BY LINDA O’REILLY, PARTNER, BROOKFIELDS LAWYERS

After the excitement of riding the rollercoaster with Rodney Hide as Minister for Local Government, Dr Nick Smith has taken the reins.

As a senior member of the Government who also holds the environment portfolio it can be expected that he will see to it that local government plays its part in the Government’s plans to promote infrastructure and economic development. For the second term in a row, local government will have a strong, hands-on minister who will be pushing for it to perform better.

In the meantime, local authorities around the country are feeling the squeeze between rising community expectations and funding difficulties. The strain on rates continues as lower and medium income families struggle to meet this major expense. At the same time, funding for capital expenditure through financial and development contributions has dried up in many areas with the slump in property development.

That the public no longer regard local government as at best benign and at worst meddlesome, has been demonstrated by the reaction to the Hamilton V8 Supercars financial fiasco; the recent events in Christchurch occasioned by a beleaguered community fed up with perceived inaction; and by the fascination with the performance of the new structure that is Auckland Council.

The alarming report of Audit NZ into events surrounding Hamilton City Council’s sponsorship of the V8 Supercars event is a sad illustration of what can happen when enthusiasm for an event is allowed to supersede good governance.

When the Audit NZ report (commissioned by the council itself) came out late last year, Hamiltonians were aghast at the apparent financial mismanagement of the event that the council had attracted to the city. There were cries for the councillors and/or relevant staff members to resign, and for the former chief executive to be held accountable. The matter has not been helped by the revelation of over-budget work on the Claudelands Event Centre, and its under-budget financial performance. The centre is expected to post a deficit of $2.64 million this year.

In one of his last acts as Minister for Local Government, Rodney Hide put the council on notice that Government intervention could be expected if it did not make good progress on implementing the V8 report recommendations.

Yet more recent news that the Waikato Regional Council is taking Hamilton City Council to court over a spillage of 90,000 litres of sewage into the Waikato River from its Pukete Wastewater Treatment plant does little to reassure the community that all is well with the council.

In Christchurch, no one is suggesting that the tragic events resulting from two major and a multitude of minor earthquakes can be laid at the door of the council. But residents are holding the council accountable for its response to those events, not so much in the immediate aftermath as in the longer term. The council is faced with almost overwhelming difficulties in restoring Christchurch to its best ‘business as usual’ form.

In that endeavour it is both assisted and constrained by the work of the Government-appointed Christchurch Earthquake Recovery Authority, which is the agency leading and coordinating the ongoing recovery. This is a role that the council might have expected to fulfill. Even so, the council retains responsibility for the future form of the city as it rebuilds, and has many regulatory functions to perform in relation to both demolition and new building works.

The performance of the council in relation to these matters is up for debate, but the Government has already intervened with the appointment of Kerry Marshall as a Crown observer to oversee the workings of the council, and to sit in on council meetings and provide advice to Mayor Bob Parker and councillors. The chief executive, Tony Marryatt, has also come under public fire in relation to his performance and his proposed pay increase of around $68,000 —which he has since declined to take.

Further, although Earthquake Recovery Minister Gerry Brownlee apologised for recently calling Christchurch Mayor Bob Parker a clown, he has made it clear that the council has to perform better in relation to its plans for the restoration of the city and its funding.

The situation facing Christchurch City Council is extraordinary, but it is giving all New Zealanders an insight into what local authorities do and how they do it. As such it raises questions about the relationship between local and central government, the extent of local government powers, and the manner in which local authorities exercise and fund those powers.

The other location where the relationship between local and central government is being critically observed is in Auckland. The creation of the Auckland Council was fraught with controversy and nervous excitement over what would emerge. Would the massive new council perform better or worse than the organisations it replaced, and could it successfully take on central government to win advantages for Auckland?

The jury remains out on the first question. The answer to the second perhaps awaits the outcome of the tussle over transportation issues. The Associate Minister for Transport Steven Joyce and Mayor Len Brown are at odds over projects and funding, although both agree that improvements to the network are a priority.

The other issue keenly followed by the public is the debate concerning the future form of the city. Will it be the compact urban environment that the council seems to favour based on documents released for consultation, or will development be allowed to spread into new green-field locations where the tradition of having one’s own backyard can be preserved?

How well the Auckland Council model is perceived to perform will no doubt shape the future of local government in urban areas where the possibilities of further amalgamations are already being discussed. What we can and must learn from these examples is that local government is not a quiet backwater where most businesses pass under the radar and few offer challenges to the decisions reached.

People are now aware of just how great an impact local government can have on their communities, businesses and welfare, and that local government business can be big business. Life in local government may be about to become more uncomfortable than ever before as the result of public scrutiny, but at least there can no longer be any doubt that it is a critical arm of government in New Zealand.