Prime Minister Christopher Luxon visits Whanganui with message for local councils

Christopher Luxon chats to members of the Collegiate first XV during his visit to Whanganui. Photo / Bevan Conley

Prime Minister Christopher Luxon says local councils must stop doing “dumb stuff” and take responsibility for their own affairs.

Luxon was in Whanganui last week visiting the hospital’s new chemotherapy unit and construction company eHaus.

He was also given a presentation by Fleet Line Markers chief executive John Carr at Whanganui Collegiate School.

The company has unveiled its first line-marking robot, with Luxon giving it a test drive on school grounds.

He arrived in town as consultation on Whanganui District Council’s Long-Term Plan entered its final week.

Luxon said every local council needs to focus “on the must-do, not the nice-to-do” and deliver well on core services.

“Families across New Zealand are tightening their belts because of the cost of living crisis, and Government centrally is doing the same thing.

“Councils need to be very focused on that as well and have good financial literacy [so] the money they’re spending is getting an outcome.”

The partnership between local and government needed to be more joined up and that could be done via regional and city deals, Luxon said.

“We agree a 10-year infrastructure programme and who is going to get the sharing of costs.

“Equally, I think we have to find a way to incentivise councils so they can actually participate in growth and get some revenue from that.”

He said he was not interested in working with individual district councils.

Christopher Luxon inspects Fleet Line Marking's Spike robot, under the watchful eye of chief executive John Carr (left). Photo / Bevan Conley

“I want to see sub-regional approaches across New Zealand - for example, the four district councils in Hawke’s Bay and one regional council there.

“The five of them have come together and they have a proposal.”

Whanganui Mayor Andrew Tripe said his council had been working on a draft deal to present to Local Government Minister Simeon Brown in June.

It had different components, including housing, renewable energy and “connecting Whanganui to the world” via multi-modal transport, digital connectivity, tertiary education and tourism.

“At the end of the day, we can’t just rely on rates revenue to be able to deliver all our community aspirations,” Tripe said.

“We need to find a way to partner constructively with central government, and that’s what the city deal does.”

To get the attention of central government, the Whanganui council would look to partner with others as part of the deal, Tripe said.

“One example is what I’m calling the Western Bight - a renewable energy collaboration that could potentially include transport and logistics.

“That could be from Taranaki right through to Horowhenua-Kāpiti and even Ruapehu, which has more geothermal and hydro.

“If you look at solar, wind, hydro and geothermal, we have a massive opportunity to be an energy hub.”

Luxon said councils needed to be “opened up” to new funding and financing tools.

“The temptation in New Zealand has been that government - centrally or locally - has to fund everything.

“Actually, there are assets and balance sheets and, on that basis, you can go and get borrowings and money and you can think about doing things in different ways.”

He said central government would be using private finance, either from New Zealand or overseas, for desperately needed infrastructure.

Rangitīkei Mayor Andy Watson said the way local councils were funded was fundamentally broken.

“We have, as a sector, said for quite some time that the GDP generated from these regions, in some way, needs to be reflected back in the costs and how the regions are run.

“It could be a simple one like [returning] GST on rates or a wider look at returning some of the GDP that goes into Government coffers.

“I feel sorry for districts like Ruapehu that have an enormous amount of DoC [Department of Conservation] land that they have to provide for services and roading for bur receive no income from it.”

The final report from the Review into the Future for Local Government, released last year, recommended an annual transfer of revenue equivalent to the GST charged on rates from central to local government, along with central government being charged rates for Crown property.

Christopher Luxon visiting eHaus during a trip to Whanganui.

Luxon said the Government had “already been doing that thinking” and had looked around the world at other small, advanced countries that were often wealthier than New Zealand.

“We think there is a big opportunity for us to make sure we can get councils to rezone land now for growth, rather than in the ad-hoc fashion that’s been happening.

“We do expect councils to run their shows well.

“When they are doing dumb stuff, that has to stop. It‘s all very well doing dumb stuff and then saying, ‘I’ve got a problem, I need more money’. No, you take responsibility for your own affairs. We expect councils to do that.”

Speaking to the Chronicle last year, Tripe said that based on the 2022/23 financial year, the revenue equivalent to GST charged on Whanganui rates amounted to $10 million.

An “earn back mechanism” would be even better, he said this week.

“That is about investing in projects to create jobs and employment, and to improve productivity.

“That in turn creates an increase in revenue for the Government - for Treasury - to then reinvest back to us.

“Year on year on year, the model suggests we would increase our share of Government’s revenue.”

Councils are currently appraising options on regional or sub-regional Three Waters models following the Government’s decision in February to repeal reforms.

Luxon said there were big opportunities in Three Waters investments - “balance sheet separation of those assets”.

“You would then be able to go and get financing - long-term debt.

“You get 30 to 50-year kinds of loans and you pay off a little bit every year like you do a mortgage, rather than, ‘There’s a leaking pipe, let’s raid our savings’.

“Have consistent, regular investment, but you structure it in quite a different way.”

He said there could be a lot of private-public partnerships when it came to infrastructure and housing.

“We might have to deal with toll roads but if we get the road built 40 years quicker than we could do waiting for the Government to have the money for it - centrally or locally - that’s a much better outcome for people.”

Watson said there had been conversations between councils within the Horizons region about delivering Three Waters collectively but nothing had been decided.

“That’s a bit frustrating to me, that we haven’t been able to nail that down. Other regions in the country have.

“We absolutely have to get together to work out what regional priorities are.

“I have doubts around whether individual councils can go it alone.”

Mike Tweed is an assistant news director and multi-media journalist at the Whanganui Chronicle. Since starting in March 2020, he has dabbled in everything from sport to music. At present, his focus is local government, primarily Whanganui District Council.