PRESS RELEASE
21 February, 2014.
Submission to the Local Government Commission on the Northland Reorganisation Proposal
This submission is from Northland Inc Ltd, a Council Controlled Organisation (CCO) of the Northland Regional Council.
Northland Inc is Northlands regional economic development agency formed in 2012 from the amalgamation of two
organisations; Destination Northland (1997) Ltd (Northlands prior Regional Tourism Organisation) and Enterprise
Northland Trust (2000) (Northland’s prior economic development agency). Accordingly, our submission considers primarily
recommendations based on contemporary regional economic development thought as it relates to regional governance.
1. Introduction
1.1. The context for local government has and is changing. Local government plays a key role in working with
their communities to help shape their future addressing complex social, environmental and economic issues with limited
resources. They do this by working with local institutions, the private sector and higher tiers of government in
different forums and contexts and through innovative governance and operational arrangements. The Northland
Inter-sectoral Forum, Far North Holdings Ltd., Northland Emergency Services Trust and Northland Inc are examples.
1.2. In their paper ‘Merging Municipalities: Is Bigger Better?’ Enid Slack and Richard Bird stated that while
the amalgamation in Toronto solved no problems it had some benefits which included ‘a stronger presence in economic
development, a fairer sharing of the tax base among rich and poor municipalities, and the opportunity to equalize (sic)
local services so that everyone can enjoy a similar level of services.’ They go on to say that on the whole ‘two tier
structures may be more effective in allowing municipalities to reap the benefits that come with large size, while
retaining the responsiveness typical of smaller municipalities.’
1.3. At a regional level better integration across central government ministries and with local government and
local institutions is desirable and can be achieved.
1.4. Two key streams of thought influence contemporary regional economic development. One is “new economic
geography” where the broad disciplines of geography and economics are being forced to join up bringing a spatial
variable to economic growth theories; in other words, recognising that development happens in places through people.
Regions are increasingly recognised as focal points for policy and action as they represent functional economies where
the dynamics of social and economic life are concentrated and where environmental effects of human activity are more or
less immediately apparent.
1.5. Secondly ‘over the past two decades regional economic development theory has shifted from a focus on
exogenous factors to an increasing focus on endogenous factors.’ Endogenous factors include soft factors such as
institutional vitality, governance, social capital, leadership, creativity, innovation, connectedness and the regions
ability to capitalize on opportunities; alongside hard factors such as capital availability, infrastructure, comparative
and competitive advantages. Increasingly it is recognized that the soft factors are key to unlocking a regions potential
and contributing to the national economic development effort.
1.6. This means that a greater focus needs to be placed at the regional level on those factors that are within
the region’s (and nation’s) control and that policies, programmes and interventions need to be developed and enacted at
the regional level. In this context the notion of regional governance (not just regional government) becomes important
as innovative and fit-for-purpose governance arrangements can be made drawing in sectors of the community alongside
tiers of government to address complex and/or chronic issues.
1.7. We support change to ensure that the performance of the Northland economy can improve, therefore
benefitting the communities and people in Northland.
2. Stronger local governance
2.1. Local Boards. Both regional and local governance need to be strengthened in Northland in order to unlock
the economic potential of the region. Serious thought needs to be given to the roles and functions performed at both
levels and the structures that underpin those roles. Given Northland’s large geographic area, diverse communities and
small population there is a strong argument for statutorily established ‘Local Boards’ with wider decision making powers
and resources than those seen in Auckland. This does not mean that smaller units of local government will necessarily
be tasked with the delivery of onerous services devolved from a unitary council (see rationalisation and efficiency
below), more that the principle of subsidiarity is considered by the transition authority in terms of decision making,
staffing and resources.
2.2. The most important advantages of smaller units of local government are accessibility and accountability,
with better opportunities for direct contact with representatives and access to hearings and public forums. In this
way local democracy can be strengthened, especially if Local Boards have a number of services delivered on their behalf
by the unitary authority and CCOs.
2.3. Thought must be given however, to the relationship of ward councillors on the Northland Council with Local
Boards, the relationship and accountability of CCO’s to Local Boards, and the ability of Local Boards to have input into
regional planning.
2.4. Further thought must also be given to ward boundaries and communities of interest, particularly with
reference to hapu and iwi rohe, but also the local economy.
3. Stronger regional governance
3.1. Stronger more unified regional governance underpins better regional development.
3.2. One Council, one Mayor, one plan. A new Northland Council will have to ensure that there is an integrated
and coordinated approach to development in Northland. This can be achieved by having one overarching plan for Northland
- a spatial plan that all other plans drop out of and talk to. A plan that is driven by Northlanders, negotiated with
Central Government and delivered in partnership. One Mayor can give voice to the region at central government level and
can advocate more powerfully on behalf of the region to deliver the plan.
3.3. Mayoral executive powers should follow the example of the recent best practise legislation in New Zealand.
3.4. A more representative model for the Northland Councillors. Further thought needs to be given to the
balance of elected members at the Northland Council level. Currently there are two (out of nine) suggested councillors
for Whangarei where approximately 50% of the region’s population and economy resides. Whangarei is Northland’s largest
economic hub and services the region in a number of ways. It is not a matter of rural versus town or any other variant,
it is more a matter of understanding the economic geography of the region and how that can be leveraged for the
advancement of the whole region.
3.5. Governance for economic development in Northland can be best developed through a Council Controlled
Organisation with a fit-for-purpose board and of sufficient size to negotiate on a strong footing with potential
investors, business and government. Northland Inc has been established to achieve this and has made significant
progress since its inception in 2012. A Regional Economic Development Agency (REDA) needs the capacity to manage and
facilitate projects of regional significance and link and coordinate sub-regional economic development efforts. Regions
are focal points for economic development; further capacity must be built and supported at this level for Northland.
4. Regional economic development; building prosperity for Northland/ Taitokerau
4.1. A further empowered regional economic development agency for Northland. A key task of Regional Economic
Development Agencies is to work with both the private and public sectors in strengthening and diversifying the regional
economy to enhance the quality of life for residents, workers, and visitors. Internationally there is a diversity of
arrangements for this function, ranging from centrally controlled government programmes to private companies and
everything in between. The consensus on the optimal arrangement seems to be that a separate legal entity is most
desirable when working across and between the public and private sectors.
4.2. Currently economic development services are fractured and split across local government in Northland.
Northland Inc acting as the REDA deals with a number of differing arrangements in local government. This produces
duplication, inefficiency and confusion around priorities despite best efforts at coordination and collaboration. As in
Auckland a hub and spoke arrangement would be optimal for Northland.
4.3. The CCO model developed in Auckland and in use in other regions such as Taranaki is a useful model in that
the agency can be market facing and quick to react, have a different risk profile to that of [local] government, and be
project-driven and business-like in its operations. Being at arms-length from Council (and a separate legal entity)
means that a REDA can navigate commercial sensitivities, but work in the public interest to facilitate jobs and
investment and work to reduce market failure.
4.4. REDAs provide the focal point for the vertical and horizontal integration of economic plans and strategies.
They also provide access to business and market intelligence for regional economic development strategies and can
facilitate the implementation of strategies.
4.5. As in Auckland the REDA needs to consider all sectors in strategic planning and implementation. Tourism is
an important sector in Northland, however it makes no sense in terms of the public interest to have separate
institutional arrangements for one sector. The formation of Northland Inc has been a step in the right direction in that
regard which allows for a more integrated approach to attracting visitors to Northland and in trying to create new jobs
and increase prosperity in Northland.
4.6. The NRC has set up the Investment and Growth Reserve, a fund designed to spur economic development in
Northland. It is an insightful intervention which, combined with other sources of capital can be used to partner with
the community and to leverage further investment into Northland. This fund must be maintained as a key economic
development tool for Northland alongside a further empowered regional economic development agency that can develop
projects suitable for the fund.
5. Rationalisation and efficiency
5.1. One of the key aims of the reorganisation is to increase the efficiency and effectiveness of local
government in Northland. Bottom line cost savings should not be the only driving rationale for reorganisation. The
main benefits of the reorganisation are in the form of long term efficiency benefits such as better management and
utilisation of assets and council owned investments, rationalisation of services, attracting and managing significant
investments and integrated regional strategies, planning and policies.
5.2. There is no one-size-fits-all in the allocation of services to either smaller or larger units of local
government. Some principles that can apply are that where there are commercial economies of scale or efficiencies to be
gained and there are relatively undifferentiated consumer needs, rationalisation may provide better outcomes. On the
other hand thought should be given to those services where there are different consumer preferences or, even if they are
undifferentiated such as building consents for example, it may be more efficient to deliver them locally.
5.3. Council Controlled Organisations. Shared services are the second best option as institutional barriers
still remain despite the best will in the world. Council Controlled Organisations (CCOs) provide the opportunity to
gain economies of scale, efficiencies and effectiveness in Council operations. They also provide the opportunity to
gain better governance through ‘fit-for-purpose’ boards being selected on skill and merit and better use of skills not
normally found in Councils. Examples could be water and waste-water, transport, council owned investments and property,
and economic development – predominantly those functions with a strongly commercial aspect. Longer horizons in planning
and investment are a feature of CCOs and investment in regional infrastructure can become more aligned with region-wide
business needs. Having separate legal entities at arms-length from Council also reduces the kind of political
interference that can come from vested interests or short term (three year) political horizons.
5.4. Devolving decision-making should aid in efficiency at both levels. If Local Boards are less encumbered
with decisions on roading or waste water, for example, more attention can be turned to engaging with their community and
working on local projects – “place shaping”. A far more meaningful engagement. The problem with small units of local
Government with small rating bases is that large capital projects, whether they make sense or not, become
all-encompassing and decisions are made in isolation. Even if a larger council is managing debt prudently, but it
regards itself as separate from its neighbour ignoring the social and economic interdependencies, it is sub-optimal for
the region as a whole. A better way of viewing the optimal governance arrangements is to consider the economic
geography of the region and try to match that. In this way the right capital investments can be made that benefit the
region as a whole and the level of services can be equalised and fairer on residents.
6. Partnership with Maori
6.1. A statutorily established Maori Advisory Board, with representation on key Northland Council committees
could provide stronger partnership between Council and Maori. The nature of representation on this board should be up
to Maori to decide, but it needs to be high level. The potential of the Maori economy needs to be unlocked for the
benefit of all in Northland and an integrated strategic approach needs to be developed so that Maori can feel part of
and contribute to the economic development of Northland.
7. Partnership with Central Government
7.1. A ‘Northland Council’ with strong local democracy and rationalised regional decisions and services,
represented by an executive Mayor is better for Northland in two ways. One, the Mayor carries the mandate and weight of
the whole region when negotiating with Wellington. Two, central government is more likely to align with regional
priorities if they are agreed by the region, part of the plan, and in alignment with national priorities. The problem
with smaller units of local government in Northland is that they seldom have the levers available to them to make
interventions of regional significance. A Northland Council with a larger balance sheet has much more scope to do this.
8. Conclusion
8.1. Northland Inc supports the local government commission’s recommendation for a single unitary authority in
Northland. It is the best way to strengthen and diversify the economy, get better infrastructure, provide more and
better jobs, higher incomes and to reduce inequality. However Northland Inc believes that in order for the current
proposal to work the second tier of local government needs to be strengthened in the current proposal.
8.2. One Council, One Mayor, One Plan. A unitary authority offers the opportunity to implement policy and
strategies on a region-wide basis and to gain better alignment and integration with national, regional and local
priorities. It also provides the opportunity for Northland to negotiate with Wellington from a stronger position.
8.3. Statutorily established Local Boards need to be part of the structure rather than community boards, giving
a strengthened two tier structure. Our submission is predicated on this being achieved. The Northland region has
differing community needs and dynamics from that of a metropolitan region such as Auckland.
8.4. A statutorily established Maori Advisory Committee to advise the Northland Council will be needed to unlock
the Maori economy for the benefit of all Northlanders.
8.5. CCOs need to be established to gain efficiencies in Council investments, operations and service provision
where the product, service or output is largely commercial in nature, relatively undifferentiated, savings and
efficiencies can be made and where it is logical to do so.
8.6. An empowered Regional Economic Development Agency as a CCO to provide a vehicle to plan, integrate,
coordinate and action economic development efforts in Northland.
Northland Inc wishes to appear before the commission to speak to its submission.
Colin Mitten
Chairman
Northland Inc
David Wilson
Chief Executive Officer
Northland Inc
Dated: 21.02.1014
Slack, E & Bird, R. (2013). Merging Municipalities: Is Bigger Better? Institute on Municipal Finance and Governance, Munk School
of Global Affairs, University of Toronto.
Stough, R.R., Stimson, R.J. & Nijkamp, P. (2011). ‘ An Endogenous Perspective on Regional Development and Growth’ in Kourtit, K., Nijkamp, P. & Stough, R.R. Drivers of Innovation, Entrepreneurship and Regional Dynamics, Springer, Heidelberg.
Wilson, D., Neill, C. & Lambert, M. (2008). Governance for Economic Development in Auckland, paper prepared for the Auckland Regional Economic
Development Association, Institute of Public Policy, AUT University, Auckland, April.
Stimson, R., Stough, R.R., & NijKamp, P. (2011). ‘Endogenous Regional Development’ in Endogenous Regional Development: Perspectives, Measurement and
Empirical Investigation, Edward Elgar, Cheltenham, p.1.
Royal Commission on Auckland Governance (2009). Auckland Governance Report, Royal Commission on Auckland Governance,
Auckland, vol. 1, March, p.17.
Slack, E & Bird, R. (2013). Merging Municipalities: Is Bigger Better? Institute on Municipal Finance and Governance, Munk School
of Global Affairs, University of Toronto.
There is vast literature supporting this notion in the academic areas of new regionalism, new economic geography and
regional development. See for a start the territorial forum and the cities and regions forum in the OECD.
Clark, G., Huxley, J. & Mountford, D. (2010). Organising Local Economic Development: The Role of Development Agencies and Companies, OECD,
Paris, p.84.
ENDS