Who Is Council Amalgamation Good for?

My attention to this topic is several-fold. First of all there is the proposal to re-organise local government in Northland. Then there is the end of the first term of the new Auckland Council and the associated reviews of how it's all gone - including the one held with the Public Policy Unit of the AUT on the 29th of August. And last night we heard from Mai Chen at an Auckland Conversation event held in the NZI room of the Aotea....

This blog posting covers this ground:

• it explores the Local Government Act and some of what it says about the re-organisation of Local Government
• it briefly reports on the AUT event
• it reports the Auckland Conversation event

This week I have provided an update on where things are at in Mangawhai. As I see it. Part of my posting covers the Local Government Commission's recommendation re the re-organisation of Northland local government.

Role of Local Govt Commission and Re-Organisation

A quick refresher to this starts with a look at the new Schedule 3 of the Local Government Act after the government inspired amendments of 2012. In short, anyone can make an application to the Local Government Commission to re-organise local councils, regional council, community boards:

5 Contents of reorganisation application
 (1) A reorganisation application must include the following:
 (a) the name and address of the person making the application; and
 (b) if more than 1 person is making the application, the name and address of the person who is the representative of the applicants; and
 (c) a description of the proposed changes, including (but not limited to)—
 (i) which of the matters listed in section 24(1) is being sought; and
 (ii) a plan or other description sufficient to identify the affected area or affected areas concerned; and
 (d) a full and detailed explanation of what the proposed changes are seeking to achieve and how the changes would be achieved by the approach proposed in the application; and
 (e) a description of the potential improvements that would result from the proposed changes and how they would promote good local government as described in clause 12; and
 (f) information that demonstrates that the application has community support in the district of each affected territorial authority.
etc.

 This asks a whole lot of questions, but I want to focus here on (e). This requires an application to state: "how they would promote good local government as described in clause 12..."

12 Promotion of good local government
For the purposes of clause 11(8), the Commission must be satisfied that its preferred option—
(a) will best promote, in the affected area, the purpose of local government as specified in section 10; and
(b) will facilitate, in the affected area, improved economic performance, which may (without limitation) include—
(i) efficiencies and cost savings; and
(ii) productivity improvements, both within the local authorities and for the businesses and households that interact with those local authorities; and
(iii) simplified planning processes within and across the affected area through, for example, the integration of statutory plans or a reduction in the number of plans to be prepared or approved by a local authority. 

 If you stare at this requirement you will see that the Commission must be satisfied the preferred option: "will facilitate, in the affected area, improved economic performance...". No ifs, buts or maybes. A clear statement that re-organised Local Government "will facilitate improved economic performance" but only "promote" the purpose of local government.

AUT Event - The SuperCity Project

This event was run in association with Radio New Zealand. A number of commentators got together who had considered the AUT's report. I attended. One of 300 in the audience. It was supposed to be a little more interactive than it became. But the commentators held the floor. You can get the report and hear the Radio NZ program at the SuperCity Project website.

I took some notes at the event. Suffice to say it seemed uninformed. Preliminary verdicts were given on a scorecard assessment ranging from B, B+ and A-  (I noted at the time that the structure got a C-, but that staff and councillors and board members had made the best of it....)

There was some useful discussion about democracy, diversity and participation, but the high point seemed to be a discussion about ethnic diversity and representation. This was a bit of a lightning rod for dissent. Advocates talked about needing to be "governed with" rather "governed to...".

I quietly cheered when David Wilson argued that there was little being done by Auckland Council about social development, and a lot for economic development - this was in the context of comments about ATEED.

However when the discussion drifted into transport (New Lynn, Busway etc) of water (three waters, Watercare), I was embarrassed at the state of knowledge that existed. Perhaps I have been immersed in these issues for too long - but I don't think it is helpful that this sort of event is conducted in an environment where recent history and facts around projects is largely absent.

The chestnut of costs and debt was raised and CEO Doug McKay was there to defend Council's achievements. He said that Council had saved $140 million, that Watercare had saved $100 million. And when asked why rates hadn't dropped - because of the savings - he talked about the infrastructure deficit.

This was the first time I'd heard Mai Chen of Chen Palmer Public Law Specialists. She spoke cheeringly of the re-organisation:  "we have the platform, now it's blast off". But it was bit thin. And then when the panel's Judy McGregor suggested that Watercare was  "the lone ranger" when it comes to CCO's, Mai Chen jumped on her comments. In my notes: "Mai Chen - Watercare apologist..."

I asked someone afterward over the nibbles where Chen's comment might have come from, and was told, "she's looking for work in Auckland..."

Auckland Conversation - Mai Chen on Amalgamation

I have to say this was a weird event. We'd all heard earlier in NZ Herald that Chen had been engaged by Ports of Auckland in a legal challenge with Auckland Council over the Unitary Plan provisions for port expansion and reclamation. Not a very good starting point for an Auckland Conversation about Auckland Amalgamation.

Roger Blakely introduced Mai Chen. Best buddies it seems from Wellington days. We learned that Mai had come to live in Auckland in 2012, and that "Doug and I got her to document the Auckland council reforms and present her findings...."

And then we heard from Mai. Paraphrased:   "It's all about the angle of the narrative... Auckland is a role model for the rest of New Zealand... I have conclusive proof... discovered yesterday... this is what is happening right across New Zealand.... imitation is the most sincere form of flattery... success has many friends...   failure does not...."

Mai talked up the example of the Northland local government re-organisation proposals that have been notified by the Local Government Commission (LGC). She quoted, at length, the summary of these proposals as notified by LGC (which you can see about 2/3 of the way through this posting.) In her view these proposals "look a lot like Auckland." Mai also read out sections of the Local Government Act that I have quoted above.

But there was no reflection here. No reflection about the 2012 changes in the Local Government Act that now force the LGC to support re-organisation changes that prioritise economic development over other objectives.

This is not imitation. This is not flattery. This is a careful Government initiative to force local government amalgamation. And it doesn't take a close reading of these new provisions of the LGA. All it takes is ONE person to write an application to the Local Govt Commission calling for amalgamation. That triggers the new re-organisation provisions of the LGA, which REQUIRE the LGC to prioritise options that "facilitate economic performance....". In other words to restructure local government in the interests of the economy. Environmental, social and cultural objectives all take a back seat.

And then later Mai talked about Infrastructure Funding: "We will see Government move on infrastructure funding.... rates won't pay for it... elections are next year... it is likely new tools will be put in place... fuel taxes etc..."  And drew a link between re-organisation and Government funding support. Conditional. You prioritise economic development through re-organisation, and we will give you the funding tools....

Mai was hot on innovation that had emerged from re-organisation, citing the Auckland Investment Office that has come from ATEED (wondering aloud how that would intersect with the CCO review and ensure coordination with central government finance), and the Housing Project Office that has emerged from the Housing Accord.

Then we had 41 separate deliverables read out, from the Mayor's Office, one at a time. That was a gap filler. Man oh man. Give us an original idea.

Local Board democracy was one of her key points. This was worrying: "There was 30% turnover in the election...". She referred to the LGC's recommendation about community boards in Northland: "Do we need 6...?"  This was code for "Do we need 21 in Auckland...".  And began to argue against rigid boundaries between board areas suggesting that having different signage policies in different parts of Auckland was problematic (is Devonport different from Botany, is Mt Eden different from New Lynn - when it comes to signs?)  There was an edge of mockery in this part of Mai's presentation which clearly irked the audience.

It was helpful to have someone in attendance from McKinlay Douglas Ltd because after Mai cited work that had been done by them about local government re-organisation in NSW Australia, someone stood up and corrected her, pointing out the concerns there that governance at local level, where people actually live, was very different from what was needed at regional level. Mai replied, "my job is to start a conversation..."

Well. Yes. That's right. But these conversations require more than a glib, cheerful, once-over lightly. Auckland deserves better. (You can see the full video and Mai's presentation here.)

1989 Local Government Amalgamation Review

Those with memories or an interest in learning from history will recall what happened to local government in 1989. In a major reform of local government in New Zealand (population four million), over 230 units of local government were restructured.... into 74 territorial local authorities (TLAs).

P. Rouse and M. Putterill of the Department of Accounting and Finance, School of Business and Economics, The University of Auckland, looked into what happened: 

Our investigation focuses on highway maintenance, the largest of the range of service activities undertaken by each TLA. It should be noted that the process of public sector reform began in 1984 with widespread changes in central government organisational structure, financial management and accountability.

You can see this paper here, if you want to read it for yourself, but here are some key summary paragraphs:

The results of this study of highway maintenance show no evidence that amalgamation was justified in terms of diseconomies arising from smallness of TLA size....

And: 

no evidence was forthcoming that amalgamation per se improved performance

That might be a bit on the terse side, so here's a bit more detail from the research:

Not everyone was convinced that the changes were appropriate. “Local government structure is not amenable to scientifically verifiable universal laws. While certain criteria might be endorsed, there is no agreement on relative weighting, nor whether they translate into local bodies of any particular size or capacity. Rather, political preferences and political judgements permeate the issue. There is for instance, an interminable yet fruitless quest for revealed truth about the optimum size of a local body. Vaunted economies of scale have proved to be a mirage, but no ex post facto review of any New Zealand urban amalgamation has ever been conducted”   (Bush)

In other countries, various arguments are used to support or oppose amalgamation. In the UK, Dearlove (1979) provides an excellent discussion of howpotential economies of scale were used (without supporting argument) to justify an increased scale of local authority. He notes a long tradition of arguments against the smallness of local authorities as illustrated by the UK Poor Law Report of 1834. Citing a number of authors, Dearlove (1979) continues: “The orthodoxy which explained the inefficiency of the established system by pointing to the weakness of the small authorities carries within itself a number of ideas. First, there is the idea that the provision of services and the size of areas are interdependent; second, there is the idea that within the established system functions bear little or no relation to area; and third, all this leads smoothly into a rule of reform which points to the need for larger areas in order to increase efficiency” (ibid., p. 64). Dearlove describes a number of studies carried out in the 1960s that did not show improvements in performance associated with increasing size.

A closer relationship between representatives and their constituency makes for effective information flows and consequently greater efficiency. This theory posits that citizens’ satisfaction will decrease with increasing size. Boyne (1992) defines ‘fragmentation’ as the number of separate units in a local government system and ‘concentration’ as the distribution of responsibilities and revenues. Both concepts can be applied to either vertical or horizontal structures of local government. “In sum, the broad pattern of the evidence suggests that lower spending is a feature of fragmented and deconcentrated local government systems. By contrast, consolidated and concentrated structures tend to be associated with higher spending. This implies that the technical benefits of large units with big market share, such as economies of scale and scope, are outweighed by competitive and political costs, such as disincentives towards fiscal migration and problems of public scrutiny” (Boyne, 1992, p. 354).

If this tickles your taste buds, then have a look at the paper.

Before we all rush into amalgamation - and Mai Chen suggests that other areas that have applied to the LGC with reorganisation proposals include: Masterton, Hawkes Bay and Wellington - then I would suggest there is a much cooler assessment of Auckland's situation - especially the cost of it all and the loss of democracy and the reduction in citizen satisfaction - before rushing headlong into more of the same.

And ask yourself this question: Who Is Local Government Re-Organisation REALLY good for?