Need to reform Local Government
The Funding Mechanism for Local Government creates a conflict of interest
When pecuniary interest eclipses public interest in the culture of local government the institution fails in the purpose for which it was created
A recent headline in Business Desk read Builders say consents system is ‘broken’ . It is. It’s not just the Building Control Authorities (BCA), the council department that provides building consents. What is called council planning, the group that issues resource consents has become a self-funded bureaucracy that operates as an unaccountable monopoly.
And, in large councils, most notably Auckland, fines have become a revenue source: one 160 meter bus lane in Newmarket generates $12,000 fines a day. Of course council officials replied: “…although AT had been clear bus lanes weren’t aimed at revenue gathering…” but then goes on to say “revenue from fines helped fund public transport, parking, road safety campaigns, walking and cycling initiatives and road maintenance… With Auckland Transport utilising the enforcement revenues collected in this way council is also able to allocate funding Auckland Transport would have otherwise needed, to other council services like libraries, parks, community centres, the Art Gallery, the Zoo, and other recreational facilities.” That sure sounds like revenue gathering, despite the prior disclaimer. And staying with Auckland Transport for a moment, during the COVID crisis, $863,170 of taxpayer and ratepayer money was spent altering lower Queen Street that was ripped out a year later. If that has been a private sector stunt, heads would have rolled.
The problem? Local government is no longer local. It is government by unelected officers, team leaders and senior managers who use standing orders, privacy and commercial sensitivity to erect barriers between their decision-making and the public they ostensibly serve. They are not held accountable for their spending, for their policies, for their revenue collection or their failures. Checks and balances including the role of the elected councillors and that of public consultation have been neutered. The bigger the local government, the worse the problems.
The problems are systemic. It’s not that bad people are running local government, it is the natural outcome of a closed system. Systemic changes are needed:
Remove pecuniary interest
Problem: The funding mechanisms for local government finds senior management passes the message down to operational staff that revenue generation by fees, fines, contributions and hourly billings are a council priority. Indeed some departments such as building control authority and resource consent departments are told they are self-funded – you want your budget funded? Go get the money. This distorts the purpose of local government and contributes to adverse outcomes, such as the affordable housing crisis.
Solution: All fees, fines, contributions and other charges levied by the territorial authority are paid into a central trust fund. Each territorial authority then applies for a share of that trust fund as revenue sharing. The trustees of the Trust Fund will provide a base rate based on population adjusted by local cost of living, with a remainder paid as an incentive bonus based on success criteria. For example, coming in under budget and under schedule on a road project would earn a bonus. Fixing a road so it lasts longer would earn a bonus. The fastest turnarounds in building and resource consents would earn a bonus.
In some cases, the bonuses should not be awarded to the authority, but to the personnel who delivered success… this means the managers and staff directly responsible for the accomplishment.
Remove joint and several liability
Problem: The joint and several liability principle applied to the leaky building crisis completely changed local government culture from public service to risk control.
Solution: Local government is established by Central Government. The buck stops at the top. All fiscal liability should be held by the State. But personal liability should remain with the individual not the legal fiction of a limited liability company. In other words, staying with the leaking building crisis, the State should have immediately stepped in – similar to how it does with ACC – and paid to stop the leaks before there is further damage, and with no money wasted on endless court battles. Then it should investigate who is responsible with no protection of limited liability where the culprit simply puts their company into liquation, in a take the money and run scenario.
The power of the State to deprive persons of liberty or property should not be broken by limited liability companies. If a company is liable, the money cannot escape to the investors, owners, directors, family trusts, etc. The natural persons can be held liable if they do not repay their takings with the only out being personal bankruptcy. In other words, instead of holding the tax and ratepayers joint and severally liable, pierce the corporate veil and hold the culpable individuals liable. And if that liability extends to council personnel, they too should be held personally liable, but only if it is clear they failed to do their job.
Require councils to obey the law
Problem: Example: RMA Section 36AAA sets out the basis on which councils can charge applicants fees. The benefit must fall to the applicant as opposed to benefiting the community as a whole. This is ignored by council. For example, charitable trusts apply for consent to build pensioner housing. The benefit is to the community that otherwise finds its pensioners become hidden homeless. But the council charges are not only assessed, but in some cases become so onerous, both in donations the trust has to raise, and the years it can take its volunteers to prevail, that the trusts abandon the projects and sell the land to developers for comfortable-class housing.
Solution: Require councils to obey the law. In particular, have a tick-box on the online application that takes the applicant to a Section 36AAA payment section where they can signal the application is a community-benefit application and not subject to fees. These flagged applications are then reviewed by a council official to confirm the claim and then processed without fees charged.
Restore checks and balances
Problem: Elected officials stand for office promising change, but when they are sworn in, they discover their powers are limited. They are provided reams of briefing papers by the Chief Executive’s staff who shape the debate in a form pre-decided by the administrative staff. The elected representatives are dependent on the executive for information and those who buck the system find they are cut off.
Solution: Assign an independent staff to each elected mayor whose job is constituent services. Complaints, concerns and queries by the citizens of each ward are directed to these constituency services advocates (CSA) who have full right of enquiry and direct access to every council staff member and consultant – not filtered through the chief executive or PR staff. Findings are reported to the mayor, but also to the ward councillor, as the CSA reports to both. Where possible, the outcomes are documented on a public web site controlled by the mayor and ward councillors, not the chief executive and their staff.
Dial back Health & Safety
Problem: Health and safety have become excuses for disproportionate regulation that punish the law abiding and safe in an ineffective attempt to change the behaviour of law breakers and the irresponsible. For example, lowering the speed limit to 30 km/h on a road engineered for safe driving at 50 km/h is unlikely to cause a hoon driving at 80 to slow down, but it will frustrate the safe drivers who find the new limit below the intuitive safe speed. It will however, become a new source of council revenue for speeding tickets, and foster increased resentment of local government.
Solution: Provide a disputes tribunal chaired by ward councillors and the mayor’s CSA staff (see above) that may hear any complaint of a regulation based on health and/or safety that the complainant views as unreasonable or lacking effectiveness. Empower the tribunal to order the respective administrative staff to change or revoke the regulation (following due process of law that may require a further council resolution) to fix it.
Dial back on Commercial Sensitivity
Problem: Commercial sensitivity is used as a cover to avoid accountability, especially involving waste of ratepayers money. It’s public money being spent, any ratepayer or citizen should be able to see where it is going, and if it is value for money. Vendors doing business with council will complain, but they will get used to it, and the public will benefit as open information means more competitive services.
Solution: Place the entire accounting system, including all contracts on line, made available by password to any person on the voting role. This includes job titles, but not person’s names. It includes company names. For the few cases that truly do require redaction due to commercial sensitivity (or personal security), the applicant must demonstrate to a committee of the council (elected officials) why redaction should be provided.