I recently had occasion to hear Rodney Hide speak in Napier. As most BayBuzz readers will know, he holds rather conservative views on the role and spending of local bodies. So, given our focus in the next BayBuzz Digest on our Councils’ budgets and planning, and his post as Minister of Local Government, I sought this follow-up interview with Mr. Hide. Whether one agrees or disagrees with Minister Hide, it is refreshing to hear a politician speak as bluntly as he does. Just a bit of hedging here and there.

BayBuzz: You believe local councils should stick to quite limited core activities, and shed the luxuries. What are the core activities you consider appropriate?

Local government has tended for political and legislatively-mandated reasons to spend too much time on process. We have thousands of people following processes, filling out paperwork, as opposed to getting on with the business. You have councils engaged in all sorts of activities which you’d expect to be the last thing for them to be doing, when in fact they’re the first things they are doing – things like monuments, business ventures that you’d expect business to be doing … the latest proposal to come out of local council is to start a banking service, which is the last thing I’d expect to come out of local government. We want to concentrate local government on getting its core business done, which is getting adequate water systems, sewage systems, road and transport systems in place, before they start doing the flash stuff.

Let me try some examples. What about tourist attractions?

Yes, but in doing activities like that they should be sure they have the community’s support. I can imagine there are a lot of community events that are good for the community and good for business, but councils need to make sure they have community support rather than just heading off and doing them.

Property development?

I wouldn’t expect local councils to be involved in property development. Because then you have them acting as both the regulator and the developer, which seems silly.

Water storage?

Sure. The interesting question is who pays for it and who drives it? But it is something that has to be done at a community level.

Many Councils use the benchmark of keeping rate increases at the rate of inflation. Is that a good enough measure?

It’s a good start … The problem has been councils running way ahead of inflation in general. I accept the point that there are costs that councils incur, in particular roading costs, that don’t necessarily follow the CPI. I’m having the statistics department do some work on what would be a good inflation measure for local councils to follow for that reason.

What about public employee costs? Outside government, people are losing jobs, not getting automatic raises, but arguably public employees are insulated from the pain others in the community are feeling.

Politicians are the same. Civil servants, council staff are guaranteed salaries put in their bank accounts each week, whereas everyone else is out there having to earn it. Those in the protected sector don’t feel the sharp end of the recession. That’s why it is so important that we strive for efficiency and good service and low cost approaches from government. What we have had for many, many years is bloated and big government, which has put further pressure on the tradeable sector, which is ultimately the source of New Zealand’s income and wealth. The world is now telling us that we need to live within our means and that includes government.

Local elected leaders say that labor agreements are the barrier to reducing public employee costs. Is that right, or is it just a lack of political will on part of elected officials?

There’s been a change of government and there’s been a recession. We’ve had a Government that was big on spending and spent a huge amount at central government and required a huge amount to be spent by local government. And of course that was through the good times. Now we got the bad times, but a new Government that’s a bit tougher on spending and a new minister of local government who is very concerned about rate costs and the pressure being put on home owners and businesses. So I think it’s a changed dynamic compared to what we had in the past.

With the recession, a lot of proposed spending by local government, especially on infrastructure, is now defended as priming the pump economically. Just about anything people want to spend money on locally has become infrastructure. Do you think local officials are paying fast and loose with this?

Of course. Governments are doing that around the world. No one more so than in the United States, where the fiscal spend up is so extraordinary. Of course I don’t belong to the camp that says we can spend our way through the recession.

Your supporters in Hawke’s Bay are pretty conservative with regard to what should be within the circle of core services. But we also have some local elected officials here who are busily promoting so-called infrastructure spending.

I understand that. If there’s pork being thrown around, people will want it coming their way.

How are you fending that off?

Look, people know that I’m the last person to come to. Very early on in the piece, I was at a meeting of the Auckland area mayors. John Key explained they were going to be spending up on infrastructure. The question was asked: “Who they should approach in Government if they had some good infrastructure projects?” John Key suggested myself. I said “No way, because the answer from me will always be no.” I’m the last person to be approaching about spending more taxpayers’ or ratepayers’ money.

Let me ask about debt. Some councils appear to be holding rates down by borrowing more instead and using loser definitions of capital spending.

Sure. That’s why in central government we worked so hard on the Fiscal Responsibility Act, to ensure that we follow the proper accounting procedures about debt and the calculation of assets. Ultimately there’s politics coming up against proper accounting.

Is there some benchmark or rule of thumb you would apply to define the appropriate level of debt for a local council?

No, even with regard to expenditures at the local level. We have local governments for a reason. They need to make those decisions locally. So, while I don’t want money spent on luxuries and I want that goal of holding it to the rate of inflation, I’m not going to dictate that nor can I. Because ultimately it is up to the local community and the Councillors to be making those decisions. Likewise the level of debt the community carries. What I want to achieve is a level of transparency and accountability so that ratepayers and people in the community know what they’re voting for.

Speaking of local accountability, do we need elected Health Boards?

No, we don’t need them.

You’d toss them?

Yes. It’s been ACT’s policy all along.

Will the underlying decline in property values, which underly the rate base, have an impact on the funds local councils will be able to raise?

Well, you’d think that. But advice I’ve had is that the way they strike the rate is that they work out how much money they need, and then work out the rates accordingly. So it doesn’t follow that their income will fall if property values fall. Ever increasing expenditures are imbedded deep in our body politic. We tend to take our current spending and then think of a few more things to spend on. The pressure is always upwards.

Have you heard of the edifice complex – the compulsion to spend on big structures?

Yes.

Is now the time to making those kinds of expenditure – sports parks, municipal theatres, museums? Many ratepayers support such amenities, but is now the time to be making those kinds of investments?

I think we have to be very conscious of the costs. And the money we need to earn to cover the costs. We need to be very honest about the situation we find ourselves in. We have to be honest about the ultimate costs. We’ve seen in local government time and time again the statement: “Well, it won’t cost the ratepayers a dime.” And then down the track ratepayers are left with the large bills. So I am looking at getting greater transparency and accountability around issues like that.

Mr Hide concluded the interview with some kudos to Mayor Yule.

I have established a great working relationship with Lawrence Yule. We’re lucky in local government to have someone who’s actually outside of one of the main metropolitan areas representing the local councils. He’s helped me a lot actually, because it’s a new job for me. He’s been good at helping me and taking on board what I’ve had to say.

Tom Belford

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12 Comments

  1. Firstly, in responding to this article I must declare a conflict of interest in that I have been an ACT supporter since its inception and was the ACT candidate in the 2008 elections. I commend you, Tom, for publishing this article. Obviously I heartily endorse Rodney's sentiments. It is like breath of fresh air to have Rodney as Minister of Local Government.

    Why the public sector think that their jobs are sacrosanct when the need for so many bureaucrats is diminished is beyond me. Reliable sources inform me that the number of applications for building permits has halved. Any other business would have to shed staff. In any case, at the very least one would expect the permits to be processed much quicker and possibly at a cheaper price. The information I have is that they are taking just as long, or in some cases longer, and cost more. It is as if they were going through everything with a fine-toothed comb determined to find things that will require adjusting and reapplying. The fact is that these added expenses and delays are costing the builders and the owners and potentially jobs at the very time we need to make it as easy as possible to get productive work done.

    I know many people over recent years have complained about the pettiness of some permit and compliance costs and the ensuing delays in dealing with councils. It seems that central government loaded the councils with lots of stuff they neither asked for nor wanted – especially when those things were expensive and councils received no central government funding for the extra work.

    Never the less, as you say, Tom, councils do like spending our money on edifices that will be like monuments for them to be remembered by.

    We must continue to hold councils to account before they spend up large on things like a velodrome and grandstands.

  2. Now that this region’s only ‘newspaper’ has had its descent into irrelevancy sealed by an insipid editor who seems to think she is working on a church newsletter, it is reassuring that there is at least one place local readers can turn for real news, analysis and commentary. While I am not a Rodney Hide supporter, I dislike him a lot less after reading this unusually frank and intelligent Q&A. Thank you for bringing this piece, Tom.

  3. Rodney is no conservative…he's a Libertarian….and supporters of bloated,socialist parasitism should be very afraid….he's gonna cut the pork and get them all working for a living instead of bludging for one on the public teat…

  4. I heard Rodney speak recently and found him very engaging and forthright in presenting his ideas and vision.

    Act is an extreme right-wing party party, so much of their philosophy is not reflected in the policies of the centre-right National government we have at present.

    It is important to realise that he is a MInister OUTSIDE of Cabinet so his bark is unlikely to be followed up with much of a bite.

  5. If Rodny Hide and ACT are, as Maxine Boag declares, an "extreme right-wing party" presumably Maxine and her ilk are exreme left-wing Marxists. The problem with such terminology is that it is generally perjorative propagandist talk, with ill-difined content. If left-wing is large government with centralised control, no doubt, Maxine will accept that there is inherently little difference between the Nazis, the Fascists and the Communists – certainly all are left-wing.. If limited government, with maximum personal freedom and personal responsibility is right-wing, Nazis and Fascists don't fit.

    As to whether or not Rodney will be an effective Minister of Local Government, we will indeed see. Most people I have heard on the subject can are wildly enthusiastic about what he is doing.

    The implication that ACT and National are at odds is ridiculous. Are there differences between the two parties? Of course. But there is more in common.

  6. Maxine Boag

    ACT is not an extreme right wing party.

    I challenge you to find one right wing policy in ACT's manifesto that is not also being used by a left wing government in another country.

  7. I'm surprised at the exception taken to calling the Act Party EXTREME right wing because surely that's where it's political advantage lies with National being centre right . (I take all agree they are right of National)

    At the election Act got 3.6% of the party vote (less than NZ first) and if they're to increase that in 2011 surely they have to define themselves being way right of National. The great danger to Act is that National will take their popular policies.

    MMP encourages minor parties to define themselves at either ends of the spectrum and I think Act's future lies in being right of right.

  8. OK OK the word "extreme" might have been a bit … extreme? No offence intended. Rewrite it as "very".

    But I see it as Mark does. Act is way beyond the blue National line out there with Reaganomics, Thatchernomics and of course our very own Rogernomics.

    Lower taxes. Fewer social services. Pay for your own health care, education, and pension. Cut welfare, tariffs, red tape. Lock up criminals and throw away the keys. There's no climate change or if so it's not our problem, privatise (sell off) everything and so on. Far "righter" (wronger?) than the National Party today as I understand them.

    You can see it all for yourself on the Act website, and in response to your challenge, "find one right wing policy in Act's manifesto that is not also being used in a left-wing government in another country" Kevin, I suggest you go to:

    http://act.org.nz/plan

    where they have listed their policies and countries where "similar policies work well" and you will see policies such as "Reform the Resource Management Act" which is apparently working well only in "Houston" (US)…. and "Cut remaining tariffs on imports" which appraently works well in "Hong Kong and Singapore" and of course "Cut and flatten tax rates" as they do in "Singapore, Hong Kong, Russia, Estonia, Slovekia, Latvia and Lithuania"

    If there are any left-wing governments doing these things, they are not listed with the others on Act's own website.

  9. I go with Maxine & Mark.

    Before the general electionI listened to the Act candidate, Mr Ormond, at a public meeting state not less than 3 times that 'climate change' -global warming-or whatever you want to call it, is not being caused by the actions of man!

    It's hard to take any party that utters such stuff seriously! But even harder when it was the efforts of Prebble & Douglas that helped get this country into serious difficulty. The type of thinking that got us into this situation is not the type of thinking that will get us out of it. [I did not say this-just borrowed it].

  10. Is it significant that Maxine ignores my suggestion that the Nazis, Fascists and Communists were all of a similar left-wing ilk in that they all, like the Greens and Labour, believe in large, heavy-handed government that inferferes in and dictates to the market place. Such governments also severely restrict personal freedoms with personal responsibility. So much of the language of political debate has been captured by the Marxist propaganda machine which lables not merely free-market policies as right wing, capitalist, but simultaneously attaches the terms to dictatorships which are anything but free-market – or free anything. In fact anything the Marxist social engineers dislike is lumped under terms like "right-wing" and "capitalist. "

    I am currently reading Ian Wishart's book on the Clark years. His accusations are so direct that if they are not true it is difficult to know why none of the many left-wing people accused of lies, deceit and fraud have not sued Wishart for libel. If I had to choose to stake my life on the integrity of either the lefties or Prebble and Douglas, I'd feel a lot safer with my ACT friends!

    Dave, the term global warming was not coned by it's skeptics but by the true believers. Although it has taken some time for the information too get around, United Nations states quite plainly that the earth's temperatures have been falling since 1998. Lefties and Greenies have swallowed propaganda like Al Gore's "An Inconvenient Truth" which British courts have exposed as riddled with false and misleading information. In his scathing reference to Sir Roger Douglas and Richard Prebble, Dave Head ignores the fact that NZ was on the brink of bakruptcy because of NZ's left-wing polices leading up to Rob Muldoon's totalitarian control of the economy. The Third Labour Government saved us from being placed in the hands of the receivers. Clark, Cullen and their mob have put us back into a similar mess to what Muldoon put us in. We do indeed need to return to the policies that got us out of the proverbial in the 1980's. Let Roger loose again!

  11. Um… excuse me while I…

    Communism, Fascism, and Naziism are not my leanings, and although capitalism is our current modus operandi (or is there another name?), I must say I'm not very impressed with its recent performance either.

    My concern is with the people, and the environment. What is happeniing, under various government systems, to ordinary people, and especially people in the lower socio economic strata, and non-white. Similarly what is done to protect our environment from irreversible damage.

    To me a major test of a political party is how well it tries to look after the weak. Many right wing parties are there to protect and strengthen the rich and powerful, often at the expense of the poor and the enivronment.

    John Key's National party is trying to strike some sort of balance, but I'm shocked with the haste they are rushing through some very important legislation, which I would suggest came from Act's manifesto.

    The Resource Management ( Simplifying and Streamlining) Amendment Bill is an example of that, with the government trying to rush through changes to the RMA to make the process quicker, less accessible for public input, and remove some of the current protections. It will make it harder for kiwis to have a say and prevent permanent damage to the environment.

    And the deadline for any submissions is…..Friday, 3rd April!

    Did anyone tell us about this bill and how it would give developers the upper hand for unsustainable development? Where does our local MP stand on this? It should be out for public discussion and our MPs told to take a stand.

    If any readers are interested in finding out about these changes to the RMA, and making a submission, I suggest go to the following websites:

    http://www.eds.org.nz/index.cfm; (Environmental defence socieity)

    http://www.forestandbird.org.nz; and http://www.greens.org.nz/rma

    Just think: if we don't stop this, we could join Houston, Texas, as having the only governments that got rid of the RMA!

  12. goodness me! if one was an uncommitted voter looking for sensible leadership in a topsy-turvy world and read Mr Lennox' unruly one-eyed misleading diatribe, one would conclude that if he and ACT aren't committed, they should be!

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