Costs of regulation burdening councils

“The cost of complying with Government legislation is placing a huge burden on local government and ratepayers, and must be reined in,” said Lawrence Yule, President of Local Government New Zealand.

Mr Yule was speaking today after releasing a report, commissioned by Local Government New Zealand (LGNZ), into quantifying the actual costs councils face when implementing, monitoring and enforcing compliance with Government regulation.

The release of the study is timed to coincide with the first Central Government Local Government Forum (CGLGF) held between the two sectors on Thursday 22 October.

“I’m grateful for the effort Local Government New Zealand staff and PricewaterhouseCoopers have put into investing in the science and facts in this debate.

“We now have some hard numbers to demonstrate the real financial impacts of specific pieces of legislation on councils.

“The research shows fifty-six councils alone have faced external costs of close to $25 million and 720,000 staff hours implementing just four pieces of legislation imposed by central government.

“Time is money and this level of unfunded regulation puts enormous pressure on council resources, and ends up hitting ratepayers in the pocket.”

Of the six key activities measured, gathering and assessing relevant information is the most time consuming and second most expensive. Reporting was the second most time consuming and fourth most expensive activity.

“All new legislation must produce benefits that outweigh the costs and for the past few years this hasn’t been happening.

“Councils don’t have the resources to take on the extra responsibility of adhering to excessive regulation. The Government has already delayed requirements for communities to meet new drinking water legislation enacted by Labour. Given the cost burden placed on councils this was clearly the right decision.

“These numbers confirm what the local government sector has long been saying: it is not financially equipped to handle the implementation costs imposed on it by excessive red tape.”

The Minister of Local Government, Rodney Hide, has promised to streamline much of the unfunded regulatory responsibility that impacts on rates levels.

As part of the first Government Statement on Regulation, the Government committed to introducing regulation only when it was satisfied that it’s required, reasonable and robust. The Government is looking to review existing regulation to identify and remove requirements that are unnecessary, ineffective and excessively costly.

The LGNZ study shows that a commitment to good legislative practice within other governments (UK, Denmark and Holland) has seen a 25% reduction in costs.

This would amount to potential savings of 150,000 staff hours and $5 million spending on external advice if applied to this study.

“A commitment to a 25% reduction in the cost of legislation would not only mean financial savings, it would free up council staff to deliver projects and services to their communities,” said Mr Yule.

“It’s good practice not to place unnecessary burdens on other sectors when introducing legislation.

“This report confirms that the two arms of government need to talk much earlier on about the impact of new legislation on local communities.

“A good example of central government and local government working together to reduce the costs of regulation was the recent deferral of drinking water legislation by three years.

“I am pleased the Prime Minister and Government made a commitment to work with us on streamlining future regulatory reviews.”

ENDS

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