Two weeks ago, we learned we had a new government. Congratulations to those, including local MP Mike Butterick, who were successful. My sympathies to those who came up short.
You will not be surprised to learn that many people come up and ask me: “What does the election result mean for local government?” The simple answer is that it means change, uncertainty, and very likely, new costs.
As businesses know, uncertainty creates problems. At the moment, councils are developing their next 10-year plans. Because we cannot be certain what central government’s plans are, some councils are preparing two plans, each using different assumptions. That comes at a cost to ratepayers.
Many infrastructure changes are much more predictable.
National has said it wants to end major infrastructure projects such as “Lets Get Wellington Moving” and Auckland’s light rail project. The Three Waters reforms, kicked off by the last National government in 2017, will be repealed.
All those projects, and more, have cost the country and councils a lot of money. And whether we approve of them or not, and there are plenty of councils who do not, no one wants to spend another six years working out the replacement.
Mayor Wayne Brown of Auckland, who has been no fan of the Three Waters reforms, has said that Aucklanders will face a doubling of their water charges over the next few years if the new government repeals Three Waters without having a plan to deal with the consequences.
On a more positive note, National is promoting a 30-year infrastructure plan to deliver long-term certainty and enable more effective planning. Most people in local government would say “hallelujah” to that. But realistically, this will only work if the 30 year plan is developed in such a way that it gets a large-scale buy-in from across the political spectrum. Not impossible to achieve, but difficult.
Another uncertainty is the effect that the government’s plans have on council’s credit rating. Just before the election, international credit rating agency S&P Global, revised its long-term assessment of Hamilton City Council from stable to negative. Hamilton, along with many other cities, incurred debt on water infrastructure in the expectation it would be reimbursed when the water assets, and the debt, were moved to the new regional water entities. Typically, a lowered credit rating leads to higher interest rates on borrowed money.
Following recent weather events, councils are very concerned about the country’s readiness to recover from major disasters. If we have learnt anything it is that disaster recovery starts at home. Our neighbours and local community will always be our first responders. This is an area where local government, working with local communities, can shine. I look for some signs from the new government that they recognise the value of localism as it applies to emergency responses, and that they are willing to devote adequate resources to the task.
Above all, I wish the new government all the best. Their task is a tough one and the decisions they make will impact on us all, councils and residents alike.
I urge them to empower communities to make decisions about their own development and to give their councils financial incentives to grow. As we know, at the moment, when new development takes place the Government profits through mechanisms such as GST, while councils have to fund the roads and services needed by that development.
