Media statement Friday, August 31st, 2012

New local government law gets business backing

The jury is still out on whether the Auckland model of an executive mayor has been a success, the Employers & Manufacturers Association advised the Parliamentary Select Committee hearings in Auckland today on the Local Government 2002 Amendment Bill.

Therefore changes to the Local Government Act should not include executive powers for all mayors until the Auckland experiment has had more time to prove its worth, EMA said.

"Questions have been raised over how effective the Auckland mayor's executive powers have been in delivering democratic outcomes," EMA executive Peter Atkinson told the hearing.

"An example is information requested by Auckland councillors has not always been as available as it might be for the proper testing of mayoral decisions, and to ensure genuine accountability.

"Though EMA advocated for an executive mayor when the Auckland Council was established we also wanted mechanisms in place to counterbalance those executive powers, such as an auditor role, but they were not provided for.

"In general EMA is a solid backer of the Bill and the statement of purpose to apply to local government.*

"The change implicitly removes councils' 'power of general competence' in the current Act and would prevent councils getting involved in areas more properly the preserve of central government or the private sector.

"Examples of the misuse of the powers of general competence are widespread: Hamilton City Council's investment in a Novotel hotel; South Taranaki District Council buying a Hawera cinema; and another council buying a Lotto shop.

"We want councils to focus solely on the things that only councils can do. These are: delivering effective regulation in a timely manner for local planning, consenting etc, implementing rating reform as prescribed in the Shand report, limiting debt consistent with intergenerational equity and managing debt risk, and providing good quality local infrastructure.

"Other issues are that elected councilors should not be involved in determining policies on staff remuneration and numbers. The council's chief executive has that responsibility - the council could always sanction its administrators by not approving the annual budget.

"Business wants to see a minimum Uniform Annual General Charge (UAGC) prescribed in the legislation; 20 per cent as a minimum with a target of 25 to 30 per cent.

"Councils should adopt 100 per cent depreciation as a target with a minimum of 75 per cent, and all councils should report their depreciation level annually.

"We also say councils' net interest should not exceed 15 per cent of their revenue where revenue for this purpose is defined as rates and council fees, not any grants or subsidies."

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