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Amalgamation
The A word. Amalgamation
It’s something previous councils haven’t just shied away from but have vehemently spoken out against in the past.
The Waikato Chamber has advocated for a serious discussion about the potential for amalgamation of our region’s councils for years now. A rational discussion grounded in data and driven by a desire for better productivity, reduced bureaucracy, and the drive to do better by the community as a whole. A discussion that considers evidence-based information from the likes of Auckland’s Supercity merger where we drill into what’s worked there – and what hasn’t.
In 2018, then-Chamber CEO Chris Simpson drew the ire of most of the region’s then-mayors with his call to have an amalgamation discussion. He had, quite rightly, pointed out that the Waikato had 247 representatives compared with Auckland’s 196. The 12 territorial authorities in the Waikato regional catchment were in Chris’s sights when he first compared Waikato's 136 elected councillors, representing 537,000 people, to Auckland's 20 councillors who represent a population of 1.7 million. Chris’s research showed that Auckland had a representative ratio of one for every 10,000 people. In the Waikato, it's one for every 2,000 people.
Of the 10 mayors the Waikato Times spoke to in 2018, none showed support for amalgamation then and many attacked Chris’s stance, with one referring to it as “bollocks” and another questioning “hasn’t he got anything better to do?”
A disappointing response, but the idiom ‘turkeys don’t vote for Christmas’ springs to mind.
Then in 2021, the Chamber raised the possibility of having an amalgamation discussion, saying that we, as a Chamber, want to see the region have a united and stronger voice and one involving less bureaucracy.
We said at the time: “Twelve replications, 12 governance bodies, 12 bureaucracies, 12 large cost-centres and 12 voices singing off separate song sheets.”
There was a more measured response from the mayors then, a willingness at least to engage in a discussion. But nothing much more was said until Hamilton City Council’s recent submission to the nationwide review into the Future for Local Government showed support for a large Waikato unitary council combining local and regional council powers for Hamilton and surrounding districts. Waikato District Council gave qualified support to a possible sub-regional unitary body.
Stuff reported that under the city’s new ideas, a “Hamilton-Waikato sub-region” unitary council could be based on fast-growing Hamilton, Waikato district, Waipa and Matamata-Piako, with Mayor Paula Southgate saying, “we’re not looking at a takeover, we’re looking at a partnership.”
We’re the first to agree that there is a strong case to explore a unitary authority. We believe it’s worth looking at the relative competitive advantages of each region. You could have a unitary body that encompasses Hamilton as the major metropolitan hub along with its spokes in Cambridge, Te Awamutu, Morrinsville, Matamata, Huntly and Ngaruawahia. And you then have three other bodies: North Waikato, Coromandel and South Waikato. Each of those regions offers different competitive advantages and should be included in the discussions.
We don’t necessarily need to be a super city like Auckland. Instead, you’d have councillors and community boards so that each town was represented by democratically elected people, but in a pared back way. However, important growth infrastructure issues such as a third bridge in Cambridge, the Expressway extension to Tauranga, the economically important Southern Links project to the Airport to open up the west and Te Awamutu, the improvements and straightening of the Hamilton-Morrinsville road, will be better advocated and lobbied for by a united council, much stronger in its weight with Wellington politicians and bureaucracy.
Now, we’re also the first to acknowledge amalgamation is a complex issue with multiple layers that would take a great deal of consideration. For example, the Waikato Regional Council’s territorial authority is based on regional catchments. So how would you structure a unitary authority with that in mind?
Here at the Chamber, we don’t profess to have all the answers. But we are throwing our support behind our 12 councils being open to having that rational and robust conversation about how amalgamation of some form could happen.
What some people may not realise is that there is already a level of cooperation happening behind the scenes between councils.
CoLAB
CoLAB was established in 2005 to provide local authorities in the Waikato with a vehicle to procure shared services. The key purpose of CoLAB evolved, and it now drives collaboration between councils and aims to improve local government customer service and performance and to reduce costs.
CoLAB is owned by 12 councils: Waikato Regional, Hamilton City, Hauraki District, Matamata-Piako District, Otorohanga District, Rotorua District, South Waikato District, Thames Coromandel District, Waikato District, Waipa District, Waitomo District and Western Bay of Plenty District Council.
It should be the basis of economies of scale and further co-operation, thus reducing costs and complexities for the ratepayer.
We, on behalf of our ratepayer members, applaud any innovative solution that aims to reduce cost, improve efficiency and productivity, and more especially, one that enhances the customer experience. So, how do we build on that?
Mayoral Forum
The next Waikato Mayoral Forum is coming up on March 27. We understand amalgamation is set to be discussed at that meeting. We wholeheartedly encourage that debate, but we also ask that the issue be given real weight and consideration as to how it can be examined in more depth region-wide. And that the mayors in the conversation communicate clearly and fully their various positions to the wider public. We went hunting for information on the Waikato Mayoral Forum website but came up short. The website appears not to have been updated with meeting summaries or news for some years now.
On behalf of our members, we’re asking that our regional mayors show real leadership in spearheading this important conversation.
If we do not grasp the nettle now and debate the opportunity, central government will dictate to us our structures. As we found with Three Waters, they may not be to our liking.
The Waikato is in growth mode, and it will only accelerate with the recent strong Fonterra result underpinning our regional economy.
We need courageous mayors to stand up and be counted on March 27 for the generations that follow us.
University of Waikato Medical School
New Zealand isn’t training enough doctors to meet the needs of the country’s population and to accommodate the anticipated pattern of retirement of our existing health workforce. And, put simply, it’s costing lives now.
New Zealand currently graduates 550 new doctors each year, but 750 are needed per year to meet health workforce demand. That means we are heavily dependent on international medical graduates. In fact, more so than any other OECD country. And those doctors come here, stay for a short time, then leave. Just 25% are still here three years after their arrival.
The doctors we are training largely don’t choose primary care specialties and are practicing in the main metropolitan centres, leaving provincial and rural communities short of GPs.
There are GP clinics around the country that have closed their books because they can barely keep up with their patient workload as it is, leaving thousands of people without a family doctor to call on.
In short: We aren’t training enough doctors, immigration isn’t cutting it, and scores of GPs are set to retire. The GP shortage is dire. And it is costing lives. Which is why the University of Waikato’s proposal to establish a medical school ticks all the boxes.
More reading
The three “diseases” that are destroying our once world class health sector
University of Waikato's new dean of health renews push for third medical school
New Zealand’s reliance on foreign doctors to plug gaps highlights the need for another medical school
RMA reform
On 15 November 2022 the Government introduced the Natural and Built Environment Bill and the Spatial Planning Bill to replace the Resource Management Act (RMA).
Reaction to the Bills has been mixed. While the RMA is widely unloved from all quarters, and some have suggested that the reforms could provide developers with more certainty about getting consents, others have said that what replaces the RMA could be worse.
As at the time of writing, both Bills are awaiting their first readings and will be referred to a select committee for consideration of submissions.
The Natural and Built Environment Bill will be the main replacement for the RMA, and its intent is to protect and restore the environment while better enabling development
The Spatial Planning Bill will require the development of long-term regional spatial strategies to help coordinate and integrate decisions made under relevant legislation
A further Bill on Climate Change Adaptation is intended to follow in 2023. It will address complex issues associated with managed retreat, and funding and financing climate adaptation.
The Government has set five objectives for the new resource management system.
To protect and, where necessary, restore the environment and its capacity to provide for the wellbeing of present and future generations.
To better enable development within natural environmental limits including a significant improvement in housing supply, affordability and choice, and timely provision of appropriate infrastructure including social infrastructure.
To give proper recognition to the principles of Te Tiriti o Waitangi and provide greater recognition of te ao Maori including matauranga Maori.
To better prepare for adapting to climate change and risks from natural hazards and better mitigate the emissions.
To improve system efficiency and effectiveness and reduce complexity while ensuring local input and involvement.
More information can be found on the Ministry for the Environment’s website.
Hamilton City Council's views
Read what Hamilton City Council has to say about the RMA reform here.
Review into the Future for Local Government
The Future for Local Government Review Panel released their final report, He piki tūranga, he piki kōtuku, in June 2023. You can read it here, and a summary of the proposals by the NZ Hearld here.
Submissions
The Waikato Chamber was involved in two submissions to the Future for Local Government Review Panel. The New Zealand Chambers, including us, contributed to the Local Government Business Forum submission, while we were involved in the Citizens Assembly submission which was led by Margaret Evans, Prof Frank Scrimgeour, Prof Tom Roa and Andrew Bydder.
Summary
On 28 October 2022 the Future for Local Government Review issued a 261 page draft report, making a number of findings and recommendations, and posing a number of questions.
The review was set up 18 months ago by the Local Government Minister to consider what councils should look like in the wake of the Government’s reforms of three waters and resource management.
The Review has an ‘interesting’ vision for local government, including radical reforms to how councils will be governed, what they will do, how they will be funded.
Most of the attention on the review has been on its ideas to reduce the voting age to 16, change to a four year term, impose the single transferable vote system for local elections, and to impose co-governance on councils with unelected mana whenua appointees on councils and to require councils to embrace te ao Māori values in all they do. It also has a very strong emphasis throughout the report on councils being ‘champions and activators’ of wellbeing.
These would be great ideas if there was evidence they would improve the effectiveness and efficiency of councils and result in better outcomes for their communities and a lower rating burden. However, the draft report seems to believe in hope and faith rather than evidence let alone ‘western concepts’ of public policy and liberal democracy. This should be concerning.
The draft report has a number of findings, recommendations, and questions, in chapters on the following topics.
Revitalising citizen-led democracy (i.e., ways to boost voter turnout)
Tiriti-based partnership between Māori and local government
Allocating roles and functions in a way that enhances wellbeing
Local government as champion and activator of wellbeing
A stronger relationship between central and local government
Replenishing and building on representative democracy (i.e., ways to make council governance more diverse and Tiriti-centric)
Equitable funding and finance
System design (i.e., structure of local government)
System stewardship and support
To take just one example from the draft report, local government funding and finance is an area of particular interest for the Forum.
In its chapter on this topic the Review Panel doesn’t think the funding system will be sufficient for the future considering population and demographic changes; central government imposing responsibilities without funding to cover costs; pressure from tourism; impacts of climate change; lack of incentives for growth and development; volatile investment income; and specific challenges from natural disasters.
The draft report says a successful funding system is one “where community outcomes and priorities are equitably funded by central government, local government, and other parties, reflecting respective national and local outcomes, objectives, and priorities”.
It sees several opportunities for this:
There should be co-investment in public goods, with co-funding by central government and local government in partnership with Iwi, against an agreed set of outcomes and objectives.
The passing of unfunded mandates to local government should end.
New funding mechanisms should be established (e.g., road congestion charges, bed taxes and visitor levies, value capture using targeted rates, revenue bonds, and volumetric charging for water).
Rating should be retained and simplified, including processes for developing, consulting, and auditing long-term plans and annual plans.
Intergenerational fund to tackle climate change – for both adaptation and mitigation.
These options, plus a specific recommendation that central government should pay rates on its land, sound good on the face of it but there is much devil in the detail.
Of concern is the draft report’s scepticism about the benefit principle, with it saying that people and groups have different ideas about public versus private benefit that councils have to measure and identify who benefits over specified time horizons, which can be complicated. It also notes affordability concerns about the beneficiary principle, the implications of which should make farmers’ blood run cold.
Businesses and farmers tend to support the beneficiary principle as it’s a key way to ensure they pay a fairer share. The problem from our perspective is that in many areas the principle hasn’t been applied appropriately and councils haven’t always been transparent on how decisions have been made and what the impacts are. It’s often hard work extricating how much different categories of rateable property pay relative to each other or even showing on rates invoices how much individual ratepayers pay for specific council activities.
The review panel wants ‘a more equitable funding system’ that delivers both vertical equity (right balance between local and national funding) and horizontal equity (where some councils will require more support than others to get a similar outcome). That’s fine between the tiers of government and between councils but it’s also important that there’s equity for those funding councils – i.e., ratepayers should be paying their fair share. That means, in our view, that the beneficiary principle must be maintained and if anything strengthened.
On ending the unfunded mandate, we would agree. However, for this to be successful it would require a significant improvement in central government regulatory impact analysis. Also necessary is a fundamental change in culture from regulators to reduce the regulatory burden generally (including on local government). Both the quantity and quantity of regulation needs to be examined. A Regulatory Standards Bill would assist by requiring regulation to be consistent with principles for good regulation.
On the need for more co-investment, might also find broad agreement. However, if it means discrete time-limited funding pots to be applied for on a case-by care basis it would be little different from the ‘low trust’ status quo which does not provide a lot of incentive to be more friendly to growth and development.
Simplifying rating sounds all very reasonable but the benefit principle relies on having more rather than less granular rating systems with the use of user charges and targeted rates rather than just having a ‘simple’ general rate. ‘Simplicity’ is often used as an excuse for councils to not provide more information on how much different categories of rateable properties pay in rates (e.g., residential vs business vs farming) and itemised rates assessments so individual ratepayers can see what they are paying towards council activities.
Submissions are open on the draft report until 28 February 2023 with the review required to provide its final report to the Minister in June. There is therefore a strong chance that politics, specifically the small matter of a General Election, will mean – like with other previous reviews – nothing comes of this. But at the very least it’s illustrative of a very different vision for local government.
Three Waters reform
The Water Services Entities Bill, which will establish the four water services entities, and on which the Forum submitted in July 2022, was reported back to the House on 11 November.
The Forum’s submission recommended that the Bill not proceed and we asked the Select Committee to reconsider its approach and consider alternative options.
Although we agreed with the problems the Government is trying to solve there are significant problems with its ‘transformational’ approach:
The benefits of the changes have been overstated and the costs understated
The four water services entities cover such large and diverse geographic areas they will be remote and distant.
There will be complicated layers of governance including appointees who are not accountable to the local authority owners or their voters
There are impacts on property rights and ownership rights.
Three Waters reform combined with RMA reform will result in councils losing key roles and responsibilities, assets, revenue, and staff capability and becoming less viable.
The Forum’s submission considered there are better ways of enabling infrastructure renewal and expansion without complex and costly structural reform, including the use of revenue bonds.
More than 88,000 submissions were received on the Bill, the vast majority of them against it. Three Waters was also a prominent issue at the October 2022 local authority elections, with it costing a number of mayors their jobs.
On 31 October the newly elected mayors of Auckland and Christchurch put forward an alternative approach, including:
Support and endorse the new water regulator, Taumata Arowai.
Support the local ownership and control of water treatment and reticulation to ensure local accountability.
Ownership and management of stormwater assets should be retained by local councils to ensure clear management alongside transport and drainage assets.
Encourage local government entities to consolidate, where sensible, into Regional Water Organisations (RWOs) which would be unable to be sold outside local authority ownership.
Affordable finance should be provided to qualifying Three Waters asset owners to ensure high quality investment in these assets to provide a higher standard of water treatment:
A new water infrastructure Fund (WIF) to be established by Crown Infrastructure Partners.
Will provide high quality access to equity and investment in new water treatment assets for large councils or RWOs. The WIF will be the primary provider of long term investment / funding in water and wastewater assets for councils and RWOs. It will have access to debt markets.
The WIF will operate on commercial lines but only able to be subscribed for equity by the NZ Government, ACC, NZ Superfund, or iwi, who will be attracted by the inter-generational nature of the investments.
The WIF could enter financing structures with councils and RWOs for schemes in excess of an agreed threshold.
Would act like the Local Government Funding Agency (LGFA) and manage debt and financial arrangements. Could hold debt off the council balance sheets.
Would ensure compliance with green investment principles. They can access international bond markets but will ensure NZ ownership of assets.
The Government was unmoved and the Finance & Expenditure Select Committee (which has a majority of Labour MPs) reported the Bill back to the House on 11 November. Despite minority dissenting reports from National, ACT, and even the Greens, the Select Committee reported the Bill back essentially unchanged.
The Government agreed to some amendments suggested by the Select Committee but they do not in any meaningful way address concerns of those opposed to the Bill (e.g., providing for an annual shareholders meeting). In some respects, it doubled down, such as by extending stormwater into a whole catchment approach.
As of the time of writing the Bill had passed its Second Reading and is now at the Committee of the House Stage.
A further Bill to provide for implementation detail is imminent.
Hamilton City Council's views
Read what the Council has to say on Three Waters reform here.
Climate Change and Local Government
Until recently local government’s role was understood to be narrow, focussing on climate change adaptation, recognising that central government had primary responsibility to set policy for addressing climate change and its effects.
The New Zealand Emissions Trading Scheme (NZ ETS) has been relied upon as the key mechanism to encourage emissions reduction and the Resource Management Act RMA prevented councils from considering greenhouse gas mitigation when granting consent, developing regional plans, or setting regional rules. Adaptation rather than mitigation was where councils were seen to have an appropriate role.
Over recent times councils have come under increasing public and political pressure to do more to address the impacts and consequences of climate change. The Government also amended the RMA in 2020 to remove restrictions on councils from considering greenhouse gas mitigation in RMA processes.
What is the appropriate place for local government on what is primarily a national policy issue?
Councils’ key role in climate change should be adaptation. They have important role in ensuring that their regions and districts adapt to the varied and many expected localised impacts of climate change. Such adaptation may include protecting infrastructure from rising sea levels and securing drinking water supplies in the face of more frequent and severe extreme weather events. Some regions are expected to become hotter and drier, other regions are expected to become colder and wetter, and extreme weather events are expected to become more frequent and damaging across all regions. The need to explore increased water storage infrastructure highlights the appropriateness of local councils developing plans to adapt to the expected impacts of climate change.
With regard to mitigation, councils could do more to reduce their own emissions footprints, such as by moving to clean energy for their buildings and using electric vehicles for their fleets. Beyond this, councils should not seek to do more.
Despite concerns about the effectiveness of the NZ ETS, recent changes to the scheme are and will be driving a higher emissions price and over time it will drive the intended behaviour change if the scheme continues to be improved upon. Long-term certainty in the functionality of the NZ ETS is critical for its success and the NZ ETS should be allowed to remain the primary mechanism for encouraging emissions reduction, especially for long-lived gases like carbon dioxide.
Direct action by councils to manage and reduce emissions locally could also duplicate or even worse be contradictory with central government policy. There is a huge and ambitious workplan set out in the Government’s Emissions Reduction Plan (ERP) and local government needs to stick within its lanes.
Meanwhile, taking an overly expansive role on climate change going beyond councils’ core roles would not be the best use of ratepayers money at a time when councils are facing financial challenges and when many ratepayers are struggling to make ends meet.
Cambridge to Piarere
The Waikato Chamber of Commerce is calling on the people of the Waikato to make the recent road tragedies between Cambridge and Piarere a turning point.
These and future accidents could be preventable if this current Government would measure the urgency to upgrade this stretch of road in terms of people’s lives and wellbeing rather than in dollars. An unacceptable number of lives have been lost and others seriously injured on this stretch of road. Road users, local residents and Chambers have appealed for urgent action for the right safety measures to be put in place and have been ignored.
We are appealing for urgent action from the Government for the right safety measures to be put in place immediately, and funding to be allocated so work can begin on the Expressway extension now. Waka Kotahi is proposing a 16km extension from the southern end of the Cambridge section, but there is no funding for design and construction. Currently, funding will not be available before the 2027 – 2030 period, while construction is predicted to take another five years. This is not acceptable to us, or the wider Waikato community.
Visit our website at the link below to sign the petition urging the Government to fast-track safety changes and fast-track the Waikato Expressway extension from Cambridge to Piarere.
Te Huia
The Chamber commissioned a report in February 2022 to analyse the financial and environmental viability of the Hamilton-Auckland commuter train, Te Huia. The report was produced by final year Waikato University student Nicholas Farrell.
Amongst other findings, the report concluded that patronage KPIs are just half of year one predictions in the original Te Huia business case, with an overall load factor of 26 per cent; journey times are 91 minutes driving compared with 145 minutes on Te Huia; and the implementation of the train service has seen a congestion reduction of just 0.13 per cent.
The report also found, with current levels of patronage, Te Huia creates more carbon emissions than if those passengers would have driven private vehicles.
A follow up report analysing Te Huia's performance throughout 2022 will be released soon.
