may be a fair goal. It does not prove that a bigger council will be cheaper, faster or better for business.
I made that case in the Herald in June. The plans now on ministers’ desks do not answer it.
Start with the Government’s own Infrastructure Commission. In 2022, it examined road maintenance, building consents and council overheads. Together, these make up more than half of council operating costs. It found no clear link between a council’s population and how efficiently it delivered those services.
Auckland does not settle the argument either. Auckland Council says it has saved billions in operating costs since eight councils merged in 2010. Yet the promised review of the merger was never completed. We do not know how Auckland’s costs compare with what the former councils would have spent. Auckland’s operating spending has risen at roughly the same pace as that of other councils.
Measured against other councils, Auckland is not a disaster. It offers little support, however, for the claim that bigger councils are cheaper.
The immediate costs are easier to see. Every merger plan must resolve what happens to computer systems, staff contracts, rates, debt and service levels. Some differences may be kept for a time, but transition is not free. The outline estimates use no common basis for transition costs, debt, assets or service levels. Cabinet cannot yet compare them fairly.
Mergers also remove a useful check on poor performance: the council next door. Selwyn and Waimakariri have grown quickly while remaining separate from Christchurch City. Their councils still face weak rewards for accepting growth because they pay much of the cost of new roads and pipes while central government receives most of the extra tax. Even so, their presence gives households and firms another option within the same regional economy.
If one council makes housing difficult, development can cross the boundary. If its rates climb or its consent office slows down, people can compare it with a neighbour. Councillors cannot easily dismiss a poor result when another council nearby is doing the same job for less.
Many councils charge a business property two or three times the general-rate amount charged on a home of the same value. Nearby councils provide a ready comparison and, sometimes, a realistic place to move. A large merger can make that move harder and the comparison less useful.
The same point applies to regulation. Christchurch City Council, the country’s second-largest council, lost its official approval to issue building consents in 2013 after failing quality and timing checks. It was then dealing with a huge post-earthquake workload, and it has since rebuilt the service. Its 2013 failure is still a useful warning that size alone is no safeguard. Several consent departments let us compare performance and work around a failure. One large department can spread the same failure across a whole region.
Existing councils plainly have problems of their own. Too many take too long to issue consents. Some resist housing and business investment. Mayors and councillors often lack the information and authority to hold council managers to account.
Those problems need direct fixes. Give councils a share of the GST generated by new building, so welcoming development helps pay for the roads and pipes it needs. Publish comparable consent times, fees and infrastructure results. Give elected members better access to independent advice and more power to hold council managers to account. Those steps can improve performance whether or not boundaries change.
In September, Cabinet will decide which plans move to detailed design. Some mergers may make sense. But Cabinet should move one forward only after its promoters have shown in public what it will cost and why services will improve. That work has not yet been done.
Nick is a Senior Fellow at The New Zealand Initiative, focusing on local government, resource management, and economic policy. This article was first published HERE
2 comments:
The whole council 'industry' has become a bloated, unaccountable, cost plus, out of touch one.
Lets be honest, all employees know that they are on to a very good thing.
It's a fact that most functions undertaken by local councils have been contracted out.
To even more bloated, monopoly service providers.
And yet council staff numbers continue to rise?
What the hell do they all do?, let alone all the perks and vehicles that go with it.
I read yesterday, that the annual cost per household, in one large local council, was over $3000 just to cover staff salaries.
That's $60/week tax paid income each and every week, for every household, just to pay the salaries of these leeches.
We can rabbit on about costs of amalgamation etc for ever, but the basic issue is that councils have become unsustainable.
If they were private businesses, with competition, most would have gone broke years ago.
People on low and fixed incomes haven't got any more to give.
There are hundreds of cities in the world, with populations larger than NZ.
Why is this so hard?
We need a new model, not designed by some self serving fish bowl dweller in Wellington..
What about the Swiss approach - local control and real accountability?
Things have got badly out of hand.
Ameni
Our local Whanganui District Council in 15 years has gone from a debt of 60 million to 240 million. For a district of 50,000 over $600 pa of our rates is just to pay the interest on this debt. Our Council employees are the amongst the highest paid in our community, over 100 on over 100k pa.
We have nothing to show for this massive debt except a 100 million art gallery, a failed and now closed flight school, Council purchases of now vacant business land and buildings. Some residential rates are now nearly 10kpa. And wonder why our city and District is stagnating
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