28 November 2013

LGNZ One Year Out – the case for balanced growth across New Zealand

A keynote address to business leaders - by Lawrence Yule, LGNZ President.

Thank you all for joining us here today, I’m delighted to have the opportunity to outline, to so many key influencers, Local Government New Zealand’s vision and challenge to central government to work with us and industry to deliver balanced growth across our country. I hope today will be a springboard for many conversations on this subject in the lead up to elections in 2014.

For too long local government has been regarded as an economic handbrake. There is a misconception that we are anti-development – in fact, nothing could be further from the truth.

We understand, better than many, that effective fit-for-purpose infrastructure will drive economic success. To suggest otherwise is to completely misunderstand the purpose of local government.

We are on the same page as business regarding infrastructure development and we are on the same page regarding growing the economy – the question is, how can business, central government and local government most effectively work together to develop this country in a more productive way?

A shared national plan for balanced growth

First we need a clear strategy. Currently central government does not have an articulated plan for regional development – and while Auckland continues to grow stronger, much of provincial New Zealand is either static or in decline.

Over the coming year, in the lead up to the 2014 general elections, we will be advocating very strongly for the development of a shared national plan between local and central government to deliver balanced growth for New Zealand. We’d like to see this launched with a symposium for thought leaders and influential people from around New Zealand – people like you.

We want to see serious and connected conversations about working together to achieve these aims – and we need to get the message out there that, for New Zealand to succeed, all parts of the country have to be successful.

Regional economic development

New Zealand’s economic development plan can no longer just be about our biggest cities – Auckland and Christchurch – although both are critical to New Zealand’s success. Auckland’s growth is projected to account for three-fifths of New Zealand’s population growth from 2011 to 2031 – and by that time the region is expected to be home to 38 per cent of New Zealand’s population.

Migrants to New Zealand arrive in Auckland and rarely go further. We need to find ways to address that. It does not make sense to simply try to manage and enable growth in Auckland to deal with its over-capacity issues when many other parts of NZ are under-utilised.

New Zealand needs Auckland to succeed. However, Auckland also needs the country to succeed. It is simply not a viable strategy to allow a situation to develop where we have Auckland, and then we have “the rest of New Zealand.”

Local and central government need to work together to reduce these regional inequalities. We need to find ways to develop our regional centres into environments which offer opportunities in education and employment – places where skilled locals want to stay and skilled migrants want to settle.

Local government is prepared and ready to play a vital role in enabling all our communities, but it is only through a shared role with central government and a clear national strategy that we can address the growing gap between Auckland and the rest of the country.

Local government is actively exploring and embracing options to stimulate our local economies. An excellent example is Hutt City Council which consulted and won buy-in from its community to encourage economic development by remitting development contributions, and resource and consent charges for specific developments for a two year period to encourage growth. It’s an innovative, development-friendly strategy.

There is great enthusiasm within the sector for working with business, to develop opportunities. To quote another example, my own council, Hastings, has key account managers who are assigned to work with stakeholders on major initiatives and projects to arrange the whole interaction with the council.

Infrastructure

Alongside a joint plan for balanced growth we need a joint local government/central government plan for infrastructure. Local government is very focused on infrastructure – in fact the infrastructure value of the sector is not much different to central government. Our councils own community assets worth more than $120 billion.

Supported by skilled council officers, elected representatives develop and oversee significant assets and scores of services. From the potable water that comes from your taps to the pavements you walk on, the roads you drive on, and the swimming pools and parks where you exercise.

Councils take away rubbish, pipe your sewage, and deliver many more services to communities and businesses 24/7, 365 days a year. For residents, it’s an average cost via rates of just $5 per household per day. That’s a remarkable value proposition. Without councils providing such services, wider economic activity simply could not happen.

Local government is clearly open for business when it comes to the development and maintenance of infrastructure.

Water

The sector is taking action with regard to water infrastructure through the 3 Waters Project. This will enable local government to establish a national picture on the current state of infrastructure and performance of drinking, waste and storm water assets and services, and develop a robust framework for building on best practice.

We are investing in data acquisition for water. Good planning is based on good data. We consider that a holistic LGNZ national plan for our water assets, working alongside the Government’s National Infrastructure Unit and the wider sector, is the way forward.

3 Waters is a good example of how local government can lead infrastructure development. We need to use this model to get other infrastructure working more productively for our economy.

Roading

Roading is another example of where growth can be facilitated. The understanding of the economic contribution of the local roads network is not as clear as it could be. At present, local government is bearing the risk and cost for 90 per cent of the roading network, but only receives 50 per cent of the funding for it.

There is no plan to consider how local roads can be better used to enable economic growth. Instead, under the New Zealand Transport Agency’s FAR review, we’re being asked to re-distribute the existing funding pie – where’s the economic growth considerations there?

Our rural roading network makes a huge contribution to the profitability of New Zealand and is crucial for the farmgate to factory process. To name but a few: the Northland roads carry dairy trucks and significant tourist traffic, Southland roads service many rural industries, Gisborne and Tasman roads bear countless trucks shipping logs to port.

The introduction of High Productivity Motor Vehicles – or, in other words, heavy trucks – poses additional risk. The NZ Transport Agency says they will not damage the roads, but if they do, who pays? Again, we need a shared national plan to consider, and appropriate funding to deliver, the economic benefits of opening roads to industry.

Local councils spend $800 million annually building, fixing, renewing and maintaining roads. We’d like to open up new local roads to industry – but if we are to do that the risk needs to be shared and we need a shared funding model to facilitate this.

Building and housing

We also need to work with central government on building reforms – both to enable further infrastructure development and new affordable housing. This is a key issue in our largest cities, particularly Auckland and Christchurch – it will be one of the biggest tasks for elected representatives throughout the current triennium.

The Auckland Housing Accord between Auckland Council and the government aims to increase housing supply and improve affordability, including consenting 39,000 new homes by the end of 2016. Similar accords are being considered for Christchurch City Council and Wellington.

LGNZ wants to speed up the building consenting process and we are already in discussion with government on this – including online consenting. However, there is the big question of liability. Following the leaky homes crisis, councils were left holding the baby to the tune of $12 billion. Is it any surprise then that many are risk averse?

If we, as a country, are going to empower councils to make the big decisions around speeding up consenting, and the infrastructure development that is needed to bring about balanced economic growth, then central government has to step up to the plate and start sharing the risk.

The Law Commission is currently addressing the issue of joint and several liability, and we would like to see movement from central government on sharing risk. That would be pro-development and pro-business. It would enable a move to proportionate liability, allowing councils to speed up consenting with the knowledge that risk is shared.

We also need to see sensible changes to development contributions. LGNZ understands the Government is concerned that the benefits to the wider community aren’t currently recognised adequately in cost allocations for some projects.

However, a number of other reforms being proposed should address this – there is concern that the current proposals would transfer significant additional costs to rate funding and would possibly result in future community facility projects being cancelled, deferred or scaled back.

Governance and financial leadership

The local government sector knows that, in order to deliver a plan for balanced growth for our economy, we too need to raise our standards of governance and performance.

LGNZ is leading and supporting our members to improve governance accountability and value for money performance through training. Early next year, we will start delivering a joint governance training programme in conjunction with the Institute of Directors, and there is very considerable interest in this from local authorities across New Zealand.

These workshops will focus on key governance, leadership and strategy skills for elected members and contribute to improved governance and performance in the local government sector, delivering greater value for money.

We are also looking at where councils can work together to share best practice and deliver shared services to provide better value across many areas – from IT, to water to human resources.

LGNZ is committed to embedding these changes. It’s going to be challenging and a very steep learning curve for many, but the sector has an appetite for change.

LGNZ supports the new benchmarks for financial performance and financial prudence regulations which have come about as part of the Local Government Act review. We contributed to the development of these and we consider that they may provide some useful measurement of local government performance.

However, we also see better value in a wider set of contextual performance measures relevant to the different size and scope of the different organisations within local government. After all, Westland is very different to Auckland.

Strong local democracy

To successfully implement a shared national plan for growth, LGNZ needs to work with central government to reform the voting system and get people participating in their local community to make it vibrant, resilient and economically successful.

On-line voting is already under consideration for 2016 but we need to look at other options too, such as shorter polling periods – again, it’s about having the right incentives in place.

There is a need for a national campaign to lift voter turn-out. We need to stop making voting a chore, dispel the apathy and bring about recognition that it is a privilege to vote. We need to make elections and polling an event – because people respond better to events rather than piles of papers.

We also need to see more high calibre people from business stand for local government – and I’m going to throw a challenge out to industry now. When the next local elections come around in three years will you stand for your local council?

To be as business-friendly as possible, to have the best possible relationships with business, we need experienced business-minded people in every council chamber in the country.

Many farmers now serve on rural councils and we enjoy a good relationship and productive conversations with Federated Farmers. Other areas of business can follow. We need the big thinkers to help us build economically-vibrant communities. I call on you to consider the idea, and let’s get the conversations flowing on how we can bring this about.

The environment

Turning to the environment, there is a need to develop effective policies around the Resource Management Act – policy that works to encourage growth whilst maintaining our environment. To provide the best environmental protection possible, we need to ensure that decision-making remains in the hands of local councils.

This will ensure that the decisions that are made take into account specific and often unique local knowledge and environmental considerations.

In closing

Finally, I would like to reinforce my message that local government is open for business. We are here to work with central government on a plan for balanced growth across New Zealand.

I cannot emphasise strongly enough that local government is a business enabler. It is focussed on growth. The handbrake is off, the engine is running. What we need now is to develop a shared plan with central government and get support from the business community to get this vehicle out on the road and developing this country in a more productive way.

*Ends*

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