Steven Joyce: Centralisation isn’t working, time to trust the regions

Polytechs and hospitals need an ownership model that provides local control, Steven Joyce writes. Photo / 123RF

OPINION

So far, so good for the new Government. In the past week, it has come up with a tidy set of portfolio allocations and a clear plan for its first 100 days. The plan is an entirely recognisable amalgam of the election policies of the three coalition parties, as are the coalition agreements. Those who supported the change of Government will be happy with the early signs, while those who voted for the losing side are proving to be loud in their grief. Such is democracy.

This is just the start. There remains much thinking and work to be done across a whole range of thorny issues. And one of the burning platforms is what to do about local government and the regions.

It’s no secret local government is struggling, and in some cases completely broken. Our capital city is the poster child. Forget for a moment the travails of the current mayor, and look back over the past 20 or 30 years. Wellington’s story is one of spending money on grand above-ground monuments to itself, while not bothering to do the things it is most clearly mandated to do, like managing the delivery of fresh water, removing wastewater, and helping people get around the city in practical ways, including, God forbid, using a car.

Wellington councils have been past masters at building a convention centre and gold-plating its reserve Town Hall, while running cap in hand to central government for money for their core functions. I have personal experience. After the Kaikōura earthquake, Treasury asked councils for urgent infrastructure projects which would help restore their resilience. Wellington cynically came up with the same bunch of capital projects for its water network on which it had refused to spend ratepayers’ money over the previous 20 or 30 years. The Labour Government’s Three Waters plan was as much a plan to bail out Wellington as anything else.

Auckland isn’t as dysfunctional as our capital city, but sometimes it’s a close-run thing. Witness this week as the council once again indulged in flights of fancy about expensive new stadiums or shifting the city’s port to who knows where, while at the same time musing aloud about cutting rubbish collections from weekly to fortnightly to help balance the books. At least Watercare is doing a reasonable job of rebuilding its infrastructure in the 12 years since the creation of the super city. It would be doing a better job if previous mayors hadn’t co-opted its balance sheet to prop up the rest of council.

Regional areas have a different problem but it is just as acute. The previous Government largely dismantled local governance and control over big areas of activity in regional centres. In the clearly mistaken belief that Wellington knows best, local hospitals and polytechs have had their leadership removed, and local government was slated to lose control of its planning functions and Three Waters provision until that was all halted by the election result.

Centralisation is clearly not working, and if it continues, it will get worse. I have lost count of how many regional leaders I have talked to over the past few years who report that their polytech and hospital have completely disengaged from their community as a result of the reforms. The visibility each local region has of these crucial local services and their ability to shape them is now non-existent.

The question is, what to do next? How do you make an argument for restoring local control and leadership in regional New Zealand when the evidence is clear that leaders in two of our largest cities would currently struggle to run a bath?

Prime Minister Christopher Luxon. Photo / Mark Mitchell

The answer must surely be to restore both limbs of leadership at the same time. The ability to make decisions, and clear accountability for those decisions. Part of the reason local government is often a bad punchline is because many people don’t take it seriously. Voting turnout is low and public interest is low, because it has too little impact on people’s lives - at least until it all goes wrong. For local government to work and local leadership to be successful, paradoxically, it actually needs to be given more responsibility.

Take water. As I’ve written previously, Labour’s Three Waters plan was not universally bad. One good part was the independent regulator. It should have the power to require water standards to be met, and punish entities that don’t meet them. Corporatising water entities and providing a clear funding stream (from rates or water charges) is also important. You can’t have a long-term infrastructure investment plan if you have to go to council every year to beg for funding. Wellington Water currently has to beg for money from five entities each year.

The Government may need to provide some infrastructure funding to help councils catch up with their water investments, and that’s fine too. Governments do that all the time. But it should come with clear strings attached. A defined programme of work, a clear structure of the type mooted, and commitments to things like water meters to reduce wastage - all in return for the funding.

Polytechs and hospitals need an ownership model that provides local control, and that might mean something new. Nobody is arguing for a return of the DHBs. Shane Reti is rightly wary of more major structural change in health, but a community trust ownership model for regional polytechs and/or hospitals could give real local leadership, without much, or any, upheaval. Appointed local directors would provide a real local voice for these important local services, and again, regulators like NZQA and Health NZ can ensure accountability.

The new Government is promising regional deals to manage all this sort of stuff – a long-term partnership between central and local government around the likes of transport funding and water, to ensure agreed projects and agreed outcomes, such as housing affordability. These are a good idea. We did something similar in Christchurch post the earthquakes.

The trick with regional deals will be not making them too complicated. And to prevent the time-honoured local government trick of revenue substitution – where central government offers to build pipes, and the local council says thanks very much and goes off and builds the Taj Mahal with the money it has “saved”. That comes down to agreeing on clear outcomes, and not making the deals too “global”.

Central government should trust local leadership to do more, because on the whole they know their regions better and know how to do things more efficiently and effectively. The key to avoiding the Wellington and Auckland malaise is agreeing on clear outcomes and clear accountability.

Steven Joyce is a former National Party Minister of Finance and Minister of Transport. He is director at Joyce Advisory, and the author of the recently-published book on his time in office, On The Record.