PM shows he doesn't understand local government

The PM Christopher Luxon got the reception he deserved when he spoke to the Local Government Association conference yesterday. He (or who ever wrote his speech) trotted out a tired prescription of ‘reducing spending’ and ‘tackling waste’ in local government, when the problem for many years is that local government has been underfunded for the services it needs to provide to communities.

Local government has been complaining for a long time about how the system works against them and traps them into shifting costs to residents without councils being able to increase their incomes. Major issues include:

Central government encourages immigration, which increases its tax take. Councils inherit extra costs in the form of infrastructure development and housing, but doesn’t get any money from central government to help with the load.

Infrastructure is often invisible (e.g. underground pipes) and is ‘out of sight, out of mind’, so councillors and residents are happy to ignore looming problems until they become very expensive to fix. Residents vote for councillors who are happy to promise to keep rates low, even when they know they won’t be able to do that forever.

These are some of the tone deaf comments Luxon made:

“Ratepayers expect local government to do the basics and to do the basics brilliantly. Pick up the rubbish. Fix the pipes. Fill in potholes. And more generally, maintain local assets quickly, carefully, and cost effectively. But nothing in life is free, and ratepayers expect to pay for it in exchange. But what they don’t expect to pay for is the laundry list of distractions and experiments that are plaguing council balance sheets across the country.

Ratepayers are sick of the white elephants and non-delivery. So, my challenge to all of you is to rein in the fantasies and to get back to delivering the basics brilliantly.“

He also told councillors that Cabinet is investigating how to limit councils’ spending on ‘nice to haves’, i.e. the so-called vanity projects that critics latch onto. The reality is that, except in situations where councils get involved in economic development and build big conference centres, the nice to haves make up a very small fraction of council spending. The vast majority of spending is on the basics. But the cost of that is ever increasing and rate payers don’t want to pay for it.

Councils and ratepayers have kicked the can down the road for years on infrastructure spending, and central government has been happy to allow that to happen. Well, the chickens have come home to roost in the form of rate increases in the mid or high teens and no one is happy. Many ratepayers can’t afford to pay any more, and have legitimate gripes about the situation. However, we have no one to blame but ourselves.

When I stood for election to Porirua City Council in 2019, PCC had an $800 million liability in its long term plan to replace water and waste water pipes throughout the city. When I tried to bring that up, no one wanted to know. A few weeks ago, I found some old emails between a councillor and residents assocations about how PCC was doing a wonderful job of keeping rate increases to under the rate of inflation, i.e. two per cent. This is exactly the attitude that kicked off more than a decade ago that got us into this situation.

For Luxon to trot out ‘cut costs’ and ‘do the basics brilliantly’ as the solution was patronising and ignorant. The government’s approach won’t work. There is a serious structural problem that everyone is blaming on everyone else, and until both central and local government accept they have a joint responsibility to fixing it, we will continue to stumble along in this unhappy and wasteful way.

Abolishing the wellbeing provisions for councils

I am also very concerned about the government’s proposal to abolish the four wellbeing provisions in the Local Government Act to help councils ‘focus on the basics’. This also shows a woeful ignorance of the role of councils in their communities. In a local example I understand, Porirua City Council’s wellbeing indicators are social, economic, environmental and cultural. It’s similar for other councils. This is where councils get involved in working with communities to make them the sorts of places people want to live in. Where people are nurtured in ways that bring meaning to their lives, communities and neighbourhoods. Where the environment is protected for the good of us all. Where jobs and businesses are encouraged and supported.

The government seems to think that councils should be least-cost infrastructure managers and leave all the community activities to underfunded community groups like charities, schools, churches, and sports clubs. What a disaster that will be.