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Speech notes, Basil Morrison to Local Govt NZ Zone 4

Date: 3 July 2013





11.45am, 3 July 2013

The Local Government Reorganisation Process

Many thanks for the opportunity to be here today.

As you might expect, I’m going to talk mainly about the new reorganisation process enacted in December by the Local Government Act 2002 Amendment Act.

I probably need to say at the outset that I’m not here to talk about or debate the pros and cons of the process or of reorganisation generally. I also don’t want to go into the pros and cons of particular reorganisation applications. This is neither the time nor place for that.

Next week the Commission begins its engagement with councils in the Wellington Region in respect of the application lodged by the three councils in the Wairarapa. We will be meeting most if not all you next week and that might be an opportunity for some more detailed discussions on how the process affects the council’s in Zone 4.

I do, however, want to deal with one issue related to the two applications we currently have affecting the Wellington Region – those lodged by the Wairarapa councils and the Greater Wellington Regional Council. As you will be aware we have decided to call for alternative applications to both these applications at the same time – that is assuming the Commission decides to assess the Greater Wellington Regional Council proposal, a matter it will consider tomorrow.

I understand that some people have suggested that by doing this we have given the Greater Wellington Regional Council application a greater status than other potential applications. I can assure you that this absolutely not correct.

When agreeing to assess the Wairarapa application we were aware that within a very short space of time the Regional Council was likely to lodge its application. We had not been informed that any other council was intending to lodge an “original application” within a similar time frame. We simply took the view that it would be confusing for the public for us to call for alternative applications for the two applications separately and at different times when those two overlap from a geographic point of view.

There is no such thing as some applications having higher status than others, until of course later in the process when the Commission has to choose “reasonably practicable options” and then a “preferred option”. At this stage the Wairarapa and Greater Wellington applications have the same status and if and when any alternative applications are lodged they will have the same status as the two applications already lodged.

Now, in dealing with any applications, I want to assure you that I will be able to see things through the eyes of the member of an affected local authority. For those of you who don’t know me I’ve been through the process myself, in 1989 when my OhinemuriCounty, of which I was Chairman, merged with HaurakiPlainsCounty and Paeroa and Waihi Boroughs to become the Hauraki District. I chaired the transition committee to establish the new council and was then elected the district’s first Mayor.

Now I want to go through the process set out in the Act and tackle or at least identify some of the questions that have been raised with us or that we have asked of ourselves.

As you are probably aware, the Commission has so far received two reorganisation applications from other parts of New Zealand – one from the Far North District Council for it to become a unitary authority, and one from a group called "A Better Hawke's Bay" for a unitary authority covering the existing Hawke's Bay Region. I'll illustrate some points in the process by referring to how we have dealt with those applications so far.

A reorganisation application (or an alternative) can be initiated by any person, body or group. This is a significant change compared with the previous legislation. Previously this required 10% of the electors of each of the affected areas or the local authorities by agreement, or the Minister of Local Government.

After receiving an application the Commission decides whether to assess it or whether to decline it. Grounds on which an application might be declined are that –

  • The application is “frivolous”
  • The application does not contain the required information
  • A substantially similar application has been declined by the Commission and the reasons for declining still apply
  • The intent of the application is contrary to law
  • The Commission is not likely to be able to assess the application in a timely manner
  • It is not in the public interest to assess the application

Some of the information requirements are fairly standard – names and addresses and such like – but others require a bit more effort on the part of the applicant. These are the requirement to provide a description of the potential improvements that would result from proposed changes and to provide information showing that the application has demonstrable community support in the district of each affected territorial authority and will promote good local government.

Before making decisions on community support, the Commission has to determine exactly what the affected territorial authority districts are. In the case of the Far North application, although it was focused only on the Far North District, the Commission decided that Whangarei District and Kaipara District were also affected. That was because removing Far North from the Northland Region obviously has a big impact on the Regional Council and the rest of the region.

In the case of Hawke's Bay the issue was more straightforward as the concept being promoted is one unitary authority over a whole region. There is, however, one quirk we had to deal with. Hawke's Bay Region includes a small piece of Rangitikei District and two small pieces of Taupo District. Because they are in the region, we were required to consider whether there was community support in each of the affected parts of Rangitikei and Taupo districts.

Both of these situations have parallels in the wellington Region.

The Act does not define what level of community support there has to be for an application. We have taken the view that at this stage of the process the purpose of this step is to determine whether or not the application should get on to the table for further consideration. The level of support does not have to be huge, but it does have to credible. The Commission is required to assess community support at other stages of the process and at each additional step the height of the community support will get a little bit higher.

If the Commission decides that an application has community support and meets the other requirements for an application we then start the assessment.

The first step in that assessment is for the Commission to be satisfied that there is demonstrable community support in each affected territorial authority district for local authority reorganisation. That is support for reorganisation of any sort, not just that proposed by the application.

In assessing community support for the two applications so far we have considered a variety of information. These include letters of support from individuals and organisations, opinion polls (both very recent ones and ones carried out over the last couple of years), indications of support we have received verbally at meetings, and, in the case of the Hawke's Bay application a list of the applicant group's supporters.

If the Commission is satisfied that there is demonstrable community support it then publicly notifies the application and calls for alternatives. We have received a number of responses through the alternative application processes the Far North and Hawke's Bay applications – 41 for the Far North and 19 for Hawke's Bay – although not all of them could be defined as an actual alternative. Some are just an expression of views.

The requirements for the alternative applications are the same as for the original application, except that they do not have to include information showing community support. It would, however, be useful they did include that information as it would assist the Commission further on into the process.

After receiving alternative applications the Commission identifies the reasonably practicable options. The options considered must include the status quo. They may also include options formulated by the Commission or combinations of different options.

In identifying the reasonably practicable options the Commission must, amongst other things, have regard to the degree of community support for applications that has been demonstrated to the Commission.

There were, of course, some existing criteria in the old legislation which were largely rolled over and I want to talk a little bit about one of them now. That is that the Commission has to consider –

“the likely affects on a local authority of the exclusion of any areas from its district or region”

This means that if an application involves transferring areas from one district into another, the Commission (and the applicant when developing the application) has to think about the impact on what’s left of the local authority losing territory. The Commission does, after all, have to consider what is good local government for all areas.

I’ll illustrate this by giving a very simple example a previous Commission had to deal with. About 15 years ago a group of residents initiated a proposal to transfer an area from Wairoa District to Hastings District. That area contributed about 9% of the Wairoa District Council’s rates revenue. The then Commission concluded that excluding this area from Wairoa District would cast into doubt the ability of the Wairoa District Council to continue carrying out its functions.

The example used is a fairly small case, but the same issue could be applied to much larger proposals, and issues other than financial viability, eg whether the remaining part of a district continued to have a coherent and recognisable community of interest or whether it still had a district appropriate for carrying out functions and providing services.

One new criterion to be applied when identifying the reasonably practicable options is that, when an application involves a regional council or a unitary authority, the Commission will also have to consider if it will enable catchment-based flooding and water management issues to be dealt with effectively.

After the Commission has identified the reasonably practicable options it then has to identify its preferred option. This has to be the one that best promotes good local government. This is assessed by determining that which will –

  • Best promote the purpose of local government specified in section 10 of the Local Government Act; and
  • Facilitate improved economic performance, including -
    • “efficiencies and cost savings”
    • productivity improvements for the affected local authorities and households and businesses
    • simplified planning processes

If, after all that, the Commission considers that the application or some modification of it meets the tests of demonstrable community support and promoting good local government it may issue a draft proposal. This is a higher-level document than the current reorganisation scheme, with fewer detailed arrangements in it.

It will contain an outline of the proposal being pursued, and –

  • the representation arrangements for a new local authority
  • any community board arrangements (or local boards if allowed for)
  • provision for a transition body
  • the names and areas of interest to iwi and hapu in the district or region
  • any other matters the Commission considers necessary or desirable

The Commission will then consult on the draft proposal and collect views of interested parties. Apart from very small boundary alterations, this would almost certainly involve meetings with the affected parties and public hearings of submissions.

The Commission can also, as at present, make investigations and inquiries to collect any further information it requires to make a decision on the draft proposal.

After doing all that, the Commission decides whether to –

  • issue a final proposal based on the draft or with some variations; or
  • not issue a final proposal.

Before issuing a final proposal the Commission must be satisfied that the proposal is likely to have demonstrable community support in each affected district.

If a final proposal is issued, there is a period of 60 working days in which electors may petition for a poll on the proposal.

Important points here are that –

  • a successful demand for a poll must be signed by 10% of the electors of any one affected area
  • electors may not start to sign a petition seeking a poll before a final proposal is issued

There is a single poll over the whole of the affected area. For a proposal to succeed, the majority of those voting over the whole of the affected areas must vote for the proposal, i.e. fifty per cent of the votes cast plus one vote. This is different to the current poll requirements where separate polls are held in each affected district and to succeed a scheme must be supported in each individual poll.

If a poll is not requested or if the poll supports the proposal, the next step is for an Order in Council to be made to give effect to the final proposal. This would also establish a transition body tasked with doing the work necessary for the new arrangements to be put into place. A transition body for a small boundary alteration could be an officer from each council. Where something bigger is involved, however, the transition body would be overseen by a transition board comprising mainly of members appointed from the affected local authorities.

The Act contains some slightly more explicit provisions about what the Commission can provide for in a reorganisation scheme about transitions. New features include –

  • the ability for the Commission to appoint the Chair of a transition board (who could be an independent person)
  • an explicit ability for a transition board to appoint an interim chief executive for a new local authority
  • provisions enabling the Commission to monitor and make recommendations on the transition to the transition body or board.

The Act provides that if a proposal is at a certain point in the process the next triennial election of a local authority may be suspended by Order in Council for not more than 12 months. I have been asked from time to time how this would work in practice. Some key points here are that –

  • Suspension of an election may only occur when a final proposal has been issued
  • An Order in Council to defer an election requires the agreement of the Commission and the affected local authority

There are several different scenarios which I will go through.

  • If an election is not suspended and the reorganisation is defeated at a poll everything carries on as before.
  • If a particular election is not suspended an existing council affected by a reorganisation will go through its normal election process. If at a later date the reorganisation is successful, the council will go out of office when the council for the new local authority is elected.
  • If an election is suspended and the reorganisation is defeated at a poll the existing council will be subject to an election within 12 months of the date of when the suspended election would have been held.
  • If an election is suspended and the reorganisation is not defeated at a poll the existing council will remain in office until the new council comes into office.

The key point at the moment, though, is that it will not be possible to postpone elections later this year for any of the council's affected by the two applications the Commission is currently dealing with. We will not have got to the point of issuing a final scheme for either of them by the time the election process starts.

Another aspect of the process than is discussed is the so-called second tier. The Act provides for the Auckland local board model to be applied to new unitary authorities that will be predominantly urban and will have a population of more than 400,000. In practice this probably only applies to Wellington.

The only second tier option currently available in the rest of New Zealand is the community board model. We do understand, however, that the Department of Internal Affairs is working on options for a new second tier model that could be applied to the rest of the country and it will be interesting to see what comes out of that work. The immediate question for the Commission is, will any new model be enacted in time to be considered in relation to the Far North and Hawke's Bay applications.