PM Luxon addressed the Local Government NZ conference last week.
I’ve attached at the end a link to his remarkable CEO-like rant to a group of underperforming subsidiary managers so you can inhale its full measure.
But I can summarise it in two words addressed to local and regional councils: Screw you!
There is much threatened and conveniently ignored in this speech, which I will try to unpack in the future, but here’s the bottomline:
“There is no magic money tree in Wellington, thanks to the previous government’s economic mismanagement and vandalism.
“Shifting your costs onto taxpayers doesn’t save anyone any money. It means ratepayers pay more tax, and are left with less of their own money, to meet the cost of a slightly smaller rates bill.
“Or it means we spend less on health and education so that councils can avoid tightening their belts exactly as Kiwi families, businesses and central government have had to do across New Zealand.
“Yes, I’m sure that will be very popular among councillors, who want to spend money without raising rates to pay for it. But if any of you think those will be the terms of a regional deal, it’s time to come back to reality.
“We do want to work closer together – and there will be new revenue tools for councils, where that makes sense – but the days of handouts are over.”
And he went on, basically warning councillors the Government is considering capping rates.
“Yes, councils need adequate revenue to fund core responsibilities like roads, rubbish and water, but the value-for-money proposition is more questionable in a range of other areas.
“Councils need to examine those areas more closely, and I’m up for any tool – like revenue capping – that makes them do so.”
You can read the full speech here.
But … Regional Deals?
After ‘bad cop’ Luxon lowered the hammer, ‘good cop’ (sort of) Local Government Minister Simeon Brown released the eagerly-awaited ‘Regional Deals Strategic Framework’. This 28-page document lays out how the Government will engage with local councils (on a regional basis) to formulate long-term economic growth plans focused mainly on core infrastructure, roading and housing investment.
The chief advantages of these are that they would be: 1) regional in scope; 2) cross-agency, getting relevant central government players committed to the same planning and delivery page; 3) long-term commitments – 30-year visions with negotiated 10-year implementation plans; and 4) potentially offer bespoke regulatory relief (e.g., fast-tracking consents) and financial support from government.
Merely positing that, by definition, growth is trickle-down good, the framework is silent regarding any collateral social or environmental benefits or trade-offs.
Initially, only five regions, yet to be announced, will be invited to propose Regional Deals to the Government.
Since fostering regional collaboration is a key principle driving the framework, it would seem that Hawke’s Bay should be a leading contender for an invite, with our HB Regional Recovery Agency – at the pinnacle of our council collaborative efforts – apparently highly regarded by Ministers. As I write, our political leaders have welcomed and praised the Regional Deal framework, but are mum about any expectations of HB making the initial cut.
The framework does allude to ‘unlocking’ potential new funding streams to support the deals, mentioning:
- A clear commitment to support agreed projects across agency investment pipelines and coordination of capital commitments to funding for transport, schools, hospitals and other aspects of growth relevant to the region;
- Enabling new user charges, value capture, targeted rates, tolling and congestion charging, an enhanced Infrastructure Funding and Financing Act;
- Proposals for the reallocation of existing government funding (e.g. from the International Visitor Conservation and Tourism Levy);
- Enhanced Going for Housing Growth payments which could include a share of GST for local government;
- Sector specific commitments, which could include sharing royalties generated by new and reestablished exploration of the mineral estate, or other forms of regional economic development.
In making his announcement, Minister Brown echoed Luxon: “We’re not going to be using these deals to build flashy convention centres. This is not about cash handouts. There is no magic money tree here in Wellington.”
The framework also assumes significant private sector involvement and signals a heap of monitoring and reporting requirements on local government.
The Government intends to complete the first deal in 2025.
I certainly agree that councils should stick to their core resposibilities and have no argument that they should have that aim as the first thing on their minds at all times. With regard to “vanity” projects – there is a place for them provided they are essential to well being of the rate payer – such as a museum, theatre etc that gives an outlet for research, entertainment and general well being of people. I agree that some grand edifice that may or may not bring visitors to a region is not necessary. But I do hope that God (sorry the PM) doesn’t go back on his statements and allow Central Government to undertake similar projects for the aggrandizement of the Coalition – maybe they could do something equally grand like making the power companies increase power generation so that businesses and households can operate with going bankrupt?
Councils should get back to basics.
If they weren’t a monopoly provider of services we have to buy they wouldn’t dare raise rates to the obscene levels proposed
the major message which you fail to note is that he was telling councils to stop frivolous spending, and be fully accountable and transparent on the need for rates increases.
I disagree with your summary.
Councils have been imposing double digit rate increases with more planned. They get elected on promises of smaller rises but just can’t deliver for a number of reasons.
There is no reason why they can’t live within the reduced means that the rest of the country faces.
quite right John. when the pipes burst and the sewage overflows, the roads fail and the bridges get taken out by unmonitored slash, and the rubbish piles up because no-one’s made a new dumpsite for it, we will all realise that these number of reasons are why we must now live within reduced means, like the 3rd-world country we have become. and why? because the rich have consistently for at least 50 years refused to back adequate modest rates increases that would have kept infrastructure not only maintained but growing robustly, so now we face abnormally large expenditures to correct that… making them quail and protest even more. but of course, the rich can always move overseas, so…..