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Attention turns to local government

Written By: - Date published: 10:07 pm, November 26th, 2008 - 24 comments
Categories: uncategorized - Tags: ,

Seems the commentators are definately picking local government as one of the issues to watch in terms of how the new Nationaladministration handles MMP politics (and how the opposition parties handle it as well I guess). Gordon Campbell notes:

Giving the local government portfolio to Rodney Hide creates some management challenges for John Key. Can Key really afford to let Hide loose down the privatising track in local government which would entail the wholesale contracting out of council services and the privatizing of water and roads, along lines set out in Hide’s private members’ bills on the subject. Only a minuscule number of people in New Zealand voted for this agenda.

Or will Key do the exact opposite and try to repeat what Kevin Rudd is doing right now in Australia ? Rudd is treating local government as the best, most readily available jobs engine to soak up the unemployment bound to flow next year from the global recession. Which path will Key choose to follow yesterday’s extremism, or tomorrow’s pragmatism?

While in the NZ Herald Brian Rudman observes:

There are many in local government scratching their heads after the appointment of Act leader Rodney Hide as Minister of Local Government and wondering what on earth they did to upset Prime Minister John Key so much….what does he [Key] do but appoint as Minister of Local Government the leader of a party which is pledged to strip most of its functions over to private operators, confining councillors “to the core activities that produce public benefits, such as regulations, flood controls and roads”.

Top of the scorched earth local government policy list Mr Hide was elected on was that “local government will be required to shed its commercial activity, thereby eliminating the need to separate regulatory and commercial functions between local and regional councils”. Policy number two was that “roads and piped water will be supplied on a fully commercial basis”.

When can we expect to hear what the actual agenda for local government is over the next three years – and what will be the processes by which any change occurs? Local government is often seen as the quiet cousin of central government politics but in actual fact it has a pretty big impact on all of us. I, for one, am feeling a little nervous! I want more than footpaths and rubbish collection as council duties.

24 comments on “Attention turns to local government ”

  1. mike 1

    “most readily available jobs engine to soak up the unemployment”

    And see your rates go through the roof – no thanks.

    Rodders is just the man to streamline the RMA and consent process that had been bloated by the now defeated left leaning councils throughout NZ’s main cities.

  2. ak 2

    heh heh….fun times ahead….watch the thin moronic flint of ACToid ideology attempt traction in the vast, viscous local body morass….

    Can’t wait for some enterprising journo to ask Fed Farmers what they think of the prospect of privatised, user-pays roads……or water schemes, come to that….

  3. It’s fascinating watching the people from ACT and the stranger fringes of the National Party advocate policies that would destroy centres of expertise, cut wages and conditions and throw thousands out of work on the basis this would be a good thing.

  4. RedLogix 4

    It rather begs the question; if Hide is simply going to implement National Party Cabinet decisions in his portfolio, then exactly what is his justification for all the baubles of power that he is happily sucking down?

    If he is NOT going to implement his own ACT Party published policy regarding Local Govt, then is he going to come clean and tell ACT members and people who voted for him that what ACT was saying prior to the election was just window dressing?

    Because if Hide as Minister is going to be nothing but a National Party pet-troll, then it really confirms that ACT is not a real political Party, rather the conveniently deniable extreme right-wing of the Nats.

  5. Quoth the Raven 5

    Footpaths and rubbish collection can be privatized. How about PPPs for footpaths. They could have toll footpaths. The possibilities are endless. You’re only limited by your free market imagination.

  6. Paul Robeson 6

    Hasn’t John Banks already begun to do this the day after the election?

  7. tsmithfield 7

    Identifying wasteful spending and refocussing it towards more productive ends for ratepayers is a good thing, right?

  8. TimeWarp 8

    Simple one-liner based “answers” to complex and sophisticated issues can never be.

  9. tsmithfield 9

    TimeWarp “Simple one-liner based “answers’ to complex and sophisticated issues can never be.”

    I am not sure if you are referring to my previous comment. If so, my comment is certainly one sentence, however that does not imply a simple solution.

    There is no doubt there is incredible wastage in local government spending, at least from what I have seen with the Christchurch City Council. For instance, we have a tram that runs through the city centre that has never made money and is therefore heavily subsidised by rate-payers. The council recently purchased millions of dollars worth of properties from Dave Henderson at dubious and most likely over-inflated value, much of these without obtaining independent valuations. This has caused a major stir down here.

    My view is that councils should steer clear of a lot of the ancillary stuff and focus
    on doing core services really well.

  10. gingercrush 10

    Surprising little will change for local councils I suspect. There will be the RMA process which will change. I see something being done about rates but other than that not much. I’m certainly not scared by Hide being the minister.

    Your right when you say councils are just as important as central government. But sadly not that many vote. Barely over 50% and councillors are never held accountable anyway. Sure Auckland turfs out their Mayor each term because they see a new candidate that offers so much better. But elsewhere most Mayors and councillors are voted in each and every time. Even when everyone complains about them. Being that I’m in Christchurch. The fact we supposedly have a huge surplus and are actually saving money and yet council rates keep increasingly. Our rubbish service is turning into a bureaucracy. I really think three wheelie bins is excessive. And I don’t personally agree that council rates should to go pay for public housing. And then there’s the mayoral fund which is given away to people that can’t buy groceries or firewood and yet have two pretty good cards, flash televisions etc. And then there’s the roadworks, needs to be done. But why is it that the street where one of the councillors lived got a huge makeover and got thousands spent on it.

    If Hide should do anything as Local government minister. Make councils accountable. Because yes we can vote them in but there is little accountability whatsoever.

  11. ghostwhowalks 11

    Hides policy changes would have to approved by the national cabinet and then nationals caucus.
    I think they quite like being at 45% of the vote

  12. Ianmac 12

    On Maori TV last night the (fogotten his name was MP but was dropped 2005 ummm) gist was how little power they had with Labour, because they could have ideas, then form policy, then to the Party for approval then to Cabinet and by that time the original idea had been neutred! But now “John Key has given us plenty of room/power to actually get things done. The possibilities are exciting.”
    Maybe the National Govt really has devolved power to the Ministers outside cabinet. Maybe Hide can get done what he intends! Yet wouldn’t it all have to fit in with general Nat Policy???

  13. Quoth the Raven 13

    tsmithfield – Would you like to see the tram go? I think that’s a horrible thought. It’s part of our city, it’s iconic like San Francisco’s tram. Not everything has to be given a dollar value, that is the poverty of yoúr right wing thinking. You see nothing of worth in human life and endeavors beyond that which can make money. That’s very sad.

  14. tsmithfield 14

    Quoth the Raven: “Would you like to see the tram go?”

    As it stands now, most definately. Whenever I see it go past, it has virtually no passengers. Therefore, it is not surprising it is making a huge loss. That doesn’t mean it couldn’t be run profitably if some attention was paid to the price of travel so that it was more fully utilised. You may not like the “profitability” argument. However, managing things profitably is the best way to ensure survival in the long term. A bit like those snails on the West Coast. The best way to ensure their survival as a species would be to commercialise them as a delicacy (like the French do) and breed them for food. A requirement of breeding them could be that 10% of all bred commercially would be returned to the wild.

    So Quoth, what do you think of the council bailing out Henderson with his properties? More rate-payers money down the toilet do you think.

    Here is another example from Christchurch: Ferrymead.

    That receives a lot of council funding, yet according to someone I know who recently worked there, many of the exhibitors hardly ever open their exhibits up to the public. Apparently they have been offered people to keep the exhibits open, but they have turned that down, preferring to use the facility as venue for them to play with their own toys at the rate-payer’s expense.

    I think the council should threaten to remove funding unless the stakeholders actually run the facility in a profitable way. As it is, it is just a black hole for rate-payers money.

  15. Quoth the Raven 15

    tsmithfeild – The council seems incompentent. Who would have voted for Bob Parker? I don’t know. I always thought he was right wing so maybe I’m biased, but I don’t follow the minutiae of local politics that closely. When you think about the tram you’ve also got to think about the image it represents like the botanic gardens, the cathedral and the gondaliers, that sort of thing attracts tourists and whether or not the tram makes any money in of itself it maybe contributing to the city finanicially.

  16. gingercrush 16

    Bob Parker tends to be centrist and if anything leans left. But to be perfectly honest. I’m not sure left/right binaries in local government work. They might campaign with a left or right campaign. They might campaign to reduce spending or not increase rates. They may campaign to not cut services etc. Unfortunately with local government you will break promises. The inherent nature between not enough income and too much services means rate increases and cuts to services will happen.

  17. Quoth the Raven 17

    GC – I’m not sure either. It’s hard to tell. I just went by the people that were voting for him and image to some degree. He did promise no rates rises and broke that promise. Obviously due to some of the spending tsmithfield is talking about and the new council building. I wonder what others opinion is if they actually needed that or not. That Henderson bussiness does seem like classic right wing pork to me, isn’t he some kind of right wing hero. But I don’t know too much about it.

  18. ts smithfield,

    Identifying wasteful spending and refocussing it towards more productive ends for ratepayers is a good thing, right?

    LG is not my field of interest, but I think your comment particularly apt in regards to any/all enzed LGs whose prior ‘investment’ endevors included the purchasing and acquisition of US bonds.. like the ten year deals in whose term investment banks like Merrill Flinch went awol before galloping identity loss along with ‘obligations’ in Bank of America.. and other inter-arresting activities.

    BTW, and to all readers here, have there been any updates on the folks who willingly ‘sold’ this bond (-age) to LAs here. Were they hailed and welcome visitors to our Douglas-deregulated shores or onshore surrogates both able and capable of shafting their own kind..?

    Couldn’t say though can suspect that above are laid out reasonable grounds for further inquiry into the new Minister’s appointment. Who, for instance, might he seek to hide in the dispensation/s of favors.. that only cabinet collegiality bestows..?

  19. tsmithfield 19

    Quoth, I it looks like we would both agree that it would be a good thing if Hide can “encourage” councils not to engage in some of the foolish spending going on in Christchurch at the moment.

  20. Quoth the Raven 20

    tsmithfield – I don’t want to see any privatised roads or water system though.

  21. RedLogix 21

    ACT’s privatisation policy for water supply is a triumph of ideology over reason anyhow. The reason is simple.

    About 90% of the actual cost of delivering bulk water is in fixed capital and overhead costs. A typical wholesale price of bulk water supply (into distribution reservoirs) is about 50c/m3. The actual marginal cost of producing each extra m3 of water at a treatment plant is around 5c/m3.

    The vast bulk of costs are fixed in terms of servicing capital. There is relatively little opportunity for a lean mean private operator to reduce this cost. (Besides experience assures me that most local water operators already run on the smell of rag that was once in the same room with closed bottle of turps.)

    There are only two effective opportunities a private operator has to reduce production costs:

    1. Reduce quality standards, reduce compliance monitoring, and poorer treatment control, Use the least qualified staff, with minimal training and safety standards.

    2. Reduce maintenance standards to a minimum of essential work only. Contract out anything that is done to the “lowest price of the day” bidder, ie the new guy who was most desperate for the work or who had cocked up his pricing. Allow the plant to gradually run down so that you spend as little as possible during the term of your contract. Leave the biggest possible back-log of deferred maintenance and obsolete equipment for the next sucker to pick up the tab on.

    A contract can be written to cover these aspects, but the price goes up accordingly. Capital intensive water supply systems are a rather poor match for private operators, because public sector entities will usually be able to source funding at a lower cost and are willing to run to a 50 year design life/depreciation schedule… and not have to return a dividend to shareholders.

    Private enterprise cannot compete head to head with public water utitlites. The only reason why private enterprise would ever want the business, is to exploit an essential service monopoly position to unilaterally hike prices at the first possible opportunity. It makes no business sense otherwise.

  22. Phil 22


    I suspect you’re making an unfounded accusation against LA’s investments. If there was surplus cash in our local gov’t coffers for international investment (and I find that very hard to believe!) it would most likely be invested in US T-Bills and their equivalent of out Gov’t Bonds. As a defensive investment, they’ve probably done quite well recently.

    The idea that LA’s would be buying up USRMBS is very far fetched. You’d be better off looking at someone like ACC – they’re a big purchaser of securitised paper on the NZ market, from what I understand.

  23. Phil,

    “accusation” — bah! Try reading my first paragraph back over.

    Then what you find very hard to believe does not make it so. As Carl Sagan might have put it — the absence of evidence (to a beholder) is NOT evidence of absence.

    Of course you may not be a beholder, you impress me with finding excuses to avoid further – deeper – inquiry.

    As for ACC, if as you say they are into ‘securitised’ paper, why don’t you take a look. Else influence another to do so. [not my field, as I said]

    BTW: did you pick my clear inference that investment losers and actual losses amount to bad spending as well as the types ts smithfield sought to highlight.

  24. Ianmac 24

    Private Provider profit is simple. Cost + profit. Costs stay more or less the same then add delivery charge to suit the profit motive. Add 50c/m3. Take it or leave it. Then in a year add another 25c/m3. Take it or we will cut your water off.

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