Locals know best

Dr Matthew Birchall
Insights Newsletter
14 October, 2022

It might not have been a vote of no-confidence in local government, but it was far from an enthusiastic endorsement of the status quo.

In 2019, 42% of eligible local voters cast a ballot. This year, the proportion dropped to 36%.

Those who did turn up turfed out incumbent mayors in Wellington and Dunedin. In Auckland and Christchurch, where the mayors did not stand for re-election, voters opted for change.

While New Zealand does not have the sort of polling data to enable pundits to draw strong conclusions from local election results, the apparent consensus is probably correct: voters want basic services delivered well and are fed up with dysfunction.

But the fault does not just lie with local authorities.

Later this month, the Review into the Future for Local Government will publish its draft report. If the Review team has done its job well, it will embolden localism.

The idea that local communities know best has deep philosophical and historical roots in New Zealand, and it has an enduring practical appeal. What is more, localism makes for good economics.

Take housing. Councils do not currently receive enough of the benefits that accompany new housing and development. While central government takes the lion’s share of tax that comes with population growth, local government instead has to scramble to pay for new infrastructure.

Is it little wonder that local councils then resort to zoning rules and planning restrictions to block new projects?

A framework that incentivised growth would apportion the costs and benefits between central and local government in a more equitable manner. It would also enable councils to demonstrate real competence.

Special Economic Zones (SEZs) can likewise deliver greater prosperity. Economist Shamubeel Eaqub has documented how many of the problems afflicting New Zealand’s smallest provinces are magnified by government policies that prioritize national rather than regional interests. If local authorities were instead able to set their own regulatory settings, then regions would be better placed to serve local needs.

Making it possible for local government to work well can make more sense than continued centralisation. And it just might encourage greater engagement with local democracy.

Nobody seems happy with the status quo – and they shouldn’t be. That’s why the timing of the draft Review into the Future for Local Government could not be better.

Let’s hope it reinvigorates localism.

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