Basic service provider or mini democracy? Why NZ needs to decide what it wants from local government

Prime Minister Christopher Luxon’s recent challenge to local government “to rein in the fantasies and to get back to delivering the basics brilliantly” was unsurprising, given his government’s focus on fiscal restraint.

It was in keeping with his announcement that councils’ legislative purpose of delivering their communities’ economic, social, environmental and cultural wellbeing are to be removed from the Local Government Act.

Local government responded with the usual indignation and suggested solutions. There were complaints about inadequate funding mechanisms, questions about whether libraries are basic services. The whole spat likely flew under the radar of the wider public.

Yet the problems facing local government are very real and will not just go away by kicking costly decisions down the road. Rather, they are symptomatic of fundamental choices facing the sector.

Foundational issues

The problems go back to the late 1980s when our current local government system was designed.

Led by then local government minister Michael Bassett, the reforms were the first in over 100 years. More than 850 city, borough and county councils, catchment boards, united councils and local boards were amalgamated to form 86 in 1989 and now 78 regional, city and district councils we have today.

But Bassett still considered local government reform incomplete because of the failure to address water provision.

But I would argue the real unfinished business was the failure to resolve the purpose of local government in the first place. Only when that is agreed can we address local government’s functions, form and funding.

Until then, the shape and function of local government will remain a political football.

According to section 10(1)(a) of the Local Government Act 2002, the purpose of local government is “to enable democratic local decision-making and action by, and on behalf of, communities”.

But the second subsection describing its purpose, (s.10(1)(b)) has changed with the various governments. In 2002, under Helen Clark’s Labour-led government, the purpose of local government was:

to promote the social, economic, environmental, and cultural well-being of communities in the present and for the future.

John Key’s National-led government in 2012 replaced that purpose with a remit

to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.

The previous Labour government reintroduced the wellbeing purpose. Luxon is set to remove it.

Function, form and funding

Should local government be a true local government with comprehensive and wide powers, or simply a property-services organisation, providing little more than street-lighting, roading, water and sewerage?

The two very different conceptions of local government determine its functions, form and funding.

These differing views reflect the disparate Anglophone and European concepts of local government. National aligns with the Anglophone model, with its limited local government functions under a strong central government. Labour leans towards the European model, with devolved wide-ranging functions.

The distinction between the two models was made very clear to me while working as part of an international team researching local government responses to the COVID-19 pandemic.

My Italian colleague, for example, reported how his country’s local governments were vitally involved in their cities’ day to day management during the crisis.

Mayors and councils were making daily decisions and announcements about their hospitals’ resourcing, whether to close the schools and training institutes, increase social welfare provision and housing, and so on.

On the flipside, New Zealand local government was largely sidelined to address humanitarian services such as ensuring people had access to food and accommodation.

Instead, councils searched for local “shovel-ready” infrastructure projects to access central government funds in order to reduce unemployment and stimulate local economies. The public focused on national daily press announcements from the prime minister and director-general of health.

No appetite strong local government

For all that, the distinction between Labour and National conceptions of local government may not be as great as recent history suggests.

Both want a strong centre and weak local government. Our councils have largely reinforced this reality. Some have sought to extend their scope of activities, others have clearly defined themselves as property services agencies.

Most have largely refrained from the excesses the prime minister appears to be concerned about, partly to avoid being caught out by changes in central government, but also because most council expenditure is already committed to infrastructure.

But does it have to be this way?

The Labour-led government’s 2021 Future for Local Government review envisaged local government using partnerships with hapū and iwi to promote the four key wellbeings as key to any reform. This is at odds with the present government’s priorities and views on governing with Māori – a big reason why the reports now collect dust.

The review was also very constrained in considering local government functions. Rather, it seemingly took existing functions as its starting point to focus instead on local governance.

Writing about our local government nearly 70 years ago, public servant and academic R.J. Polaschek imagined what would have been if New Zealand had been colonised by Denmark instead of Great Britain. In this hypothetical scenario he saw strong independent local government based on communities with wide-ranging functions.

It still could be, but tinkering at the edges is not going to solve its problems. Our local government project remains unfinished business. It will take political courage and vision to complete the task. One that remains a fantasy, and we are all the losers.