Despite considering 518 written submissions, and hearing 178 oral submissions in several centres, the Local Government and Environment Committee has recommended very few changes to the Local Government Act 2002 Amendment Bill.

Even numbers on the select committee (6 National members, and 6 members from Labour, Greens and NZ First) meant that there was no majority view on most of the issues raised by submitters. Only the most uncontroversial changes have been recommended.

Supplementary Order Papers (SOPs) will come thick and fast at the House's committee stage. Only Government backed SOPs will pass, but some compromises may be required. From the National members' comments in the select committee report, it appears the Government remains committed to all key aspects of the Bill, so fundamental changes to it are unlikely. The process is unfortunate, because there is limited time for analysis of SOPs by those affected; but it is not unprecedented, happening most recently with the Marine and Coastal Area Bill.

'Hot' topics for submitters

Most of the 518 submitters opposed some or all of the Bill. Provisions in the Bill that got many particularly hot under the collar included:

  • the removal of the "four well-beings" from the purpose statement;
  • the Minister's power to postpone local elections pending a reorganisation process;
  • the Minister's broader powers of intervention; and
  • the removal of mandatory polls for reorganisation proposals.

No substantive changes were made to these provisions because the select committee was evenly divided.

Submitters also took the opportunity to raise concerns beyond the scope of the Bill. In particular, the select committee noted the following:

  • it sympathised with ratepayers on low or fixed incomes who fear rate rises may lead to them being rated out of their properties, and noted there was considerable advocacy in submissions for different revenue mechanisms for councils, such as regional fuel taxes, regional GST, and a local share of central taxation revenue;
  • it would like to see greater consistency and more detail in the financial information that councils are required to provide, noting a useful first step in the Local Government (Financial Reporting) Regulations 2011;
  • submitters raised concerns about councillors and council staff acting ethically and professionally, and the lack of repercussions when they do not. This may be a reference to the outdated provisions of the Local Authorities (Members' Interests) Act 1968. In any event, the select committee was reluctant to address this issue without significant policy and legal analysis; and
  • a number of submitters argued for an extension of the Auditor-General's and Ombudsmen's powers in assessing council activities, but the select committee shied away from making changes that would likely have significant consequences for councils, the Auditor-General and the Ombudsmen. In particular, it did not support calls for the Ombudsman to be able to consider full council decisions.

Select committee's recommended changes

The select committee recommended just four changes to the Bill, with only two of these being in any way substantive.

The enhanced mayoral powers are to be clarified. In particular, some checks and balances will operate on mayors. Further provisions are recommended to make clear that, although a mayor may have the powers to establish committees and appoint a deputy mayor and committee chairs, the council retains the ability to remove a deputy mayor or discharge a committee chair, and to reconstitute committees as it sees fit. Councils are already able to do these things under Schedule 7 of the Local Government Act 2002. The select committee's change clarifies that the enhanced mayoral powers do not override these Schedule 7 powers.

The other key change recommended by the select committee relates to the new regulation-making power to establish financial parameters and benchmarks for councils. Obligations are added to require councils to disclose their planned or actual performance against parameters and benchmarks in their long term plans, annual plans and annual reports. This change will be backed-up by a requirement on the Auditor-General to report on the adequacy and accuracy of a council's disclosure as part of the current reporting carried out by the Auditor-General on long term plans, annual plans and annual reports.

The select committee also agreed to add provisions to make clear that the financial parameters and benchmarks can apply not only to councils, but also to council organisations, including council-controlled organisations and council-controlled trading organisations.

The two minor changes recommended by the select committee concern the definition of "Commission" and clarifying the Order in Council process for reorganisation schemes. Both changes are fairly technical in nature.

Next steps for the Bill

The select committee reported to Parliament on the Bill on 30 October, one week ahead of its 5 November deadline. This deadline had been extended from 15 October because of the volume of submissions needing to be heard by the select committee.

When the Bill was first introduced to Parliament back in May, the expectation was that it would be enacted in October or November of this year. This deadline is unlikely to be met, and the Bill may not even pass before Christmas.

We wonder whether urgency is warranted. Even if the Bill were to be enacted this year, it seems unlikely that any reorganisation processes under the new reorganisation provisions in the Bill could be completed in time for the October 2013 elections.

Judging by the opposition parties' comments in the select committee report, there is likely to be considerable opposition to many aspects of the Bill, and they will presumably introduce and force debate on their own SOPs during the House's committee stage. Whether the Government will want this troublesome Bill out of the way this year or be willing to have debate spill over into 2013 is not yet clear.

Comments by the National members in the select committee's report indicate that the Government remains committed to all key aspects of the Bill. However, given the relative haste with which the Bill was prepared and the minimal outcome from the select committee, there remains some need for refining the provisions. In particular, we expect some changes to the reorganisation provisions in the Bill (notably, the definition of "significant community support" would benefit from some clarification), and possibly to the provisions dealing with the Minister's intervention powers.

The debate on the removal of the "four well-beings" and the implications of that will not go away. In particular, it will be interesting to see if the Government backed SOP tackles the issue of transitional provisions for the amended purpose statement that replaces the "four well-beings". The intention behind the purpose statement appears to be to narrow the scope of councils' activities. If so, some sort of regime needs to be put in place so that councils have direction on day one about how to deal with any existing activities and contracts that fall outside the scope of their new lawful role.

We will continue to monitor the Bill's progress, and will keep you up to date through future FYIs.