* The author, Andrew Bydder, is a Hamilton City Councillor. These are his personal views.
Voter turnout for council elections is around 33%. It is hard to describe the results as democratic when, for whatever reason, the majority don’t see voting as worthwhile. Clearly, something is wrong. The usual complaint is that voting doesn’t seem to change anything, so what is the point?
The average household income after tax is $88,000. The average rates bill is now 3% of that. In a cost-of-living crisis, this is significant. Yet for most of us it is manageable. We turn our taps on and clean water flows out; we flush our toilets and dirty water disappears. We leave our rubbish on the kerb side and somebody takes it away, we notice the potholes because we are used to driving on sealed roads, and we occasionally like to visit the library or the swimming pools. There is a general acceptance that we are getting some value for our money.
What stands out more is rate rises. When they go up by more than inflation each year while the service stays the same, we start to get annoyed. That leads to some of us looking a bit deeper into council budgets and noticing the debt levels increasing each year as well. We are told that the debt is an investment in long-term assets and that growth will pay for growth, i.e. there will be more ratepayers to share the burden in the future. Logically, this should mean rates will trend downward over time. After twenty years of rising populations and ballooning debt, the plan doesn’t appear to be working.
When the initial Three Waters (drinking water, wastewater, and stormwater) review started, it was in response to the failure of existing assets. Contaminated water in Hastings, sewage leaks in Wellington and Auckland harbours, and frequent flooding in many parts of the country have shown that the basics have been neglected. This occurred while spending on new projects had racked up the debt.
The figures to fix this are eye-watering with estimates of up to $80 billion. Neither the current council rating system nor debt capacity can cope with this.
Is it time for a change?
Labour thought so. It decided to take Three Waters assets off the councils by ramming through highly divisive legislation. At first glance, the principle seemed good. Creating new water entities would free up councils to deal with other issues by removing the financial burden. But there was absolutely no plan for how the new entities would actually solve the water problems. Technical solutions around maintenance and upgrades were ignored, while the only innovation was an ownership structure that involved 50% Maori control. Entity borders were designed to fit tribal areas rather than geographic watersheds. There was simply no improvement, no efficiencies or economies of scale – nothing that could lead to the claimed cost savings.
Late in 2022, Labour began consultation on Local Government reform. This was timed to occur over Christmas. Following the Three Waters revolt, it appeared that they were trying to avoid the public’s attention.
With a half-hearted input, the output was also a half-hearted discussion of amalgamation. In the Waikato region for instance, there are 12 separate councils and obviously, the smaller ones, such as Waitomo (population under 10,000), Otorohanga (11,000), Hauraki (21,000), South Waikato (25,000), Thames-Coromandel (34,000), Matamata-Piako (37,000), Taupo (39,000), and Waipa (56,000) do not have the resources available to Hamilton (180,000). The duplication of bureaucracy is inefficient, so there is potential for improvement.
Should some of these councils get cancelled?
There is a history of cancellations. Borough councils originated from the amalgamation of Road Boards and Water Boards in the 1880s. The number of local authorities peaked at 757 by 1960, including regional Electricity Boards and the like. Reforms in 1989 reduced the then-454 organisations to 86. There are currently 67.
Amalgamation is not an easy choice. A single Waikato council inevitably means the needs of the smaller rural areas will be drowned out by the political dominance of the one big urban centre. It is likely to create as many problems as it solves. The requirement for local representation still exists.
Separating out Hamilton while combining the others seems to make more sense; however, it creates a significantly under-resourced council with a huge geographical area.
The councils themselves have come up with a partial alternative solution. They set up a company called Co-Lab to provide shared services and bulk buying power. Appropriately, Hamilton contributes the most resources. Some processes are standardised across the members such as the regional infrastructure technical specifications, which helps consistency and integration. It is a good step in the right direction, yet sometimes it is just a thirteenth body to deal with in order to work in the Waikato.
Auckland amalgamation appeared to be a no-brainer. Driven by Rodney Hide, 7 councils were unified in 2010. The promises of service improvements, efficiencies, and rates reductions have not eventuated. The bureaucracy has increased, regulations got more complicated, and decision-making slowed down. 21 community boards were created to keep local voices, but their powers are trivial, so the voices are merely whispers competing with each other to produce an easily ignored background hum.
There is another approach.
Using Hamilton City Council as an example, the organisation is made up of 28 ‘business units’ (key functions). These include infrastructure such as roads and traffic, property development, and three waters; regulation such as building consents, town planning, and dog control; services such as rubbish collection, libraries, and buses; asset management such as parks and gardens, stadiums, and swimming pools; community investments such as tourism, airports, and hotels; overheads such as finance, work safety, and communications; and miscellaneous activities including a zoo.
A business of similar scale with 1,500 employees will have a single focus, such as manufacturing a specific product or providing accounting services. Everyone in the business has a reasonable understanding of the core business, while management has a deep understanding of most parts. There are economies of scale, and systems are tailored to the specific needs of the business.
Having 28 different functions not only prevents economies of scale but also creates complexity for all parts. Consider an occupational health and safety system that needs to cater for librarians at risk of a paper cut, dog control officers who could get bitten and pool attendants who could drown, to road workers needing protection from out-of-control trucks. The one system is going to be inefficient and overly bureaucratic for each function. We see this reflected in high overheads and large administrative departments.
Management becomes layered and hierarchical. The chief executive is in charge of an administration system that is essentially a go-between for elected councillors and the group managers. There is no guarantee that somebody at this level has the expertise necessary to provide sensible ‘governance’ oversight of each of the 28 business units. Certainly, this is not the basis for electing councillors.
Unit managers may have the skill and responsibility to operate their part of the business, but they are essentially competing for limited funding and resources against the other units. There are no common performance indicators to assess this competition. Libraries are free to use, so revenue is not an option. Success could be measured by the number of books issued, but that metric is useless for comparing Zoo outcomes. Stadiums typically make a loss, but they generate visitor nights for motels and hospitality spending at restaurants. Sport and recreation have huge community value but that is hard to quantify in dollar terms. So resource allocation is arbitrary and political.
Some of these functions don’t serve the council structure, i.e. do not benefit other business units. Other functions are not served by the council structure, i.e. the overhead complexity does not add value. Many of the functions exist for historical anachronistic reasons. Since the Roads and Water boards were joined, other activities have been forced upon councils by government legislation (such as dog licensing and microchipping), by philanthropy (Carnegie free libraries were gifted), and even by natural disasters (the 1931 Napier earthquake led to building consents and inspections).
A fresh look in a modern context suggests that not all the functions belong together anymore. For example, every council has its own library system, and they already work together nationally with an inter-loan scheme to allow for book borrowing from other councils. Kaitaia Library has more in common with Bluff Library than either has with the sewage systems in their own towns.
It makes more sense to amalgamate the libraries across New Zealand than it does to amalgamate the councils regionally. As an autonomous organisation, a national library can have a tailored and simple health and safety system, manage its own buildings, and pay its own staff, without the complexity of process and decision-making of the council hierarchy. Funding could be provided through central government taxes (in a trade-off with rate reductions) or by a levy on councils.
The benefit to councils is that their own systems can then be simplified. The public gets the same service, only the provider has changed.
This could be applied to about half the functions.
Building consents are already operating under a nationwide Building Act. Architects complain about needing a different form for each council and the wild variance in the application of construction standards between councils (this should not exist, according to the Act), so consistency would be greatly appreciated. Building inspectors provide no benefit to the rest of the council. The inspectors themselves can stay locally, while employed and managed by a central body.
Every council has its own local dog register, yet dogs can move around the country with their owners. This leads to information problems which could easily be solved by a national database.
The replacement for the Resource Management Act is already looking at regional amalgamation for town planning and environmental protection.
Councils can continue with the remaining functions where local control is desirable. Simplification of the hierarchy will lead to better governance and lower overheads. Roading, parks, sports, and recreation are all community-specific business units.
Perversely, this includes Three Waters. The sewage and drinking water infrastructure is exclusive to each town, needs localised investment, local knowledge for maintenance, and rapid response in a breakdown. Flooding can be a regional issue, but this is currently managed by cross-council working groups in each watershed. There is no crossover between Hamilton and Tauranga because the Kaimai mountain range separates them.
For some of the smaller councils, this may end up making amalgamation easier. The ongoing existence in the likes of Otorohanga and Te Kuiti of libraries, building inspectors, and other functions supported by larger organisations will make it more palatable for unification with one or two neighbours.
There are a number of other issues to consider in council reform, such as four-year terms, alternative funding systems, and the relationship with central government, but there is no point in making other changes until the actual functions of councils are properly resolved.
