The mayors in our region are all singing from the same playbook. They want more of the tax money that's going to the central Government because they say they can make better decisions with it for their distinct areas. And they need it to meet ever-increasing costs, whether that be for earthquake-prone buildings or storm damage to roads. Reporter Jacob McSweeny looks at the balance of power between local and central government in New Zealand and asks four mayors about what needs to change.

"We cannot depend on policy bureaus in Wellington to possess all the answers and chart our future development. The risks are too great."

That was how Local Government New Zealand's principal policy adviser, Mike Reid, posed the issue in February this year.

"The previous Government (2008-2017) systematically stripped back local government in New Zealand, reducing local democracy and treating local government as an agent of central Government," he wrote.

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The two forms of government were no longer partners in running the country, Reid said.

"The purpose of local government was narrowed to the provision of services - rather than the 'good government' of or 'well-being' of a district. Ministers were given unprecedented intervention powers. These reforms ultimately privileged a narrowly defined idea of efficiency at the expense of most other values."

Local governments in New Zealand spend about 12 per cent of total tax intake, with the rest coming out of central Government. That makes New Zealand a highly centralised country compared with others such as Switzerland - where, as New Zealand Initiative's chief economist, Eric Crampton, explained, a thousand small councils have more of a say.

"They have well over 1000 councils … and a lot of local autonomy," Crampton said.

"You've got a system there where there's a lot of democratic accountability for local councils where much of what they do is subject to referendum. Where there's the additional constraint that if residents don't like what's going on in their particular canton [local council] it's very easy to move to the next one over.

"That kind of competition among councils helps keep them all in check so they're all performing reasonably well."

Crampton said population growth in New Zealand had led to increases in income, corporate and retail taxes and all that went to the central Government. Councils did get increased rates but they got a lot more cost in having to cover demands on infrastructure.

"What we were seeing was during the last Government, central Government always yelling at councils for doing things to the detriment of the country as a whole in zoning and preventing housing growth and local government just pushing back."

Ruapehu District mayor, Don Cameron, said most councils have had a 'gutsful' of being handed legislation and expectation with no money.
Ruapehu District mayor, Don Cameron, said most councils have had a 'gutsful' of being handed legislation and expectation with no money.
Rangitikei mayor, Andy Watson, was concerned about the pressures climate change exerted on farmers and roads.
Rangitikei mayor, Andy Watson, was concerned about the pressures climate change exerted on farmers and roads.
Andy Watson, Hamish McDouall and kaumatua, John Maihi, listen to Economic Development Minister, Shane Jones.
Andy Watson, Hamish McDouall and kaumatua, John Maihi, listen to Economic Development Minister, Shane Jones.

New Zealand didn't have to be a highly centralised country - in fact it would work better if it wasn't, Crampton said.

"Now the situation in New Zealand has always been that local government doesn't get trusted with very much because central Government doesn't trust them with very much … sometimes with good reason.

"If you walk up and down Lambton Quay … there's a pretty strong view that a lot of councils couldn't be trusted to do anything. In some cases that will be true."

He cited the story of a cake decorator being hired to build a dam as one example where a council had dropped the ball.

Crampton said Manchester was an interesting city where several mayors banded together and made a proposal to take more control over central Government money being spent in their areas.


"They said, 'okay, central Government, here are the things we want to be able to achieve and the areas we would like to administer for ourselves. If you just pass us the funding that you were going to be spending in our area anyway we're going to show you that we can do a better job of this.'"

This, which he described as "devolution by contract" could be a good way forward for New Zealand.

Crampton said there were many ways of transferring tax money from central to local government. One possibility would be to give GST taken from council infrastructure spends back to the council that spent it. He also said if councils did follow the "devolution by contract" pathway - any growth seen from these projects could be funnelled back.

The feeling among the mayors in Whanganui, Ruapehu, Rangitikei and South Taranaki was along similar lines. They all explain how dealings with central Government need to improve.

Ruapehu District mayor, Don Cameron

"Each year there's legislation that still gets passed down to us whether in food safety or parts of the RMA [Resource Management Act] … and no money comes with it," said the Ruapehu District mayor, Don Cameron.

"Ratepayers are expected to pay for every single piece of legislation that comes from central Government. There's always been that tension and it's built to a point now … most local governments, to put it mildly, have had a gutsful."

Revenue is a big problem for councils and rates are the primary source of it. Cameron said tourist numbers were overwhelming his area and it wasn't right for ratepayers to have to bear the cost of infrastructure upgrades needed to meet the increasing demand from visitors.

"We've got six waste-water systems that were built some years ago now for the usual population. Now all of a sudden ... in places like Taumarunui and National Park the visitor numbers are way exceeding where the planned sizes in waste-water systems and water systems were actually made.

"That's not going to decrease. That's going to grow and keep on growing. The one project we've got with the gondola going up to Whakapapa - that could bring in another 350,000 over the next three years - most of them will be going around National Park and those places so you can see the strain on infrastructure will be enormous."

South Taranaki District mayor, Ross Dunlop, said his council was caught completely by surprise when the government announced it wouldn't give any more permits for oil and gas exploration in the area.
South Taranaki District mayor, Ross Dunlop, said his council was caught completely by surprise when the government announced it wouldn't give any more permits for oil and gas exploration in the area.

It was now time to look at what other taxes could be collected locally in a user-pays style, the mayor said.

He wanted a fairer partnership with central Government.

"Central Government has really got to sit down with local government and work through this. It's something previous Governments have just virtually pushed to the background.

"When it has been raised we were told to take our place and not to speak up. I think we're well beyond that now. We've got a chance with this new Government. They are at least listening. We're working with them.

"You know, central Governments - they are what they are and they particularly do not like to devolve power of any kind. We understand that but they're going to have to start doing it."

Cameron also said councils were leading the conversation on how to deal with climate change and the increasing number of worsening weather events on infrastructure.

He was happy for that to happen, but "to lead it, we need money".

Whanganui District Council mayor, Hamish McDouall

"You can count stats on the dark side of the moon," Whanganui mayor Hamish McDouall said. Really though, he'd prefer stats were crunched in Whanganui.

A good way to decentralise New Zealand would be to put central government departments in the regions, McDouall argued.

"It feels more appropriate to have the operational arm of the Ministry of Primary Industries looking out over Hawke's Bay at horticulture and agriculture than looking over Wellington Harbour. The Ministry of Forestries has already moved to Rotorua which is the appropriate place for it."

After the 2016 earthquakes, McDouall contacted several government departments to try to get them to relocate to Whanganui for a while. He said he got a fair trial with one department but short shrift from the other.

McDoull, also frustrated by the amount of legislation coming from the Government without financial support, wanted a payment to local government for any central government land use within a district.

"It happens in several jurisdictions around the world. The classic example would be some states in America have federal land and the federal government pay a payment in lieu for the land tax for those parts of federal land.

"I support the principal that a lower body shouldn't be able to tax a higher body but I believe a payment in lieu is the way around it. That would instantly bring a fair chunk of money to places like Whanganui, like the West Coast.

"It would be a way to take the pressure off ratepayers and share the load a bit more fairly."

Rangitikei District Council mayor, Andy Watson

"We face a whole lot of infrastructural challenges like most councils," said the Rangitikei mayor, Andy Watson. Watson was able to rattle off a list of big issues his council was facing that needed good central government collaboration.

"The whole issue of earthquake-prone buildings. In our patch we have to replace council-owned facilities in Marton, Bills and Taihape. All of those are expensive projects. And then there's the challenge for the private sector and what assistance we can give them."

Watson said his region was becoming increasingly vulnerable to damaging storms that were more frequent.

"The other issue that is becoming far more apparent to the whole of the country is climate change ... the climatic effect. The number of storms that we see and associated damage from those.

"In 2015 - a $12.5m hit on our roading. But we've had four of those events since 2004. [When] 2004 came along, [it was] a 100-year-event, but they seem to be more common so maybe there has been a fundamental change in climate."

Then there was the domino effect it had on the region's economy.

"When you have farms losing a significant amount of their grass coverage, they have to sell lost stock, they have to reopen access ways.

"Those farms struggle and we often rate them very heavily and they ... want to put their chequebooks away for a year or two to get over things and that flows over to an impact within our towns."

And Watson said councils needed to be financially stronger to deal with it. Watson said a good way to hand more money over to councils would be to give them a slice of GST.

South Taranaki District Council mayor, Ross Dunlop

"On one hand they [central Government] say they're very supportive of provincial New Zealand and then yet ... the decision around oil and gas was a complete surprise to us. There was no discussion or talk with us or our community about that. It has had quite a serious impact on the Taranaki economy already."

South Taranaki District mayor Ross Dunlop said the Government's decision to stop granting permits for offshore oil exploration in the area was an example where there wasn't any sign of a partnership.

He said the economic effects of the decision could be seen already.

"I was talking to a business that hires out storage facilities. They said they've had three clients leaving Taranaki because of the uncertainty of oil and gas. That's just one example and I'm sure there's lots of other examples where people are thinking, 'oh, do we stay in Taranaki or do we go somewhere else where there's a bit more certainty?'."

Another problem Dunlop has had handed down from central Government was around earthquake-prone buildings.

"The legislation that's gone through, particularly the one where you've got to assess higher-risk buildings and it could mean that work has to start on them within 12 years or so, which is a very short timeframe.

"It's really worth thinking through. What are the implications of this? The worst case is ... the councils end up with a whole lot of abandoned buildings in their communities and have to deal with them."

He said rating government land use in the district was a good idea and he was supportive of the Provincial Growth Fund.

But he was concerned the Three Waters Review might take some control of water away from councils.

"There again we're getting mixed messaging of 'hey, we want to support provinces' ... then they're talking about amalgamating water supplies. There is the potential to be one water authority for the whole of the North Island. We believe we're doing a really good job of providing water to our community.

"That's decisions about what you want locally being taken away from communities. In a lot of situations local communities know the issues and often are better at dealing with lots of things than a central Government or central authority."