Q+A: Greg Boyed Interviews David Carter
Local Government Minister “would support” council asset sales to maintain funding as rates cap introduced.
“…if they had shares in an airport or shares in a port company, they may well decide they could sell down some of those
shares to help them provide the infrastructure which their community’s demanding of them.”
With rates limits, the Minister says more user charges could also be introduced.
Insists councils will still get to decide rates and spending levels, denying power grab by government. “It is still the
responsibility of the council to engage with its community and find out what services that community wants.”
But adds: “…if a council was proposing to put up its rates by 2% or 3% or 4% above inflation, we want to know why
they’re doing that in central government so we have the ability to intervene.” And, “We want to put some financial tests
and thresholds on to local government so that they must justify their rate increases, justify their debt increases.”
As a minister and ratepayer, Carter says Christchurch City Council “needs to think carefully about rationalising some of
Carter hopes to reform mayoral declarations in wake of Dotcom donation: “I think when you look at local government,
there’s no reason to me why the rules should be different [from central government].”
Hopes to introduce law change this year to bring more transparency to local-government campaign donations.
“We’re certainly going to get local government to be far more focused on what activities it undertakes.”
Minister defines core ‘public services’ as: “rates and rubbish and water, et cetera”.
Tells Auckland mayor Len Brown he may want to prioritise fixing city drains over “some of the other… spending
On one hand, Carter says “The [Christchurch City] council’s decision is to run the Ellerslie Flower Show, and that is a
decision for the council to make.” On the other, he says, “I think Auckland is stepping too far when it’s starting to be
involved in the NCEA levels and greenhouse gas emissions, et cetera. That is more a central government function…”
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Q + A
GREG BOYED INTERVIEWS DAVID CARTER
PAUL Well, now time to talk rates. What should they pay for, and are councils spending too much on pet projects? The
government thinks so. New laws due to be introduced in a matter of weeks will make councils more accountable, they’ll
limit their spending and they’ll cap rates rises, forcing councils to focus on core services. Sounds good, of course,
but what are core services? Nick Smith announced what amounted to significant reforms just a couple of days before he
was forced to resign, but the new Local Government Minister, Mr David Carter, has not spoken about how he plans to
handle things until now. And David Carter is live with Greg Boyed.
GREG Paul, thank you so much. Good morning to you at home, and a very good morning too to Local Government Minister David
Carter in Christchurch.
DAVID CARTER – Local Government Minister
GREG Exactly what are the proposed changes?
DAVID The changes are a suite of measures that are coming into Parliament in the next couple of weeks. The first one is to
relook at the purpose statement of the legislation, which is the driving purpose for which local government has to act
and to tighten that, because at the moment it’s very broad. We want to put some financial tests and thresholds on to
local government so that they must justify their rate increases, justify their debt increases. We want to assist the
mayors with some more powers so that the mayor has the ability to campaign on an agenda and more ability to deliver on
that agenda and then be judged three years later at the election. And finally we want to assist streamlining, provided
it’s driven from the community. There are still too many councils in New Zealand, but rather than impose from the top
down, we’re going to enable the streamlining to occur so that communities that see the opportunity for amalgamation and
rationalisation can drive it and get through the process more reasonably than they can at the moment.
GREG Okay, is this essentially the same proposal put forward by Nick Smith just before he stepped down?
DAVID Oh, it is absolutely the same proposal put forward by Nick Smith. The Prime Minister rang me and asked me to take on
this portfolio and gave me a very clear instruction that what the Cabinet had passed on a week or so earlier was to be
pushed through and put into Parliament, and I’m doing that. I’ve spent a lot of time talking to local-government people
right around New Zealand over the last six weeks, and, frankly, most local-government politicians are very supportive of
these reforms. At the moment, they get caught with requests from their ratepayers for them to be involved in all sorts
of projects which are often difficult to turn down, because of the very wide purpose statement in the act passed in
2002. So local-government people tend to want these reforms.
GREG Okay, let’s talk dollars and cents. First and foremost, ratepayers – they’re paying too much in the way of rates.
6.85% has been the average increase every year for the last 10 years. It outstrips everything. Are you determined that
is going to stop and you’re going to be able to keep rates at a more reasonable rate in line with inflation?
DAVID Yes. The central government itself has been very focused over four years in getting an agenda to drive a productive
economy. We want the economy to perform better. When you look at local government, it is a significant part of the
economy. And at the moment, some of the rate increases that have been pushed through are exceptionally high, so we want
to make sure there are tests there by which the councils get the ability to control their own rate increases. There may
on occasions be very good reasons for significant rate increases, but we certainly want some flashing lights there as
councils debate rate increases so their communities understand the reason for any proposed rate increase, the
councillors themselves understand, and if they’re stepping well and truly outside the line, we in central government
want to be able to engage in a discussion to understand the reason for it.
GREG Okay, core services – what on earth are core services? Because there seems to be a lot of scope in what a core service
is and what a council should be taking care of.
DAVID Well, it’s certainly clear what core services are, and they are rates and rubbish and water, et cetera. But this
legislation’s not about saying to councils, ‘You can only embark on core services.’ It is still the responsibility of
the council to engage with its community and find out what services that community wants. But we want that debate to be
far more transparent than it has been in the past.
GREG Well, hold on. It sounds like the Government’s wanting a bob each way in this. They’re wanting to say they keep in
touch with what’s happening with the rates, but they’re only to go and do core services at a local level or not. Which
way is it to go?
DAVID We are not saying that councils can only do core services. If you take my Christchurch City Council, for example, and
it runs the Ellerslie Flower Show in Hagley Park. You could argue that’s not a core service. The council has
determined that there is value in delivering that show for the people of Christchurch, and, frankly, I meet a lot of
people on planes who are travelling from all over New Zealand to come to that. The council’s decision is to run the
Ellerslie Flower Show, and that is a decision for the council to make. It’s certainly not a decision for central
government to make or for myself as minister.
GREG Okay, then from the central government point of view, where do you stand on things like greenhouse gas emissions, child
welfare and NCEA levels in a region like Auckland, for example?
DAVID I think Auckland is stepping too far when it’s starting to be involved in the NCEA levels and greenhouse gas emissions,
et cetera. That is more a central government function, and in discussions we’ve had with Len Brown, they can certainly
have an aspiration to work with government around some of their social— southern initiatives around employment, et
cetera, NCEA. But that is a fundamental core responsibility of central government, not local government.
GREG But Len Brown’s made the very very valid point, that I’m sure most mayors in the 78 councils would make, if they can’t
do that, how are they going to make their city, their province, their region a place everyone wants to live. If that’s
just up to local government— central government, how are they going to make it better?
DAVID You’re hitting on the essence of the relationship that should be between local government and central government. It
has to be truly a partnership, but it’s not on for local government then to step into the space which is clearly central
government’s role. And it is central government’s role to establish the education system in this country. It is
central government’s role to establish parameters of measuring the success of that. We can then work with Len Brown and
his council, particularly as he tries to develop solutions to some of the social problems in South Auckland, and we’re
happy to work with him in a partnership. But the core responsibility still remains with central government.
GREG So you are limiting local government? They are going to be in charge of very basic things and numbers and keeping an
eye on rates. You are limiting their scope quite a bit.
DAVID We’re certainly going to get local government to be far more focused on what activities it undertakes. In the past,
some councils have stepped too far and undertaken activities, Hamilton city, for example, with the Grand Prix racing. I
think that was an activity that went far beyond where local government should have gone. It cost local government in
that area a lot of money. We’re not saying you cannot run race cars; we’re saying you need to think very very carefully
before undertaking that activity. And by putting these financial management tests in place, I think councils will think
more carefully about some of those longer-term extraneous activities they’re undertaking than they did in the past.
GREG I think a lot of people at this point at a local level are going to be thinking, ‘Why did I bother electing a local
council at all?’ If I’ve elected, say, a very left type of local council, then a centre-right National government comes
in and says, ‘No, you can’t do it this way. You’re going to do our way,’ why bother having local governments at all?
DAVID Well, I think you’ve hit on the very purpose for tightening the purpose statement of the act. At the moment, if you
have a right-of-centre government that says, ‘No, we’re not going to fund that particular school in that area because
there’s another one two or three kilometres away,’ under the current purpose statement of the legislation which councils
operate today, they could actually make the decision to step in and run that school if they wanted to. That is where
the purpose statement has become too wide, so we are changing the purpose statement, we’re making sure they’re far more
focused on cost-effective delivery of services to their communities and to their business, and I think that way we’ll
get the right relationship between a central government and a local government.
GREG Okay, let’s go back to rates. You’re putting a cap, albeit a soft cap, on what rate rises can be. That’s how councils
get their money; that’s how they fund the schools, the roads, the whatever. If that’s nobbled – essentially that is
what’s happening; it’s going to be nobbled by central government – where’s the money going to come from?
DAVID At the end of the day, it is still the responsibility of a particular territorial local authority to set rates, so they
must now justify their rate increases—
GREG So, hold on. Hold on. We need to clear this up. Are you going to say that rates can only go at the same rate or
thereabouts of inflation or not? This is what most ratepayers are wanting to know.
DAVID No, we’re not. No. No, we’re not doing that, because that would be a hard cap. For instance, rates can only go up by
CPI plus 1%. We’re not putting in place a hard cap, because if we put in place a hard cap, there may be a particular
council that has to bring its wastewater system up to scratch. If we restrict that council doing it, we’re eventually
going to end up with an infrastructure deficit. So it is not a hard cap; it is a soft cap. But certainly if a council
was proposing to put up its rates by 2% or 3% or 4% above inflation, we want to know why they’re doing that in central
government so we have the ability to intervene and talk to that council. At the moment, the ability of central
government to interfere with a local-government decision around rates is very very limited, and we want more ability for
central government to work more closely so we can manage some of these very large rate increases that have occurred in
GREG Again, though, you could then force local-body elections. You could force a change of who’s running local councils by
your actions from Wellington.
DAVID We can do that now. We can step in there with what we call the nuclear option, and here in Canterbury, in my region, we
did it a couple of years ago with the regional council. We came in and fired that council and replaced them with
commissioners. That is a very heavy-handed intervention from central government. What I’m proposing in this
legislation is a more graduated response, because in many cases the ability to work and put a Crown manager or observer
in to work with a council may actually get the council acting more functionally, more responsibly than that nuclear
option of simply firing a council, imposing commissioners or directing that they have fresh elections.
GREG Okay, how’s that going to work? You’ve got 78 councils, 78 mayors, you know, everything that goes with 78 different
councils. Presumably, you’re not going to fly from one end of the country to the other all day and every day. Money’s
going to have to be spent to keep some sort of a monitoring, some sort of a control in. Is that not defeating the
purpose of what you’re trying to do in the first place?
DAVID Yeah, there is a number of people who work for the Department of Internal Affairs that focus on local government. Those
people are advisors to me as the minister. They will be able to keep in touch with the decisions that the councils are
making. I get a lot of correspondence from people all around New Zealand as ratepayers complaining about their council.
We want to be in touch with some of those complaints. If there’s the ability to work with local councils so that they
do make better decisions, so that they don’t impose unjustified rate increases on ratepayers, I think, frankly, we’ll
get a better performing local-government sector, and that will help drive a more productive economy, which is a
fundamental aim of this National Government.
GREG Okay, Rodney Hide when he was in your job didn’t rule out the possibility of selling bits of the waterfront and
basically doing on a local level what the Government’s now planning to do on a national level. Is that something you’d
rule out – local asset sales?
DAVID Well, I think if you look at my own city of Christchurch where we clearly have an extraordinary situation, the
Christchurch balance sheet is strong with a number of assets, the council needs to make the decision. But from a
ratepayer point of view, from a ministerial point of view, I think the Christchurch City Council needs to think
carefully about rationalising some of those assets to help it meet its huge challenge with the rebuild of the city.
GREG Okay, Christchurch is an exception to the rule at the moment. I think everybody will agree on that. But broadly
speaking, though, if the rates aren’t going at the rate needed by local councils, asset sales – is that going to be on
DAVID Well, I think they’re in a very similar position to central government. If they find a way where they can sell down
some of their assets to maintain the funding, to deliver some other infrastructure required within in their communities,
in principle, I would support that. But having said that, Greg, it would still be a decision for local councils to
make. This legislation—
GREG But surely at the end of the day—
DAVID It’s not about—
GREG if a council comes in, you’ve said, ‘No, you can’t put the rates up at this rate,’ they don’t have enough money and go,
‘Well, your museum would make a lovely block of apartments. Knock that off,’ you’re going to say that, aren’t you?
DAVID Well, I think if you take a museum, for example, they may decide that that is a fundamental asset that they need to keep
for the benefits of their community. But if they had shares in an airport or shares in a port company, they may well
decide they could sell down some of those shares to help them provide the infrastructure which their community’s
demanding of them.
GREG What about user charges? In so many parts of Australia we see the toll roads. If they can’t get money out of rates,
they’re going to start doing that type of thing, aren’t they?
DAVID Well, I personally think if we could move to more of a user-pays basis for roading that would be good. The ability for
councils to set their rates remains the responsibility of council, so they can do that on a capital value charge. They
can do it on a uniform annual charge They could move to do that on more of a user-pays. That is the sort of decision
which councils still have the responsibility.
GREG All right, let’s move on from the local-government reforms. Let’s look at a couple of other things. ONE News last
night – 375 kilometres of underground stormwater drain in Auckland needs replacing. Where is the money for that going
DAVID Well, I didn’t get to see ONE News last night, but—
GREG Oh, you should have. It was very good.
DAVID that is a fundamental requirement of the Auckland city to address. So if they’ve decided that they have fundamental
flaws in their infrastructure, they are going to have to find a way to address that, and I’d suggest to Mayor Len Brown
that that would take priority over perhaps some of the other planning decisions and spending decisions they were
GREG Mayoral donations, Kim Dotcom – do we just need the transparency we have at a central-government level on that?
DAVID Yes, I don’t think there’s any doubt that the two regimes should be far more similar. As a central-government
politician, the rules for me collecting donations to help fund my campaign are very specific, very transparent. I think
when you look at local government, there’s no reason to me why the rules should be different. And it would be of my
interest to try and get another piece of legislation before Parliament at some stage looking to try and bring the two
GREG When, possibly?
DAVID Well, at the moment, the legislative programme in Parliament is very busy. My first priority is the current better
local-government reforms we’ve been talking about. But if there was an opportunity, with a legislative gap perhaps
towards the end of the year, it would be good to try and bring another piece of legislation. It wouldn’t be a
complicated piece of legislation, but trying to get the regime for central-government campaigns, local-government
campaigns more or less aligned, giving transparency to all of us.
GREG We will have to leave it there. Local Government Minister David Carter, thank you for your time.
DAVID Thank you, Greg.