Trends in Local Government: Efficiency, Functions and Democracy

Abstract

Renewed interest in local government reform in New Zealand can be viewed as the continuation of a yet-to-be-completed process that commenced in 1989.' Calls for further rationalisation of the sector (fewer units of government) come from a number of quarters and reflect several motives. First, there is a perception that local government continues to be inefficient.? As local government divests or reorganises its traditional infrastructure services, so this argument goes, its overheads should also be reduced. Second, there is a concern to improve the capacity of local government to deal more effectively with its increased responsibilities for such matters as environmental regulation3 and the quality of the urban environment.4 It is argued that local government is the most appropriate level at which to deliver environmental and social services to increasingly diverse communities.-5 Thus, the amalgamation of smaller units of local government to increase the institutional capacity of the sector can also be understood as a establishing a viable alternative to traditional centralist solutions to such problems. Third, there is the simple view that less government is better government.6 This can be seen as part of a more fundamental reassessment of the role of the state in the face of demands to reduce the costs of business, which is in turn a response to the globalisation of capital. It can also be seen as part of an ongoing reassessment of the nature of public goods and of the benefits claimed for the private delivery of public services. It may also be conceived as a conservative reaction to the challenge of devolution. Whatever the motives of the protagonists, debate over the number and size of local government units should be conducted with proper consideration given to the respective functions of different levels of government, as well as to the I R. Howell, P. McDermott and V. Forgie, 'The Unfinished Reform in Local Government: the Legacy and the Prospect', Occasional Papers in Local Government Studies 3 (Palmerston North, 1996). New Zealand Business Roundtable, Local Government in New Zealand: an overview .f economic andfinancial issues (Wellington, 1995); National Business Review, 4 September 1998.

Local Governance in Industrial Countries

“…The findings by McDermott and Forgie (1999) about shifts in the real value, relative size, and functional composition of New Zealand local government spending are shown in tables 6.9, 6.10, and 6.11. These findings are representative of the empirical background against which both minimalists and activists have sought to evaluate the effect of the 1989 reforms.…”

“…McDermott and Forgie (1999) provided a detailed empirical analysis of the effect of these structural reforms on the real value, relative size, and functional composition of New Zealand local government spending as well as on the democratic functions. The statistical material produced by McDermott and Forgie (1999) seems to suggest a trend toward greater activism in the 1990s as local authorities reallocated spending from a services to property approach to a services to the people approach, while substantially absorbing the costs of complying with the accountability requirements of the 1989 reforms and the increased statutory responsibilities for environmental regulation imposed by the Resource Management Act 1991, without significantly increasing their spending or the burden on ratepayers. Although McDermott and Forgie (1999) view these trends as an achievement, those same trends have also been seen as a source of concern by a minimalist advocacy coalition, which largely took its lead from the New Zealand Business Roundtable (NZBR).…”

“…The statistical material produced by McDermott and Forgie (1999) seems to suggest a trend toward greater activism in the 1990s as local authorities reallocated spending from a services to property approach to a services to the people approach, while substantially absorbing the costs of complying with the accountability requirements of the 1989 reforms and the increased statutory responsibilities for environmental regulation imposed by the Resource Management Act 1991, without significantly increasing their spending or the burden on ratepayers. Although McDermott and Forgie (1999) view these trends as an achievement, those same trends have also been seen as a source of concern by a minimalist advocacy coalition, which largely took its lead from the New Zealand Business Roundtable (NZBR). The NZBR, a self-selected lobby group that includes in its membership most of New Zealand's leading chief executives, is alarmed that the growing activism of local authorities could place more publicly funded services outside the control of the center and diminish the capacity for activist councils to meet the demand for "traditional" local public goods.…”

Local Government Policy Evolution in New Zealand: Radical Reform and the Ex Post Emergence of Consensus or Rival Advocacy Coalitions

“…McDermott and Forgie's (1999) findings about shifts in the real value, relative size and functional composition of New Zealand local government spending as shown in tables 5 to 7 are representative of the empirical background against which both minimalists and activists have sought to evaluate the impact of the 1989 reforms. Table 5 indicates that while public sector reforms appear to have induced a downward (albeit modest) trend in the rate of increase of central government expenditure, the same cannot be said of local government in respect of which spending increased by 2.7 per cent in real terms over the 1990s after falling 0.9 per cent in the period immediately preceding the reform GDP, 1978GDP, -97 1978GDP, 1984GDP, 1990GDP, 1997 Lower North Island 1993/4-1997 McDermott and Forgie (1999) 'this supports the view that reform carries with it significant and unpredictable costs that take some time to work through the sector' (p. 251). Table 6 nevertheless shows that the impact of these trends on the relative size of local government has been negligible, with local government's share of GDP rising 0.4 per cent between 1978 and 1984 and remaining stable at around 2.4 per cent thereafter.…”

“…Secondly, minimalists view the trend toward a functional realignment of local government spending in a way that is diametrically opposed to that of activists. On the one hand, McDermott and Forgie (1999) suggest that the impact of the 1989 reforms should be positively evaluated more in terms of the way they enhanced the capacity of local authorities to take on more functions and thereby play a more activist role in the social and economic development of their communities rather than in terms of any overall contraction in the size of this sector. On the other hand, the NZBR has become increasingly concerned that this trend could place more publicly funded services outside the control of the centre and diminish the capacity for activist councils to meet the demand for 'traditional' local public goods.…”