Changing New Zealand's government

Dr Oliver Hartwich
Insights Newsletter
13 October, 2017

It is Friday, 13 October and I am not writing about the coalition talks.

We would have hoped to have a new government by now. But good things take time. And deciding on the new government is a serious task for the board of a minor party.

So let’s stop criticising New Zealand First for the time they take to tell us who our next Prime Minister is. Let’s instead ask why, in an ideal world, it should not matter too much.

This week, we learnt that Wellington City Council has made a good first step in this direction. As Newsroom revealed, the Council proposed a "city deal" to central government.

What sounds like a technocratic proposal has much potential. It could change government in New Zealand (without changing the government).

The idea behind the ‘city deal’ will be familiar to Insights readers. It is what the Initiative has proposed for a long time: To grant local government more autonomy. And to allow it to share in tax revenues generated in the local economy.

Wellington City Council’s proposal takes inspiration from Manchester’s city deal. The UK central government has granted Manchester freedom to run its affairs. The result is a vibrant and innovative local government. We wrote about it in our report The local benchmark.

Manchester council is now in charge of critical areas of government. It controls transport, housing planning, police, skills, education and health services. It can also borrow and earn income from its investments in infrastructure.

Wellington’s proposal also borrows from the Initiative’s work on special economic zones. Two years ago, we made a case for them in our report In the zone.

The gist of our idea was this: We should allow councils to opt out of national legislation and try their own rules. For example, Wellington could open itself to foreign investors. Instead of using the Overseas Investment Act, it could use a more permissive regime. To encourage good policy-making, we would then give the council some of the extra tax revenue.

Wellington Council’s city deal has much potential. It could change the way of policy-making for New Zealand. It would create more incentives for economic growth. And it would move power from central government closer to the people.

New Zealand First has often called for such a devolution of power. If they achieve that in coalition talks, it would be a legacy to be proud of.

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