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On 4 November 2013, the Local Government Act 2002 Amendment Bill (No 3) (the "Bill") was introduced into Parliament.  The Bill details the Government's second phase of the "Better Local Government" reform programme, which aims to encourage and enable local authorities to improve the efficiency and effectiveness of their operations and processes.

The Bill builds on the changes made to the Local Government Act 2002 (the "LGA") in 2010 and 2012, and covers significant changes in the following areas:
  1. Development contributions;
  2. Local boards outside Auckland;
  3. Efficient delivery and governance of local authority services;
  4. Consultation, decision-making and long-term/annual plans; and
  5. Infrastructure strategies and asset management planning.
Below Matthew Prendergast, Solicitor, details some of the changes that may be on the horizon.
The Bill has been referred to the Local Government and Environment Select Committee, and submissions close on 14 February 2014.
Improving the Development Contributions Regime

In early 2013, the Department of Internal Affairs undertook a review of the current development contributions regime.  The review formed part of the Better Local Government programme and the wider Government response to housing affordability issues.  During the review, several issues were identified, including:
  1. Development contributions being used to fund infrastructure of questionable justification;
  2. Developers having limited avenues to challenge development contributions; and
  3. Variable territorial authority practice and transparency in the apportionment of the costs and benefits of infrastructure.
Accordingly, the Government has proposed to amend the provisions that relate to development contributions so that they are fairer, better focused, more transparent, and more workable.  The Bill contains:
  1. A new purpose for development contributions, and principles to guide their use;
  2. Provisions to clarify and narrow the range of infrastructure that can be financed by development contributions; and
  3. Provisions that re-introduce a development contributions objection process, with decisions to be made by independent commissioners.
Local Boards

The local board model is currently used in Auckland, and is capable of being adopted, but only where an urban unitary authority with a population of more than 400,000 is proposed as part of a reorganisation.

Local boards share governance with a council's governing body.  Each tier has different, but complementary, responsibilities that are guaranteed in legislation. 

The Government aims to make the local board model more widely available.  The Bill contains provisions that would enable the Local Government Commission to:
  1. Consider the option of local boards during any proposed reorganisation and establish them as part of new unitary authorities; and
  2. Consider establishing local boards in existing unitary authorities.
The Bill also outlines that the local board model will have many of the same features as used in Auckland, but that the Commission will be able to tailor some of the details to suit each reorganisation.

Efficient Delivery and Governance of Local Authority Services

The Government has proposed to amend the LGA to encourage and facilitate shared services, joint delivery and other collaborative agreements between local authorities.  It is proposed that councils within a particular region will be required to enter into Triennial agreements. 

After each election cycle, a review of the "cost-effectiveness of the current arrangements" will be required.

It is anticipated that these changes will provide local authorities with a range of practicable options to achieve efficiencies in the scale at which services and facilities are managed and delivered.

Efficient and Effective Consultation, Decision-making and Long-term/annual plans

The Bill proposes amendments to the LGA to give councils greater flexibility and clarify how and when to consult on the promulgation of long-term and annual plans.

It is anticipated that these changes will allow for councils to design decision-making and engagement processes that are the most appropriate for the particular circumstances.  The changes include:
  1. Removing most of the requirements to use the special consultative procedure under the LGA for a number of processes, including establishing council-controlled organisations and policy reviews related to development contributions, rate remissions and rates postponement;
  2. Amending the special consultative procedure so that when it is used it can accommodate new techniques and technology for communication and consultation with the community; and
  3. The introduction of a new plain English consultation document for councils to use to avoid duplication within long-term and annual plans. 
Improving Infrastructure Strategies and Asset Management Planning

Local authorities own nearly $100 billion worth of fixed assets.  The majority of the fixed assets relate to core infrastructure which includes; water, roading, and flood protection.  While most local authorities have plans for some or most of their assets, there is no statutory requirement to prepare asset management plans.

Accordingly, the Government intends to change the law to ensure that all councils are planning for future infrastructure needs with a coherent and long-term approach, across assets.  The Bill proposes to:
  1. Revise the principles relating to local authorities  to state that asset management planning should be undertaken as part of the prudent stewardship of resources; and
  2. Require local authorities to prepare an Infrastructure Strategy for at least a 30 year period, and for the Infrastructure Strategy to be incorporated into long-term plans from 2015.
It is anticipated that the Infrastructure Strategy would identify key infrastructure issues, options, and consequences and would cover, at least, the five core infrastructure categories that local authorities provide; being water, wastewater, stormwater, flood protection, and roading.

In addition, the Bill requires that councils disclose risk management arrangements for physical assets in their reports, including the value of insurance cover or self-insurance.
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