Hon Rodney Hide opening address to SOLGM Shared Services in Local Government Conference; Brentwood Hotel, Kilbirnie, Wellington; Monday, February 14 2011

Thank you for the opportunity to speak to you this morning at your Shared Services in Local Government conference. I would like to thank SOLGM for organising this event and, in particular, Western Bay of Plenty District Council Chief Executive and Conference Chair Glenn Snelgrove for bringing us all together. It is great to be here.

Public servants which include, of course, council officers are a vitally important component of democracy. The better the public servant, the stronger and more effective the democracy.

In this regard SOLGM provides valuable support to its members through professional development, networking opportunities, and events such as this conference.

The great benefit of this conference is that you have the chance to meet people from other councils and share your experiences. Putting a face to a name will make it so much easier to contact your council colleagues for their advice when you are faced with new situations. And sharing ideas and experiences will be invaluable in enabling you to do your work more efficiently and in ensuring that shared service opportunities are created and continue to work effectively.

This conference provides a fantastic opportunity for you to hear from speakers who understand the challenges you face, and to learn some practical solutions to these challenges. It also provides me with another chance to talk to you about my vision for local government and the work programme that I have planned, and to also hear what you have to say.

We all know the efficiency and effectiveness of local government impacts on the performance of New Zealand nationally. Yet, all too often it can be taken for granted by the general public, and sometimes by central government.

Local authorities can help facilitate economic development at the municipal level by providing good infrastructure, cooperating with businesses where appropriate and applying less and better regulation when it comes to building and resource consents. We also can’t underestimate the importance of working together to keep costs down through the use of shared services.

The Local Government Act 2002 provides the freedom for local authorities to work together in the interests of their ratepayers. This means prudent management by providing ratepayers with necessary services in the most cost effective and efficient way possible.

There are numerous benefits to such arrangements, including reduced costs, greater access to skills and expertise, the exchange of best practice between councils and procurement savings from economies of scale. This can be achieved through the collective purchasing and provision of services, while still keeping the decisions at a local level.

There are some good examples of innovative, more efficient ways to deliver services. I am aware that cross boundary arrangements to share services and facilities are not uncommon between territorial authorities.

For example, we will be hearing later today about the work of BoPLASS Ltd, which is a council-controlled organisation set up by the councils that operate within the Bay of Plenty region.

As you will know, BoPLASS Ltd was set up to investigate, develop and deliver back-office services and communications where and when it can be done more efficiently for the councils in the region.

Its Statement of Intent for 2010 – 2011 outlines clearly the benefits that can be achieved through shared services. These include:

• improved levels of quality and service;

• reductions in costs of administration services; and

• the savings created by having an organisation representing many councils.

On top of all its current shared services arrangements I see BoPLASS is also aiming to introduce at least one new shared service a year. I commend the company for this goal which will ensure the benefits for ratepayers will continue to grow into the future.

There are a number of other councils around the country working to provide shared services.

Palmerston North City Council provides an award winning after-hours phone service to the local government market. The centre is able to deliver high quality service to over 25 councils across the country.

This work has enabled other councils to deliver higher levels of customer service and reduce costs on their phone services while Palmerston North increases revenue for the benefit of its citizens.

The Manawatu-Wanganui Local Authority Shared Services Ltd is working to pull together its region’s archives.

Five councils will join their archives together on one database which already includes the archives of both the Wanganui District Council and Palmerston North City Council.

Shared service initiatives are not a new phenomenon, either. Institutions such as Civic Assurance have been providing shared financial services for years to local government.

I encourage councils to continue to look at ways to increase efficiency, contain or reduce costs, and, where appropriate, improve service delivery through shared service arrangements.

I appreciate that smaller local authorities have limited capacity and investigating new ways of doing things takes time and money. Those first few steps can be expensive and difficult but over time the benefits will be potentially significant.

This conference is a great opportunity to make those first few steps a little easier. You are going to hear from people talking about their experiences and best practice which should help you avoid some of the major obstacles in your way.

You may be aware of the Department of Internal Affairs’ report ‘A Review of Collaboration Among Councils’ which was released in December 2009.

The report noted that key drivers of inter-council collaboration are fiscal constraints (the requirement to achieve more with fewer resources) and higher expectations of citizens, customers and the councils themselves relating to council services.

The top two barriers to council collaboration were perceived to be ‘council leadership not supporting or promoting collaboration’ (93 per cent) and ‘councils operating in an insular way and taking a parochial approach’ (90 per cent).

It also identified that the top four areas that respondent councils saw as potential areas for some or more collaboration were: geospatial information (53 per cent), procurement processes (50 per cent), field services (47 per cent) and management of water (45 per cent).

I appreciate that the sector is well aware of the challenges of creating effective shared service arrangements and you’ll be working through such issues today. The Government is keen to help where it can. Currently, for example, the Department of Building and Housing contributes funds and resources to support shared services arrangements and operational activities.

There are a range of other examples of good teamwork between central and local government. These include the Ministry for the Environment facilitating information exchange and networking between local authorities and central government, and the Department of Internal Affairs collecting and sharing information about good practice with local and central government. The Ministry of Health also offers drinking water assessors to provide technical assistance on the development of drinking water systems.

A further way in which central government is currently working with local government is through its investigation into setting up a single local government debt vehicle. The proposed fund will potentially help councils finance up to $30 billion of planned infrastructure over the next decade.

The establishment of the local government debt vehicle to reduce the cost of borrowing was one of the Job Summit initiatives and was also recommended by the Capital Markets Development Task Force.

The Government recognises that councils may face an increase in costs over the next decade to provide improved water and waste water systems and it is also sympathetic to any arrangement that can lower the cost of local authority borrowing.

The model involves a single organisation that would issue bonds to wholesale and retail investors. The funds raised would support participating councils to meet their infrastructural and capital investment requirements. It is envisioned the fund would be voluntary based; however, it would need the backing of a sufficient number of councils for it to be effective.

This is an example of how local councils, in this case with the assistance of central government, can provide better and more cost effective ways of providing services to their community. This could be a very valuable shared service indeed.

As many of you may know, work is underway on a project entitled ‘Smarter Government, Stronger Communities’ which will review local government in New Zealand; specifically, its structures, functions, funding, and relationship with central government.

I believe that local government faces a number of challenges and there is a need to identify these and develop ideas for resolving them.

More clarity also needs to be created around local government’s relationship with central government. While local government is accountable to its communities, it must also answer to central government, which confuses local government’s role.

The Auckland governance reforms may also have implications for local government as a whole. The effects of these need to be addressed.

It is important to allow time for the scoping of this work. The next step will be to seek the views of a range of interested stakeholders.

The information we receive will help us identify the key issues and challenges for local government and further focus the review.

As part of this, the Government needs to work closely with our key partners in the local government sector including Local Government New Zealand and SOLGM.

Why there is need for the review?

Since 1989 there have been major reforms of aspects of local government, without reviewing the system as a whole. These include the democratic and community-focussed reforms of the Local Government Act 2002 and the establishment of the Auckland Council in 2010.

Longstanding institutions and processes help ensure stable and accountable community-based governance. However, legacies such as smaller councils with limited revenue, and aging infrastructure may have left local government operating less effectively than it could be.

Councils used to deal with smaller, more localised issues; however, with larger and more diverse communities, councils must deal with wide ranging and varied issues. Councils must also deal with far more difficult issues such as New Zealand’s aging demographic, and population growth.

These challenges require councils to work in collaborative ways. Councils will need to attract expertise in a range of specialities. While larger councils may be able to achieve this, smaller councils may struggle.

This project gives the Government an opportunity to think about these challenges, and help offer solutions and put local government in a position where it will be able to respond effectively.

I have no preconceptions about the outcomes of the project. We may conclude that nothing significant needs to change. We may find that the system could be improved through minor adjustments. Or we may decide that significant reform is needed.

The review is timely. This Government has a strategic economic policy agenda of significantly lifting growth and living standards, improving efficiency throughout the economy, and reducing the income gap with Australia. I believe that efficient and effective local government has a positive impact on New Zealand’s performance nationally, and is essential for us to thrive

With local government assets totalling just under $99 billion, we simply cannot afford to underestimate the importance of having effective and efficient local government.

There are practical day-to-day challenges that council staff must deal with. In addition, councils are also faced with the challenges of prioritising multiple conflicting desires into coherent, well-planned decisions that promote the social, economic, environmental and cultural well-being of communities in the present and for the future.

I trust that the work I’ve discussed has given you an overview of where I hope to go in the coming year and beyond.

I am very much looking forward to working with SOLGM, and individual councils, on the goals that I have planned for local government and I trust that future work will help you as chief executives and managers to meet the practical and high-level challenges of working in local government.

Thank you for listening to me. I’m looking forward to your questions and comments.

ENDS

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