Redefining roles and responsibilities for a better New Zealand.

New Zealand has some of the best public institutions in the world. Our political leaders and the departments, councils and agencies they lead are the least corrupt, the most transparent.

Processes are clear. Rules are enforced. All available evidence clearly shows central and local government operate at levels equivalent to or better than anywhere else in the world.

All evidence, that is, except the outcomes these institutions deliver.

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Prosperity is surprisingly low. Incomes relative to costs puts New Zealand closer to 30th in the world, not first.

Productivity is falling. We're working harder for less. Just ask any teacher.

We are top in some things we would rather not be. After-tax inequality is fourth worst among OECD countries.

The OECD recently found we spend more on housing than anywhere else and our levels of homelessness put us second. We have worse homelessness than the United States.

How is this possible? How can the institutions which deliver public services and govern economic, social and environmental performance be so apparently good and bad at the same time?

The answer lies in the unnecessarily fragmented, siloed and under-resourced system in which these institutions operate.

More often than not, the roles and responsibilities of a complex maze of governing bodies, their powers and how they work together are misaligned and their focus is on budgets and process rather than outcomes.

The Government's "A to Z" of public organisations lists 845 institutions including 29 government departments, 20 district health boards, 26 tertiary education institutions, 300 crown entities, and 11 regional and 67 local councils.

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We've built a legal and funding system where, even if institutions want to target the things everyone wants, they can't.

They don't have the mandate, the scale, the resources or, in some cases, the capability to do the job.
For example, successive governments have set regional economic development as a priority. Yet there is no entity responsible or empowered to take the lead at a regional level. Regional councils are, above all, environmental planning and monitoring entities, with some co-ordination responsibilities. They have no accountability or resources to take real action on social or economic development.

On the other hand, district councils create district plans and levy rates to provide for local infrastructure. But they are constrained by debt to revenue limits and reap no financial benefits from any growth they drive.

In fact, growth is a problem for most councils. Central government receives increased GST, PAYE and company tax but councils just get to share increased costs over a slightly larger population base.

Councils are often working against growth at the same time as central government promotes it to drive national prosperity and wellbeing.

The incentives are all wrong.

Central government is increasingly frustrated by local government's performance and is imposing more controls and direction from the top, often without full knowledge of local challenges, capability or capacity.

We need to change the incentives and capabilities of institutions if New Zealand is to enable regional development, lift productivity, and tackle the environmental and housing crises, let alone address other stubborn, complex problems like child poverty and domestic violence.

Funding for institutions should empower authorities to tackle problems. Agencies charged with service delivery must have the mandate, accountability and capability to achieve outcomes.

This is no small change. It requires major structural reform to central and local government entities and powers. New Zealand will need to properly empower regions where people work, live and play. It is nearly impossible to promote social and economic outcomes across governance boundaries with different priorities. Regions will need resourcing tied to economic performance. Their responsibilities will need to encompass regional services, like transport, spatial planning, housing and infrastructure.

Local councils will need a broader scope. Community based responsibilities where local knowledge and experience count and where economies of scale don't matter are the strength of local government.

Elements of welfare, social development and other centrally provided services can be devolved and shared. Existing functions in placemaking will remain.

Central government would step back from providing localised services and move into a system governance role.

Environmental, financial and societal outcome monitoring, regulation and oversight are the strengths of central government.

Under such a system, the Government would let others do the work. It would make sure the job gets done.

Getting there will take time, so it's important that we start now.

The Government should accelerate reforms under way across the RMA, State Sector Act, water provision and Urban Growth Agenda.

New Zealand will need to separate planning and environmental management legislation to better enable all levels of government, central, regional and local, to plan for and invest in growth.

Environmental bottom lines need their own statute. Regional governments will lead social, economic and environmental development through spatial planning and will be funded and empowered to deliver.

As a stepping-stone towards regions receiving a share of national taxes, the Provincial Growth Fund could be expanded to include all of New Zealand. It could incentivise alignment between regional and local government, the private sector and communities.

The UK and Australian governments achieve this by signing city and regional deals with lower levels of government to agree on mutually beneficial investment programmes.

In time, the Fund could transition into automatic transfers to regions who can demonstrate good governance and outcomes management. Central government will be able to devolve regional functions.

With a direct link to revenue and enhanced capability to deliver, regions will invest in sustainable growth. Social and environmental costs will be managed down. If not, Government can pull funding and assume responsibility.

Performance across the system will improve as institutions, regions and communities focus on their natural advantages.

Sharing of tax revenue and planning powers will reduce silos as institutions are both encouraged and forced to collaborate.

Regions and communities will deliver. Outcomes will be monitored by central government. Economic, social and environmental wellbeing will be improved.


• Stephen Selwood is the outgoing chief executive of Infrastructure New Zealand.
He was the inaugural chief executive of the New Zealand Council for Infrastructure Development which launched in 2005 and later morphed into Infrastructure NZ in 2016