The Future for Local Government review has proposed the biggest reorganisation of councils since the 1980s – but the country's smallest district won't lay down and die
Jim Palmer has a message for provincial New Zealand on new boundaries and structures: "It's important local councils start those conversations in a measured way, probably as early as they reasonably can," he tells Newsroom, "because they're seeking certainty as well".
The chair of the Government-commissioned Future for Local Government review panel has presented the long-awaited plan to restructure the country's 78 regional, city, district and unitary councils.
And while it stops short of naming councils that are no longer considered viable, Palmer says if councils can't make the tough decisions about their future, then a new central agency should do so.
READ MORE: * Kawerau leads small councils' fight against new amalgamations * Review proposes new tools to finance local roads, parks and homes
The Infrastructure Commission and the Government-commissioned Review of the Future for Local Government have both raised questions about how smaller districts remain viable. There's been talk of merging three or four Wairarapa councils, several south Canterbury councils, or districts like Kawerau and Whakatāne (which entirely surrounds Kawerau).
Kawerau District is just 24 sq km – you can walk from one side to the other in 20 mins. Yet locals have enjoyed some of the cheapest council infrastructure costs, thanks to paper mill owner Norske Skog.
Now, if the next government embraces the review panel's recommendations this week, councils will be reorganised into 15 groupings providing the infrastructure and services presently delivered by regional councils and territorial authorities – and some like Kawerau will be asked to consider their future.
"The recommendations are not government policy but will provide an opportunity to work with local government to agree on what changes need to be made to make it fit for purpose for the next 30 to 50 years." – Kieran McAnulty, Local Government Minister
The councils would be asked to adopt one of two new structures: either a new unitary model where the functions of regional and district councils are combined, headed by one mayor; or a combined network model in which smaller territorial councils elect representatives to a combined council that takes over regional council functions.
According to mayors spoken to by Newsroom, the timing of this report means the future and funding of local government will be an election issue – and rightly so.
Local Government Minister Kieran McAnulty says he won't be making any detailed decisions in response to the review until after the election. "This is an independent report, requested by the sector," he says.
"The recommendations are not government policy but will provide an opportunity to work with local government to agree on what changes need to be made to make it fit for purpose for the next 30 to 50 years.
"The general election provides local government with a window to get together, look over the recommendations and decide what they like and what they don’t. Then, after the election, we can sit down and agree on how to progress things."
"In the event councils within a region can't find a solution, then decisions would need to be made on their behalf." – Jim Palmer, Future for Local Government review
The reorganisation – the biggest since the 1989 local government reforms – would be driven by local communities. But a new independent local government stewardship institution would be established, taking over functions including those of the existing Local Government Commission.
"In the event councils within a region can't find a solution, then decisions would need to be made on their behalf," says Palmer.
Fighting back against amalgamation
Kawerau was founded in 1953 as a base for the construction of the big Tasman pulp and paper mill and, for many years, the mill propped up the town's economy and infrastructure. Households pay some of New Zealand's lowest rates – just $2,243 on average. Their fixed water charges were the cheapest in the country at just $82 a year, according to a Fair Go survey.
But Norske Skog pulled out in 2021; it's said to be in talks to sell some of the remaining assets to Oji Fibre, which operates the adjoining pulp mill. With the paper mill's closure, the town lost 160 jobs, $1m rates revenue and the corporate sponsorship of its water and waste infrastructure.
"I don't think the report uses the word 'amalgamation' anywhere. And actually what I see is the ability to take a networked approach in regions ... You can't just look at small as being unsustainable." – Alex Walker, Local Government NZ
There were already questions about Kawerau's future. From 2015 to 2017, the Bay of Plenty regional council and local authorities commissioned Martin Jenkins to report on the futures of communities of interest in the Bay.
New Kawerau Mayor Faylene Tunui has told Newsroom the district's 7000 residents would fight any amalgamation.
"What I can tell you, hand on heart, is that the Kawerau community is not in favour of amalgamation around anything," Tunui said. "I can say that without a shadow of a doubt.
"Our community has told us loud and clear that decisions to be made about Kawerau need to be made by Kawerau."
In April last year, shortly after Norske Skog's exit and the Infrastructure Commission report, Kawerau quietly lodged an application with the Local Government Commission to change its boundaries. Not to finally concede defeat and amalgamate into Whakatāne – but instead to expand further into Whakatāne's planned industrial park and rural hinterland.
"Yes, our biggest ratepayer has closed. The conversation that hasn't gone hand in hand with that is who's growing, and who's actually come into Kawerau since Tasman started to signal that they would no longer be operating in Kawerau." – Faylene Tunui, Kawerau Mayor
It's the first application to change boundaries between two local authorities for more than a decade; the last one was a small boundary alteration between Manawatū District and Palmerston North City in 2012.
The Kawerau proposal isn't so small, proportionately: it would increase the district's size by nearly a fifth, to almost 2900 hectares.
Tunui said that since Norske Skog's departure, there had been new industries keen to move to Kawerau.
"Yes, our biggest ratepayer has closed," she said. "The conversation that hasn't gone hand in hand with that is who's growing, and who's actually come into Kawerau since Tasman started to signal that they would no longer be operating in Kawerau."
Three areas of land, totalling 434 ha, would be shifted from Whakatāne into Kawerau: the land belonging to Tohia o Te Rangi Marae, the big Otarahanga Farm owned by Ngāti Tuwharetoa and, critically, the new Pūtauaki Industrial Park.
Undeveloped, the land is worth $26,200 a year in rates to Whakatāne; developed, it would be worth much more to whichever district its sits within.
The Local Government Commission has been investigating the application, which was backed by former Whakatāne mayor Judy Turner. It is to announce shortly whether the decision will go to public hearings in July.
It's complicated by the need to consider connections with, and potential implications for the Western‐Central Water Services Entity and the proposed Three Waters reforms.
The Pūtauaki Industrial Park, owned by local whānau groups, adjoins the Tasman mill. They received Provincial Growth Fund money to construct internal roading and related infrastructure, which would connect up to a new inland container terminal and existing industries. One of the first businesses to open in the new part was Waiū dairy processing plant, a collaboration between 12 local businesses.
"Kawerau has already been sustainable up until now – it's probably the only council in New Zealand that doesn't have any debt. Doesn't that say something? – Victor Luca, Whakātane Mayor
In Kawerau's application, the council chief executive Russell George says a boundary change would enable a single territorial authority to provide and charge for all local infrastructure, services and regulatory functions in the industrial park.
Kawerau's infrastructure was designed to serve up to 15,000 people, George says, but instead the population peaked at 8000 in 1981, then went into decline. "This means that Kawerau has relatively new public infrastructure with surplus capacity," he argues.
A local industry association, Industrial Symbiosis Kawerau, has successfully marketed the district's attractions to new businesses: its access to a significant geothermal field, forestry resources and transport links.
"At just 24 sq km the Kawerau District is currently very small and has little or no hinterland outside the urban and industrial areas," George says. "It would be entirely appropriate that more rural land be included within the district."
Whakatāne backs neighbour's land grab
When Whakatāne Council endorsed the proposal, Turner commended their smaller neighbours for supporting the economic development aspirations of the Kawerau community.
Now, the new Whakatāne Mayor Victor Luca is a little more cagey about Kawerau's land grab. He says his new council hasn't yet discussed the proposal and he's not yet willing to take a position.
But more broadly, he's dubious about the need to reorganise local authorities – he says the status quo is working, and the real problem is with central Government's failure to finance local infrastructure.
"It is very difficult to achieve an amalgamation of councils under current settings whereby a majority of voters need to approve it ... The status quo is a known, the future is an unknown." – Martin Jenkins, 2017 report
Kawerau is a rare example of a council that's managed to pay its way, relying on Norske Skog to remain viable rather than on help from Government.
"Kawerau has already been sustainable up until now – it's probably the only council in New Zealand that doesn't have any debt," Luca says. "Doesn't that say something?
"I know they've lost their biggest ratepayer, but there are still some very big ratepayers in that district. The reason it exists at all is because of that heavy industrial base they have there. So I don't want to pre-empt things, because what I think will be influenced by what they think.
"What we do have is a pretty good partnership going between the mayors and councils of Eastern Bay of Plenty. We're working well together and have got the basis of really doing some good things on a regional scale."
Reorganising a whole region
The Martin Jenkins report on the future of Bay of Plenty communities says any case for change needs to be very clear, compelling and go beyond arguments about financial efficiency.
"While many communities have rejected amalgamation proposals, they are not necessarily against change – particularly in the form of more shared services or more integrated functions," it says.
"Communities are often comfortable with councils sharing services with others, where it makes sense, to be more efficient or effective in what they deliver to residents and businesses. This means there is significant scope for councils to improve the way that their functions and duties are provided, while retaining local representation and influence over decisions."
The report warned that uncertainty about the impact of proposed changes on an individual’s rates was an issue for many voters, particularly for older populations who were on fixed incomes. There was often concern about the possible impacts of wealth transfers – for example, redistributing debt, assets and rates burdens among communities.
"It is very difficult to achieve an amalgamation of councils under current settings whereby a majority of voters need to approve it ... The status quo is a known, the future is an unknown.
"Communities value local identity and voice – this is partly to do with a strong sense of identity and historic affiliations, and partly a very real attachment to local decision-making."
"Boundary discussions would also need to include direct engagement with hapū/iwi to consider existing rohe and takiwā boundaries. Economic and cultural communities of meaning will be another form of local identification to consider." – Future for Local Government review
The new Future for Local Government review skirts delicately around some of those questions.
"Where a council geographically positions itself – including the location of staff – sends signals and messages to community as to priorities and ease of access," this week's report says. "The opportunity for shared and managed services is a further example of a move to stronger cohesion and leveraging investment beyond current council boundaries."
Beginning next year, local authorities would be expected to collaborate with their communities to determine the structure that would best meet local needs. This would be done on a region-by-region basis, using the resource management reform boundaries as a starting point for discussions.
"Boundary discussions would also need to include direct engagement with hapū/iwi to consider existing rohe and takiwā boundaries," it says. "Economic and cultural communities of meaning will be another form of local identification to consider.
"The panel envisages that the new local government stewardship institution would guide the process and make final determinations where councils and communities are unable to agree on the preferred structure for their region, taking their feedback into account."
Local government leaders reject amalgamation threat
Local Government NZ president Stuart Crosby says it's "way too early" to work out which councils aren't viable. In the Far North, he argues, there's not enough local government; in other parts of the country there's too much local government.
"Councils and communities need to work through those conversations themselves," he says. "If we don't sort it out ourselves, will it be done to us? That's a very possible reality.
"But we would argue that we know local government best, and we should be best placed to make the decisions in terms of form and function."
Local Government NZ national council member Alex Walker says some of New Zealand's smallest councils are actually the highest-performing, grappling with complex decision-making and strategy and delivering really close local solutions to local communities.
"So you can't just look at small as being unsustainable," she says.
Walker is the Mayor of Central Hawke's Bay. "If you look at the response during Cyclone Gabrielle, a few months ago, if there hadn't been autonomous, local leadership in places like Central Hawke's Bay or Wairoa, the consequences to their local communities would have been far different," she argues.
"I don't think the report uses the word 'amalgamation' anywhere. And actually what I see is the ability to take a networked approach in regions, which is how we operate in Hawke's Bay. But we do that voluntarily. So the possibility of legislative tools and funding tools to allow us to strengthen those collaborative models would be very helpful."
