June 27, 2024 • 26 mins
As councils struggle with rising rates, failing infrastructure and blown out budgets, one of the solutions proposed to keep these institutions afloat has been city deals to improve the relationship between central and local government.
To explain how these could work and what progress is being made on them, Georgina this week talks with Local Government NZ President Sam Broughton.
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Speaker 1 (00:04):
Kyoda and welcome to On the Tiles, the Herald's politics podcast.
I'm your host, Georgina Campbell and this is a local
edition episode. Today we are going to talk about city deals.
The government is keen on them, but what exactly are
they and how can central government reset its relationship with
local government to make them work. Local Government New Zealand
(00:28):
has released a proposal for what it says moves decision
making away from Wellington and back into the hands of
local communities. The organization's president, Sam Broughton joins me to
discuss how the government can play its part in a
long term solution for our cities and regions. Thanks so
much for joining us, Sam, and welcome, Yeah, Cuta. How
(00:51):
do you define a city deal? Let's start with the basics.
Speaker 2 (00:55):
You'll I mean city and regional deals is language that
can mean a lot of different things. Has been used
in the Britain and the UK, It's been used in
the Netherlands, it's been used in Australia. So when we
say sit in region or deals for New Zealand, we
do want to make sure we're taking a New Zealand approach.
But the context is how do we get central government
and local government, local businesses NGOs to all think about
(01:19):
what a city or region needs to be and who's
best to provide for those needs. And at the moment,
local government is required to think about thirty years ahead
with our infrastructure strategies. But we often see decisions from
central government change over a three or a six year
election cycle, and our communities deserve better than that, and
actually is much cheaper if we could think about a
(01:41):
better spend of tax around long term deals with some
certainty and outcomes for cities and regions.
Speaker 1 (01:48):
So this is like having an agreement that will withstand
changes in either a council level or central government level.
Speaker 2 (02:00):
Right. Yeah, we're going to see long term commitment, so
beyond election cycles, which gets us away from just because
someone news elected. All these things change because the projects
we're talking about, you know, there's tens of billions of
dollars worth of investment. So sure there's going to be
some shaping and maybe prioritization of things that might you know,
be in year five rather than year seven and that
sort of thing. But generally we want acceptance about the
(02:22):
type of big infrastructure required for communities by all parties involved.
Speaker 1 (02:27):
What sort of projects. Would we likely see the first
agreements kind of made on like what sort of projects
would be the subject of a city jail.
Speaker 2 (02:39):
Yeah, I think projects is probably where it will start,
but they sat in regional deals really needs to be
about long term partnership and not just about one or
two projects that get done and then you tick them off.
They need to be about building trust between central and
local government. New Zealanders the most over centralized country in
the OECD. You know, central government spends ten times and
(03:00):
collects ten times the amount of revenue than local government
does and the imbalance. You know, the New Zealand Initiative
is shown that the more decentralized you get actually the
greater GDP growth you can have for communities. So we
do need to think about weird decisions are made in
New Zealand. That feels far, far, far too much like
it's all in Wellington at the moment. So when we
(03:22):
think about the projects that might be come across the
line early, I think that's going to be in water
and transport. Those are the big needs at the moment.
They're obviously getting a whole lot of conversations with councils
needing to lift rates sort of between six and twenty
six percent this year with an average of sixteen percent.
You know, there's big issues with the way that we
fund infrastructure, and so the key projects in the beginning
(03:45):
I think will be around transport and water.
Speaker 1 (03:47):
And would they be sort of like quite meaty projects
considering the kind of timeline of these deals, like are
we talking about like really big stuff as opposed to
small stuff.
Speaker 2 (04:01):
I think we've seen internationally that city and regional deals
change over time. So we're going to need to begin
somewhere and that will be around a few projects. But
in Greater Manchester they've gone through a process over the
last decade where there was over one hundred and fifty
different streams of funding and accountability for all that funding
and reporting for all that funding, and just earlier this
(04:21):
year they have signed one deal, which so you've got
a narrative all those one hundred and fifty bureaucratic ways
of trying to deal with things and come down to
one space. And that's because they've built trust in a
relationship over time. So in New Zealand, we need to
go through that same process project based to begin with,
prove the concept and move into a partnership model long term.
Speaker 1 (04:42):
Okay, so are you saying that initially like there would
be a series of smaller deals if you light struck
over specific projects, rather than having a deal to start
with that was more like a package.
Speaker 2 (04:56):
I think the package will involve each of those little pieces,
but I don't think that we can expect that we're
going to have mature ten year old deals in year one.
So we've got to be responsive to the needs of
communities at the moment. That is particularly around water, waste,
water and transport. So let's focus on deals that start
solving those problems around housing for New Zealanders.
Speaker 1 (05:17):
And you've talked about Manchester. Can you speak about some
other overseas examples, because as you've said, they don't all
work the same way, do they.
Speaker 2 (05:28):
No, that's right. So the Netherlands, the City Deals an
agreement between some selected cities and the national government, and
they've also included the private sector in some of those spaces.
It's not explicitly about the redistribution of central government resources
for them, whereas in the UK it was particularly focused
on devolution, but in the Netherlands it was around food
(05:50):
security and room for walking and health hubs. And other things,
and the UK we've seen education and policing and safety
within communities be a part of their conversation because the
roles and responsibilities for local government there looks slightly different
than they do here in Australia, being very infrastructure focused
around transport solutions for.
Speaker 1 (06:11):
Places, and considering Australia is quite infrastructure focused, which I think,
what that's what our city deals will look like at
least to begin with. You know, you said transport would
be a big priority. Is that where we're mainly looking
for inspiration across the ditch considering that alignment, Yeah, I.
Speaker 2 (06:33):
Think there are nearest neighbors, aren't they, So we like
to look across the ditch and see what they've been
up to. Their government situation is a bit different than
ours because they've got both state and federal governments as
well as the local government, so that the funding for
local government looks quite different in Australia than it does
in New Zealand. But I think it's very natural that
we'd look across the ditch and see how they've made
them work and then build it from there.
Speaker 1 (07:07):
Of Course, the whole reason that we're sort of talking
about city deals is because the government has indicated it's
keen on them. What have ministers said about city detail
city deals so far so other than in saying that
it's a way they'd like to work, we're very light
on detail from the government so far about what that's.
Speaker 2 (07:27):
Going to look like. So that's why we've come up
with from local government with a way of saying, this
is the framework discussion that we need to have. Any
city origional deal needs to have an alignment of outcome
between local communities and central government's desires. It's got to
provide access to new funding and financing tools for local government.
The current financing way for local government around rates as
a broken system. It served us well up till now,
(07:50):
but actually we need some new tools and a toolbox
for local government. I've already talked you about that sort
of long term commitment beyond election cycles and trust and
authentic partnership, and I think particul we want them to
be efficient to administer. We don't want to set up
a whole system that's going to become really difficult in
time consuming and costly to administer. So that's sort of
the basis of our framework, and we think that the
(08:11):
government should look to that adopt it. They might want
to add a few other things, and that's going to
be really important to them. And let's get on with
the first few city and regional deals and we can
understand what they look like in out here's context.
Speaker 1 (08:22):
Yeah, who do you think would be first in line?
Is that likely Auckland?
Speaker 2 (08:27):
Yeah? I mean Auckland is different than the rest of
local government in the New Zealand context. We often talk
about Auckland as a city, but Auckland's actually a region.
You know, They've gone through a bigger amalgamation, they cover
a large area and they have a number of ways
of working together now as one that the rest of
New Zealand doesn't have. So I think it's natural that
(08:47):
Auckland's going to be part of that conversation really early on.
And if we look around the rest of the country,
there's a number of regions Hawk's Bay for example, around
its water and conversation around water infrastructure as in a
more mature based then some other regions. I've been working
on it for a while. Cycling gabriels meant that they've
worked together in different ways, and so I think there's
(09:07):
cases to say that it's not going to just be
the big cities to begin with. We need to also
look a bit broader than that.
Speaker 1 (09:13):
Yeah, and in your proposal, you know, you specifically say
all cities or regions should have the opportunity to propose
a deal. Are you worried about smaller towns maybe missing
out on the likes against the likes of Wellington and Auckland.
Speaker 2 (09:31):
Yeah, I think, particularly if there's going to be leavers,
that the government users to incentivize particular outcomes and they're
only made available through city and regional deals and then
some regions or cities are excluded from that. You know,
that's not going to serve the purposes of making things
work across the country. So we're really saying the framework
needs to be broad enough that all New Zealand can
benefit from this new way of working.
Speaker 1 (09:53):
Okay, and so you've written to Prime Minister Christopher Luxon
and Ministers Chris Bishop and Sami and Brown about your proposal.
I think you might have met with some ministers about
this as well. What kind of response have you had
from them in terms of what you've had to say?
Speaker 2 (10:11):
Yeah, that thanked us for what we've put forward through
our framework. And they've said they're currently working on their
own framework themselves, and we now wait to hear back
from them, but excited that they're working on a framework.
We definitely think there's a much better way of working
than coming to the table already thinking that there's one
or two deals that they've got signed and sealed ahead
of actually understanding how these are going to work.
Speaker 1 (10:32):
And you know, one of the things you've said is
that there needs to be increased trust between local government
and central government. Firstly, why is there a lack of
trust between the two.
Speaker 2 (10:47):
I think it's because we've seen there's a big power
and balance when you've got ninety percent of the funds
and decision making held in Wellington and ten percent in
other places, and so so many of the decisions that
New Zealand makes at the moment are very Wellington centric
and don't have necessarily the input for local government ahead
of time and ahead of those decisions. And there's I mean,
(11:07):
there's so much knowledge and experience in local government. Actually,
we could contribute to better outcomes for our ti Iowa
if we're involved in the formulation of legislation as opposed
to submitting at the end of the process, and so yeah,
I think successive governments when there have been an opposition
before they've come into power, have talked about localism, have
talked about working with local communities and regions. But our
(11:29):
system is set up that once you get into once
you're in power, and you hold the reins around where
those budgets dispense and the decisions that you want to make,
and you're informed by the ministries that sit around and
with all the knowledge around how Wellington should function has
tended to be that it's been lead out of Wellington
rather than partnered with local government. But on the other
(11:53):
side of that, you've got local government knowing its place,
knowing its people, knowing where its resources are, knowing where
help can come from, knowing with the areas of greatest leaders,
knowing the businesses to partner with and the NGOs that
already working in that sector. And it doesn't feel like
so much of that knowledge and resource is used and
trying to deal with the things that we all want
(12:13):
New Zealand to be an awesome place and to continue
to be better than it is now for generations to come.
Local government's got to keep part to plan that, and
it doesn't feel at the moment, like that level of
voice has been heard by not just this government, but
previous governments beforehand. There's a system issue that we've got
in New Zealand, and city and regional deals are part
of trying to deal with that.
Speaker 1 (12:33):
System, and I think there's sort of a sense of
almost entrenched frustration around things like unfunded mandates like that
comes up a lot when I talk to council leaders
and as you say, like this, it's been this way
over successive governments, so it seems to me like it's
(12:54):
quite a steep hell to climb. Although the city deal
proposal has come up at a time when I would
argue local government is facing a crisis in terms of
trying to fund everything that it needs to so that
might be helpful in terms of resetting this relationship. But
how do you reset that relationship when it's sort of
(13:15):
been on this path for so long.
Speaker 2 (13:18):
Well, I think all relationships require, you know, both parties
to want to improve the relationship. It means that we
both need to take steps in the right direction. They
might be smaller steps than you know, you don't start
running on day one, but we take steps towards each
other that builds that trust and then continue dialogue and
talking together, and like interpersonal relationship, sometimes having third parties
(13:42):
in the room and being able to learn from others'
experiences rather than just coming from your own knowledge basis
important in that turm and I think that's where looking
at overseas models around how city and regional deals have
worked can show us that you know, in the UK
after ten years has actually massively increased the level of
trust between central and local governments to point now where
Westminster's paying single deals out to combined authorities to manage
(14:06):
the affairs within the local area. I think that's a
great story and hopefully in ten years time we'll be
able to talk about similar things in.
Speaker 1 (14:26):
Local government. New Zealand has said it's unlikely councils will
agree to a city deal unless there's additional funding and
financing put on the table. You have mentioned some of
this earlier on, but can we maybe just dig down
into a bit more detail. What is the problem with
(14:49):
trying to fund everything by rates and is there a
sort of top alternative or a low hanging fruit alternative
that you'd like to peck first.
Speaker 2 (15:04):
Yeah, so local government looks after it owns twenty five
percent of the infrastructure in New Zealand, and we receive
less than ten percent of the funding to run ourselves
in our communities needs. And so just even on in
that space alone, we need to think about what's the
provision like and how sustainable as that model going forward.
(15:26):
Central local government sorry across the country about over fifty
percent of our income is from rates. That isn't about
ability to pay. It's purely on either property or the
capital property plus whatever's built on top of the land
as a mechanism for pain. On top of that, there's
use of debt and some councils, to varying degrees, have
(15:48):
taken on small or large amounts of debt or that
debt needs to be repaid in the future. Debt is
a great way to pay for interogenerational infrastructure and we
need to change some of that thinking within count source
and that and that has been good to see, but
debt you can only take on the debt that you
can afford to repay, so that needs to be thought
through as well. Councils also have the ability to have
(16:09):
fees and charges, and whether that's for resource consents or
swimming pool entries, or parking fines, those sorts of things.
It's a small portion, and some councils have some investments,
but many don't. So we were heavily on rates, and
when the cost for running communities goes up, then our
rates go up, and that doesn't necessarily take account of
those that use the particular facilities that councils provide. Roads,
(16:35):
you know, get used by everyone, regardless of how much
they're pain and here from councils all the time that
the road user charges and fees that come out of
a particular area and never seem to come back to
their area when the co investment with Wakokutahi comes along board.
So it's like the system at the moment isn't set
up to work in a way that's transparent and sustainable.
(16:58):
And there's a number of things that we've put to
the government to request further conversation on funding for local
government that includes the government paying rates on their land
and their facilities within the community, whether that's dockland or
schools and hospitals or defense spaces. We've talked to them
and it was raised by the government about the GST
on new builds. Coming back to councils a share of
(17:21):
GST in general, I think is a conversation that needs
to be head to the GST on rates coming back
to councils, it would be a fifteen percent left straight away,
so people are paying their rates and then having to
pay GST on top of that. Mineral extraction royalties out
of areas, increased in fuel taxes, tourism levies, beards taxes.
There's been a number of things that we've raised because
(17:45):
we need a number of things because not every council
is going to benefit from each of those tools in
the same way, and some will be appropriate and some
will be inappropriate for some areas. So we need a
range of tools that councils can fund themselves through picking
the ones that are going to suit them at any
one time. We've raised those with the government, we continue
to hear those on those things, and that doesn't deal
(18:07):
with the issue. So through this city and regional deal piece,
there needs to be the ability for new funding and
financing tools for councils, incentives to work together, and the
ability to bring bring new revenue into the local government system.
Speaker 1 (18:23):
Out of that long list, is there anything that you
feel optimistic about that the government might agree to or
is potentially more open to than something else, or you know,
one of those things that you really want to see
as a priority.
Speaker 2 (18:40):
Yeah, I mean the GST on new builds is something
that the government has raised, so that's come from them
rather than from us, so that, you know, if we're
going to start somewhere, let's start with that one. But
that doesn't help every council equally, so that's not going
to solve the problem. It's not a silver bullet for anyone.
But that's the sort of thing that I think we
need to develop. Let's look at that tool and see
how that's going to work. One of the keys in
(19:01):
trying to create the funding is that Treasury has already
accounted for certain streams of income into the future, and
government's making decisions on the budget based on those future streams.
So we really need to look at new ways of
generating income, and I guess the GST on new builds
is that new revenue that could happen. So, yes, it
would be great to get some of the GST back
(19:23):
in general, particularly the GST that's paid on rates. It
would be a fifteen percent hit, as I said before,
and really help local government, but that's not what the
government's talking about currently. So if we can work with
the new builds piece, that would be helpful to begin with.
Speaker 1 (19:36):
Okay, cool, And as you mentioned, and I have covered
this in a previous episode on the podcast, we did
a episode on the future of Local Government review if
anybody wants to draw back and find that. But one
of the recommendations or things identified in that report was
you know that the Crown does not pay council rates
(19:59):
on its proper, which I just think personally is kind
of wild. And I want to talk about that report.
It's a nice segue actually into some other issues that
I wanted to discuss with you while i've got you,
But just versusly on that report. You know that that
was commissioned under labor. It came out last year, a
(20:22):
few months before the election. It kind of hasn't gone anywhere.
What's your view on that, Like, is that kind of
disappointing because it was a really meaty report with lots
of recommendations like can we bring that back to life
at all?
Speaker 2 (20:36):
Yeah? Well, so local government's done a lot with that report.
So instead of just picking it up and saying this
is all implementable. Now. We ran a couple of sessions
over a number of days with two hundred participants at
each looking at what of these things can we find
consensus on, because there's a number of things that are
the controversial and controversial issues still needs to be addressed.
(20:57):
But sometimes if you can find some early consensus, then
you can start implementing things a little bit earlier. And
so we ran those events out of that, Things like
mandatory STV voting or the voting age dropped away because
we just you know, there were people passionate about making
that stuff happen and people equally passionate about never making
it happen, So they dropped away. But funding and financing
(21:21):
changes for local government remained. The thinking about the shape
and size and structures within local government, you know, that's
a matter we need to address, and that remained. Local
government commitment to MANAFENAA partnership, you know, was discussed and
that remained. Those types of things are still there and
are still very live for local government at the moment.
Speaker 1 (21:43):
And one thing that is very live is electoral system reforms.
There's a new group focused on this, cheered by Nick Smith,
and can you tell me about that and the four
key areas of electric reform that this group will be
looking at.
Speaker 2 (22:04):
Yeah, so I'm really really keen that this group has
been formed. It's been about twelve months in the making
to get to where we are now. A four year
term for New Zealand is just one of the key
things that would make the biggest difference to the efficiency
of both central and local government. We should make that
change tomorrow. I know that the government and as part
of their coalition agreement, wants to see it happen. I
(22:26):
haven't actually talked to a politician in Wellington who doesn't
want it to happen because they see the needs to
improve the system that they're currently working within. The Government
could actually change local government to a four year term
next week if they wanted to, because it's just a
piece of legislation, whereas the conversation for central government as
a much broader conversation and they want to run through
(22:48):
and understand a bit more about what New Zealanders want
in that space, and the Prime Minister's keen to work
both central and local government changes in the same conversation.
So we're hugely in behind that. That's kind of the
key area to see change in electoral form, but we
need to increase VHOTO turnout. We need to change the
way that people can vote, and we should think about
who administers local elections because at the moment, each council
(23:11):
kind of picks a contractor to run an election, which
means is quite a lot of variance across the country
at the way people engage in not necessarily the same
level of either information available or voting spaces to be able. Sorry,
the way that things that do not even email, the
way things post it out to people. We need to
think about moving beyond just relying on the postal system
(23:34):
when it comes to local government election. So NeXT's going
to lead that work, and ye're really excited for the
others that are involved and dept with him as well.
Speaker 1 (23:43):
And so this was one of the things that the
Future for Local Government Review considered. Why do we need
another group to look at it when there's kind of
a clear appetite to do this.
Speaker 2 (23:56):
I think this group will look at it and then
look at how we implement it. Has been identified that
it needs to happen again, New Zealand's a real outlier
and the OECD and so much of what we do
in the local central government space. We're one of the
few countries that has a three year term. Most countries
have realized that they're actually better off having councils and
central government on a four, five or six year term
(24:19):
because the types of projects and dollars that we're dealing
with four communities run into the billions of dollars and
things changing every three years. You get a year of
settling after an election, you get a year of doing
some great work on councils, and next year the report
is going to call in January and ask if you're
standing for election in October, and that changes the whole
type of conversation that the council will have over that
(24:42):
next year. So a four year term is going to
mean twice as many productive years in the middle between elections.
And we're all outlier compared to the people that we
measure ourselves against. So you're right. I think some of
this stuff and the need for it has been well canvassed.
We need to get on with it. But actually creating
the pathways to make that happen is going to be
a keep up for this new groups to sort out.
Speaker 1 (25:04):
Interesting and when does that group have to report back
is there a timeline for when we might see you
some change.
Speaker 2 (25:11):
We agree the terms of reference today Steve, National Counsel
for Local Government, New Zealand. So that group's underway and
going and happen as quickly as the team can bring
the work together. I don't have a date for that
report back.
Speaker 1 (25:22):
Sorry, no, that's all right. Oh well, we'll have to
watch that space. Thanks so much for joining us, Sam,
it's been a real pleasure.
Speaker 2 (25:28):
Thank you very much.
Speaker 1 (25:30):
Thanks for listening to this episode of On the Tiles
Local edition. For more local politics, news and opinion, head
to enziperold dot co dot NZED. You can follow this
podcast on iHeartRadio or wherever you get your podcasts. Thanks
to my producer Ethan Sills. This episode was edited by
Enzibne Sound Engineers and you can catch us again next
(25:52):
Friday for more on the Tiles
Kyoda and welcome to On the Tiles, the Herald's politics podcast.
I'm your host, Georgina Campbell and this is a local
edition episode. Today we are going to talk about city deals.
The government is keen on them, but what exactly are
they and how can central government reset its relationship with
local government to make them work. Local Government New Zealand
(00:28):
has released a proposal for what it says moves decision
making away from Wellington and back into the hands of
local communities. The organization's president, Sam Broughton joins me to
discuss how the government can play its part in a
long term solution for our cities and regions. Thanks so
much for joining us, Sam, and welcome, Yeah, Cuta. How
(00:51):
do you define a city deal? Let's start with the basics.
Speaker 2 (00:55):
You'll I mean city and regional deals is language that
can mean a lot of different things. Has been used
in the Britain and the UK, It's been used in
the Netherlands, it's been used in Australia. So when we
say sit in region or deals for New Zealand, we
do want to make sure we're taking a New Zealand approach.
But the context is how do we get central government
and local government, local businesses NGOs to all think about
(01:19):
what a city or region needs to be and who's
best to provide for those needs. And at the moment,
local government is required to think about thirty years ahead
with our infrastructure strategies. But we often see decisions from
central government change over a three or a six year
election cycle, and our communities deserve better than that, and
actually is much cheaper if we could think about a
(01:41):
better spend of tax around long term deals with some
certainty and outcomes for cities and regions.
Speaker 1 (01:48):
So this is like having an agreement that will withstand
changes in either a council level or central government level.
Speaker 2 (02:00):
Right. Yeah, we're going to see long term commitment, so
beyond election cycles, which gets us away from just because
someone news elected. All these things change because the projects
we're talking about, you know, there's tens of billions of
dollars worth of investment. So sure there's going to be
some shaping and maybe prioritization of things that might you know,
be in year five rather than year seven and that
sort of thing. But generally we want acceptance about the
(02:22):
type of big infrastructure required for communities by all parties involved.
Speaker 1 (02:27):
What sort of projects. Would we likely see the first
agreements kind of made on like what sort of projects
would be the subject of a city jail.
Speaker 2 (02:39):
Yeah, I think projects is probably where it will start,
but they sat in regional deals really needs to be
about long term partnership and not just about one or
two projects that get done and then you tick them off.
They need to be about building trust between central and
local government. New Zealanders the most over centralized country in
the OECD. You know, central government spends ten times and
(03:00):
collects ten times the amount of revenue than local government
does and the imbalance. You know, the New Zealand Initiative
is shown that the more decentralized you get actually the
greater GDP growth you can have for communities. So we
do need to think about weird decisions are made in
New Zealand. That feels far, far, far too much like
it's all in Wellington at the moment. So when we
(03:22):
think about the projects that might be come across the
line early, I think that's going to be in water
and transport. Those are the big needs at the moment.
They're obviously getting a whole lot of conversations with councils
needing to lift rates sort of between six and twenty
six percent this year with an average of sixteen percent.
You know, there's big issues with the way that we
fund infrastructure, and so the key projects in the beginning
(03:45):
I think will be around transport and water.
Speaker 1 (03:47):
And would they be sort of like quite meaty projects
considering the kind of timeline of these deals, like are
we talking about like really big stuff as opposed to
small stuff.
Speaker 2 (04:01):
I think we've seen internationally that city and regional deals
change over time. So we're going to need to begin
somewhere and that will be around a few projects. But
in Greater Manchester they've gone through a process over the
last decade where there was over one hundred and fifty
different streams of funding and accountability for all that funding
and reporting for all that funding, and just earlier this
(04:21):
year they have signed one deal, which so you've got
a narrative all those one hundred and fifty bureaucratic ways
of trying to deal with things and come down to
one space. And that's because they've built trust in a
relationship over time. So in New Zealand, we need to
go through that same process project based to begin with,
prove the concept and move into a partnership model long term.
Speaker 1 (04:42):
Okay, so are you saying that initially like there would
be a series of smaller deals if you light struck
over specific projects, rather than having a deal to start
with that was more like a package.
Speaker 2 (04:56):
I think the package will involve each of those little pieces,
but I don't think that we can expect that we're
going to have mature ten year old deals in year one.
So we've got to be responsive to the needs of
communities at the moment. That is particularly around water, waste,
water and transport. So let's focus on deals that start
solving those problems around housing for New Zealanders.
Speaker 1 (05:17):
And you've talked about Manchester. Can you speak about some
other overseas examples, because as you've said, they don't all
work the same way, do they.
Speaker 2 (05:28):
No, that's right. So the Netherlands, the City Deals an
agreement between some selected cities and the national government, and
they've also included the private sector in some of those spaces.
It's not explicitly about the redistribution of central government resources
for them, whereas in the UK it was particularly focused
on devolution, but in the Netherlands it was around food
(05:50):
security and room for walking and health hubs. And other things,
and the UK we've seen education and policing and safety
within communities be a part of their conversation because the
roles and responsibilities for local government there looks slightly different
than they do here in Australia, being very infrastructure focused
around transport solutions for.
Speaker 1 (06:11):
Places, and considering Australia is quite infrastructure focused, which I think,
what that's what our city deals will look like at
least to begin with. You know, you said transport would
be a big priority. Is that where we're mainly looking
for inspiration across the ditch considering that alignment, Yeah, I.
Speaker 2 (06:33):
Think there are nearest neighbors, aren't they, So we like
to look across the ditch and see what they've been
up to. Their government situation is a bit different than
ours because they've got both state and federal governments as
well as the local government, so that the funding for
local government looks quite different in Australia than it does
in New Zealand. But I think it's very natural that
we'd look across the ditch and see how they've made
them work and then build it from there.
Speaker 1 (07:07):
Of Course, the whole reason that we're sort of talking
about city deals is because the government has indicated it's
keen on them. What have ministers said about city detail
city deals so far so other than in saying that
it's a way they'd like to work, we're very light
on detail from the government so far about what that's.
Speaker 2 (07:27):
Going to look like. So that's why we've come up
with from local government with a way of saying, this
is the framework discussion that we need to have. Any
city origional deal needs to have an alignment of outcome
between local communities and central government's desires. It's got to
provide access to new funding and financing tools for local government.
The current financing way for local government around rates as
a broken system. It served us well up till now,
(07:50):
but actually we need some new tools and a toolbox
for local government. I've already talked you about that sort
of long term commitment beyond election cycles and trust and
authentic partnership, and I think particul we want them to
be efficient to administer. We don't want to set up
a whole system that's going to become really difficult in
time consuming and costly to administer. So that's sort of
the basis of our framework, and we think that the
(08:11):
government should look to that adopt it. They might want
to add a few other things, and that's going to
be really important to them. And let's get on with
the first few city and regional deals and we can
understand what they look like in out here's context.
Speaker 1 (08:22):
Yeah, who do you think would be first in line?
Is that likely Auckland?
Speaker 2 (08:27):
Yeah? I mean Auckland is different than the rest of
local government in the New Zealand context. We often talk
about Auckland as a city, but Auckland's actually a region.
You know, They've gone through a bigger amalgamation, they cover
a large area and they have a number of ways
of working together now as one that the rest of
New Zealand doesn't have. So I think it's natural that
(08:47):
Auckland's going to be part of that conversation really early on.
And if we look around the rest of the country,
there's a number of regions Hawk's Bay for example, around
its water and conversation around water infrastructure as in a
more mature based then some other regions. I've been working
on it for a while. Cycling gabriels meant that they've
worked together in different ways, and so I think there's
(09:07):
cases to say that it's not going to just be
the big cities to begin with. We need to also
look a bit broader than that.
Speaker 1 (09:13):
Yeah, and in your proposal, you know, you specifically say
all cities or regions should have the opportunity to propose
a deal. Are you worried about smaller towns maybe missing
out on the likes against the likes of Wellington and Auckland.
Speaker 2 (09:31):
Yeah, I think, particularly if there's going to be leavers,
that the government users to incentivize particular outcomes and they're
only made available through city and regional deals and then
some regions or cities are excluded from that. You know,
that's not going to serve the purposes of making things
work across the country. So we're really saying the framework
needs to be broad enough that all New Zealand can
benefit from this new way of working.
Speaker 1 (09:53):
Okay, and so you've written to Prime Minister Christopher Luxon
and Ministers Chris Bishop and Sami and Brown about your proposal.
I think you might have met with some ministers about
this as well. What kind of response have you had
from them in terms of what you've had to say?
Speaker 2 (10:11):
Yeah, that thanked us for what we've put forward through
our framework. And they've said they're currently working on their
own framework themselves, and we now wait to hear back
from them, but excited that they're working on a framework.
We definitely think there's a much better way of working
than coming to the table already thinking that there's one
or two deals that they've got signed and sealed ahead
of actually understanding how these are going to work.
Speaker 1 (10:32):
And you know, one of the things you've said is
that there needs to be increased trust between local government
and central government. Firstly, why is there a lack of
trust between the two.
Speaker 2 (10:47):
I think it's because we've seen there's a big power
and balance when you've got ninety percent of the funds
and decision making held in Wellington and ten percent in
other places, and so so many of the decisions that
New Zealand makes at the moment are very Wellington centric
and don't have necessarily the input for local government ahead
of time and ahead of those decisions. And there's I mean,
(11:07):
there's so much knowledge and experience in local government. Actually,
we could contribute to better outcomes for our ti Iowa
if we're involved in the formulation of legislation as opposed
to submitting at the end of the process, and so yeah,
I think successive governments when there have been an opposition
before they've come into power, have talked about localism, have
talked about working with local communities and regions. But our
(11:29):
system is set up that once you get into once
you're in power, and you hold the reins around where
those budgets dispense and the decisions that you want to make,
and you're informed by the ministries that sit around and
with all the knowledge around how Wellington should function has
tended to be that it's been lead out of Wellington
rather than partnered with local government. But on the other
(11:53):
side of that, you've got local government knowing its place,
knowing its people, knowing where its resources are, knowing where
help can come from, knowing with the areas of greatest leaders,
knowing the businesses to partner with and the NGOs that
already working in that sector. And it doesn't feel like
so much of that knowledge and resource is used and
trying to deal with the things that we all want
(12:13):
New Zealand to be an awesome place and to continue
to be better than it is now for generations to come.
Local government's got to keep part to plan that, and
it doesn't feel at the moment, like that level of
voice has been heard by not just this government, but
previous governments beforehand. There's a system issue that we've got
in New Zealand, and city and regional deals are part
of trying to deal with that.
Speaker 1 (12:33):
System, and I think there's sort of a sense of
almost entrenched frustration around things like unfunded mandates like that
comes up a lot when I talk to council leaders
and as you say, like this, it's been this way
over successive governments, so it seems to me like it's
(12:54):
quite a steep hell to climb. Although the city deal
proposal has come up at a time when I would
argue local government is facing a crisis in terms of
trying to fund everything that it needs to so that
might be helpful in terms of resetting this relationship. But
how do you reset that relationship when it's sort of
(13:15):
been on this path for so long.
Speaker 2 (13:18):
Well, I think all relationships require, you know, both parties
to want to improve the relationship. It means that we
both need to take steps in the right direction. They
might be smaller steps than you know, you don't start
running on day one, but we take steps towards each
other that builds that trust and then continue dialogue and
talking together, and like interpersonal relationship, sometimes having third parties
(13:42):
in the room and being able to learn from others'
experiences rather than just coming from your own knowledge basis
important in that turm and I think that's where looking
at overseas models around how city and regional deals have
worked can show us that you know, in the UK
after ten years has actually massively increased the level of
trust between central and local governments to point now where
Westminster's paying single deals out to combined authorities to manage
(14:06):
the affairs within the local area. I think that's a
great story and hopefully in ten years time we'll be
able to talk about similar things in.
Speaker 1 (14:26):
Local government. New Zealand has said it's unlikely councils will
agree to a city deal unless there's additional funding and
financing put on the table. You have mentioned some of
this earlier on, but can we maybe just dig down
into a bit more detail. What is the problem with
(14:49):
trying to fund everything by rates and is there a
sort of top alternative or a low hanging fruit alternative
that you'd like to peck first.
Speaker 2 (15:04):
Yeah, so local government looks after it owns twenty five
percent of the infrastructure in New Zealand, and we receive
less than ten percent of the funding to run ourselves
in our communities needs. And so just even on in
that space alone, we need to think about what's the
provision like and how sustainable as that model going forward.
(15:26):
Central local government sorry across the country about over fifty
percent of our income is from rates. That isn't about
ability to pay. It's purely on either property or the
capital property plus whatever's built on top of the land
as a mechanism for pain. On top of that, there's
use of debt and some councils, to varying degrees, have
(15:48):
taken on small or large amounts of debt or that
debt needs to be repaid in the future. Debt is
a great way to pay for interogenerational infrastructure and we
need to change some of that thinking within count source
and that and that has been good to see, but
debt you can only take on the debt that you
can afford to repay, so that needs to be thought
through as well. Councils also have the ability to have
(16:09):
fees and charges, and whether that's for resource consents or
swimming pool entries, or parking fines, those sorts of things.
It's a small portion, and some councils have some investments,
but many don't. So we were heavily on rates, and
when the cost for running communities goes up, then our
rates go up, and that doesn't necessarily take account of
those that use the particular facilities that councils provide. Roads,
(16:35):
you know, get used by everyone, regardless of how much
they're pain and here from councils all the time that
the road user charges and fees that come out of
a particular area and never seem to come back to
their area when the co investment with Wakokutahi comes along board.
So it's like the system at the moment isn't set
up to work in a way that's transparent and sustainable.
(16:58):
And there's a number of things that we've put to
the government to request further conversation on funding for local
government that includes the government paying rates on their land
and their facilities within the community, whether that's dockland or
schools and hospitals or defense spaces. We've talked to them
and it was raised by the government about the GST
on new builds. Coming back to councils a share of
(17:21):
GST in general, I think is a conversation that needs
to be head to the GST on rates coming back
to councils, it would be a fifteen percent left straight away,
so people are paying their rates and then having to
pay GST on top of that. Mineral extraction royalties out
of areas, increased in fuel taxes, tourism levies, beards taxes.
There's been a number of things that we've raised because
(17:45):
we need a number of things because not every council
is going to benefit from each of those tools in
the same way, and some will be appropriate and some
will be inappropriate for some areas. So we need a
range of tools that councils can fund themselves through picking
the ones that are going to suit them at any
one time. We've raised those with the government, we continue
to hear those on those things, and that doesn't deal
(18:07):
with the issue. So through this city and regional deal piece,
there needs to be the ability for new funding and
financing tools for councils, incentives to work together, and the
ability to bring bring new revenue into the local government system.
Speaker 1 (18:23):
Out of that long list, is there anything that you
feel optimistic about that the government might agree to or
is potentially more open to than something else, or you know,
one of those things that you really want to see
as a priority.
Speaker 2 (18:40):
Yeah, I mean the GST on new builds is something
that the government has raised, so that's come from them
rather than from us, so that, you know, if we're
going to start somewhere, let's start with that one. But
that doesn't help every council equally, so that's not going
to solve the problem. It's not a silver bullet for anyone.
But that's the sort of thing that I think we
need to develop. Let's look at that tool and see
how that's going to work. One of the keys in
(19:01):
trying to create the funding is that Treasury has already
accounted for certain streams of income into the future, and
government's making decisions on the budget based on those future streams.
So we really need to look at new ways of
generating income, and I guess the GST on new builds
is that new revenue that could happen. So, yes, it
would be great to get some of the GST back
(19:23):
in general, particularly the GST that's paid on rates. It
would be a fifteen percent hit, as I said before,
and really help local government, but that's not what the
government's talking about currently. So if we can work with
the new builds piece, that would be helpful to begin with.
Speaker 1 (19:36):
Okay, cool, And as you mentioned, and I have covered
this in a previous episode on the podcast, we did
a episode on the future of Local Government review if
anybody wants to draw back and find that. But one
of the recommendations or things identified in that report was
you know that the Crown does not pay council rates
(19:59):
on its proper, which I just think personally is kind
of wild. And I want to talk about that report.
It's a nice segue actually into some other issues that
I wanted to discuss with you while i've got you,
But just versusly on that report. You know that that
was commissioned under labor. It came out last year, a
(20:22):
few months before the election. It kind of hasn't gone anywhere.
What's your view on that, Like, is that kind of
disappointing because it was a really meaty report with lots
of recommendations like can we bring that back to life
at all?
Speaker 2 (20:36):
Yeah? Well, so local government's done a lot with that report.
So instead of just picking it up and saying this
is all implementable. Now. We ran a couple of sessions
over a number of days with two hundred participants at
each looking at what of these things can we find
consensus on, because there's a number of things that are
the controversial and controversial issues still needs to be addressed.
(20:57):
But sometimes if you can find some early consensus, then
you can start implementing things a little bit earlier. And
so we ran those events out of that, Things like
mandatory STV voting or the voting age dropped away because
we just you know, there were people passionate about making
that stuff happen and people equally passionate about never making
it happen, So they dropped away. But funding and financing
(21:21):
changes for local government remained. The thinking about the shape
and size and structures within local government, you know, that's
a matter we need to address, and that remained. Local
government commitment to MANAFENAA partnership, you know, was discussed and
that remained. Those types of things are still there and
are still very live for local government at the moment.
Speaker 1 (21:43):
And one thing that is very live is electoral system reforms.
There's a new group focused on this, cheered by Nick Smith,
and can you tell me about that and the four
key areas of electric reform that this group will be
looking at.
Speaker 2 (22:04):
Yeah, so I'm really really keen that this group has
been formed. It's been about twelve months in the making
to get to where we are now. A four year
term for New Zealand is just one of the key
things that would make the biggest difference to the efficiency
of both central and local government. We should make that
change tomorrow. I know that the government and as part
of their coalition agreement, wants to see it happen. I
(22:26):
haven't actually talked to a politician in Wellington who doesn't
want it to happen because they see the needs to
improve the system that they're currently working within. The Government
could actually change local government to a four year term
next week if they wanted to, because it's just a
piece of legislation, whereas the conversation for central government as
a much broader conversation and they want to run through
(22:48):
and understand a bit more about what New Zealanders want
in that space, and the Prime Minister's keen to work
both central and local government changes in the same conversation.
So we're hugely in behind that. That's kind of the
key area to see change in electoral form, but we
need to increase VHOTO turnout. We need to change the
way that people can vote, and we should think about
who administers local elections because at the moment, each council
(23:11):
kind of picks a contractor to run an election, which
means is quite a lot of variance across the country
at the way people engage in not necessarily the same
level of either information available or voting spaces to be able. Sorry,
the way that things that do not even email, the
way things post it out to people. We need to
think about moving beyond just relying on the postal system
(23:34):
when it comes to local government election. So NeXT's going
to lead that work, and ye're really excited for the
others that are involved and dept with him as well.
Speaker 1 (23:43):
And so this was one of the things that the
Future for Local Government Review considered. Why do we need
another group to look at it when there's kind of
a clear appetite to do this.
Speaker 2 (23:56):
I think this group will look at it and then
look at how we implement it. Has been identified that
it needs to happen again, New Zealand's a real outlier
and the OECD and so much of what we do
in the local central government space. We're one of the
few countries that has a three year term. Most countries
have realized that they're actually better off having councils and
central government on a four, five or six year term
(24:19):
because the types of projects and dollars that we're dealing
with four communities run into the billions of dollars and
things changing every three years. You get a year of
settling after an election, you get a year of doing
some great work on councils, and next year the report
is going to call in January and ask if you're
standing for election in October, and that changes the whole
type of conversation that the council will have over that
(24:42):
next year. So a four year term is going to
mean twice as many productive years in the middle between elections.
And we're all outlier compared to the people that we
measure ourselves against. So you're right. I think some of
this stuff and the need for it has been well canvassed.
We need to get on with it. But actually creating
the pathways to make that happen is going to be
a keep up for this new groups to sort out.
Speaker 1 (25:04):
Interesting and when does that group have to report back
is there a timeline for when we might see you
some change.
Speaker 2 (25:11):
We agree the terms of reference today Steve, National Counsel
for Local Government, New Zealand. So that group's underway and
going and happen as quickly as the team can bring
the work together. I don't have a date for that
report back.
Speaker 1 (25:22):
Sorry, no, that's all right. Oh well, we'll have to
watch that space. Thanks so much for joining us, Sam,
it's been a real pleasure.
Speaker 2 (25:28):
Thank you very much.
Speaker 1 (25:30):
Thanks for listening to this episode of On the Tiles
Local edition. For more local politics, news and opinion, head
to enziperold dot co dot NZED. You can follow this
podcast on iHeartRadio or wherever you get your podcasts. Thanks
to my producer Ethan Sills. This episode was edited by
Enzibne Sound Engineers and you can catch us again next
(25:52):
Friday for more on the Tiles
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