Local government will not be constrained by the current proposals

Like many one of my biggest concerns about local government is how unconstrained it is about what activities it enters into, whether it be an impost directly on ratepayers through spending, or an indirect impost in the time of Councillors and Council staff misdirected away from core business into other activities. Whether it is foreign affairs, shiny things (typically sport, arts, culture, entertainment), unviable businesses or any other "nice to do" activities, local government tends to attract a greater proportion of people who promise to "do stuff" which is typically not a promise to stick to the core.

It is rare to get candidates for local election who promise to simply ensure the roads are well maintained, the rubbish collection remains reliable, litter and graffiti are addressed, (all types of) water infrastructure is managed efficiently and effectively, and parks are well maintained.  It's especially rare to get any who want to get Councils out of the way of building more homes, commercial or industrial property, or who want to make it easier to set up new businesses (unless they are tiny businesses, in Council premises, of certain pre-selected types).

So while I was hopeful that Simon Watts would announce a sea-change in the legislation governing local government I ended up being sorely disappointed.  His main announcement is the abolition (again!) of the "four-wellbeings".  This should be familiar with those who know about the local government sector (unfortunately in a previous career I got to know about local government legislation), because the Key Government did it before. You can be forgiven for not knowing that because it made not a jot of difference to local government, except perhaps slowing down its growth.  

So while I think all of the proposals have some merit, they don't tackle the core cause of the problem, which is the "power of general competence" which Sandra Lee under the Clark Government got passed to reform local government. It was part of a vision of expansionist local government (which Lee, when she was in local government cheered on with alacrity) that represents the wet dream of the hard-left.  The idea that "communities" (activist groups) would engage continuously with democratically elected representatives to get local government to address the cultural, social, environmental and economic wellbeing issues of their "communities".  Of course the only ways local government can "address" these things is through its two instruments of compulsion: Taxing and subsidising (mostly rates, but also fees on anything the Council does and of course lobbying for central government to give it more power to tax) and regulating (forcing people to do what it wants, banning them from doing what they don't).  It's the idea that "highly engaged" communities (which doesn't realistically include most entrepreneurs or the self-employed or busy workers, because they don't have the time) pushing everyone else around with a "democratic mandate". The sort that comes up with "Should Wellington become a sister city with Ramallah?"

My friend Peter Cresswell writes adroitly on the debacle of the power of general competence (dare I note that Greater Wellington Regional Council Chair Daran Ponter, pictured on PC's blogpost, was once a bureaucrat who worked on the Local Government Act reforms in the early 2000s).

I wrote a bit about it around a generation ago.  It's not called that explicitly in the Local Government Act 2002, but it is Section 12 in the Act:

12  Status and powers

(1) A local authority is a body corporate with perpetual succession.

(2) For the purposes of performing its role, a local authority has—

(a) full capacity to carry on or undertake any activity or business, do any act, or enter into any transaction; and

(b) for the purposes of paragraph (a), full rights, powers, and privileges.

As you can see it gives local government carte blanche to do just about anything it likes. This is at the heart of the problem.

If Simon Watts is NOT proposing to replace Section 12(2) with something else, then he is tinkering around the edges of the problem. I'm not surprised he isn't proposing to replace it, because the Department of Internal Affairs (DIA) would not have advised in favour of it. 

DIA supports the power of general competence because it mopped up a wide range of highly specified powers that previously existed that meant that local government couldn't undertake activities unless legislation specifically said it could. Now the law says it can do pretty much whatever it likes (with some provisions constraining regional councils and territorial authorities overlapping).  A Council could set up a restaurant, a school, a taxi company, a radio station, a supermarket and a brothel. A Council can publish books, make movies, open up a liaison office in Equatorial Guinea, campaign in favour of Russia's invasion of Ukraine and open a nudist camp. 

DIA would not have wanted the repeal of Section 12(2) because they would say it would require a "lot of work" (for them) to identify what Councils do and don't do now so activities wouldn't be suddenly banned. Frankly that would be a rather good thing.  It would be simple enough to give Councils powers over their own property and then list the types of property Councils should not be allowed to own, and businesses it should not be allowed to own (a good start would be any type of business already existing within its boundaries).  Then allow Councils to only exercise their legal obligations under any other legislation (e.g., RMA and its replacement) and limit it to rubbish collection, public spaces (parks, pools, coastlines, rivers). 

The debacle over "three waters" has pretty much proven why the "power of general competence" was a mistake.  We have had over 20 years of local government being given full capacity to look after water, waste water and stormwater infrastructure whether as a business or any other form of structure, and many have failed abjectly to do so.  With a few exceptions, local government simply isn't up to managing large complex infrastructure networks as far too few Councillors and well-meaning local bureaucrats have the skills and experience to do so.  The local road network is far from perfect, but at least NZTA and its predecessors for the last thirty five years have had some oversight of performance so that the network isn't crumbling. 

Some may say the problem is Councils don't have enough powers to tax and regulate (that would be the Greens who rarely find a problem they don't think would be solved by forcing people to do what they think is best for them), some may say the problem is too many small Councils without the capacity to be more responsible, but then Auckland Council is hardly the shining city on the hill to emulate.  Some may say the problem is that "the community" doesn't vote enough, and maybe teenagers who are deemed not fit to decide on whether they consume alcohol, tobacco or pornography should be allowed to vote.

It's pretty basic. We have had over twenty years of the "power of general competence" and Councils have proven incapable of managing their assets effectively, and most think that their problems can only be fixed by getting other politicians to make taxpayers bail them out (that's, in part, what Labour was going to do with Three Waters). 

It's time to end the power of general competence. Tell local government exactly what its functions are.  Don't put up with excuses from DIA about how long it will take, just get some clever people together to do it. You can be sure if something is missed out, then the affected local authorities will cry loudly at the Select Committee stage of the Bill and you can decide if it is worth addressing then. If the local authorities fail to identify that pending legislation will ban something they are currently doing, then it's pretty obvious how incompetent they are.

Oh and yes, you should cap rates increases to inflation.