At the sharp end of delivery: What role for local government?
Rarely, if ever, has New Zealand had more going on in the world of infrastructure. In one direction you’ll see massive recovery-oriented Government spending, with announcements on housing acceleration, water and transport, competing for attention with wider spending plans.
Turn your gaze and seemingly every government ministry and agency are tasked with a mandate to deliver broad social, economic, cultural, and environmentally beneficial outcomes – think health, defence, and tertiary education.
Look again, and you see council budgets and resources under huge strain as they struggle to cope amid huge constraints. And right through the middle, you might pick out multiple planning, sector and system reforms that are either underway or just ahead.
In this environment of often competing initiatives and activity, a key question is: what is the role of local government – the guardians of our most local public dollar?
Three influential chief executives – Susan Freeman-Greene of Local Government New Zealand; Stephen Town, formerly of Auckland Council and now at Te Pūkenga NZ Institute of Skills and Technology; and Adrian Littlewood of Auckland Airport – apply themselves to this not insignificant task.
It’s great to have a pipeline, but how do we make progress at a local level?
With their long-term plans, local government arguably have the most clearly signalled public sector pipeline. However, Stephen Town says that local government has unique challenges in a system that is ‘in a bit of a muddle’ at the moment.
“If you think about where the conversations are, they’re all a bit confused, and that’s partly because plans keep changing. One of the first things we’ve got to do is nail down where investment is going to go, and how we’re going to procure it, and then stop re-litigating the big plan every three years, which is what happens at the moment.”
“We need to create a plan and funding commitment that spans many election cycles, and we need to try to de-politicise the question of infrastructure more than we have been able to achieve so far. I would back the Infrastructure Commission to deliver a really clear plan of where we should invest over the next 15 years, taking account of the climate change bottom line.”
"We can only deliver at the scale the Government wants with a true partnership between local and central government.” - Susan Freeman-Greene, Local Government New Zealand
This is echoed by Susan Freeman-Greene, who says: “We are a small country with a massive pipeline of work ahead of us. With pipeline certainty we can invest in our workforce. Creating certainty will also help us detach from the political cycle, which is difficult to do, but we will be better off.”
Freeman-Greene adds that one way an infrastructure-led economic recovery could take place is by thinking about central and local government as a system.
“Each has different strengths and roles when applied to infrastructure and wellbeing. We can create wonderful policy, but it needs clarity and alignment, a marriage of planning, resourcing and on-the-ground skills.”
Budgets and funding for the future: a joint central and local approach
When asked if local government has the tools to be able to fund the infrastructure that communities require, Stephen Town is clear.
“No. I think that that topic has been well-traversed. Even with very low interest rates – never a better time to borrow – there’s still a limit to what you can expect a local community of any size to take on. Intergenerational equity still bubbles up as a limiting factor.”
This sentiment is echoed and expanded on by Freeman-Greene, who says more consistent funding over the longer-term is needed.
“We have to think longer-term, not just planning for one objective. This needs people to pause at the beginning, and to stop ‘just burrowing on’ with their work. Councils are there to enable communities, but everyone is under the budgetary pump. We just had Covid which saw the 40% of council income derived from non-rates resources decimated. To fund growth infrastructure in communities requires rates. So how do we fund infrastructure so it is right for communities?”
Town says there is a quick way for central government to fix that.
“That would be [for central government] to underwrite the balance sheet if the council is investing in an agreed infrastructure plan. You tie the balance sheet issues, the limitations of the local government balance sheet, underpin that balance sheet providing the council is investing in the right things.
“This all comes back to needing an agreed infrastructure plan that looks out over four or five election cycles so that it doesn’t become a political football. We’ve seen it fail quite a few times in the last couple of decades. At some point someone is going to need to bite the bullet and agree to lead it politically.
“I think the idea behind the Infrastructure Commission was a genuine attempt to lift our game, get an agreed infrastructure plan, and then set about developing a workforce plan to deliver it.”
Adrian Littlewood says that one of the biggest things central government could do is to repatriate some of the GST to the regions around New Zealand.
“This would create an incentive and a revenue-generating mechanism for local councils to invest in productive activities that add capacity or grow their regions.
“Councils are pinned in a corner. If you think about Queenstown, a lack of funds absolutely stopped the right things happening around investing to support growth. They’re penalised for growth because they have to pre-fund it all. What they’re now discovering is that a large chunk of the growth is resident growth, and it creates traffic in the morning, and puts pressure on the sewage system. The council is at its maximum limits, yet investment in new housing assets would generate benefits through growing GST receipts that could go to the cause. Repatriating some of the GST is the key. It would support investment in new capacity and infrastructure in the regions, which in turn creates local jobs and improved amenity and services for residents.”
"Repatriating some of the GST is the key. It would support investment in new capacity and infrastructure in the regions, which in turn creates local jobs and improved amenity and services for residents.” - Adrian Littlewood, Auckland Airport
Will water and RMA reforms help or hinder progress?
The national case for change that underpins pending three waters reform is clear, says Freeman-Greene.
“Everyone agrees that significantly more investment is needed in water services delivery infrastructure to meet the environmental and public health aspirations of our communities. We’ve worked with the Government to develop a national-level package to wrap around the reform proposals that addresses the sector’s concerns and supports our communities.”
This reflects a key challenge which is how local government has a voice in the conversation, she adds.
"Local government is vital to delivering on community wellbeing.” - Susan Freeman-Greene, Local Government New Zealand
“Local government is vital to delivering on community wellbeing and the package acknowledges this. Covid demonstrated how important councils were as the backbone of the country during lockdowns. More than just taking away the rubbish, councils supported communities to deliver medicines, social support, and more. Given how much local government knows about its communities, a conversation about leveraging this knowledge will be key to generating true value.
“We are working with the Government to hold up what is important to our communities, but some really crunchy conversations need to be had and issues need to be resolved. These include how to manage transition, price harmonisation, equity, governance, boundaries – and how does it all work as a system?
“Through reform we can make changes to maps, but people are at the heart of the system: the consumers, deliverers, and regulators. What people and communities think and feel, and how they get their voice into the system, is important. Reform can’t just be top down; we need the community voice, as local input can influence all other pieces of work.”
Stephen Town shares this view. “If you take the proposed Three Waters reforms and the break-up of the RMA into different parcels of legislation, you would ultimately look at taking transport into some bigger entities for delivery. Local government would end up being the local voice for community development and community facilities. And once you’ve stripped most of that planning away and responsibility, you’re going to attract a very different kind of politician who is motivated by those things.”
And a message for the infrastructure sector?
“Mine is a simple message,” says Freeman-Greene.
“It’s all about partnership and alignment. There are such huge-ranging pressures on the infrastructure system, and we can only deliver at the scale the Government wants with a true partnership between local and central government. I would therefore open community eyes to the value of local government, putting communities at the heart of the structure, working to achieve things for the people who will benefit for them. This involves creating real and enduring partnerships between central government, local government and iwi that speaks to their different strengths, to deliver for the people of Aotearoa. And it would involve an exercise to examine what central government might do differently to enable that outcome.
“Our infrastructure sector has massive experience and skills, and I know how committed the sector is to the greater good. If we can create alignment between central and local government, the private sector and iwi we will do better. Iwi are really important as we go forward and set the frame for the future.”