Please note the report Improving local government investment into Economic Development Services in New Zealand will be available for download soon.
What does inclusive growth mean for local government?
Good afternoon everyone, my name is Dave Cull, President of LGNZ and Mayor of Dunedin City.
Can I acknowledge my fellow mayors, councillors and council officer colleagues in attendance today.
Local Government New Zealand is a membership organisation that advocates on behalf of councils in New Zealand on issues including government legislation affecting their communities and our responsibilities.
We have all of the 78 councils in New Zealand as members. But it is important to note that LGNZ can’t just come to conclusions no matter how sound, and impose or even expect that our members will take them up.
LGNZ’s vision is - Local democracy powering community and national success.
In responding to the question, What does inclusive growth mean for Local Govt? I will focus on three things:
- The vital role that local government needs to play if communities are to achieve their aspirations across a the full range of well-being measures. The measures and examples I will reference are the Sustainable Development agenda and the Sustainable Development Goals (SDGS) of the United Nations.
My basic thesis here is that those various goals and measures are much more likely and indeed able to be achieved if responsibility for them is devolved to the local level of governance and community decision making.
- Secondly I want to talk about the importance of having a fair distribution of the wealth gained from Tourism in New Zealand; and
- Lastly I want to share some of our findings from recent research into the performance of New Zealand local government’s provision of Economic Development Services which I note were excluded from the current purpose of Local Govt.
The OECD’s Inclusive Growth Framework and the SDGs put people at the heart of policy making with a deliberate focus on equity, people and well-being. It is about empowerment of citizens and communities to help shape policies for the people.
In simple terms, this is bottom up policy development rather than top down which we have become so conditioned to here in New Zealand. And by developed world standards, NZ has a very centralised governance system – both in terms of funding and responsible authority.
So for our sector, it was reassuring to see Local Governments role so strongly acknowledged in United Nations 17 Sustainable Development Goals, which New Zealand signed up to in 2015.
It is important to note that when developing these goals, the UN conducted the largest consultation in its history. Throughout its inclusive approach the UN took into account the different contexts, opportunities and challenges at the sub-national level. These goals represent an important shift and help to move local government from simply implementers of an agenda to policy makers, catalysts of change and the level of government best placed to link the global goals with local communities.
Although not legally binding, the goals do have implications here in New Zealand and alongside them LGNZ has welcomed the Government’s introduction of the Treasury’s well-being framework that supports the re-introduction of the four well-beings into the purpose of local government Act. Something we have been advocating for some time.
Both the OECD Inclusive growth agenda and the U.N’s 17 goals for sustainable growth identify Local Government as necessary to achievement of those.
In New Zealand we have for a long time bucked the localism trend globally despite compelling evidence such as the 2010 Berl report that showed local government as an important enabler of economic growth.
LGNZ’s position is to turn this trend around.
Here’s a couple of examples.
The first is Goal 6, which is to ensure availability and sustainable management of water and sanitation for all. The target is by 2030 to achieve universal and equitable access to safe and affordable drinking water for all.
In New Zealand, Local Government owns the drinking water infrastructure, which has an asset replacement value of $19 billion. The Havelock North enquiry has triggered a Government review completed earlier this year.
The Government’s response has been a policy development process that in our view does not meet the OECD’s inclusiveness test. Put simply there is not the level of consultation and engagement on the important issues of future provision of water that there should be here in New Zealand. That could lead to perverse and unintended consequences.
In New Zealand Local Government feels like it is too often expected to implement the Governments agenda. This does not represent empowerment of citizens and communities to help shape policies for the people. That is very concerning for us.
The second goal I want to mention is goal number 8, which is to promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.
Local government’s investment in the development of economic development strategies generate growth and employment outcomes from the bottom up. They harness the unique resources and opportunities in our regions.
For a sustainable approach to tourism, development in New Zealand our sector is best placed to work with the communities to assess the benefits and costs of tourism and establish plans to ensure the activity in the sector is sustainable.
The implications for this in New Zealand are important. Tourism has enjoyed substantive growth on the back of local government funded mixed-use infrastructure for years.
However, with sustained growth both the social license to operate in parts of New Zealand, and the sustainable provision mixed-use infrastructure required to meet the 2024 forecasts of 5.1million visitors/year are now under threat.
The revenue and benefits generated by the growth in tourism across New Zealand is not being fairly distributed.
Queenstown reported 3.6 million guest nights year ended July 2018. A rise of 2.4% on previous year. These visitors used the mixed-use infrastructure funded by the 23,526 local ratepayers such as toilets, recycling and rubbish facilities, signage and car parking free. However none of the extra GST or income tax generated by this growth contributes to the local infrastructure or services that support it. This is not sustainable and is not fair.
Under an inclusive growth framework, we would have an opportunity to ensure that the revenue generated by tourism is more evenly distributed. LGNZ welcomes the Governments introduction of the International Visitor and Conservation Levy as a move in the right direction but we strongly advocate for more funding tools.
A significant weakness is the International Visitor and Conservation Levy’s inability to capture Australian and Domestic Visitors who would continue to free ride.
LGNZ is strongly advocating for the introduction of enabling legislation so where the case exists local councils can introduce a Local Tourist levy. This would protect the social license for the industry to operate, create the incentives needed for councils to further invest in tourism and establish sustainable funding streams that would ensure the provision of the required mixed-use infrastructure to meet forecast demand.
Meeting both the water infrastructure and tourism goals under the UN’S sustainable development agenda have large and complex implications for local government in New Zealand. The complexity surrounding these issues requires a more decentralised approach so that the uniqueness across New Zealand’s regions is properly recognised and understood and that local citizens can be empowered to come up with innovative policy solutions.
We call this localism and LGNZ is devoting significant resources to progress this agenda in line with both the principals of the OECD inclusive growth agenda and the achievement of the UN sustainability goals.
I want to note another factor. I think there is a tendency to view the SDGs as needed by, or only important to, developing countries. However one could plausibly argue, that by at least half of the SDG measures, NZ has gone backwards over the past 3 or 4 decades. Think about environmental water standards, appropriate housing availability, poverty and wealth differentials.
To what extent, you might ask, does extreme centralisation exacerbate that trend?
Which leads me to my last topic, which is the results of the recent research into the performance of local government’s investment in economic development services.
As I mentioned earlier local government will play an important role in the achievement of goal 8 through establishment of local economic development strategies. In addition, it was pleasing to see that the creation of local economic development strategies (82% of respondents) was the top activity for council investment into Economic Development Services.
Total investment by local government in New Zealand into Economic Development Services is $248 million, which we think, is significant although never enough.
Against a backdrop of an unfair and uneven distribution of wealth across New Zealand, we need to feel comfortable that this money is being spent in an efficient, transparent and accountable way.
There is much good practice in the market but our research did reveal two priority issues to resolve.
The first is that the services as they currently stand are ill defined. Only half of councils that responded define Economic Development Services and of those that did, there was a wide variation.
The second issue is that the performance measures for both governance and public understanding of what communities get in return for this investment were generally unsophisticated and had an over reliance on long term outcomes.
LGNZ has taken its time to consult widely on this research and we want to continue to engage with you to ensure the system improves. As part of that process, we have produced a report, which you can download at www.lgnz.co.nz that provides information on the research and presents a future vision with suggestions on what a well performing system could look like with a pathway on changes needed to help get there.
LGNZ would welcome your feedback on this research and be keen to hear from you on some of the key findings and how we might implement these together.
So, in summary:
- The implications of the inclusive growth agenda and SDGs for local government are significant;
- They provide New Zealand with a great opportunity to recalibrate the role of local government in the delivery of New Zealand’s growth aspirations; and
- Local Governments investments in Economic Development Services have the opportunity to make a significant contribution to achievement of the Sustainable Development Goals in particular Goal 8.
Thank you for the opportunity to speak today and I wish you the very best for a successful conference.