Eric Crampton says Local Government NZ's funding report deserves better than John Key's dismissal

By Eric Crampton*

It turns out that you can both agree with Local Government New Zealand that we need to change how local government is financed, and with the Taxpayers’ Union that a lot of local governments could be more efficient.

I think we can manage to hit both targets with one instrument in this case: fixing how local government is financed can help to make local government more efficient.

I recently argued that even those who think that councils are terrible and wasteful should support giving councils more money, so long as that funding stream is structured to provide appropriate incentives to encourage growth.

The LGNZ report released this week investigates a few new mechanisms for improving council finances.

They very correctly note that central government offloads a host of regulatory compliance costs onto local government with little in the way of compensation for those costs – as central government also does to the private sector, I might add.

They also correctly note that tax exempt land, often owned or managed by central government, adds distortions and imposes a burden on other property owners then loaded with higher taxes to make up the difference.

But the meat of the report is in its discussion of mechanisms for funding local government.

And, there is a lot there to like.

As in any report that canvasses a wide array of options, there are some that are really terrible ideas, like new locally levied taxes on billboards. Local income taxes can also prove very expensive in terms of the bad incentives then created for people to move just outside of the jurisdiction’s borders – as the report itself notes.

How can we provide a better funding stream to local government without introducing pernicious effects or bad incentives?

First, assess how much of central government’s tax take – GST, income tax, and company tax – comes from each of the different districts.

Then provide each district with a percentage of any increase over that base level. Councils that do a great job in encouraging development would be rewarded for it; those that do not, will not.

Councils then would have stronger incentive to compete for new firms and new housing developments.

To get more residents and more businesses, and thereby increase their share of the flow of funds from central government, they would have to do a better job than their neighbours in providing speedy and effective consenting, appropriate levels of public amenities, and reasonable property tax rates – basically, all of the things that firms have to do in competing for customers. And central government could finally stop worrying so much about local government performance.

Central government would have to be willing to share a bit.

But the returns could be well worth the investment.

The report deserves more than Prime Minister John Key’s peremptory dismissal.

-----------------------------

*Eric Crampton is head of research at the New Zealand Initiative.

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72 Comments

this is where you fail off the bat,
"appropriate incentives to encourage growth."
You cannot grow forever on a finite planet.  Welcome to the "Great Shrink"
 

I agree we need to think differently about funding local government. In my view rates should be replaced with a land tax which is collected by Inland Revenue; then local government allocated funds from the overall tax pot. 
 
And councils need to downsize - I understand Auckland Transport employs more staff than NZTA = absurd wastage!

rates WAS a land tax, then it bcame a capital tax to draw funds, and to draw more from the more affluent people who could afford to contribute more (cf window tax) - people with unimproved properties were starting to get upset that their costs had risen 50% where the property value and their income had not changed.

Part of the point of council based taxation is it gave locals influence and responsibility for their own ammenities, whereas central government always preferred it's political footballs for fund allocation (ie areas with voter sway, or politically intense issues like crime or less than perfect phone (now internet) lines, would get king size budgets, yet anyone in the middle was ignored (as not being needy enough, or too many or not enough population to deserve a pro rata cut).  By going down a step it allowed community choice - sadly it also made it a target for tinpot socialists who expect government to see to their needs and them not to pay for their wants.

The problem is then the Local govn just has its hand out, land tax can be got locally.  On top of that Central govn can favour councils it wants to win, the UK had that so bad idea.

Giving more funding to local government (actually I think regional government is the appropriate body in NZ) and making them responsible for providing things that attract new residents like transport infrastructure to new areas of housing and employment is actually the norm overseas. This sort of local governance is part of our western heritage, it is part of the enlightment package of 'rights' that we have inherited.
 
Not only is there historical and overseas evidence that this practice works, there is very good theretical support for Eric Crampton article from the Tiebot hypothesis.This being citizens can influence local government by either voting for what they want or migrating to another jurisdiction that provides what they want.
 
I think New Zealand needs a 'cut the crap' moment regarding local governance.
 
It is part National's DNA not to give any of the taxpaying pie to local government because they do not want some local communities 'attractive package of public services' to include transit based housing developments. National ever since the first Labour government provided transit based housing developments up the valleys and coast of the Wellington region has undermined the spread of these sort of communities.
 
Meanwhile Labour DNA is all about big statist institutions. In there last failed attempt at re-election how many Kiwi-this and Kiwi-that institutions did they propose?
 
These ideas do not deserve a quick dismissal.

Any organisation that can legally put their hands in your pocket and take what they want will always be coming back for more.   It's time for L.G. rates to be capped.
Also N.Z. is overgoverned in that we have national, regional and local Government plus community boards.  Why does a country with just over 4 million people need four tiers of Government?  

Andy I can suggest a few places where there is no legal state that has the power of taxation..... although they are all described as failed states. Beware of what you wish for.

Brendon one only needs to think of Germany to know that the power to legislate must have limitations........the rights of individuals are not something that should be balanced by pretentious public (group) good......
If you read and understand the Universal Declaration of Human Rights then you would know that the power of taxation has imposed limitations!!!

Notaneconomist I am not sure what your point is. But I'll take a stab that you are against absolute power of an all powerful legislater and I can reassure you that in Germeny they have checks and balances on their legislaters to prevent abuse. Actually they are a bit phobic of Hitler types these days.....

Germany (WW2) is the reference only.....legislators can do what they like and do in any country including NZ.......and even worse is the calibre of the people administering the legislation!!
 
Just tell me where are the checks and balances are in NZ????  There aren't any !!  Socialism like its cousin Communism ensures there is complete control over individuals via indirect mechanisms that control the individual rather than direct physical restraint!
Anyone or organisation that has demand controls over another persons spending is abusing the person they make the demand from when there is no agreed contract between the parties....

I disagree here. "the rights of individuals are not something that should be balanced by pretentious public (group) good.." If an individual is damaging the group, then the group takes precidence.

A group can cause far more damage than an individual. Hitler or any other similar type could not have achieved the damage that was caused without those who supported him and this is why the rights of individuals have been protected......as you have been told before the right to freedom and liberty has a cost of responsibility to protect those freedoms for all.

because they do different things.
Central govn sets laws, the rest obey them.

Move to somalia, see how you do.

Better, more efficient local govt funding will only work if councils get back to their core services. 
What are they there for?  Maintain and provide services to the rates payers, nothing else!  Look at Auckland council, they have more subsidiaries than Fletchers and the only services they haven’t got is selling cold Pizzas! 

I don't have any issue with a review of income and expenditure, but the review is all about more income and since councils don't create a margin as such, they just 'break even,' then it suggests that under Parkinson Law, that their costs will rise to match. 

I'm a little wary of making regions compete for citizens like that. Countries around the world compete for global corporate head offices and that leads to dutch irish sandwiches... 

There would be central government oversight/ rules to prevent that sort of 'beggering thy neighbour' practice.
 
Effectively there is already competition for our citizens. Kiwis can freely move to the various States of Australia and it is not that difficult to move elsewhere. Perhaps as many as 1 million kiwis have been been 'attracted' by this sort of competition.
 
Would giving NZ regions the ability to attract some of them back be a bad thing?

In the USA there isnt...result corps often pay almost zero state tax.

How would they attract ppl?  just about the only thing I see is Govn handouts, bad idea IMHO.
 
 

Agree

Please get this through to your brain.  "Regions" don't go begging.  Identify your target of blame more clearly.
 

Whoa there cowboy, steady on! All I'm saying is I can see the potential for abuse unless the right incentives and regulation would be in place... and that's not something I have a whole lot of confidence would happen...

First step is to identify the cause of the opportunity.  Just labeling it "the region" includes a lot of people who "just don't want to know" and many others who think "that's just how it works" and don't think any futher.

The first step of what is to identify the cause of what opportunity? I feel like I'm missing half the script here.
 
Fair enough about the label, I could better say "the councils." Then it's clear which body in what capacity I'm talking about. I'm not referring to the ensemble of citzens of a region.

Councils don't have a funding problem, they have a spending problem.
I reckon most of them could cut their spending by half and there'd be no loss of service.

Greetings earthlings! 
It's been a while since I was last here, due to my temporary secondment to the hallowed chamber of local government. I thought it might be useful to pass back some observations from the inside, so to speak. 
I was part of the LGNZ working group on local government funding. I thought the overall report made for interesting reading. I agree with Eric that local income taxes are a non starter but that some kind of "earn back" scheme for targeted investment is certainly worth exploring (see the experience of the Greater Manchester Authority and UK local authorities). Ultimately, that is working out some kind of GST share, as a result of increased economic activity from the investment. The key take out from the report for me was that central and local govenrment need to work better together and this is one area they can do that it. 
I was also asked about water billing and I think we certainly need to charge people for the water they use, not as an extra charge, but as a way of allowing low users to pay less and to create the right incentives to conserve. The tricky bit is getting the right technology in place and, for Christchurch at least, that price outweighs possible savings. 
Otherwise there's no free lunches. 
Which brings us to ratepayers favorite topic: why can't councils spend less. Indeed a very good question. One big problem, identified in the LGNZ report, is the huge legislative burden that local governments carry. Essentially they are putting central govenrment edicts into practice and charging for that. This gives local government little room for maneoveur, other than to deliver the prescribed services more efficiently (a whole different conversation). However, there is an awful lot that councils do that you couldn't really argue as core services, although they are very welcome ones: housing, community facilities, libraries, sports and rec, grant funding, arts and culture and more. These are all part of creating community well-being, which is very welcome but more and more these are in conflict with private providers, who can provide the same services (such as swimming pools). 
As we approach our LTP budget process, questions of prioritisation will need to be asked. Infrastructure costs more and more, demands and expectations are high for levels of service, but ratepayers have limited funds. Ultimately trade offs must be made. And what I notice is that no one ever wants to make those trade offs. The community rarely comes in to ask for spending cuts and politicians don't like to propose them. Yet people want lower rates. Something has to give. Operational efficiencies are the next cab off the rank and that's a big focus. How to improve productivity in local government? 
One thing is for sure. It's a complete myth that councils are always looking to hammer the ratepayer. I'd argue it's the opposite. Politicians are very alert to rising rates (in Christchurch that's unavoidable post earthquake) but they will need community support to make the hard decisions. 
Ok, back to the budget! 
Hope all is well in interest.co.nz land. Which reminds me, I'm sure I mentioned something about deflation many moons ago :-) 
 
 

Raf Manji is subtlety trying to hint he wrote something about deflation that still seems relevant now.

http://www.interest.co.nz/opinion/59625/monetary-dialysis-has-proven-be-...

Raf .  Councils NEED to spend less.   they have been told this time and time again. NO EXCUSES. NO IF, BUTS.  Get their spending in line with their revenue - stop being the people with credit card that must have one more thing "because".

" bad incentives then created for people to move just outside of the jurisdiction’s borders – as the report itself notes."

FFS.  This is exactly the kind of mindless crap we're talking about.
Are these people aware of what a move like that would cost?

Yes. Central government loads them with lots of bad fees.
ARE THE COUNCILS LOUD AND ON THE FRONT LINE TO SAY "NO" TO THESE COSTS?
no they're not, the first to pass these fees and extras on to people who can't afford them.
 
Who does the Council work for? 

 

Cowboy,
"Councils NEED to spend less".....
A sentiment shared by many. But how? I sat through a whole annual plan consultation process last year, with rates due to go up around 7.5%, but I didn't see many ratepayers storming in to ask council to spend less, or advise them how that could be achieved. 
In fact, people generally want more.
Then, of course, everyone complains when rates go up. 
You should also note that much of councils spending is prescribed by local government laws and regulations. They cost a lot of money to provide and process. Infrastructure has to be provided to certain specifications, water quality, waste water etc 
A recent report by the OAG stated that councils had underinvested in water infrastructure by 7- $8b. 
Its not as simple as councils need to spend less. Councils certainly need to deliver more with less and councils need to really focus on core services. Sure.
But the community needs to get more involved in feeding back what they regard as core. That's the only way anything will change. 
 
 
 

Interesting comment raf
 
you say "you should note that much of councils spending is prescribed by local government laws and regulations. They cost a lot of money to provide and process"
 
"much of councils spending is" - thats a nice "wave of the hand" statement - you should be more specific.
 
What would be helpful to this discussion would be a simple presentation of the costs of the 4 main city councils costs base as follows
 
Fixed costs
Variable costs
Total costs
 
and another
 
Government mandated costs - prescribed
Local Council discretionary costs - un-prescribed
Total Costs
 
and another
 
Infrastructure costs
Operational costs
Total Costs
 
Do the job properly - That would help

 
Budgets are presented split into capex and opex, and detailed levels of service individual expenditure areas, either required by legislation or set by the community, as required by the Audit office. What councils have to provide is guided by the Local Government Act. 
 

Subpart 1—Purpose of local government

10Purpose of local government

  • (1)The purpose of local government is—

    • (a)to enable democratic local decision-making and action by, and on behalf of, communities; and
    • (b)to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.

    (2)In this Act, good-quality, in relation to local infrastructure, local public services, and performance of regulatory functions, means infrastructure, services, and performance that are—

    • (a)efficient; and
    • (b)effective; and
    • (c)appropriate to present and anticipated future circumstances.

    Section 10(1)(b): replaced, on 5 December 2012, by section 7(1) of the Local Government Act 2002 Amendment Act 2012 (2012 No 93).
    Section 10(2): inserted, on 5 December 2012, by section 7(2) of the Local Government Act 2002 Amendment Act 2012 (2012 No 93).

I don't have the information laid out as you suggested to hand but I'm sure the Taxpayers Union could put it together in no time at all.
 

Assuming by fixed costs you mean traditional overheads these figures are not published in Ten Year/Annual Plans. There are a lot of overhead or shared serveice functions within councils: Accounting, HR, IT, Senior Management, Policy Analysis, Public Relations, Customer Service. Ther also things like accommodation (civic buildings), the vehicle fleet, phones. Internally there are budgets for all these things and Raf would normally examine these int he course of budgeting. What the public sees is all of those budgets allocated across the service delivery actiities. So the expenditure total is the same wehther you look through the Eastlight folder with 1,000 spreadsheet pages or the glossy publication that goes out for consultation.
 
Interesting question what comprises a fixed cost. Once you own an infrastructure network you are automatically stuck wiht a number of costs that you don't get much choice over. In fact almost all of them: depreciation, maintenance, energy. In fact its easier to say that the opex for the infrastructure acitivities is fixed.
 
The public versions of plans show clearly the breakdown between opev and capex for all activities (if that is what you mean by the operational/infrastructure split).
 
Interesting question about government mandated vs own choice. While it is true that government never consider implementation costs when they airily write new laws for local government, I think that teh burdens referred to are overstated.
 
In general the regulatory side (planning, building, environmental health, animal control, gambling, prostitution, alcohol) is set in legislation. But the substantive costs are funded through fees and charges and the public good component (funded by rates) is not that high a burden.
 
On the services/community services side almost all of it is own choice with one very important exception. So librariries, art galleries, museums, aquatic centres, stadia, sports grounds, parks, reserves are all own choice. Even cemeteries are not a stsutory monopoly.
 
Councils don't have statutotry monopoly over water supply, wastewater, stormwater but the design and operating standards for them are imposed externally. So a lot of the cost of stormwater and wastewater relates to resource consent conditions related to disposal of waste water. A lot of money is required to treat waste and storm water to a high enough standard that it can be disposed of. Likewise with water supply, standards imposed by the Ministry of Health determine a lot of the cost of the water network.

I was simply poking a stick and asking for further and better particulars ....much better particulars

By his own words, Raf Manji says "It's been a while since I was last here, due to my secondment to the hallowed chamber of local government. I thought it might be useful to pass back some observations from the inside, so to speak. I was part of the LGNZ working group on local government funding....."

Working on the inside I would have expected far, far better detail than that sweeping statement "much of the expenditure is government mandated" .. in fact I would have expected some precise detail, considering he has been part of the the "working group" .. and they sure as heck wouldnt be working with blue sky pie-in-the-sky nonsensensical rubbery figures .. and he would have those details at his fingertips
 
How much is much .. Think about that

Iconoclast if you had politely asked what proportion of local government costs were mandated by central government maybe you would have got an answer.
 
Instead you asked for a whole lot of other break downs and said to Raf condenscendingly that he should do his job properly.
 
Raf response I thought addressed your question that his job included producing an audited set of accounts which he then went on to explain the way it was configured. 
 
Iconoclast if you are not satisfied with the answer maybe you should look at how you ask the question?

bloody dove apologists.

If Raf & co were doing their job _properly_ there wouldn't be a need for greater than inflation funding.  It doesn't how many audits they do, how many excuses they come up with, how many apologists salute them, what they are doin is akin to asking what colour the barn should be after it burns down.

The simple litmus test is:  How much is going to be "enough"?  When are the constant rises above inflation* level going to stop?  

* I don't think it fair to expect such an organisation to _beat_ inflation, with the breadth or their responsibilities.  However if they are more than inflation one year, then they're on the slippery slope of breaking that  Rule,  "how much is going to be enough?"

What's your definition of inflation?

Drop in purchase power of money over time.   You know that thing that RBNZ has a chokehold on to stop NZ economy growing as fast as our neighbours.

Yeah but which one. Statistics NZ tracks about 10 definitions of inflation. All different.

In this particular instance I was referring to the drop in purchasing power.  Clearly we can't expect the council (tax free revenue?) to buy more with their dollar than last year, if everyone elses' dollar is buying less.
 But we can expect them to act prudent to avoid exposure to such predictable events, based on economics not on political policy

It's a really good question, though. 
 
I have to give Raf credit for engaging in public discussion like this but I think he also has to realise that he will be held accountable for throwaway lines like this one
 
I would accept that the working group weren't really there to analyse why costa are the way they are; they were really thuinking more about identifying the complete range of funding options that could be possible other than the current ones. And this idea about government imposition has been floating around for about ten years now since the Shand inquiry into council rating. The Labour government was pressured by Rodney Hide into holding an inquiry into rates but they kneecapped the terms of reference to limit it to rates incidence (who pays what) rather than why rates are the level they are. And I know a lot of mayors were frustrated that they couldn't really talk about rates risse and were limited to land v capital, Maori land rating etc etc. So that niggle has gone unresolved and remains so, to resurface in reports like this one.
 
I know that there is a bit of ugly in the detailed budgets but I also have to say that it is more or less invisible to councillors like Raf. So I am not going to criticise him for toeing the party line.
 
I'll try to post a little more below to wrap up the thread.

"I would accept that the working group weren't really there to analyse why costa are the way they are; they were really thuinking more about identifying the complete range of funding options that could be possible other than the current ones"

EXACTLY !

The old "it's not my mandate" thing, sung by jobsworths throughout the world.
What would happen to a large company if the owner/boss of a company said "I'm here to work about increasing sales not control costs".

What would the position of an employee be if they just purchase ordered what they were told and didn't keep the company budget in mind?   They might get away with it once or twice...after that their escapades better start returning more freely paid income (ie not appropriated by stealth - can't be mugging custys in alleyways or looting purses at the security check and call it "policy revenue increases"

It's a classic case of "committee validation".  All those people are paid to have that committee/thinking group right?  They're all on the teat, at the trough, on the clock.  Someone is going to spend time polishing up some beautiful report, and probably hours on a Powerpoint that will only be seen only, maybe twice ?   All tidily put together like the class suckups best present for teacher, with correct paper, carefully pressed covers, and tastefully chosen graphs and clipart.   And the committee boils down to a 30-60% participation (even though all are paid) and moves at a snails pace because of the back-and-forwards overhead in group think.  And no-one questions whether the work is proper, even though that's the first thing they should all be asking.

 Start making them hold these things on *their* time, not ratepayers.  Make the reports and presentation gear come from the pocket of the group.  THEN you'll see efficiencies.
That's how it works in private sector, why should low job risk government (central or local) get to live life on a gravy train supplied by others (and forced by legislation to pay).

raf, you were probably away when I promulgated Kumbel's Second Law of Local Government "A long career in local government depends on learning how to say 'We have to because....'."
 
It's possible that councils have to do local roading (I have never read the various Land Transport acts) but there is very little that councils do that they are truly obligated to do by law. Of course, once they do opt to provide a service there are various legal obligations concerning how they provide the service. I am familiar with the Local Government Act and I can't think of any section that requires a council to perform any particular service.
 
Most of the bundle of services provided by councils has a long history and councils remain on that autopliot today. A council today looks pretty much like its predecessor in 1890 (minus the abbatoir).
 
Of course you could have pointed out as I often do here that councils' main input costs (civil construction, energy and insurance) have risen in price 50% faster than CPI over recent years which largely accounts for rates rises as they are.

Indeed, council is an arcane institution, a machine that rolls on, irrespective of elected members who come and go. Agreed, the costs for the newly prescribed 30 year infrastructure strategy are likely to be extraordinary. We may well need to look at different ways of delivering said infrastructure e.g. Allowing developers to finance it and deliver it themselves. 
The current LTP process is not something I'm looking to repeat in a hurry! We have a bit of work to do on the way councils operate but its not going to change overnight. 

more excuses !!!!!

Gez I'd love to get a phat paycheck in a company that keeps accepting excuses like that from it's staff.

IT CHANGES RIGHT WHEN THEY DECIDE TO CHANGE IT.

WHICH IS RIGHT WHEN YOU BASTARDS STOP MAKING EXCUSES FOR THEM

To be fair, Christchurch is in a unique position when it comes to devising an Infrastructure Strategy. Other councils aren't rebuilding half their city from scratch :-)

To be fair neither is central Chch... :)

Raf I am really interested in your statement, "We may need to look at different ways of delivering said infrastructure e.g. allowing developers to finance it and deliver it themselves."
 
Can you explain some of the options, ideas that you have investigated?

It might be time for you to pull out your treatise on how councils re-value assets and infrastructure as a means of pumping up replacement reserves .. and thus rates .. that brilliant piece you did 5 years ago .. a timely re-post would not go astray

Simple.
Exactly the same way every business owner must.

Work out projected income.

SLASH anything that doesn't fit.

A LOT of ratepayers have just given up.  People have tried standing for the boards but they're a timewaster (at best).

PEOPLE ***WANT*** IS NOT GOVERNED BY WHAT THEY YELL ABOUT.
WHAT THEY _REALLY_ WANT IS WHAT THEY CAN _PAY_ FOR.
 
I WANT A NEW FERRARI AND A HOUSE IN THE TOPICS, BEST FOOD, FROM A CHEF EVERYDAY.

What I _really_ want is a hard boiled egg.  Because I can't afford the Ferrari or the House in the Tropics.

You can tell what I actually want...because I'm prepared to pay or work for it.

another simple process... take any annual overshoot from the owners and staffs pockets - just like a normal share business - you'll be amazed how fast the budget fits.   It's only the fiscally irresponsible and ignorant that knowingly propose works that are unaffordable - sadly because the way they've set up the system, those same people get into government local and central.  Local government is not responsible to the central government.  Local government represents the local interests (although central government try to make a power base and take that away...just as political wannabe's love getting into council as a way to win into central government).    Every citizens duty, whether they are natuiral born or not, is personal or corporate fiscal prudence - howw can anything survive otherwise.

It doesn't work that way.
Councils work out expenditure first and then rate for it/borrow the difference. 
I think what you are suggesting is a cap on rate rises (income). That's really the only fiscal discipline that is likely to work. 
 

Macawber

RAF.
There is no point making up the excuse "it doesn't work that way"

It "works" the way people are deciding to make it work.

 No other business can levy unrestrained costs on to a market they serve.  It's exactly why we have rules against monopolies.  What do you think would happen if they could?
The prices would just keep going up up up.

If there is no cap on rate rises...and there is a cap on our incomes (set by RBNZ at 1-3%) then it does not matter which way the councils take the money, they are destroying the prosperity and income of the market the councils are supposed to serve.

How can such a simple mathematical axiom escape peoples notice?
You can't keep spending more than you have.

When they're overspending they can't keep gouging others for their financial failure.

_No-one_ else can escape that fundamental principle of staying within their means.  No me, not my kids, not Greece, Not the Council.    They are damaging the very local economies that they supposed to be helping.

Running a houshold the council way:
 

  • At the start of the year add up all the bills you will have during the year (mortgage, food, electricity etc). Add some savings for known maintenance work coming up in the next few years (repainting etc).
  • Work out how much work you have to do to earn enough to pay the bills
  • Stop working when you have enough
  • Next year rinse and repeat

 
I am absolutely serious about this. I hope it looks odd because it is.
 
Especially note there is no pot of gold being built up for new things especially things like putting an extension on the house. 
 
Councils are fine for covering their expenditure on their current infrastructure base. They have real problems when it comes to accommodating new population. So the real question is not "what other ways can we fund local government" it is "how can we extend infrastructure in a timely way". The answers to that question will be a little diffferent.
 
 

Young couple starting out, looking forward to many years of future life ahead of them (sustainability).

Put together a budget.
Income vs Expenditure.

If they don't have enough, they can't just demand more funds from their income fairy.  they have to find ways to raise the money through doing something useful.

If they can't convince the income fairy to freely give them money more than a tight budget, then they must do without. They must keep doing without until their total costs fits within the income.
They can borrow, but it is risky, hopefully everyone on this site knows the dangers of consumer debt, let alone living day to day filling the gaps with credit...

Because the only people who are saying "stop working" are the councils, and they're not working, are they.   "Working" in your example is income generation, and they're saying we've shoved 70 weeks into out working year, and now we have to find out how to redistribute those weeks so we can put in a couple more "Working days".

But like the coming baby, if your family isn't growing then it's shrinking.  Therefore expansion is a predictable outcome.  But what ways do you know of for our young couple to convince the income fairies to give them more funds?   Passing legislation is one, steal from customers or employers is one,  but what is it that provides more income....  because the knowledge of the event is certain, and that's when to budget it 3, 5, 15 years ahead of time).   Oh they want it now?  so not only consumer debt, but instant gratification (and paying for it by un-prior-approved increases in income)...now does that sound good for everyone?

cowboy, I have taken on board many of your points but it is time for you take on one of mine. Central and local government just aren't the young couple. For them there is no baby on the way.
 
For governments there is no grow up, "get married", have a baby, raise the kids, eject them to form their own households, grow older, die. Governments just cruise along doing what they gave to do for what is is front of them now. Staff and politicians come and go but the institution is forever.

There is indeed a "get married" , a "have a baby", a "raise the kids", eject them to now house holds", "retirements", and "die".   That councils and government don't understand that is WHY they are failing in their responsibilites !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

"have a baby"  is predictably increase population of the collective.  This means new dwellings, and streamlining of infrastructure for safety and new demands for time (eg schools) and food (eg water) and potty/toilet paper (eg sewage).  Having an extra person in a household, means they need entertainment space, and places to keep their stuff - just as town needs wider roads, parks, entertainment and timesharing facilties... few households can just keep buying rooms, tvs, computers, cars, etc without a preparatory budget.

  that also includes the "raise the kids" - who also need communications and hobbies of their own, but they have to be able to choose things that their and their families budgets can handle.   Are we the community that is like the parents who pour all the resources into a handicapped or gifted sibling and the others must sacrifice?  Is that reasonable to all the others? no.  And the bigger the community, the more it tends to the mean of "no".

Ejecting them to their own households, is creating training programs and economies for them to train into.  Without insider knowledge it is hard for a person to skill into an industry with which they are unfamiliar.   Does the council ensure that they are not obstructing employers and builders financially so that young ones can leave the nest?   Or are we going for post-millienials living above the 'rents garage scenario?

Councils assets and facilities do indeed age, become paid for, and age... take the library services.   They're taking on many things which are not "community good" in order to stay relevant.  Such facillities need to be examined for age.

And tidily deposed of when they die.

To be unchanging in an evolving world is to be dead but not yet realising it.
There is no "institution forever", if it thinks so then it has already become a parasite infested zombie.  Dead flesh on an ancient skeleton, infested with minor bugs that contribute little but gorging themselves on the carcase.

The big question that needs be asked, _IF_ such a thing needed to change or be changed, who would the final decision fall to?   If no-one, then your zombie's brain has already rotted away.   If someone, then ask why they aren't transparent in their decision process because they need to be the one who is explaining why the council can't stay within budget, and they are the one needing to take personal financial responsibility for the failure.     

The Central and Local government need to become the young couple.   They always have been but they've lost it with age and direction.  This is because they're always facing the new, they're always growing - and if the location is shrinking, that's just empty nest syndrome, and they need to adapt.   The ONE thing that MUST NOT happen is constant overshoot of budget - financially they, councils or young couples or old couples, CANNOT go around stealing (forcing additional funds) from people to cover their own overspending.   (cue soundtrack https://www.youtube.com/watch?v=2k-QqbQ7CmI

an example was a flash birdhouse a Palmerston North Esplande.  It has several cages all with a few birds in them.  admittance is free, amenities are modest, and kids love it.

PNCC want to replace it with a 3 Million dollar "walkthrough" exotic multilevel modern avary.  People said no.

When told they should ask for donations if it was something they truly thought the people wanted.   It turns out they do get donations, a little over $100 (one hundred) dollars a year.  That tells you just how much "interest" there was, and just how much was a convenience that some people used only because they had free access.

Even if donations went up 100 fold, it still wouldn't even cover the interest or opex on a 3 million dollar (excluding bird costs) bird cage.   As long as it was "free" (ie someone else was going to pay for it).    As soon as they get asked to pay for it themselves those "demands and wants" vanish very quickly.
 

RAF.....Ratepayers don't expect to have to attend Council meetings and processes they elect people to do that for them.......how many of those elected members (in your annual plan consultation) canvassed their voters to see what they wanted??
 
If elected representatives aren't canvasssing their voters regularly then they are not asking their voter base what they want....they are telling them what they are getting/having!!!! 
 
If someone is truly a good representative then they are going to know or get to know a very large portion of the voters in their electorate....if they don't know their voters to talk to then how the heck can you fairly and competently represent them!

$200K on a cock and balls in New Lynn, Auckland: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11397385
Yes, such a funding problem...

While that is indeed silly. However overall central Govn dictates spending via laws it wishes to see councils enact.
 
 

Central government as fiscally incompetent anyway.  Just check the recent ACC legislation.  Everything is supposed to be perfect, cost is no object to the Law.

Central government as fiscally incompetent anyway.  Just check the recent ACC legislation.  Everything is supposed to be perfect, cost is no object to the Law.

Better than no Govn

Is it though? Belgium managed for almost a year with no government and it didn't seem to do it any harm.

No government? Did I miss the news where the EU was kicked out of Brussels and where the Dutch and French speaking local councils that actually run Belgium disbanded themselves?  Did Belgium announce itself to be an anarkist state where nobody pays taxes or obeys the law.... ?

It was a while ago now. This: http://en.wikipedia.org/wiki/2010%E2%80%9311_Belgian_government_formation is to what I refer.

This council is completely out of control, has no leader, no vision, all the various divisions have no idea what the other is doing, funding hundreds of millions of feel good projects, increasing their salaries across the board, well in excess of rates of pay available in the private sector and we have two more years of it until we can vote them out - but only a small proportion of ratepayers even give a toss and actually do vote! 

Whats the point of the vote - it only replaces some of the people on the board.  Doesn't actually change the way the organisation allocates budget or duties, doesn't fight the crap from "The Manor", doesn't get rid of the "freebie hunters" who can but won't fund their own stuff, doesn't change the latant inefficiencies or the larger than risk-allows salaries.

I think that it may be time to start electing the CEOs of the major council departments because they seem to effectively do what they like and manage the council rather than the other way round.  I would also like to see an elected representative whose sole responsibility is finance and who has final say over the annual budget.  That way we may get some sort of contestability and control over spending.  At the the moment it is an open cheque that can be increased at will and the accountability gets lost in a mixture of other issues.

Isn't local government a touchy subject?
 
A couple of wrap up points from me:
 
Firstly Raf's description of councils as "an arcane institution, a machine that rolls on" is as good as any I have ever heard. But that rolling on is a real problem. Local goverment has been given some jobs by central government but most of the costs of these are passed on fees and charges not in rates. On teh other hand councils roll on assuming they have to keep on doing what they have always done. I noted above that, if you look up a council in the Cyclopedia of New Zealand published around 1900 you will find that councils then did pretty much the same things they do now. Councils almost never do first principles of what they do, why and how.
 
Councils don't have to make themselves reponsible for, say, providing water and sewer to major subdivisions but they act as they do. Then they stop people from building where the councils aren't willing to provide new infrastructure. A brand new house for a first home buyer in Auckland would cost about 40% of the current price if Auckland Council weren't so bloody-minded about all this stuff.
 
Second we have no way of judging whether what councils do represents good value for money. If you know someone who buys just one takeaway coffee each work day it would never occur to you that that person spends more on coffee than rates (but they likely do), And its only after a major disaster knocks those basic serbuices out that we realise how great it is to have a loo that flushes. All we are acutally left with is comparing this year's rate hike compared to last year's. That is no way to assess value but it is all we have. BTW one of the attractions of hooking into GST or similar is to get the automatic lift in receipts the government enjoys (when prices rise so do GST receipts without having to change anything else).
 
 

Great to hear from Raf and Kumbel on all this.
 
One aspect that I witter on about which has quite a lot of bearing on TLA cost structures is that of the attitude to risk.
 
The current attitude is rules-based, which has a number of undesirable consequences:

  • Every single proposal, for anything, has to be 'processed' and set against known rules.  Cost #1, as such processing is staff-intensive.
  • Decisions resulting from this 'hold up against known rules' are not easily challenged.  So truly dire decisions are usually just swallowed by applicants.  Cost #2, as optimal solutions are almost by definition, not taken.
  • No clear or known rule = no decision, plus a protracted consultation to plug the gap with yet mo' Rules.  Cost #3 - mo' staff..
  • Time = money, a concept any banker will be happy to explain, and all of the above adds mucho Time.  Cost #4, but as this falls on Applicants, Council staff simply don't care.  Their salaries arrive with the regularity of a sunrise..
  • While discretionary powers exist (Schedule 1 to Building Act 2004 is a good example) to end-run Rules, they are so rarely exercised that in practice these worthy provisions may as well have been repealed for all the use they get.

 
The alternative is a thorough exercise in risk assessment, which acts as a drafting gate for proposals.  A quick risk assessment, if decided to be low risk, should result in applications being waved straight through.
 
A useful example is single-storey timber-frame residential builds:  houses to y'all.  In Christchurch, my estimate is that 70% of these pre-dated modern building codes:  they were either unconsented (pre 1970's) or lightly consented (1970-90's) by the old, sensible TLA's of the era.
 
These structures have, in Christchurch, been through a perfect risk assessment via a series of Gaia-initiated wobbly moments.
 
Subtracting exogenous sources (URM chimneys, rockfalls etc) no-one died from a cause attributable to a single-storey timber-frame residential build structural failure.  Therefore, such structures are demonstrably low risk, however constructed. 
 
So, despite the plethora of new requirements for such structures, every single one adding its own layer of cost, the net benefit of today's build versus a 1950's comparable build in a future quaky event, would be close to zero.  All cost, no benefit.
 
The logical regulatory outcome of this should be to include single-storey timber-frame residential builds in Schedule 1 to the Building Act 2004, on the grounds that they are inherently (and demonstrably) low risk exercises.  Just like a verandah. pergola, carport, shed.
 
But this would require a number of attitudinal adjustments to TLA staff culture:

  • No Mo' 'our way or no way'
  • Assessments open to swift challenge (a Low-Risk Claims Court approach)
  • Low risk = low fees, fast turnaround, layers of cost removed.
  • Staff become enablers, not obstacles.

 
But enough already.  One can tell from this simple example that we will wait a long time to see such a change.  We'll see tralier parks with tiny houses (which end-run the PooBahs), before we see a risk-based TLA approach.....or lower rates.