Support for Local Government overhaul after call for Royal Commission

The Local Government sector is reaching crisis point. Photo / Mark Mitchell

There’s support across the political spectrum to overhaul Local Government, after one councillor went as far as asking for a Royal Commission into the sector.

Councils are struggling to cope under the weight of Covid-19 deficits, decades of underinvestment in infrastructure, the looming impacts of Climate Change, and the cost of Three Waters reforms.

For example, about $5.1 billion worth of Local Government infrastructure will be at risk from sea-level rise of one metre.

This week Kāpiti Coast District councillor Gwynn Compton wrote to ministers and MPs urging them to establish a Royal Commission into Local Government.

He said the sector was reaching “crisis point” and it was clear the arrangements put in place more than 40 years ago were not coping with the significant challenges the sector was facing.

Both the Government and National indicated a Royal Commission would be a step too far, but acknowledged significant reforms were necessary.

Meanwhile, the Greens are “tentatively supportive” of a Royal Commission.

Local Government New Zealand (LGNZ) president Stuart Crosby said the organisation has discussed the need for joined-up reforms with Minister Nanaia Mahuta.

He said it was important to avoid unintended consequences of piecemeal reforms.

“We’re hopeful that this discussion will continue.

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“Local Government derives its powers from over 30 pieces of legislation, not including the Local Government Act, so it’s important that any reform looks at the whole system, to get the best outcomes.”

In its 2020 manifesto, issued ahead of this year’s General Election, LGNZ called for resource to be put where it’s needed.

It argued New Zealand was unbalanced in that it is one of the most centralised countries in the OECD.

The Greens are tentatively supportive of a Royal Commission into Local Government. Photo / Dean Purcell

Central Government spends 88 per cent of total government expenditure, with Local Government accounting for just over 10 per cent.

The manifesto said that when services were more decentralised and matched to community need, economic growth was likely to be stronger and inter-regional competition would lead to greater innovation and growth.

“All too often there is a misalignment between those who hold the purse strings, and those who can deliver the best possible outcomes with this funding.”

Local Government Minister Nanaia Mahuta was unavailable for comment, but a spokesperson said the Government was aware of a number of issues facing the sector.

“Issues stemming from the Covid-19 pandemic, and long-standing issues from before the outbreak.

“However, there is a high bar to establish a Royal Commission of Inquiry, and they are reserved for the most serious of issues facing New Zealand.”

The Government has committed to addressing issues, the spokesperson said.

“While our programme of work is still being finalised, we expect a clear focus on delivering significant reforms this term that improve the wellbeing of communities throughout New Zealand.”

A recent Productivity Commission inquiry into Local Government Funding and Financing found radical reform was not required and the current rates-based system remained appropriate for New Zealand.

It said a better relationship was needed between Central and Local Government and an agreed protocol would help end the practice of responsibilities being imposed on councils without appropriate funding.

National’s Local Government spokesperson Christopher Luxon says a Royal Commission would be a step too far at this point. Photo / Mark Mitchell

Recommendations also included better use of existing funding tools like targeted rates and debt, as well as new tools to help councils fund and manage growth, like user charges.

National’s Local Government spokesman Christopher Luxon, who was also one of the recipients of Compton’s letter, said a Royal Commission would be a step too far at this point.

But he acknowledged change was needed.

“There are plenty of issues plaguing local government right now and the system needs serious overhauling, particularly when it comes to infrastructure.”

Green Party Local Government spokeswoman Julie Anne Genter said they would be tentatively supportive of a Royal Commission.

“It is absolutely the case that something needs to change. Local authorities are responsible for a huge amount of infrastructure and vital public services, but do not have the funding or resources to meet the scale of the issues they face.

“This is resulting in run down local infrastructure and services.

“We’d be keen to explore anything that ensures local democracy is improved and that te Tiriti is honoured, to get better outcomes for people and our environment.”