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District Council Submission on Local Government Regulatory Performance Issues Paper

Inquiry into Local Government Regulatory Performance Productivity Commission PO Box 8036 The Terrace 6143

Waitomo District Council Submission on Local Government Regulatory Performance Issues Paper

Introduction

1.1 Council (WDC) welcomes the opportunity to submit on the Local government regulatory performance Issues Paper.

1.2 The submission starts by presenting relevant information about the Waitomo District in order to provide some context to the points made in our feedback. A picture of the District is important, as it is these characteristics – environmental, economic, social and cultural, that have played a role in shaping the regulatory regime developed by .

1.3 This submission then goes on to address the five topic areas explored in the Commission’s Issues Paper being

• Regulatory responsibilities of local government • Regulatory Variation and its need and importance • Allocation of regulatory roles • Adequacy of regulation-making processes • Assessment of regulatory performance

1.4 This submission does not seek to directly answer each of the 62 questions raised in the Issues Paper.

Context

1.5 The Waitomo District encompasses 354,649 hectares of mostly rural land on the west coast of the Central . The District is predominantly contained within the Region but a small part in the south-eastern corner of the District is within the Manawatu-Wanganui (Horizons) Regional Council’s jurisdiction. It is adjacent to the District to the north, to the east and Ruapehu Districts to the south.

1.6 The usual resident population for the District was 9,441 for the 2006 census. The population ranks 61st out of the 73 Districts in New Zealand. The Maori population for the 2006 Census was 38.4% whereas for the whole of New Zealand it was 17.4%. WDC’s Long Term Plan projects the population in the District to be static over the next 10 years, but estimates that further growth is likely to occur in certain parts of the District which are coastal areas of - and Te Waitere and the Waitomo Village. This growth in certain pockets of the District could potentially put pressure on the infrastructure available in these communities.

1.7 is the administrative and main trading centre in the District, with approximately 45% of the District population residing in this town. It is located about an hour south of Hamilton City, the Waikato Region’s main urban centre.

1.8 There are several other smaller settlements located throughout the District, including the popular beach settlements of Mokau, Awakino, , Te Waitere and . The main rural communities are , Piopio and Waitomo Village.

1.9 Waitomo Village (Village) is one of New Zealand’s popular tourist destinations and has been attracting visitors to its labyrinth of glowworm for over 100 years. The Village is located 15 minutes from Te Kuiti and 2 hours, 50 minutes from . Waitomo’s eco-tourism and adventures are associated with its world famous limestone caves.

1.10 The District has a strong agricultural base and also contains agricultural industry such as meat freezing works. Dairy farming is increasing in the District and is replacing some pastoral uses. Mining also forms an integral part of the District economy as represented by extensive quarrying operations and mineral extraction from the black sand in the north western part of the District. Abundant quantities of roading aggregate, limestone and coal deposits are also available across the District.

1.11 The Waitomo District Council is a small sized rural Council serving a District where the average income is lower than the national average. The pressures of meeting national standards for various activities are felt more acutely in smaller communities where the benefits of economies of scale do not exist. However, WDC has made considerable efforts in the past 6-7 years to consolidate the delivery of services and to meet the needs of its community on a financially sustainable basis. We are keen to ensure that local government is able to function efficiently and effectively into the future for the benefit of our communities and New Zealand as a whole.

The following parts of the submission address the five topic areas discussed in the Issues Paper:

Regulatory responsibilities of local government

1.12 Table 2 in the Issues paper lists the regulatory functions undertaken by local government under a central government statute. This list is incomplete. Additional statutes that influence the regulations and functions performed by local government are listed below (and there may well be more) –

1. Forests Act 1949 2. Reserves Act 1977 3. Burial and Cremation Act 1964 4. Property Law Act 2007 5. Residential Tenancies Act 1986 6. Public Works Act 1981 7. Camp Ground Regulations 1985 8. Land Transfer Act 1952 9. Civil Defence Emergency management Act 2002 10. Waste Minimisation Act 2008 11. Climate Change Response Act 2002 12. Health (Drinking Water) Amendment Act 2007 13. Government Roading Powers Act 1989 14. Land Transport Management Act 2003 15. Land Transport Management Amendment Act 2008

1.13 The above statutes are relevant since the Issues Paper defines regulation broadly to cover the full range of legal and informal instruments through which the management of behaviour is sought; of citizens, businesses as well as government itself.

Regulatory variation

1.14 It is noted that the Issues Paper acknowledges that regulatory variation is to be expected because of the diversity of local authorities in New Zealand.

1.15 It is true that variation primarily results from the environmental, economic and social differences that exist within a district or a region. For example, the existence of highly productive agricultural land, flood prone areas, forests or an extensive coastline will reflect in the planning, zoning and building regulations of a local authority. The social and economic fabric will also have an impact, for example noise control regulations or speed regulations will differ according to population density. The variation could be in the regulations or the enforcement of these regulations.

1.16 Community preferences also play a very important role in the regulations put in place by local authorities. Basically, local authorities need to and do pay close attention to the needs and wants of the communities they serve, which is also the purpose of local government by statute. Councils’ regulations are partly aimed towards addressing the issues and problems existing in their communities, as they should be. And this can lead to a big difference in the regulations put in place. For example, the issue of street prostitution which is prevalent in South Auckland is a non-issue in Waitomo District.

1.17 Another important factor that could play an important role in regulation and consequently lead to regulatory variation is the state and type of infrastructure available within a local authority. For example, a particular type of wastewater treatment plant or the state of it could lead to certain bylaws and restrictions being put in place for sustainable maintenance of it.

1.18 It is important that local authorities be allowed the discretion to vary regulation to make them ‘fit for purpose’. Providing a broad framework with common measurable parameters nationally does provide the benefit of consistent measurement and assessment. However, even minimum standards need to be approached with caution. Adherence to any minimum standard has a cost implication. What might be quite an acceptable minimum standard (or cost) for one local authority, given the significance of failure (measured by number of people impacted and the potential for the problem to aggregate given close proximity), might be inordinately excessive for a small and widely dispersed community.

1.19 Similar to regulatory variation itself, the charges and costs for a regulatory service vary within local authorities as well, as pointed out in Table 6 of the Issues Paper. This variation could be a result of different socio-economic and geographical factors intertwined with the affordability considerations in that particular community. For example, it is possible, particularly in more densely populated communities or towns, that the actual public benefit of regulation like Dog Control is higher because a potential lapse poses a threat to a larger number of people than in a sparsely populated rural town. Generally speaking, local authorities are steadfast in applying the principles to funding activities. But the principles based approach needs to be and is, balanced (as stated in legislation) with an impact assessment on the current and future well beings of that allocation to get around issues like reducing compliance due to higher compliance costs.

Allocation of regulatory roles

1.20 Generally speaking, WDC is of the view that most regulatory functions are best dealt with at a local level because the community needs and expectations are better understood and therefore regulations can be suitably tailored. This is particularly important for regulations like Sale of Liquor, Resource Management, Gambling and Animal Control. The issues and priorities of communities can be quite specific and are best met by locally informed regulations.

1.21 However, there are certain regulations that though locally or regionally administered, benefit from national standards. As a principle, national standards or regulation setting could be beneficial where the implications of anything going wrong would be more or less uniform regardless of locality. For example, it would seem desirable for certain minimum food hygiene standards to be maintained throughout New Zealand regardless of territorial considerations.

1.22 Examples of regulation that benefit from national standards being set and maintained are Building, Health, Hazardous Substances and New Organisms.

1.23 There are certain regulations, however, which though currently set and administered by local authorities would be best delivered through other agencies, primarily because other agencies would have better capabilities to administer these. Two such regulations are – Rural Fire which is best dealt with by the Fire Service since they have the training and expertise in the field and the other being excessive noise. The Police have greater general powers of enforcement to deal with this issue than Council officers or contractors.

Adequacy of regulation-making processes

1.24 The overall processes and formalities for regulation making by local government are set out in the Local Government Act 2002 (LGA 2002) and depending on the area of regulation further guidance and requirements are set out in the relevant statutes like Litter Act 1976 for regulations around litter or Dog Control Act 1996 for regulations around dogs. In a more general sense, the local government regulation-making process is rigorous and onerous and in some cases like land use planning it is overly so. Usually there is always a phase of pre-consultation to seek inputs and feedback from affected parties and residents on specific proposals and then a special consultative procedure needs to be followed once the proposals have been developed, to ensure that the community is satisfied with these. Decision making requires analysis of options and impact analysis of these bearing in mind the four well beings.

1.25 However, one main drawback is the time taken to undergo the processes for the development of regulations and plans (particularly RMA related policies) and consequently the costs associated with them. The processes could be significantly improved and streamlined if the ability to appeal on policy decisions was reduced (to a reasonable extent of course).

1.26 We understand that Central government regulation-making processes are rigorous as well, with oversight provided by the Regulatory Impact Analysis team within the Treasury. However, there is real and appropriate concern that central government agencies do not fully consider the impact of new regulations on local government especially in relation to ongoing costs. This incomplete assessment of impact can be in the appropriateness of regulations or standards themselves, or in fully understanding the impact of compliance monitoring or in the enforcement of regulations. A case in point is the Food Bill which when passed will add significant costs onto local government and thereby on to businesses without necessarily improving food hygiene standards. Currently, a competent Environmental Health Officer can carry out a detailed inspection of an average sized food premise comfortably within an hour but the new regulations (when put in place) will require a much more detailed audit of the food safety plans for assessing food hygiene standards which has cost implications.

1.27 Another example of regulatory responsibilities passed on to local government with significant funding implications is the requirement to adhere to the Drinking Water Act. Some common parameters have been set like the need to produce catchment plans, public risk management plans, water demand management plan and water conservation plans; for each water supply in the District. This has put immense pressure on small water supplies because, the preparation of these plans require specific resources that have a specific skill set in engineering as well as health. Not only that, the monitoring and reporting requirements brought about by the new standards are onerous and technology intensive both in terms of purchase and ongoing maintenance. 1.28 For an effective regulatory regime, it is important that appropriate consultation be carried out at the early stages of development with all of the affected parties. In the case of regulations developed by Central government, it is often the case that no substantive consultation is carried out with local authorities even when the responsibilities of monitoring and enforcement are intended to be devolved to this tier of government. In a lot of instances, the first consultation starts only after a Bill has been introduced in Parliament when what is clearly required is a close liaison with local government and sectoral representative bodies like Local Government New Zealand right at the outset in order to get the complete picture of problem definition, intended or unintended consequences and overall impacts. It is crucial to carry out a more vigorous and transparent cost/benefit analysis of the options, and at arms-length from political interference (though the latter might be difficult to achieve in a practical sense).

1.29 It is also often the case that regulations are prompted as a knee-jerk reaction to issues or perceived problems, when a more proactive approach to development and review following on from environment scanning exercises might be a better approach. It cannot be denied though, that regulations which address issues that have cropped up, have their place especially to avoid recurrence.

1.30 Implementation of regulations which involves administration, monitoring and enforcement is another issue that is often overlooked when regulatory responsibilities are conferred on local government. These are a large element of the increased costs faced by local authorities when responsibilities are devolved on to the sector. An example is the difficulty that rural local authorities are facing in attracting and employing suitably qualified building control officers to implement the new regulations that have come into effect. Often, new regulations impose extensive training requirements to improve the capability of the organization in the new area, which then leads to added costs which subsequently get passed on to either ratepayers or businesses.

1.31 Cost constraints, the availability of and the ability to hire appropriately trained people are two of the biggest factors spurring regulatory coordination. Increasingly, local authorities have started to work together to achieve regulatory goals. Some examples include- development of the Waikato Building cluster and the Waikato Food Safety Cluster Group. This Cluster approach allows consistency in interpretation of standards across the region, provides peer support for staff who work in professional isolation and encourages best practice in regulatory administration. The Waikato Local Government Forum is also currently working on improving regulatory performance in the region.

1.32 There are some examples in the Waikato region where regulations of one local authority are recognised as being the standards for another authority as well. For example, Waitomo District Council and some other local authorities in the Waikato region share the Engineering Standards developed by Hamilton City Council for all physical works.

Assessment of regulatory performance

1.33 WDC understands that the Commission is seeking inputs on whether or not improvements are required to regulatory performance assessment and if so then the type and areas of improvements.

1.34 WDC agrees that effective performance monitoring promotes good regulatory outcomes. In fact, performance monitoring is crucial to all functions or service delivery. It helps in understanding whether the intended objectives are being met and if not then to enable course correction to be carried out.

1.35 The Issues Paper summarises the current performance monitoring system for local government. In our opinion, the system that is in place is extensive. The main planning document which is the Long Term Plan, includes how performance will be measured and monitored. Councils have to produce annual reports, comparing their performance with what was indicated in the Long Term Plans and the Annual Plan. The Annual Report includes audited information. The Office of the Auditor-General is the main auditing body for local authorities and carries out audits of key planning documents like the Long Term Plans and Annual Plans. Other external agencies like the Ministry for the Environment and the Ministry of Health also carry out reviews and audits of Councils performance. The performance of all Council activities including all regulatory activities is monitored with some areas being more extensively audited than others like water supply where quarterly audits are carried out by the Ministry of Health. Having said all that, we do believe that there is a need for improving regulatory assessment of local authorities.

1.36 The main challenge faced by local authorities in developing a good practice performance monitoring system is the cost constraints around sourcing data. Data collection and maintaining information systems that can manage the different data needs is costly business. And therefore the general tendency is to develop indicators that are easily measureable or process indicators e.g. number of inspections carried out for liquor retail premises or the percentage of dog owner properties inspected per year. Outcome indicators would be the hardest to measure and though they would be most effective in ascertaining whether the regulation was meeting its intended objective. For certain areas of regulation like Water Supply, it would be more effective (and cost efficient as well) for local authorities if the data was collected and manipulated by some central data warehousing facility where it could be analysed and disseminated to various regulatory authorities for use. For example, there was a dramatic reduction in road fatalities following the government introduction of the requirement for a central agency (the Police, in this case) to collect data on road crashes, analyse it and send it through to Road Controlling authorities. Having this central data collection and analysis led to the development of a better and more targeted regulatory regime.

1.37 Measuring the cost of compliance is another area that can be undertaken centrally and used for comparative analysis across local authorities. This would also help to identify the factors leading to it and what can be done in certain local authorities to reduce compliance costs.

1.38 We would be in favour of developing a common framework of performance indicators but only for certain regulatory functions like Health, Dog Control and Building Control where the standards to be followed are nationally set and therefore could be monitored through a similar manner across local authorities. It would also be best if the local government sector itself developed these common indicators rather than them being set and driven by a central government agency.

1.39 Another effective way of monitoring regulatory performance could be better regulatory audits by an external agency. It is our opinion that the Long Term Plans auditing regime lent more rigour to the LTP planning and development process and was beneficial to the sector and the community overall.

Conclusion

To conclude, we would like to note that we support the intention to improve regulatory performance of local government and look forward to the draft report which will be published by the Commission in December 2012.

If the Commission requires any clarification with respect to this submission please contact WDC’s Chief Executive Chris Ryan.