How to bake a better budget
Local Government
Our local councils take too long to make what are often average decisions, and the public has fallen out of trust with the system, writes Mark Thomas
It can take months to prepare the classic Chinese dish the century egg, but the result is a rich, complex delicacy.
An Auckland Council budget takes a lot longer to make and few would describe last week’s result in savoury terms.
For six months the budget proposals were analysed, consulted on, debated and amended. There were more than 41,000 submissions – including from more than 800 organisations. There were more than 100 hours of formal discussion, more than 80 “Have Your Say” events around the region, and almost 30 separate council workshops before the two-day, 12-hour meeting where decisions were finally made.
There is a remarkable amount of quite detailed information in the Local Government Act 2002 telling councils how they should go about making decisions. The Act refers to “decision making” on 90 occasions and two of its eight sections are specifically focused on good governance and decision making.
Yet anyone watching the unedifying way Auckland Council finally agreed its annual budget, variously described in the media as a tumultuous battle, a debacle and purgatory, could be excused for thinking it had missed this reading material on good decision making. Or perhaps the 650 pages of budget-related material to read for the meeting got in the way.
One commentator called it a triumph for democracy. It may have been a victory for many of the thousands of respondents who complained about aspects of the original proposal. But it seems unlikely that the more than 1 million Aucklanders over the age of 18 who didn’t participate in the council’s budget did so because they thought democracy would win the day.
Councils are required by law to operate in an efficient and effective, and to conduct business in a clear and transparent way. No-one witnessing this year’s Auckland budget process could think that was what had taken place, and Auckland Council is not alone. Wellington’s last 10-year budget setting meeting took more than seven hours and was described as a shambles and almost incomprehensible. The Dunedin and New Plymouth Councils took as long at difficult annual budget meetings, and there are other examples around the country.
This practice of councils spending many hours, and sometimes days, making decisions is not making the public more satisfied.
In Local Government New Zealand’s last reputation survey, overall satisfaction of New Zealand local government was at 17 percent. One of the areas of lowest performance was in councils being trusted to make good spending decisions.
To its credit, Auckland Council surveys its own performance every quarter. In the last reported survey ending December 2022, only 20 percent of Aucklanders said they trust council’s decision making – the lowest level in three years.
Find a new recipe
Every briefing to the Incoming Minister of Local Government since at least 2011 has mentioned the problems facing the sector.
During the 2010s, the National government advanced a series of measures under the Better Local Government label designed to improve the administration of local government. Yet the 2016 Incoming Minister’s Briefing still spoke of significant challenges facing local authorities.
In 2019, the Productivity Commission devoted a chapter of its report into Local Government Funding and Financing to improving decision making. It concluded that many councils lack the necessary expertise for effective decision making. It also said steps should be taken to reduce the complexity and excessive compliance of local government planning and to improve quality assurance. It made a series of recommendations to improve the information, reporting and monitoring framework for councils as well as skills, knowledge and professional development where needed.
Local Government New Zealand said in 2020 it was time to review the whole local government framework to address, among other things, decision-making weaknesses in the existing system. Many of the Kiwis who make themselves available to lead our councils have ended up frustrated by the time-consuming and inefficient process they become part of.
There have been 20 different Local Government Ministers in the last thirty years and this turnover has typically meant each has focused more on discrete policy priorities such as housing, resource management changes or regulatory and administrative reform rather than more significant change.
That was until Nanaia Mahuta was appointed Local Government Minister at the end of 2017. Lasting until February this year, she became the longest serving Local Government Minister since the reforming Michael Bassett who led and implemented the 1989 transformation of New Zealand’s local government.
In her five years, Mahuta championed the politically challenging Three Waters reforms and, in early 2021, announced a widely welcomed major review of the sector. This review, the most substantial since the 1980s changes, will report next week. Underway for more than two years, its Draft Report released in October 2022 paid no specific regard to the challenges of Auckland Council decision making. It spent very little time talking about Auckland at all, despite the council being larger than the next 12 New Zealand cities combined. Its recommendations about improved council decision making relate almost exclusively to increasing participation for citizens, Māori and for climate change.
It did acknowledge that council governors usually come to the role with limited experience governing enterprises of the scale and complexity of most councils, and so recommended “mandatory professional development”. However, government already mandates how councils should make good decisions, so this seems unlikely to succeed.
New cooks in the kitchen
Another key issue the review avoided was encouraging political parties to participate in local government elections as happens in Australia and the United Kingdom.
The US based National Democratic Institute has worked in nearly 160 countries increasing the effectiveness of democratic institutions says political parties are an essential institution of democracy. A study by the New Zealand parliament says they have long played a crucial role in this country – but not at a local level.
A Yale university study in 2021 said that despite polarisation weakening support for established political parties in several countries, they remain a core institution of democratic accountability. This is because voters do not have the time, inclination or resources to evaluate competing independent political interests. This is one of the reasons why 81.5 percent of New Zealand’s voted in the 2020 General Election, where political parties are well represented, but less than half of that, 40.4 percent, voted in the 2022 local elections where notional independents and local tickets dominate.
Making local government matter more must be at the heart of any serious attempt to improve the way councils work.
The review does have some useful suggestions regarding boosting co-investment between central and local government. It also rightly addresses new funding options councils need access to, such as visitor levies, value capture charges for new development and congestion pricing. It also wants to strength and better resource the role of an elected member.
But New Zealand delivers amongst the lowest level of public services via local government of any developed country. Its largest city Auckland, responsible for almost 40 percent of the country’s GDP, does not get the focus and attention comparable cities around the world receive.
If New Zealand continues to avoid focusing on improving councils’ decision making, we will continue to see many hours of wasted effort, many more, poor decisions and continued public dissatisfaction.
Good things can take time to make well. It used to take five months to make a century egg, but process improvements, technology and customer preferences mean that can now take just several weeks.
Who are the chefs up for the challenge of helping councils not make such a meal of things?
