Media release: Wellingtonians were right to vote against amalgamation, meanwhile Auckland suffers
Wellington (25 July 2016): The people of the larger Wellington area were right to vote against amalgamation and avoid the expensive tangle of red tape. We are seeing Auckland struggling to be efficient and address issues effectively and in a timely way.
The New Zealand Initiative’s latest research, The Local Benchmark: When Smaller is Better, backs up this claim.
“Communities are better off with small councils. Competition between small councils is good. Globally, council amalgamations have proven to be an expensive mistake and are inefficient,” says The New Zealand Initiative Executive Director Dr Oliver Hartwich.
“Since 1989 government in New Zealand has used a bigger-is-better strategy to make local government more responsive. But our global research shows that bigger councils have slowed decision-making and are less responsive to local needs.
“We need to learn from international experience, where all around the world councils are backing out of their amalgamation mistakes.
“In the Netherlands and Switzerland, local authorities can number in the thousands. Instead of dragging on efficiency, diversity of councils enhances it, with Switzerland and the Netherlands rated as the 1st and 5th most competitive countries by the World Economic Forum.
“The critical factor in the Swiss and Dutch have is local government competition. There, councils have a strong incentive to attract new residents because it means more revenue. As a result they try to make it easier to build a house, or open a new factory. In New Zealand we lack these kinds of incentives,” says Hartwich.
The report studied local government in Canada, the Netherlands, Switzerland and the United Kingdom to find out if their structures helped or dragged down local council efficiency. The research shows that where councils have been merged into unitary authorities, or where central government has too much control, local government performs poorly.
For example, the city of Montreal’s annual operating cost rose by C$400 million after it merged 28 municipalities into a single council. Similarly, in the United Kingdom central government intervention has been unable to fix long-standing unemployment and social problems in northern cities like Manchester despite spending billions on turning them around.
The Montreal and UK examples contrast with the performance of the Swiss and Dutch.
Other key findings in the report show:
Highly centralised countries like the UK are devolving decision-making power to local government to boost economic growth and cut government spending;
By giving local government greater freedom, small Dutch councils have been able to solve scale problems for themselves using shared service agreements; and
Countries that devolve power to local government keep these arrangements in place through a constitutional process or formal contract.
The report was written by Initiative Research Fellow Jason Krupp, who will presenting the findings this morning at the Local Government New Zealand annual conference in a keynote address. The research was made possible with the support of the Local Government Business Forum.
You can view The Local Benchmark: When smaller is better, on our website.
ENDS
For further information, please contact:
Simone Evans
Communications Officer, The New Zealand Initiative
Phone +64 4 494 9109
Mobile +21 2937 250
simone.evans@nzinitiative.org.nz
About The New Zealand Initiative
The New Zealand Initiative is an evidence-based think tank and research institute, which is supported by a membership organisation that counts some of the country’s leading visionaries, business leaders and political thinkers among its ranks.
Our members are committed to developing policies to make New Zealand a better country for all its citizens. We believe all New Zealanders deserve a world-class education system, affordable housing, a healthy environment, sound public finances and a stable currency.
The New Zealand Initiative pursues this goal by participating in public life, and making a contribution to public discussions.
For more information visit www.nzinitiative.org.nz