Local Government in Asia and the Pacific: A Comparative Study

Country paper: New Zealand

  Description of the Country
  Evolution of Local Government
  Local Government Categories
  Local Government Functions
  Local Government Finances
  Personnel Systems
  Central-Local Links
  Public Participation
  The Way Ahead
  Further Reading
  Annex I: Statement on Local Government New Zealand

Brief Description of the Country and its National/State Government Structure

Demography

In terms of land area New Zealand is similar in size to Japan and the United Kingdom of Great Britain. Its physical geography is variable, much of it being mountainous and uninhabitable. New Zealand lies in the southwest Pacific, about 1600 kilometres southeast of Australia. It is made up of two main islands (North and South Island), Stewart Island and several outlying islands. The landscape is a mixture of flat country, rolling hill country and mountains. Over three quarters of the country is more than 200 metres above sea level. The South Island in particular has numerous peaks, fiords and glaciers, lakes and fast flowing rivers. New Zealand has a mild climate with few extremes due to it being located in an ocean environment. This climate means that New Zealand is well suited to agriculture and horticulture that are still vitally important to the economy. Mean annual temperatures range from 15 degrees Celsius in the top of the North Island to 10 degrees Celsius in the bottom of the South Island.

In 1996, the total population was 3,660,364*. Nearly three-quarters of New Zealand's population live in urban areas with populations over 20,000. A significant percentage of the population (55 per cent) is concentrated in five main urban areas - Auckland, Wellington, Christchurch, Dunedin and Hamilton. Around 80 per cent of the New Zealand population are of European origin: mostly of British descent but also including people originating from the Netherlands, Yugoslavia and other European nations. Approximately 15 per cent of the population are of Maori descent. Besides, Pacific Island and Asian (Chinese, Indian and Korean) peoples are significantly represented in the New Zealand population. Maori are recognized as the original settlers in New Zealand having been thought to have arrived approximately 700-800 years ago from Polynesia. The first wave of British settlers reached New Zealand in the 1840s. By the end of the century the population had expanded rapidly following the introduction of government assisted immigration. The Maori population is expected to grow from 425,000 (1991 census figures) to 672,000 by the year 2031, which represents a growth rate that is twice as fast as the non-Maori population. The government has a special Ministry to look after issues that are particularly of concern to Maori. Te Puni Kokiri (The Ministry of Maori Development) provides the government with advice on how key policies affect Maori and it works alongside other government agencies on issues such as education, health, employment and income.

Traditionally a predominantly rural economy, New Zealand's economic base has diversified significantly across all sectors (manufacturing, services and tourism) over the last 30 years. This has been reflected in progressive urbanization. Since 1984, New Zealand has undergone considerable economic restructuring. These changes have involved dismantling the extensive tariffs and protection that sheltered New Zealand's productive sector from overseas competition and made locally produced goods and services less competitive than those produced overseas. This restructuring also involved considerable public sector reform, privatization and deregulation. These changes initially led to economic stagnation as the economy went through a process of readjustment. Since 1991, economic performance has recovered with positive economic growth (especially export growth) accompanied by low inflation. Over this period a number of industries expanded rapidly, many of these in non-traditional areas. These included electronics, engineering, computer software, tourism, wine, forestry, boats and marine products and building construction products. In 1997 New Zealand had a per capita Gross Domestic Product (GDP) of US$18,250.

Figure 1. Contribution of the Sectors to GDP (1995)

Compared to other developed nations, the Agriculture sector still makes a relatively high contribution to total economy activity. Future trends indicate a further diversification away from agricultural products towards higher value goods and services. New Zealand is party to several international trade arrangements, including the International Trade Association and APEC. The Australia-New Zealand Closer Economic Relations Trade Agreement (CER) provides for a free exchange of all goods and most services between the two countries. This complements the free movement of people and mutual recognition of qualifications and standards that exist between Australia and New Zealand.

Although New Zealand is best known as an agricultural nation, the country is highly urbanized with 85 per cent of the country's population living in centres with more than 1000 inhabitants. New Zealand is a well-housed nation with 73 per cent of the population owning their own home. Single detached housing with private gardens predominates, although many people are choosing more high density living particularly in inner city areas of the main metropolitan centres. Material living standards and quality of life indicators remain high by international comparisons. Culture and cultural activities are important to the New Zealand way of life and this is reflected in the strong support of museums, libraries, art galleries and concerts. New Zealand has a strong publishing and film industry with films by New Zealand directors such as "The Piano" and "Once Were Warriors" achieving box office success around the world. Besides, New Zealand has a great sporting tradition and New Zealanders are active participants in a range of sporting activities. The most popular sports in 1995 were rugby, golf, netball and athletics.

The historical dispersion and distribution of New Zealand's population settlement and the need to maintain communications to sustain economic development have resulted in a well-developed road infrastructure throughout both islands. The evolution of local government structure in New Zealand and the development of the road system have occurred interdependently. In New Zealand's early history, local authorities were formed significantly in response to the need to provide for effective communications. The funding and provision of local roads have become the most significant single functional responsibility for the sector.

National governmental and political structure

Government structure

There are two branches of government: central and local. New Zealand's parliamentary system of government was originally based on the Westminster model but has progressively departed from this in recent years. The parliamentary system is unicameral. The electoral system, previously a first-past-the-post system was replaced (in 1996) by a form of proportional representation known as the mixed-member-proportional (MMP) system. Under this system, electors have a Party Vote and an Electorate Vote, which, in total, are used to select a total of 120 members to Parliament. The first election held under this system was in 1996. After lengthy negotiations between the political parties it resulted in the formation of a centre-right coalition government.

Public sector reform in the national context

Local government reform in New Zealand closely followed that applied to central government. From 1984, the Labour Government set about comprehensively reviewing the role of the state. This had significant implications for the public service and the way it was managed. The Treasury in its 1984 and 1987 briefing papers articulated the government's objectives, policies and proposals. These focussed on economic and government management. State sector reform was a product of changes in thinking arising from new institutional economic and management theories. In particular the government sought to achieve significant efficiencies in New Zealand's economic performance through:

• Achieving optimum efficiency in the allocation of economic resources;
• Achieving higher levels of transparency and accountability, especially by ensuring that public sector organizations' objectives would be clearly defined, by providing freedom for managers to manage accountably in accordance with those objectives and by ensuring better information flows; and
• Achieving better performance all round by emphasizing the importance of attaining desired outcomes and outputs, especially in public management, instead of by emphasizing inputs as had been symptomatic of the pre-reform era.

Public sector reform resulted in new management practices and organization structures. In effect, the state was to deliver policy and goods and services only where market failure demonstrably existed. Initially, central government separated the trading arms of many of its departments from their essential policy functions. Later stages of reform saw a considerable reduction in the size of most departments and the creation of much smaller policy ministries. The underlying concept of founder/provider (or policy/service delivery) split became well recognized. Many traditional functions and activities of central government were privatized, e.g. telecommunications, railways, the postal service and both state-owned trading banks. Another significant means of delivering some services was through the corporatisation of some agencies by establishing SOEs (State Owned Enterprises) - wholly government-owned corporations, operating along the lines of private companies. These were managed by appointed boards of directors, outside of the direct control of the political arm of government. The state sector reforms owed a lot to the agency theory principle where governments (local or central), as the principals, set broad public objectives and policies that the agents carry out. This principle applies to the relationships of the governing bodies with their chief executives, their trading arms (State Owned Enterprises and Local Authority Trading Enterprises) and with private contractors. Essentially, this model of reform for central government became the basis for local government reform.

Evolution of Local Government, its Legal and Political Background

History of local government

The pattern and structure of local government were shaped by the growth and distribution of population and by the needs of the economy and people for improved communications, especially roads. The provincial governments, abolished in 1875, progressively gave way to a fragmented system of territorial and single-purpose local authorities (including road districts). Many county councils were created from old road boards. The need to reform local government had long been recognized and was reflected, in particular, in the establishment of the first Local Government Commission in 1946 and others succeeding it up to the present.

Local government prior to reform

Prior to reform there were, in total, about 830 local authorities. Of these, about 730 were predecessors to the 86 new regional and territorial authorities created by the 1989 legislative reform. About 450 single purpose authorities and 22 former united and regional councils were subsumed in the new system. 74 Territorial (city and district) authorities - replacing 217 former city, borough and county councils - were established. In addition, 136 community councils were abolished, being replaced by community boards under the new territorial authorities umbrella. Community boards are set up by councils and are composed half of elected councilors nominated by the city/district council and half elected by the local electorate. They may have responsibilities delegated to them by the council that set them up, but are mostly used as a mechanism for consultation.

Table 1. Local Government Structure

There are 12 regional councils and 4 unitary territorial authorities that are responsible for the tasks of both a regional and a district council. The unitary authorities are the Gisborne District Council, Tasman District Council, Marlborough District Council and the Nelson City Council. Before the reform, local government administration was generally lacking a strong corporate planning ethic. Decision-making and budgeting tended to be incremental. Expenditure was typically constrained by financial commitments made in previous years and by the level of available funds rather than being driven by a zero-based or another explicit planning approach.

Reform of local government

The main local government reform occurred in 1989. The changes in reform were signalled in December 1987 in Government Policy Statements, which proposed that:

• As the main principle, local government should be selected to undertake responsibilities or functions only where the net benefit would exceed that of other institutional arrangements; and
• Subsidiary principles were to be applied, including functions to be allocated based on: appropriate communities of interest, operational efficiencies to be achieved, clear, non-conflicting objectives; trade-off of objectives to be explicit and transparent; clear and strong accountability mechanisms.

The Minister stressed that the review would aim to improve the accountability and performance of local government. The outcome of the application of these principles was the introduction of two types of local government units: regional councils and territorial authorities.

Local Government Categories and Hierarchies

In unitary and territorial authorities, the mayor is elected at large. Regional councilors elect one of their members as the chair. Virtually all councils have taken up the option available to them to hold elections by postal ballot. Regional councils and territorial local authorities have separated but complementary functions, with neither being subordinate to the other. One researcher has noted that there is an overlap of responsibilities between regional councils and territorial local authorities in the planning area in particular. Another outcome of reform was that the sector became smaller. The total number of sector jobs (i.e. trading and non-trading) reduced from 44,200 in 1989 to 40,000 (in February 1996). Finally, the reforms changed the ways in which councils had to make and implement decisions so as to achieve the objectives of reform - in particular, changes occurred in planning, accountability and reporting.

Local Government Functions

Local government has responsibilities and delivers functions under a raft of legislation. The influence of reform policy objectives is reflected in an emphasis on outcomes and outputs (results) instead of on inputs. Another important product of reform has been the legal requirement on councils to achieve the separation of policy and service delivery. The intention behind this is to bring about greater public accountability and transparency in their conduct and to reduce conflicts of interest between their policy/regulatory and service delivery functions and between trading and non-trading activities.

Essential functions of regional councils

• Resource management policy and plan provision as well as consents administration relating to the use and development of (and particularly the effects of these on) natural and physical resources, land, air and water discharges and water allocation;
• Pest destruction and policy aspects of biosecurity;
• Flood control;
• Regional emergency management and civil defence;
• Regional land transport planning and coordination;
• Regional hazardous waste disposal; and
• Harbour administration.

Essential functions of territorial authorities

• Community well-being and development;
• Environmental health and safety (including building control, emergency management, civil defence and environmental health matters);
• Infrastructure (roads, transport, sewerage, water and storm water); and
• Provision for recreational and cultural activities.

Local government: founder, provider and regulator

Local authorities may provide goods and services in-house, set up a Local Authority Trading Enterprise (LATE), or contract or tender out services. Clearly these are similar to the options also available to central government in its own sphere of operations, especially in the parallel between a LATE and a State Owned Enterprise (SOE). LATEs are companies in which a local authority or any combination of local authorities holds equity securities that carry 50 per cent or more of the voting rights at any general meeting of the company. Local government legislation provides a code of operation for LATEs in addition to accountability provisions. LATEs are required to pay tax and to be run as successful businesses. They also employ their own staff. At least two members of the Board must be individuals otherwise unconnected to the council. Energy, ports and airport companies cannot be LATEs, although there are LATEs that own these assets. LATEs may operate outside of the district where they are based, both nationally and internationally. They are involved in a wide range of activities including but not limited to: engineering, car parks, cinemas, shopping complexes, water, forestry, tourism, quarrying, public transport and property management. LATEs are accountable to their shareholders (who are either one or a combination of local authorities) for their performance.

Corporatisation and contracting out

LATEs have been a popular service delivery option as evidenced by the number of them set up since the reforms in 1989. Some senior practitioners have noted that sometimes setting up a LATE may not improve the financial position of a council due to the high costs of the corporatisation process. There are no universal figures available to justify the use of LATEs in all cases. Contracting out also needs to be explored on a case by case basis. However, a New Zealand business association that is normally a strong critic of local government has noted that one district council in a regional area has achieved cost savings of 30-40 per cent through contracting out the bulk of its works and services. Another council, in one of the major metropolitan areas is achieving cost savings of 18 per cent and 36 per cent in parks management and road maintenance respectively through competitive tendering. One local authority in the greater Auckland area has claimed it has been able to reduce rates by over 28 per cent through a combination of contracting out services (including the franchising of its water supply). At the same time it claims to have improved customer service.

At the local government level, corporatisation has been a far more common option than privatization, which has tended to be restricted to ports, electricity companies and gas companies (which may not be run as LATEs). The option of creating LATEs has been seen as a way of making services more contestable while retaining the public ownership of services. Some assets such as airports, which have been Crown assets in the past, have been bought by some authorities because they are regarded as strategic assets designed to ensure that communities and businesses in regional areas continue to have strong links with the outside world. Given the autonomous nature of local government and the rigorous consultation processes local authorities are required to follow, each council is accountable to their local electorate for any decisions to corporatise or contract out services. Therefore, there is not one prescribed formula for local authorities to follow outside of the planning and consultative requirements set out in local government legislation.

Independence and accountability of local government

Local government has become significantly independent of central government. This independence arises in two main ways:

• One is that the Local Government Act places an obligation on each local authority to be directly accountable through the annual planning process to its own community for the ways in which it will allocate resources. This has been accompanied by a selective reduction in central government oversight of essentially policy matters. There remains, however, oversight of local government's stewardship roles through an external audit of its management and environmental activities; and
• Secondly, there has been a steady withdrawal, over a number of years, of central government financial assistance and subsidies to local government. Present local government funding is about 90 per cent locally sourced. The balance comprises mainly financial assistance from central government for land transport.

Local authorities independently undertake extensive regulatory activities under a range of statutes (e.g. Resource Management Act, Building Act, Biosecurity Act and Sale of Liquor Act). Under some of these Acts, they are operating as the main implementers of legislation in their own right (e.g. the Resource Management Act). In others, they are agents of central government (e.g. liquor licensing).

Governance and accountability

A raft of obligations and responsibilities, of which the overriding one is to act intra vires, maintains accountability. Councils are answerable for their acts (and omissions) both in a court of law (civil and criminal breaches) and triennially to the electorate. Within their respective spheres the Ombudsman and the Auditor General may also exact accountability. The 1989 amendments to the 1974 Local Government Act require councils to prepare annual plans in consultation with their communities and to report on their performance in accordance with the plan at the end of each year. These reforms introduced significant new elements of local governance as opposed to just management/ administration. Councils were required to:

• Establish clear objectives for each activity and policy;
• Resolve conflicting objectives and conflicts of interest clearly;
• Separate regulatory functions from other functions as is practicable;
• Measure performance in terms of stated objectives;
• Reflect the separation of regulatory from other functions as far as is practicable in their management structures; and
• Outline for the year in question in particular terms and for the following two financial years in general terms, the relevant policies and objectives (for the local authority and any subsidiary enterprise or company) and describe the scope of significant activities to be undertaken together with performance targets and other relevant measures.

Every local authority must publicly report annually on its own activities and those of any companies or LATEs it is involved with.

Resource Management Act

The passage of the Resource Management Act (RMA) into law in 1991 followed several years of intensive broad-based consultation. The RMA replaced over 50 former statutes. The focus of the RMA is on promoting sustainable management of natural and physical resources; it gives councils the means to provide for the management of the effects of the use and development of such resources, rather than to plan for and direct development. It is mandatory for regional councils and unitary authorities to produce maintain and review a regional policy statement and a regional coastal plan for their regions. Territorial local authorities are required to prepare, maintain and review district plans. The purpose of district plans is to enable local authorities to manage the natural and physical resources of their districts primarily by controlling the effects of land uses and development, together with land subdivision, noise and the use of rivers and lakes.

This legislation is unique, as it is the only statute where local government is required to explicitly take into account the Treaty of Waitangi. Councils are required to:

• Recognize and provide for the relationship of Maori and their culture and traditions with their ancestral lands, water, sites and other Taonga;
• Take into account planning documents recognized by local Maori;
• Consider whether to prepare a regional plan where there are any significant concerns of Tangata Whenua; and
• Consult variously with Maori in policy and plan preparation and in processing resource consent applications.

Local Government Finances

Rating and charging powers

Local authorities' income sources are varied and include property rates, user charges, fees, some central government financial assistance, fuel taxes and returns on investments. The present rating and charging powers have been provided for in law since 1988 and remain an important source of local tax revenue for local government. These powers were reviewed (although ultimately they remained essentially unchanged) during the process leading to the 1989 reforms. Because 1996 changes to legislation radically reformed the regime by which councils make financial management policies, a major review of rating and charging powers is programmed to ensure that adequate instruments are available to councils to apply the new policy-making requirements.

Funding, financial management and reforms

The 1996 reforms to the local government legislation - notably in the financial management provisions of the Local Government Amendment (No. 3) Act 1996 - signalled changes and a new approach for local government in the ways it undertakes its financial planning and management responsibilities. These reforms amount in effect to the second major wave of local government reform in New Zealand. These changes require councils to establish policies on how they will fund expenditure needs on investment, on borrowing management and on security for loans, and reflect the earlier application of fiscal responsibility measures in central government by:

• Strengthening local accountability for the long-term financial planning and borrowing activities of councils;
• Providing more explicit economic and financial guidelines to councils in making funding decisions and allocating costs;
• Introducing explicit fiscal responsibility principles; and
• Providing a basis for councils to manage their debt and investments prudently.

This reform legislation requires a local authority to prepare every three years a long-term financial strategy covering at least the next ten years. This strategy must contain estimates of operating expenditure for each year, the reasons for incurring it and the proposed ways of funding it. Councils are also required to prepare a borrowing and investment policy. Councils are permitted to borrow the funds required to build capital works such as water and drainage systems with residents paying only the annual cost of that borrowing. This legislation abolishes the Local Authority Loans Board and the previous borrowing restrictions on local authorities. The reforms have:

• Given councils powers to make financial and infrastructure provision for their communities' long-term needs (e.g. libraries, swimming pools, parks and outdoor recreation facilities, art galleries and cultural activities, job creation, housing); and
• Provided greater legal autonomy (but subjected councils to increased rigour in explaining their financial management policies) and greater transparency.

Councils must respond to these disciplines in particular by:

• Stating those principles, considerations and matters which they propose to take into account in funding their expenditure needs;
• Preparing long-term financial strategies, funding, investment and borrowing management policies; and
• Reporting (in connection with the annual plan and report) on the strategies and policies.

The main principles that councils are obliged to address in making their funding policies and allocations are:

• The principle of recovering the costs of expenditure at the time benefits accrues. This means arriving at a balance between how much to charge current ratepayers and how much to charge to future generations, i.e. through raising loans (intergenerational equity);
• The principle that the costs of expenditure be borne by those who benefit. This may mean recovery from the community generally, or from identifiable categories of persons or individuals, consistent with economic efficiency and the nature and distribution of the benefits, commonly known as the user pays principle; and
• The principle of recovering costs of any expenditure to control negative effects from those who generate them (exacerbator pays).

Long-term financial strategies have to be prepared in consultation with communities, as part of the annual plan and require councils to show:

• Estimated expenditure necessary to meet identified needs of the local authority;
• Estimated cashflow projections and long-term borrowing requirements;
• Significant forecasting assumptions and risks involved; and
• Reasons why proposed activities are needed.

In adopting borrowing management policies councils must show broadly:

• The amount of their proposed loan;
• From where it will be derived;
• How they propose to manage it; and
• What they intend to use for collateral.

Figure 2. Steps in the preparation of local governments budgets.

Personnel systems in local government

The law stipulates that councils appoint the Chief Executive Officer to head the council management. This is the only person appointed by the political arm of the council. All other council workers are employees of the Chief Executive Officer. Section 119D of the Local Government Act specifies the role of the Chief Executive and the functions they are expected to perform. These include:

• The implementation of the decisions of the local authority;
• Providing advice to members;
• Ensuring the exercise of delegated and statutory functions by staff; and
• Ensuring effective and efficient management.

Section 119B(4) of the Act gives the Chief Executive Officers (rather than the Council) responsibility for employing staff. It has become accepted that elected members set the overall policy of the local authority and the Chief Executive and their staff implement that policy, in addition to managing the local authority's resources. Commentators have noted that the relationship between the Chief Executive and the Mayor/Chair is a crucial one because they work closely together.

Central-Local Links

The principal formal interface between local and central government is the Department of Internal Affairs, which provides policy advice to the Minister of Local Government. The Minister has an indirect power of inquiry by referring a matter to the Local Government Commission; a quasi-judicial appeal authority whose main function is to hear and determine appeals and proposals relating to reorganization schemes and representation issues. It may also consider proposals for new districts and regions and carry out investigations of particular matters affecting local government. Three other agencies enquire, monitor and report directly to Parliament on local government issues. The Parliamentary Commissioner for the Environment has the power to investigate the effectiveness of environmental planning and management. The Office of the Ombudsman generally investigates appeals against declined requests for information, in accordance with the Local Government Official Information and Meetings Act and complaints against maladministration.

The jurisdiction extends only to complaints of unreasonable, unjust, oppressive or discriminatory behaviour by an officer or committee against which there is no other avenue of appeal. The Office of the Controller and Auditor General has two distinct functions. The first is the annual audit of every local authority, covering the receipt, handling and expenditure of funds and to assess to what extent objectives are matched by performance. The other is its ability of its own volition, to investigate and report on any aspect of financial management that it deems necessary. New Zealand local authorities have considerable autonomy. Central government involvement in the affairs of local government is limited to the powers that have already been described. Governments do not have the power to dismiss a council, or to exercise the direct running of a council. Overall, it is intended that local authorities are accountable, above all, to their electors, with local government legislation prescribing the information required to be made publicly available and the processes necessary to ensure the effective participation of electors in the running of their local district.

Local government commission

The Local Government Commission is a quasi-judicial appeal authority appointed by the Minister of Local Government. It is made up of a Chairperson and two additional members. Its main functions are:

• Hear appeals against decisions on objectives to draft reorganization schemes;
• Hear and determine proposals for the constitution of new communities; and
• Hear and determine proposals for the reorganization, or abolition of communities where there is disagreement between a community board and its parent authority.

In 1994, the Commission assumed further powers to consider and process reorganization proposals for new districts with a population of more than 10,000 people and new regions with a population of more than 50,000 people. The Commission carries out special investigations of matters relating to local government, as requested by the Minister of Local Government. An example of this was in the late 1980s when the Commission was tasked with the role of reorganizing and reforming New Zealand's system of local government.

Extent of Public Participation

Any person who is entitled to vote in parliamentary elections is entitled to be a candidate for membership of a regional council, a territorial authority, or a community board. Councilors are elected for a period of three years, with the mayors of territorial authorities elected independently. Chairs of regional councils are appointed from within the council. New Zealand currently has 1132 elected members (of whom 27 per cent are women). Community boards have advisory and other roles delegated to them by the territorial authority in their area. They are part of the democratic process, with members being elected to the board, while others are appointed. Community boards have two roles: provide smaller communities with a more approachable channel through which residents can influence local government and provide an oversight of the territorial authority's performance as perceived by the community. They can be set up anywhere if there is sufficient demand for them and if the territorial authority agrees. The powers of community boards vary largely and are delegated to them by the parent council. Community boards cannot borrow money or levy a rate. Territorial authorities and regional councils have been given the right to make by-laws by a number of enabling Acts of Parliament which prescribe in a very specific manner what laws a local authority can make. The main areas include resource management, public health, litter and noise control, fire safety, public libraries, public swimming pools, removal of refuse and nuisances. The by-laws and their enforcement are limited to the authority's own district or region. Once made, the enforcement of by-laws is a regulatory function of the local authority.

Further issues for local government

There have been significant gains since the 1989 reforms with the local government sector having become more customers focussed, efficient and accountable, with a higher level of governance and leadership. The greatest challenge will be the successful implementation of the new financial management legislation. This requires councils to take a ten-year outlook on what they wish their communities to be, what local government will provide, how it will fund it and how it will allocate the costs of provision across communities. This reform is probably a greater challenge than the 1989 reforms, which were about form and function and a year-to-year accountability to the community. The 1996 reform goes to the heart of community choices and how those can be reconciled, funded and delivered.

A second major challenge now is to create a vision for local government as a whole and to establish the future for local government as a sector, while allowing for the diversity and difference that are at its core. Local government in New Zealand has joined with central government (the Department of Internal Affairs) and SOLGM (the Society of Local Government Managers) in an exercise (called Strategy 2010) aimed at creating this future vision. Strategy 2010 is aimed at establishing a vision of where the local government sector should be by the year 2010 and strategies to achieve this.

The expected benefits of such a vision should be to:

• Provide a framework for achieving better local government over the next decade and beyond;
• Establish clarity between the roles and relationships of central and local government;
• Develop alignment between long-term strategies for central and local government;
• Provide a direction and timetable to achieve a policy and legislative framework that will enable local government to succeed consistently together with central government in the governance of New Zealand communities;
• Provide a framework within which regional councils and territorial authorities can do their own strategic planning; and
• Provide greater certainty for the community and its various components, for example, citizens, electors, the business sector, Maori tribes and the rural sector.

To achieve this, a number of issues will need to be tabled. These include:

• Clarification of the constitutional position and roles of local government;
• Articulation of the governance issues of local government generally and specifically in relation to the management arm;
• Definition of the source of authority and legitimacy that supports local governance;
• Development of an enabling legislative framework for local government;
• Matching funding/rating mechanisms to the legislative principles, considerations and matters that relate to the funding of local authority expenditure needs;
• Continuing to develop good practice, especially in the coordination of annual and long-term financial planning and in asset management and maintenance; and
• Clarification of the role of local government in relation to the Treaty of Waitangi.

The Way Ahead

A strong feature of local government in New Zealand is its independence and autonomy from central government. Whilst local authorities have certain roles and responsibilities under the Local Government Act, they are primarily responsible to their electors. Local government has gone through considerable changes over the last eight years. These changes have come in two waves. The first wave occurred in the late 1980's and sought to make local government more accountable and more accessible to electors. Part of this process involved a large number of local authorities being subsumed into larger more effective units. These changes also resulted in the creation of two complementary levels of local government to promote more effective planning. The second wave came in 1996 with the aim of ensuring that councils undertake rigorous long-term financial planning. Legislative changes also sought to provide more explicit economic and financial guidelines to councils in making funding decisions and allocating costs to residents.

The greatest challenge for local government in New Zealand is to successfully implement the new financial management legislation. A further challenge will be to create a future vision for local government as a whole, to achieve better local government, to create a stronger partnership between central government and local government and to provide greater certainty for local communities.

Further Reading

Hon Dr Michael Bassett, Minister of Local Government, Statement on Reform of Local and Regional Government, Wellington, August 1988

Bush, Graham, Local Government and Politics in New Zealand, Auckland University Press, Auckland 1995

Elwood, Sir Brian, Local Government Reform, Local Government New Zealand Research Monograph Paper No. 4, September 1995

Dr Bob Chilton, A Place of Your Own; Dr Ngatata Love, Local Government/Tangata Whenua Relationship; Rt Hon Sir Geoffrey Palmer, Reflections Upon the Role of Local Government in New Zealand, Local Government New Zealand, Keynote Speeches 1996 Annual Conference, Local Government New Zealand Research Monograph, Paper No. 5, April 1997

McDermott, Philip; Forgie, Vickie; Howell and Robert (eds.), An Agenda for Local Government, Massey University, Local Government Studies Occasional Paper Series 2, Proceedings from the New Local Government Conference, Auckland, November 1995

Howell, Robert; McDermott, Philip, Forgie and Vickie, The Unfinished Reform in Local Government: The Legacy and the Prospect, Massey University Local Government Studies Occasional Paper No. 3, 1996

Annex I
Statement on Local Government New Zealand

Local Government New Zealand is a voluntary organization of all 86 local government bodies in New Zealand. It exists to promote the national interests of local government. It is founded in the belief that local governments speak powerfully when they speak together. It undertakes three core businesses:

• Promoting collective interests;
• Information sharing; and
• Development for members.

Its philosophy and work are based on six core principles, being:

• Independent local government complements and balances central government in a healthy democracy;
• Difference and diversity in local government are a value and a strength;
• Independence of funding is key to local government autonomy and community choice;
• Caring for and developing communities is a core value of local government;
• Local government commits to being fully representative of its communities in order to best lead, govern and manage; and
• Local government asserts the right to influence its own destiny and in return accepts accountability for effective and efficient governance.

Local government in New Zealand:

• Contributes 3.5 per cent of gross domestic product;
• Has an annual operating expenditure of $3 billion and an annual capital expenditure of $800 million;
• Contributes 40,000 jobs;
• Has term assets of $32.5 billion;
• Has $31.2 billion in ratepayer equity (1:11 ratio debt to equity); and
• Has 1132 elected members (of whom 27 per cent are women).