1. INTRODUCTION

1.1 This submission on the Local Government (Systems Improvements) Amendment Bill (the Bill) is made by The New Zealand Initiative (the Initiative).

1.2 The Initiative is a Wellington-based think tank supported primarily by major New Zealand businesses. We undertake research that contributes to the development of sound public policies in New Zealand, and we advocate for the creation of a competitive, open and dynamic economy and a free, prosperous, fair and cohesive society.

1.3 In combination, our members employ more than 150,000 people. They span the breadth of the New Zealand economy; a well-functioning local government system is essential for economic confidence and sustainable growth. The views expressed in this submission are those of the author rather than the Initiative’s members.

1.4 The Initiative has a long-standing interest in local government reform. We advocate for local governance that is democratically accountable, fiscally responsible, and conducive to economic growth and development. Our work since the Initiative’s establishment in 2012 has highlighted systemic issues in New Zealand’s local government and we have proposed solutions to fix them.

1.5 We support the Bill. Refocusing councils on core services and strengthening their fiscal discipline is important for addressing public concerns about rising rates and deteriorating infrastructure. The Bill’s measures (narrowing the statutory purpose to core services, enhancing performance transparency, enforcing accountability, and easing compliance burdens) are timely responses to long-standing issues in local government.

1.6 Our endorsement of the Bill’s refocusing of local government does not represent a retreat from our long-standing commitment to localism and the principle of subsidiarity. We remain firmly of the view that public functions should be devolved to the local level wherever appropriate. In other words, our support for a sharper definition of council duties should not be misconstrued as a shift away from devolution; rather, it reflects a
practical step to improve local government performance while upholding the core principle that decisions should be made as close as possible to the communities they affect.

1.7 Importantly, the Bill’s refocusing of local government should be accompanied by safeguards to preserve and strengthen local self-governance. We have consistently argued that empowering local communities must go together with accountability. Accordingly, we advocate measures such as:

• A principled framework for prioritisation rather than a set list of ‘core services’;
• Ratepayer referenda for significant discretionary projects;
• ‘Earned autonomy’ framework that grants greater powers and flexibility to highperforming councils;
• Improvements to governance practices and accountability mechanisms; and
• Targeted incentives to reward councils for achieving positive outcomes

1.8 In combination, these measures would ensure that a renewed focus on core services bolsters rather than diminishes local autonomy and accountability. We support the Bill’s approach provided it is balanced with these protections – a balance that keeps faith with the Initiative’s long-held localist philosophy.

1.9 With this in mind, we consider that the Bill can be improved. Our submission makes a number of recommendations to that end.

1.10 Our submission is structured as follows:

• Section 1: Introduction.
• Section 2: Summary and Recommendations.
• Section 3: Refocusing Local Government Purpose and Core Services.
• Section 4: Improving Council Performance and Fiscal Responsibility.
• Section 5: Strengthening Governance.
• Section 6: Regulatory Relief and Other Matters.
• Section 7: Incentives and Fiscal Sustainability.
• Section 8: Conclusion.