Editorial: Think again on reform of councils

Nick Smith. Photo / Mark Mitchell

Nick Smith's political frailties were evident long before his resignation from his Cabinet posts yesterday for twice writing in support of a friend's ACC claim when he was the minister in charge of the corporation.

His judgment has proved problematic in more ways than one. Often absent amidst his busyness was an eye for the finer points of policy and the perils of unintended consequence, as illustrated by the hiccups that accompanied sweeping changes to the Resource Management Act.

Even this week, he was at it again with his one-size-fits-all prescription for the reform of local government.

It would be encouraging to think this policy will now be rethought. But the fact that John Key announced the proposed changes, and his appointment of Gerry Brownlee as Dr Smith's successor as Local Government Minister, is indicative of a full head of steam.

Legislation designed to focus councils on their traditional roles and curb soaring rates and debt levels is still likely to be introduced to Parliament in May.

At the heart of the changes is a dismantling of a 2002 act that broadened councils' role to the "social, economic, cultural and environmental" wellbeing of their communities. Councils' new purpose will be to provide "good-quality local infrastructure, public services and regulatory services at the least possible costs to households and business".

To that end, there will be fiscal responsibility requirements. Council debt levels will be set, and rates increases will be controlled by limiting new spending to no more than inflation, population growth and extraordinary items, such as disaster recovery costs. Further, all mayors are to have the extended power handed to Auckland Mayor Len Brown in the Super City legislation.

There is nothing especially novel in most of this. Politicians often talk of caps when the public becomes annoyed at what are deemed to be excessive rates demands. For them, this approach has the bonus of greater central government control of the employment of economic resources.

Much of Dr Smith's ground was previously ploughed by Rodney Hide, whose approach was equally superficial and ill-directed.

In any community, there will always be times and projects that call for a revenue boost out of the norm. If a majority of people are behind a project and willing to provide extra funding, it makes no sense to constrain the council. Equally, a limit on new spending can easily become a recipe for static communities. Councillors have a readymade justification for inactivity. Far better for them to consult ratepayers about their needs and wants, and whether they are willing to finance these.

If councils fail to do this, and consistently increase rates above the rate of inflation, ratepayers will soon enough deliver their verdict at the ballot box.

Also misguided is the transplanting of the added powers of Auckland's mayor across the country. The Super City is still very much an experiment. There has not been sufficient time to deliver a final verdict on its pluses and minuses.

If Mr Brownlee wishes to make councils control their budgets better, there are other, more fruitful avenues worthy of pursuit. One is the waste involved in having them draw up largely meaningless long-term plans. Another is the manner in which work done for local bodies always seems to cost so much more than a similar operation in the private sector. In that context, spending limits mean only that less work will be done.

One answer could be more aggressive auditing of the cost of projects by a watchdog. Councils that have, effectively, been played by contractors would be more accountable. And ratepayers would be better served than by ill-considered constraints.