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ALTERNATIVE APPLICATION TO REORGANISE THE AND REGIONS

Contents

Foreword ...... 4 To the Chief Executive of the Local Government Commission...... 5 1. Boundaries of the Areas Affected ...... 6 2. Background...... 7 2.1 Introduction ...... 7 2.2 Work Completed by the Councils ...... 8 2.3 The basis of this application ...... 10 3. Principles underlying this alternative application ...... 12 4. Purpose of this alternative application ...... 13 4.1 Relevant Requirements of the Local Government Act 2002 ...... 13 4.2 The Purpose of the Local Government ...... 13 4.3 Enabling Democratic Local Decision-Making and Action ...... 13 4.4 Promoting Cost-Effective Service Delivery ...... 15 5. Description of proposed changes ...... 19 5.1 Relevant Requirements of the Local Government Act 2002 ...... 19 5.2 The Current Structure of Local Government in the Regions ...... 20 5.3 The Proposed Structure of Local Government in the Regions ...... 21 5.4 Key Features of the Proposal ...... 22 6. Levels of community support ...... 33 6.1 Relevant Requirements of the Local Government Act 2002 ...... 33 6.2 Initial Region-Wide Survey – Colmar Brunton, June 2012 ...... 33 6.3 Submissions made during Initial Council Consultations ...... 34 6.4 Other Surveys Conducted in the Regions ...... 36 6.5 Summary of Hutt Valley Community Concerns ...... 38 6.6 Letters of Support...... 38 6.7 Conclusions ...... 38 7. Analysis of options ...... 40 7.1 Relevant Requirements of the Local Government Act 2002 ...... 40 7.2 The Governance Options ...... 41 7.3 The Reasonable Practical Options ...... 41 7.4 Overall Assessment of the Practical Options ...... 48 7.5 The Preferred Option ...... 48 7.6 Overall Assessment of the Preferred Option ...... 53 8. Other Issues ...... 54 8.1 Resilience ...... 54 8.2 Financial Implications of the Reorganisations ...... 55 8.3 Establishing a Regional Leader ...... 57 8.4 The Role of Local Boards ...... 58 9. Maori Engagement and Support ...... 60 10. Transitional Arrangements ...... 61 10.1 Matters for the Commission to Decide ...... 61 10.2 Matters for the New Councils to Decide ...... 62

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11. Conclusions ...... 64 APPENDIX 1: Detailed Description of Current Local Government Entities in the Regions ...... 65 APPENDIX 2: Detailed Description of Proposed Local Government Entities for the Regions ...... 72 APPENDIX 3: Summary of Local Government Services ...... 77 APPENDIX 4: Planning Processes under the Three Regional Governance Options ...... 83 APPENDIX 5: Results of the Surveys of Community Opinions ...... 87 APPENDIX 6: Final Colmar Brunton Survey Results APPENDIX 7: Legal Opinion APPENDIX 8: TDB Advisory Ltd Report APPENDIX 9: Peer Review of TDB Report by McKinlay Douglas APPENDIX 10: Peer Review of TDB Report by Dwyer G Ltd APPENDIX 11: NZIER Report APPENDIX 12: Morrison Low Report APPENDIX 13: PWC Report on savings possible from water integration APPENDIX 14: Letter of Support from Friends of APPENDIX 15: Letter of Support from Grey Power Hutt City APPENDIX 16: Letter of Support from Grey Power APPENDIX 17: Letter of Support from Hutt Valley Chamber of Commerce APPENDIX 18: Letter of Support from Te Rira Puketapu and a meeting of the seven marae of APPENDIX 19: Letter of Support from Normandale Residents Association APPENDIX 20: Letter of Support from Working Men’s Club APPENDIX 21: Letter of Support from District Council APPENDIX 22: Letter of Support from Youth Infusion APPENDIX 23: Letter of Support from the Community Association APPENDIX 24: Letter of Support from the Belmont Ratepayer’s Improvement Association

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FOREWORD

The residents of Hutt City do not want a supercity. Surveys and submissions demonstrate clearly that the enhanced status quo is supported by the overwhelming majority of residents in the Hutt.

Hutt City has always said it will support the views of its community and we strongly favour the enhanced status quo for the Wellington and Wairarapa regions.

As part of the enhancements to the status quo, Hutt City supports:

. amalgamating the three small councils in the Wairarapa region and the establishment of a unitary council for the Wairarapa as proposed in the Wairarapa district councils’ application; and

. establishing a single specialised entity for land transport for the Wellington and Wairarapa regions and a single specialised entity for the “three waters” for the .

Hutt City does not support amalgamation of other councils in the greater Wellington region as there is no compelling evidence that there will be gains from these amalgamations. Further change will, however, inevitably impose significant social and economic costs and lead to losses of local democracy.

If, however, the Local Government Commission decides to propose further boundary changes in the Wellington and Wairarapa regions, that proposal should be for four unitary authorities rather than a single supercity.

Having four unitary authorities is far superior to a single as local democracy is not lost and the risk of having a large bureaucracy remote from the people of the region is avoided. Having their own unitary council would permit the people in the Hutt, who have a strong preference for low council debt and low rates, to maintain that strategy. The four unitary authority’s option has the greatest community support if boundary change is to occur.

Hutt City therefore submits this alternative application under Schedule 3 of the Local Government Act, 2010 for four unitary authorities as the structure that the Commission should propose if it is to propose boundary changes beyond the enhanced status quo.

This application has the unequivocal support of the Hutt City Council who passed (unanimously) the following resolution on August 13, 2013:

“That Council approves lodging The Alternative Application to Reorganise the Wellington and Wairarapa Regions with the Local Government Commission.”

Ray Wallace Mayor, Hutt City

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TO THE CHIEF EXECUTIVE OF THE LOCAL GOVERNMENT COMMISSION

We support the reorganisation application submitted by the Wairarapa councils. This application complements the Wairarapa’s proposal by recommending a reorganisation of the remaining districts in the Wellington region. It seeks the following:

1. The abolition of the following councils and their associated districts or regions:

Greater Wellington Regional Council (GWRC)

Wellington City Council (WCC)

Porirua City Council (PCC)

Kapiti Coast District Council (KCDC)

Hutt City Council (HCC)

Upper Hutt City Council (UHCC)

South Wairarapa District Council (SWDC)

Carterton District Council (CDC)

Masterton District Council (MDC)

2. The creation of the following four unitary authorities for the Wellington and Wairarapa regions:

Wellington Council (covering the boundaries of WCC, PCC)

Kapiti Coast Council (covering the boundaries of KCDC)

Hutt Valley Council (covering the boundaries of HCC, UHCC)

Wairarapa Council (covering the boundaries of SWDC, CDC, MDC)

3. Resolving an anomaly by transferring regional council responsibility for the small number of properties located within the boundaries of Council yet serviced by the Greater Wellington Regional Council to Horizons Regional Council.

4. The transfer of assets and liabilities, functions, and employees required to give effect to the above.

5. Restructuring the region’s council-controlled organisations (CCOs) and regional forums to best promote good local government together with the four new unitary authorities.

This alternative application is made by the following:

Hutt City Council 30 Laings Road Lower Hutt

Contact: Tony Stallinger, Chief Executive Officer and representative of the applicant

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1. BOUNDARIES OF THE AREAS AFFECTED

This map covers the boundaries of the Greater Wellington Regional Council (GWRC) and the eight local councils affected by this reorganisation proposal:

This map identifies the boundaries of the four unitary authorities recommended by this proposal:

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2. BACKGROUND

2.1 INTRODUCTION The central government-initiated amalgamation of the region’s councils into one council, or supercity, significantly increased interest in council reorganisations throughout the country.

Since that time, the central government has issued its “Better Local Government” reform programme and enacted related changes to local government legislation. These initiatives have signalled the government’s desire to see local government delivering efficient and affordable services and contribute effectively to a more productive and competitive economy.

In an early response, the Wellington Mayoral Forum initiated a review of governance arrangements to assess whether they were optimal for the greater Wellington region1 and its communities in the future. This review was completed by PricewaterhouseCoopers (PwC) in October 2010.2 The report identified nine key opportunities for the region and stated:

“We consider that the opportunity to change is related to improving the Wellington region’s performance rather than fixing dysfunctional governance which was evident in Auckland. However, not prudently addressing the issues highlighted in this review will be to the economic detriment of the Wellington region and the country.”3

One of the nine key opportunities highlighted in the report concerned possible changes to governance arrangements.

Public response to the PwC report was limited. Responses indicated strong resistance to any supercity-type amalgamation, but there was support for councils sharing services to deliver cost savings.

The Wellington Mayoral Forum spent a period considering how to further investigate and then consult in detail on possible governance changes. It became apparent that any substantial change in governance would be highly contentious, disruptive and distracting for several years. Most mayors also became aware that some of the options for changes being considered would be strongly opposed by their communities.

The Mayoral Forum resolved to apply its energy to the other key opportunities identified in the PwC report and defer further work on governance options. It was believed that this approach would have a far greater chance of bringing positive economic benefit to the region within a reasonable period of time.

The Mayor of City Council (PCC) and the Chair of GWRC disagreed with the other seven mayors and decided to pursue governance change for the region without support from the other councils. They announced their preferred outcome was for a two-tier supercity for the region that would be similar to Auckland, but with differences in regard to representation and delegations to local boards.

1 In this alternative application we use the term “greater Wellington” to refer to the combined Wellington and Wairarapa regions, where the “Wellington region” comprises the areas of the , Porirua City Council, Council, Hutt City Council (HCC) and City Council (UHCC), and the “Wairarapa region” comprises the areas of the Council, Carterton District Council and Masterton District Council. 2 PricewaterhouseCoopers (2010), Wellington Region Councils’ Governance Review, report to the Wellington Mayoral Forum. 3 Ibid, p.10.

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In 2011, GWRC and PCC commissioned Sir Geoffrey Palmer, Wira Gardiner, Sue Driver and Bryan Jackson (the Review Panel) to investigate local government reform in the Wellington and Wairarapa regions. The Review Panel presented its final report to the commissioning councils on 30 October 2012.4

Other councils, particularly Upper Hutt City Council and Hutt City Council (UHCC and HCC), did not support the Review Panel process and believed it to be flawed. The flaw was that no statistically sound survey was undertaken to canvass resident or business views on the options being promoted. Instead, public meetings were held. Attendees reported that the meetings were a platform to promote the sponsors’ supercity model rather than seek feedback from the affected communities.

The Review Panel received 234 submissions from across the entire region. The report noted that:

“Many of the submissions and virtually all the public meetings advocated with intensity and feeling the importance of local democracy and engagement on truly local issues. We agree. Our recommendations will both preserve it and improve it. The ability of people to meet with a councillor, to put their complaints, to ask for a remedy is at the heart of what representative democracy is about in a democratic society. It is what people are elected for. They take the decisions and they are accountable for them at the ballot box.”5

It transpired that there was little support for the Review Panel’s recommended governance arrangements which included a regional “lord mayor” and local councils with appointed “mayors”. Both GWRC and PCC have returned to advocating for the same model they endorsed prior to establishing the Review Panel – a two-tier supercity similar to the .

Governance discussions have become a major distraction for the regions and progress has been significantly slowed on the other key opportunities identified by PwC in their earlier report. Of particular note is the $5m annual savings possible through integration of water services (including wastewater and storm water services). This is the subject of a separate detailed report by PwC attached as Appendix 13. While there is agreement that these savings are achievable, GWRC has to date refused to negotiate towards integration unless it assumes full ownership and control of the combined operation. This is in contrast to the cooperative joint venture in place between the three participating councils – WCC, HCC and UHCC – in relation to water services.

2.2 WORK COMPLETED BY THE HUTT VALLEY COUNCILS Hutt City Council and Upper Hutt City Council have stated consistently throughout this period that they would consult with their communities and then advocate for the communities’ preferred option. This remains the commitment of the Hutt Valley councils.

A region-wide survey was conducted by Colmar Brunton on four options for governance of the Wellington and Wairarapa regions. The Hutt Valley councils participated in this process together with the other local councils.

Some very clear conclusions can be drawn from the results:

. By far the most strongly supported option in every district of the Wellington region was for no boundary change.

. The communities in the Hutt Valley are the least inclined to support boundary change and are most satisfied with current council arrangements.

4 Wellington Region Local Government Review Panel (2012), “Future Wellington – Proud, Prosperous and Resilient”. 5 Ibid, p. 7.

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. The communities in Masterton, South Wairarapa and Kapiti are the ones most inclined to support council boundary changes of some type.

. There is very little support for a supercity.

Councils in the regions also sought public submissions on the four options. This feedback also strongly opposed supercity options. More detail on community feedback is provided in Section 6 of this application.

Hutt City Council and Upper Hutt City Council considered the community feedback from surveys, submissions and public meetings. The two councils came to the conclusion that there was strong support for the status quo in terms of boundaries and pursuing savings through shared-service opportunities. Hutt City Council also concluded that if boundary change was to be imposed, then a united Hutt Valley council was the option most likely to be supported by the community.

Since that time, several pieces of work have been undertaken:

. TDB Advisory Ltd (TDB) has undertaken an independent economic and financial assessment for Hutt City of the main governance options being considered for the Wellington and Wairarapa regions. TDB examined both and international evidence on optimal governance arrangements for the different functions that the councils undertake. TDB’s analysis concludes in favour of establishing separate regional land transport and water entities for the regions and a separate unitary authority in the Wairarapa but no other boundary changes. If further boundary changes are made, the evidence provided in TDB’s report favours four unitary authorities rather than a single unitary authority. The TDB report is attached as Appendix 8;

. The TDB report was independently peer reviewed by Greg Dwyer of Dwyer G Ltd and Peter McKinlay of McKinlay Douglas Ltd.

. The TDB report builds on an earlier report New Zealand Institute of Economic Research (NZIER) undertook for Hutt City evaluating economic efficiency considerations in relation to councils in New Zealand with particular reference to an optimal size for councils. The NZIER report (refer to Appendix 11) provides further evidence in support of the model proposed in this application and the scope and scale efficiencies that could be realised;

. Morrison Low completed an assessment for Hutt City of the financial feasibility of a three unitary council model. The work was then extended to consider a revised model for four unitary councils. Morrison Low concluded the Wellington, Hutt and Kapiti unitary authorities would have the financial resources necessary to enable them to carry out the responsibilities, duties and powers of a unitary authority effectively while the Wairarapa unitary would have a deficit initially, which the Wairarapa district councils are confident they can address (refer to Appendix 12 of this report);

. The Hutt Valley councils engaged Colmar Brunton to complete a statistically sound survey to directly compare support for the multi-unitary authority’s model with the supercity model being promoted by others. The results confirmed that Hutt Valley communities want the status quo in terms of boundaries, but strongly favoured the four unitary authority’s model in preference to a supercity for the regions. These survey results were mirrored in further feedback obtained from public meetings and submissions. The Colmar Brunton report is attached as Appendix 6 and a summary of the various council surveys is attached as Appendix 5; and

. This alternative application has been reviewed by Richard Fowler, QC. In the opinion of Richard Fowler, QC this alternative application from Hutt City complies with all relevant legal requirements. The legal opinion is included in Appendix 7.

The results of the above work are included in this alternative application for the consideration of the Local Government Commission (LGC).

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Hutt City Council formally resolved to submit this alternative application following the announcement by the LGC that it would be assessing a reorganisation application for the Wellington and Wairarapa regions.

2.3 THE BASIS OF THIS APPLICATION In light of the work noted above, including the surveys of its community, Hutt City Council strongly favours the enhanced status quo. As part of the enhancements to the status quo, Hutt City supports amalgamation where the evidence indicates there are most likely to be gains from amalgamation. In particular Hutt City favours:

. amalgamating the three small councils in the Wairarapa region and the establishment of a unitary authority for the Wairarapa as proposed in the Wairarapa district councils’ application; and

. establishing a single specialised entity for land transport for the Wellington and Wairarapa regions and a single specialised entity for the “three waters” for the Wellington region. There is a good case for such infrastructure networks being managed in an integrated way and not separated by local political boundaries. The regional land transport and water entities should be separate, jointly owned CCOs so that these key services are delivered within a commercial operating environment and with clear and direct accountability to elected local councils.

Hutt City Council does not support amalgamation of other councils as there is no compelling evidence there will be material gains from such amalgamation.

Greater Wellington City Council, however, has submitted an application to combine all the functions of the nine councils in the Wellington and Wairarapa regions into a single unitary authority. Hutt City Council is opposed to the GWRC application.

The grounds for opposing the single unitary authority option are that:

. it is contrary to the clearly stated preferences of the communities of the Wellington and Wairarapa regions,

. it does not preserve local democracy, and

. any enhancements it offers in terms of service efficiency or productivity for our communities can be achieved at lower cost and in less risky ways (as outlined in this alternative application).

If the LGC is to propose boundary changes and amalgamations beyond that presented in the enhanced status quo (as described above), Hutt City favours the disestablishment of the GWRC and the establishment of four unitary authorities rather than a single unitary authority for the Wellington and Wairarapa regions. The four unitary authorities would be:

. a Hutt Valley authority,

. a Kapiti Coast authority,

. a Wellington authority, and

. a Wairarapa authority.

Under either option – an enhanced status quo or four unitary authorities – efficiency and productivity would be enhanced by establishing jointly owned regional land transport and water entities for the regions.

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Hutt City Council considers that, if changes are to be proposed beyond the enhanced status quo, the four unitary authority’s model best promotes good local government by balancing the need to preserve local democracy, while delivering service efficiency, improved economic performance, simplified planning and strong regional leadership. This is also the model that has greatest community support if change is going to happen (refer to Section 6 and Appendix 5 for a summary of the surveys that have been undertaken).

Hutt City therefore submits this application for four unitary authorities to the LGC as the preferred option if changes are to be considered beyond those described in the enhanced status quo.

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3. PRINCIPLES UNDERLYING THIS ALTERNATIVE APPLICATION

Any decisions to reform the structure of local government should be based on sound principles of public policy and governance. Accordingly, this application is based on the following four key principles:

i. evidence-based decision-making: any decisions on local government reform should be based on evidence of what works and what does not and not on rhetoric;

ii. organisational form should follow function: the optimal form for different local public services will depend on the nature and characteristics of the service being considered and the conditions under which it is produced and delivered. Thus amalgamation may make sense for some local government functions but not for others within the affected areas;

iii. subsidiarity: this is an organising principle that says matters ought to be handled by the least centralised competent authority. Political decisions should be taken at a local level if possible, rather than by a central authority6;

iv. self-determination: any reorganisation should have the support of the people the reorganisation will affect.

These principles underlie this application and the recommendations for governance reform in the application.

6 The Oxford English Dictionary defines subsidiarity as the idea that a central authority should have a subsidiary function, performing only those tasks which cannot be performed effectively at a more immediate or local level.

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4. PURPOSE OF THIS ALTERNATIVE APPLICATION

4.1 RELEVANT REQUIREMENTS OF THE LOCAL GOVERNMENT ACT 2002 This Section of our application addresses the following requirements of the Local Government Act 2002 (“the Act”):

Schedule 3, Clause 5(1):

(d) a full and detailed explanation of what the proposed changes are seeking to achieve and how the changes would be achieved by the approach proposed in the application

Schedule 3, Clause 12: promotion of good local government

(a) will best promote, in the affected area, the purpose of local government as specified in Section 10.

4.2 THE PURPOSE OF THE LOCAL GOVERNMENT The fundamental purpose of any reorganisation of regional governance must be the promotion of good local government.

Section 10 of the Act defines the purpose of local government as two-fold:

“(a) to enable democratic local decision-making and action by, and on behalf of, communities”; and

“(b) to meet the current and future needs of communities for good-quality local infrastructure, local public services and performance of regulatory functions in a way that is most cost- effective for households and businesses.”

The Hutt City Council and the people in its community believe this purpose can best be achieved without boundary changes in the Wellington region. In contrast, the super-city proposal being assessed by the LGC would represent a significant backward step by undermining democratic local decision-making in the Wellington and Wairarapa regions.

Hutt City Council presents the four unitary authorities options as a well-researched and effective compromise if boundary change is to occur. The four unitary authorities option would promote good local government by retaining the most valued elements of democratic local decision-making, yet still deliver service efficiency, simplify planning and more effectively support the region’s economic performance.

A thorough analysis of this alternative proposal against the status quo and the super-city option is contained in Section 6. This Section highlights the key benefits of this proposal in promoting the two statutory purposes of good local government.

4.3 ENABLING DEMOCRATIC LOCAL DECISION-MAKING AND ACTION In New Zealand, enabling local decision-making has always been at the heart of local government. One of the earliest articulations of this was in the preamble to the Municipal Corporations Ordinance 1842, which explained the rationale for the establishment of local boroughs. It explained that boroughs were better able to articulate local preferences and needs, and provide the necessary services to the community:

“Whereas it is necessary that provision should be made for the good order health and convenience of the inhabitants of towns and their neighbourhoods: And whereas the

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inhabitants themselves are best qualified, as well by their more intimate knowledge of local affairs as by their more direct interest therein, effectually to provide for the same: […].”7

A United Kingdom Royal Commission similarly emphasised the importance of local government as a voice for local democracy:

“Local government is not to be seen merely as a provider of services. If that were all, it would be right to consider whether some of the services could not be more efficiently provided by other means. The importance of local government lies in the fact that it is the means by which people can provide services for themselves; can take an active and constructive part in the business of government; and can decide for themselves, within the limits of what national policies and local resources allow, what kind of services they want and what kind of environment they prefer.”8

However, New Zealand’s government structure is already highly centralised. New Zealand has a relatively high population base per territorial authority and the New Zealand Initiative noted that sub- central government accounts for only 11% of total government spending in New Zealand, compared with approximately 30% of total government spending on average for the Organisation for Economic Co-operation and Development (OECD). New Zealand ranks third highest amongst OECD countries in terms of the percentage of total government spending accounted for by the central government.9

The residents of the Hutt have regularly demonstrated their preference for approaches that are different to those adopted in other parts of the Wellington and Wairarapa regions. In recent years, for example, HUTT CITY COUNCIL has stood out for adopting a low rate increase, low debt fiscal strategy.

Any amalgamation of councils in the greater Wellington region will inevitably increase the distance between decision-makers and the communities affected. This creates a real danger that decisions do not best address the needs of local communities.

Attempts can be made to maintain that local connection through community boards or local boards. While such boards can form a useful forum for community connection and advocacy to the governing council, experience shows it is difficult and very rare for genuine decision-making powers of substance to be delegated. Ultimately resources, staffing and power resides in the governing council. The role and limits of local boards in ensuring local democracy is considered further in Section 8.4 of this application.

An example of the important connections to the community that can be maintained in smaller councils is the ability of the mayor to consistently attend and officiate at community functions. Once a council becomes too large, this is simply impossible to sustain. Members of the community do not want the chair of a community board or local board to attend in place of the mayor. Conversely, few residents from the Hutt, Kapiti or the Wairarapa travel to Wellington City to attend meetings of the GWRC.

People in the Wellington and Wairarapa regions recognise that all our communities are connected in some ways. But there are clear cultural differences apparent in our separate districts. Residents want to see those local differences reflected in decision-making and in plans for the future. As a result, the communities of the Wellington and Wairarapa regions have made it clear that any supercity proposal is unacceptable.

7 Municipal Corporations Ordinance 1842, preamble, quoted in New Zealand Productivity Commission (2013), “Towards better local regulation”, p.26. 8 Redcliffe-Maud (1969), “Royal Commission on Local Government in : Government proposals for reorganisation”, (Cmnd 4040) – Vol. 1 – Report, pp. 10–11, quoted in ibid, p.27. 9 Hartwich, O. (2013), “Time to go local”, retrieved 9/8/13 from http://nzinitiative.org.nz/Media/Opinion+and+commentary/Time+to+go+local.html

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Our four unitary authorities alternative represents the best compromise if boundary changes are to occur in the greater Wellington region. We recognise that it does not result in an improvement of the status quo in terms of democratic local decision-making. But the model has been designed to best match communities of interest, and therefore minimise the loss of local decision-making power. At the same time, the model delivers the benefits of a significantly streamlined regional structure, benefits that are described in the following sections of this document.

The four unitary councils proposed, align with communities of interest and catchments in the following ways:

. there is a clear community of interest and catchment directly aligned with the Kapiti Coast Council proposed by this model;

. there is a clear community of interest and catchment directly aligned with the Hutt Valley Council proposed by this model;

. there is a clear community of interest and catchment directly aligned with the Wairarapa Council proposed by this model;

. the current boundary between WCC and PCC is not geographically distinct and is removed by this model;

. there is alignment with transport infrastructure, particularly the state highway network and metropolitan and main trunk railway lines; and

. while the would be encompassed by two councils, this is far from unusual in New Zealand and around the world. The model provides for a simple and effective structure to manage harbour-related issues.

Wellington is not like Auckland. There is clear physical separation between communities, particularly with the boundaries proposed for the four unitary councils. The four unitary councils would each represent substantial communities, ranging from a population of 253,000 in the case of Wellington Council, to 41,000 in the case of the proposed Wairarapa unitary council, which also covers a substantial land area.10

By way of comparison, the Hutt Valley Council we propose will service a population greater than that of or , and is of a similar size to Hamilton. It is important that the voice of this population be heard and influential, rather than be lost in a supercity.

4.4 PROMOTING COST-EFFECTIVE SERVICE DELIVERY TDB Advisory Ltd (TDB) has undertaken for Hutt City a comprehensive economic and financial assessment of the governance options for Wellington and the Wairarapa. TDB’s report is attached as Appendix 8. The TDB report develops and extends the economic analysis undertaken earlier by the NZIER for Hutt City. The NZIER report is attached as Appendix 11.

TDB’s draft report was peer reviewed by Greg Dwyer of Dwyer G Ltd and Peter McKinlay of McKinlay Douglas Ltd. Greg Dwyer is an independent economist with over thirty years’ experience advising central and local governments and business organisations on public policy matters. He is a former director at the New Zealand Treasury. Peter McKinlay specialises in public policy and local governance and is the director of the Local Government Centre at AUT University. Peter sits on the board of the Commonwealth Local Government Forum and is a member of the advisory board of the

10 The four new unitary councils would be among the larger councils in New Zealand (3rd, 5th, 17th and 28th when ranked by population).

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Commonwealth Journal of Local Governance. The reports of the peer reviewers are attached as Appendices 9 and 10.

TDB’s review of the extensive international research on the optimal size of local government entities shows there is no unequivocal relationship between cost-effectiveness and size. Some studies find smaller councils are more efficient, some find larger councils are more efficient and some find a U- shaped cost curve (where per capita costs first decline, then level off and then start rising as population increases). In their literature review on the existence of economies of scale in local government, Byrnes and Dollery make a similar observation on the evidence:

“Overall, 29% of the research papers find evidence of U-shaped cost curves, 39% find no statistical relationship between per capita expenditure and size, 8% find evidence of economies of scale, and 24% find diseconomies of scale. From this evidence alone we can conclude that there is a great deal of uncertainty about whether economies of scale exist in local government service provision.”11

TDB’s assessment of the New Zealand data finds that there are likely to be cost-effectiveness gains from combining units up to around 50,000 population-served but beyond that there is no evidence that further efficiency gains are available from amalgamation of entities. This is in respect of the majority of local public services provided by councils. The evidence suggests therefore that there would be advantages from amalgamating the three small Wairarapa councils (with a combined population of around 40,000) but beyond that, the benefits from amalgamation of entities that are already at or above this population-served size are less clear.

Most importantly, TDB concludes that when considering the optimal structure of local government it is necessary to differentiate between the different functions of local government: i.e., to follow the principle that “form should follow function”. This is because the technical conditions under which some local public services are produced and delivered differ in important ways that affect cost effectiveness. In this respect, capital-intensive, expert-intensive and network-type services differ materially from spatial planning regulation and administration services.

TDB’s and the NZIER’s analyses of expenditure data from the approximately 70 territorial authorities in New Zealand over the last five years indicate:

. for the capital- and expertise-intensive network operations, like land transport and the three waters (drinking water, storm water and waste water), there are economies of scale that merit a network- wide perspective regardless of the structure of other local government functions. In the case of water, for example, as noted above PricewaterhouseCoopers (PwC) found benefits of around $5m annually could be expected if the three waters were managed by a single organisation (e.g., Capacity Infrastructure Services (Capacity)) across the Wellington region.12 These capital- intensive functions, where the analysis suggests there is also a good case for region-wide amalgamation, account for around 34% of local government expenditure in the Wellington and Wairarapa regions; and

. in regard to the other activities of councils, there is no compelling case on cost-effectiveness grounds for combining functions any more than they already are in the Wellington region. The evidence suggests councils are likely to gain more from moving to best-practice management and operational techniques than from simply getting bigger.

11 Byrnes, J. and Dollery, B. (2002), “Do Economies of Scale Exist in Australian Local Government? A Review of the Research Evidence”, University of New England. 12 Refer to Appendix 13.

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The New Zealand Productivity Commission reached a similar conclusion in its recent report on regulatory decision-making in local authorities. The Productivity Commission noted:

“Local authorities generally follow adequate regulatory decision-making processes. This finding is not dependent on the size of the local authority. The review specifically tested the hypothesis that larger local authorities are able to follow better regulatory processes because of their greater financial resources and internal capability. The analysis revealed that while larger local authorities are able to draw upon a larger body of technical information when making regulatory decisions, smaller local authorities appear better able to incorporate specific community concerns, due to their closer relationship with the community. To some extent this reflects a trade-off between the resources available to a local authority and the level of community responsiveness that can realistically be achieved.”13

Council functions that do not exhibit evidence of economies of scale account on average for around 66% of council expenditure.

There may in fact be disbenefits from amalgamation in situations where no economies of scale can be expected at the level of local public service provision. As well as the disadvantages of increased bureaucracy, there is also the risk of expenditure and service level creep from amalgamation as councils with different cost structures, service levels and revenue models merge. Experience in Auckland and elsewhere suggests there will be pressures for practices and policies in the territory with the highest costs, highest service level or lowest user-charge to apply across the region as a whole. Hutt City’s community has a strongly expressed preference for a relatively modest level of service at an acceptable cost to ratepayers. There is no appetite among residents, businesses and ratepayers for an increase in council costs to fund an expanded range of services or an increase in service level.

Even if on-going net benefits were expected from amalgamations, the costs of change also need to be taken into account. Evidence from New Zealand and offshore (e.g., Toronto where the costs of amalgamation totalled C$400 million) indicates these adjustment costs can be major. Further, where after-the-event studies of council amalgamations have attempted to reconcile actual with expected transition costs the general conclusion is the initial estimates were too optimistic.

Overall, TDB’s analysis supports the establishment of single, specialised, region-wide organisations for land transport and the “three waters” from a cost-effectiveness and overall efficiency perspective. There is a good case for such infrastructure networks being managed in an integrated way and not separated by local political boundaries. TDB’s analysis also supports in principle amalgamating the three small councils in the Wairarapa region from an economic efficiency perspective. The financial impacts of any such amalgamation will depend on the actual level of efficiency gains achieved and the effect of transferring the costs of regional council functions. Beyond the small Wairarapa councils, TDB finds little evidence that there are likely to be gains from further amalgamations in the Wellington region, especially once costs of change are taken into account.

TDB’s analysis concludes therefore in favour of the enhanced status quo option, supplemented by the establishment of network-wide entities for land transport and water services. If there is to be further amalgamation, TDB’s analysis favours having four unitary authorities rather than a single unitary authority for the Wellington and Wairarapa regions. Having multiple unitary authorities has less risk of creating a large bureaucracy, smaller adjustment costs and less risk of a loss in local democracy compared to having a single unitary authority (regardless of whether the single unitary authority has local boards or not). In addition, the four unitary authorities model leaves open the option of

13 New Zealand Productivity Commission, op.cit., p. 156.

17 progressing to a single unitary authority at some stage in the future if there is convincing evidence to justify such a change.

In summary, compared to a supercity, the main benefits of having four unitary authorities are:

. local democracy is better preserved;

. less risk of creating a large council bureaucracy;

. improving oversight of council-controlled organisations (CCOs). Several key services would continue to be delivered by CCOs, but monitoring arrangements would be strengthened;

. creating four new councils that would be among the larger councils in New Zealand (3rd, 5th, 17th and 28th when ranked by population);

. councils of the size created by the proposed model can be more efficient than small councils and more efficient than very large councils;

. cost-savings are still delivered from:

. a reduction in the number of senior managers and elected managers;

. less replication of systems, processes and support services across multiple organisations; and

. vertical and horizontal integration of some activities, particularly water services; and

. establishing a more efficient regional decision-making forum. This is achieved by two principal mechanisms:

o empowering the regional forum to make binding decisions on specified activities; and

o removing the inefficiency created by the overlapping mandates between the current regional and local councils.

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5. DESCRIPTION OF PROPOSED CHANGES

5.1 RELEVANT REQUIREMENTS OF THE LOCAL GOVERNMENT ACT 2002 This Section of our application addresses the following requirements of the Act:

“Schedule 3, Clause 5(1) (c) – description of the proposed changes, including (but not limited to) – i. which of the matters listed in Section 24(1) is being sought; and ii. a plan or other description sufficient to identify the affected area or affected areas concerned.”

Section 24(1) states, “Local government reorganisation may provide for 1 or more of the following matter:

a) the union of districts or regions: b) the constitution of a new district or region, including the constitution of a new local authority for that district or region; c) the abolition of a district or region, including the dissolution or abolition of the local authority for that district or region: d) the alteration of the boundaries of any district or region; e) the transfer of a statutory obligation from one local authority to another: f) the assumption by a territorial authority of the powers of a regional council.”

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5.2 THE CURRENT STRUCTURE OF LOCAL GOVERNMENT IN THE REGIONS The diagram below illustrates the current structure of local government in the Wellington and Wairarapa regions.

Currently there are:

. nine councils,

. 23 CCOs, and

. Four key regional forums.

A list and brief description of each of the current entities, including CCOs, are provided in Appendix 1.

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5.3 THE PROPOSED STRUCTURE OF LOCAL GOVERNMENT IN THE REGIONS The diagram below illustrates the proposed new structure of local government in the Wellington and Wairarapa regions.

The proposal recommends:

. Four councils (a reduction of five),

. 23 CCOs (no change), and

. Two key regional forums (a reduction of two).

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5.4 KEY FEATURES OF THE PROPOSAL The diagram above illustrates the proposed structure. A supporting list and brief description of each entity, including CCOs, are provided in Appendix 2. Appendix 3 summarises the local government services in the Wellington and Wairarapa regions, which entity is currently responsible for delivery and which entity would be responsible for delivery under this proposal for four unitary councils.

This Section explains key features of the proposed governance model.

THE FOUR UNITARY AUTHORITIES

We propose that the Wellington and Wairarapa regions be governed by four new unitary authorities. This would require the disestablishment of nine councils being: GWRC, WCC, PCC, KCDC, HCC, UHCC, SWDC, CDC and MDC. Four new unitary authorities, as described below, would be formed.

The Act provides for unitary authorities to be described as “(name of city or district) Council”. Given this, the four unitary authorities are referred to here as Wellington Council, Kapiti Coast Council, Hutt Valley Council, and Wairarapa Council.

The boundaries of the unitary authorities would be based on the boundaries of the existing territorial authorities that form the respective unitary authorities.14 With State Highway 1 moving to , one potential change at an appropriate date in the future would be to align the borders of the Hutt and the Wellington/Kapiti unitary authorities with the new State Highway 1.

The key proposed governance elements of each council are set out below. These proposals are recommendations only. The governance arrangements for the four councils should be finalised following a representation review in consultation with the communities within each new territorial area. The proposal retains many elements of the status quo on the basis that these representation arrangements have been supported by the respective communities to date.

For the same reason, all existing community boards are shown as retained. This should be tested by community consultation to determine whether the boards continue and whether any new community boards are established. In every instance, we recommend the full funding for each board be obtained by a targeted rate on the area represented and that this cost be explained to communities during consultation.

14 As noted above, we propose resolving an anomaly by transferring regional council responsibility for the small number of properties within the boundaries of Tararua District Council that are currently serviced by the Greater Wellington Regional Council to Horizons Regional Council.

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Wellington Council The Wellington Council would be formed by amalgamating WCC and PCC. As a unitary council, the Wellington Council would undertake the functions of both a regional and a local council under the Act.

. Mayor Number of elected members . 18 councillors

Number of wards . Seven wards

. Mayor elected at large

Basis of representation . All councillors elected by ward

. Elections by STV

. The current community boards of Tawa and Community boards and advisory bodies Makara/Ohariu are retained.

Currently all councillors of WCC and PCC are elected by ward. The new Wellington Council would have seven wards and all councillors would be elected by ward. The proposed wards are based on the existing wards of the two current councils.

Not all wards would comply with the +/- 10% requirement. A full representation review should consider this issue and whether, for example, there should be a revision to ward boundaries, particularly in the Porirua area.

Population- % difference Ward Population Members member ratio from quota

Wellington North 45,700 3 15,233 +8.44

Onslow-Western 43,300 3 14,433 +2.75

Lambton 43,800 3 14,600 +3.94

Wellington East 39,700 3 13,233 -5.79

Wellington South 27,700 2 13,850 -1.40

Porirua North 20,800 2 10,400 -25.96

Porirua Eastern-Western 31,850 2 15,925 +13.37

Total Wellington 252,850 18 14,047

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Kapiti Coast Council The Kapiti Coast Council would be formed from the current territorial area of KCDC. As a unitary council, the Kapiti Coast Council would undertake the functions of both a regional and local council under the Act.

Number of elected . Mayor members . 10 councillors

Number of wards . Four wards

. Mayor elected at large

Basis of . Five councillors elected by ward representation . Five councillors elected at large

. Elections by STV

Community boards . The current community boards of Otaki, /Raumati, and advisory bodies and are retained

The key governance elements set out below are based on the existing governance arrangements of the current KCDC. Consideration may need to be given to increasing the number of councillors due to the additional decision-making responsibilities of unitary councillors.

The proposed wards, number of elected members and resulting representation ratios are shown in the table below. All wards, as proposed below, comply with the +/- 10% requirement.

Population- % difference Ward Population Members member ratio from quota

Otaki 9,180 1 9,180 -7.81

Paraparaumu 19,850 2 9,925 -0.33

Waikanae 10,850 1 10,850 8.96

Paekakariki-Raumati 9,910 1 9,910 -0.48

At large 49,790 5 9,958

Total Kapiti Coast 49,790 10 4,979

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Hutt Valley Council The Hutt Valley Council would be formed by an amalgamation of Upper Hutt City Council and Hutt City Council. The Hutt Valley Council would have the functions of both a regional and local council under the Act.

Number of elected . Mayor members . 14 councillors

Number of wards . Seven wards

. Mayor elected at large

Basis of . Elections by FPP representation . Nine councillors elected by ward

. Five councillors elected at large

Community boards . The current community boards of Petone, Wainuiomata and and advisory bodies Eastbourne are retained

Currently Upper Hutt City councillors are all elected at large and Hutt City councillors are all elected by ward. To accommodate these different preferences, it is proposed that, at least for the first elections, nine councillors are elected by ward and five are elected at large. This approach will ensure fair representation for all residents of the Hutt Valley while encouraging a focus on territory-wide decision- making.

The proposed wards, number of elected members and resulting representation ratios are shown in the table below. Not all wards, as proposed below, comply with the +/- 10% requirement. However, it is believed that in the case of the Upper Hutt ward, a slightly higher level of representation is reasonable given the overall change in representation resulting from the amalgamation. The variance of the Wainuiomata ward from the +/- 10% is difficult to resolve given geographic factors.

Population- % difference Ward Population Members member ratio from quota

Western 16,898 1 16,898 +5.3

Harbour 16,702 1 16,702 +4.1

Northern 16,350 1 16,350 +1.9

Central 16,950 1 16,950 +5.6

Eastern 17,950 1 17,950 +11.8

Wainuiomata 18,100 1 18,100 +12.8

Upper Hutt 41,500 3 13,833 - 13.8

At large 144,450 5 28,890

Total Hutt Valley 144,450 14 10,318

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Wairarapa Council The Wairarapa Council would be formed by an amalgamation of SWDC, CDC and MDC. The key governance elements set out in the table below are the same as those proposed by the three Wairarapa district councils as their preferred option for governance across their areas. The Wairarapa Council would have the functions of both a regional and local council under the Act.

Number of elected . Mayor members . 12 councillors

Number of wards . Seven wards

. Mayor elected at large Basis of . All councillors elected by ward representation . Elections by FPP

. The existing , Featherston and Greytown community boards will be retained

. Community boards will be established for Carterton and Masterton

Community boards . Community boundaries will be contiguous with ward boundaries

and advisory bodies . A Rural Advisory Committee will be set up to represent rural interests

. A structure will be set up to provide for participation by Māori, and the final form and function to be determined following consultation with local iwi

The proposed wards, number of elected members and resulting representation ratios are shown in the table below. All wards, as proposed below, comply with the +/- 10% requirement.

Population- % difference Ward Population Members member ratio from quota

Masterton 18,250 5 3,650 +7.8

Carterton 6,641 2 3,321 -1.9

Wairarapa Rural 1 3,149 1 3,149 -7.0

Wairarapa Rural 2 3,150 1 3,150 -7.0

Greytown 3,070 1 3,070 -9.3

Featherston 3,110 1 3,110 -8.0

Martinborough 3,250 1 3,250 -4.0

Total Wairarapa 40,620 12 3,385

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GREATER WELLINGTON REGIONAL COMMITTEE There are at least four important regional forums operating at present, with varying degrees of effectiveness and efficiency. This proposal recommends important changes to the structure of these regional forums.

The Wellington Regional Mayoral Forum, Wellington Regional Strategy Committee and the Wellington Regional Land Transport Committee would all be replaced by a new committee called the Greater Wellington Regional Committee.

A key component of this proposal is the empowerment of the Greater Wellington Regional Committee. The current regional committees are inefficient because they lack decision-making power. Typically recommendations are referred back to individual councils for final say.

We propose that the Greater Wellington Regional Committee be established with binding decision- making power in its areas of responsibility, which would cover:

. Greater Wellington Regional Strategy;

. Greater Wellington Spatial Plan;

. Greater Wellington Regional Transport Strategy and Programme (including public transport); and

. regional amenity funding decisions.

The new Greater Wellington Regional Committee may form sub-committees where this is useful to work through complex decision-making processes, particularly when co-opting specialist skills onto sub-committees would assist the quality of decision-making.

The four unitary councils would meet and discuss key agenda items of the Greater Wellington Regional Committee in advance, so their representatives were aware of the consensus views of their councils prior to the committee meetings taking place. Members of the Greater Wellington Regional Committee would then fully and finally represent their council when voting at committee meetings.

The chair of the Greater Wellington Regional Committee would always be the Council. This is in order to establish a clear regional leader on regional matters. This arrangement recognises the mana that comes with being mayor of the and central business district of the region.

The chair of the Greater Wellington Regional Committee would therefore be the regional spokesperson for the committee’s areas of responsibility as highlighted above. The mayors of each unitary council would lead publicly on local government matters within their respective district boundaries.

This proposal recommends that membership of the Greater Wellington Regional Committee comprise the mayors and deputy mayors from each council. Alternates would be allowed.

Voting power at the Greater Wellington Regional Committee must be determined carefully to give an effective balance of power across the Wellington and Wairarapa regions. The Wellington Council should have an influence on the Greater Wellington Regional Committee’s decisions that exceed a simple proportional 25% share of the vote. However, it would not be helpful if the Wellington Council representatives were able to out vote the representatives from the three other councils combined.

Experience has shown that the very large majority of regional decisions in Wellington are reached by consensus. Effective compromises are nearly always reached in the best interests of the regions. Nevertheless, the following voting interests are recommended for the Greater Wellington Regional Committee.

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. Wellington Council – three votes for each member present

. Kapiti Coast Council – one vote for each member present

. Hutt Valley Council – two votes for each member present

. Wairarapa Council – one vote for each member present

The Civil Defence Emergency Management Group would continue to operate as at present, but with revised membership in line with the new council structure.

The empowered Greater Wellington Regional Committee will enable decisions to be made to optimise regional outcomes without:

. the community disenchantment that would arise from a supercity;

. the conflict that arises between regional and local councils in Wellington and throughout the country as a result of regular misalignment of political interests and agendas; and

. the circular decision-making processes that sometimes occur when all significant decisions need to be referred back to local councils for ratification.

Council-controlled organisations There are currently some 23 CCOs in the Wellington and Wairarapa regions. This proposal recommends changes to these organisations as highlighted below, but keeps the same number of CCOs as present.

Most of the CCOs would continue operating as before, but under different ownership and funding arrangements. Ownership of 13 CCOs would be transferred to one of the new unitary councils. Ten CCOs would be owned jointly by the unitary councils.

The jointly held CCOs would have ownership interests apportioned equitably between the councils. In some cases this would involve issuing two classes of shares: Class A that determined voting interests and control; and Class B that determined financial interests. Contractual arrangements would specify service delivery and funding requirements for each CCO.

This is a simple and effective model and would operate in a similar manner to that which already exists for the water services company, Capacity.

Monitoring and oversight of all CCOs is important. This proposal recommends that this function is undertaken by a regional shared service. This is to ensure a regular, efficient and consistently strong review process is undertaken to protect both community and commercial interests, and to ensure effective service delivery across the regions.

It is anticipated that funding requirements of the CCOs would be met in much the same apportionment as occurs at present. For example, ratepayer funding for regional transport requirements would remain on a similar basis. The new councils would need to establish revenue and financing policies according to legislative requirements, giving due consideration to issues of equity and affordability.

Within this context, there is ample opportunity to consider regional affordability issues. These issues have been repeatedly publicised as a barrier to anything other than a supercity option, particularly as far as Wairarapa is concerned. Yet the structure proposed under the four unitary model provides ample opportunity to address affordability issues, for example, through the funding arrangements for jointly held CCOs.

A full listing of the CCOs is given in Appendix 1. The rest of this Section provides further discussion on selected CCOs where more extensive change is proposed.

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We recognise that complex issues can arise during the restructure of corporate entity ownership. Therefore we expect a comprehensive review would be undertaken covering matters such as legal, tax and contractual issues prior to finalising the arrangements for CCOs under this model or any other proposal. Such a review could include consideration of the benefits of establishing a holding company for several or all of the jointly held CCOs to simplify relationships with the councils.

Wellington Water An independent evaluation of water services in the Wellington region has identified significant savings are possible from integration of water delivery, of the order of at least $5m per annum.15 However, progress has not been possible due to the GWRC rejecting a CCO model for water service delivery and also insisting on securing 100% control of any joint operation, should one proceed.

This proposal overcomes that barrier. would be a restructured Capacity, delivering a fully horizontally and vertically integrated operation covering water supply, wastewater, storm water and flood protection services under contract to the Wellington and Hutt Valley shareholding councils.

It is worth noting that decisions around service levels would remain with the two unitary councils as Wellington Water would deliver to agreed outcomes under contractual arrangements.

This proposal would leave the new Wairarapa and Kapiti Coast councils managing their own water services directly. This arrangement would work efficiently given the clear physical separation of their water networks from the integrated Wellington and Hutt Valley network.

A fully integrated operation across the Wellington and Wairarapa regions is a possibility. A barrier to moving directly to this model is the potentially strong resistance from the Wairarapa and Kapiti Coast communities. Our preference, therefore, is for the Wellington Water model to be established for Wellington and Hutt Valley initially. The door would be left open for Kapiti and Wairarapa to choose to become shareholders and/or customers at a later date if this makes sense at the time.

Asset ownership need not transfer to Wellington Water but could remain with individual councils. The exception would be the bulk water assets currently held by GWRC. These assets would transfer directly to Wellington Water with a corresponding shareholding adjustment. Bulk water costs would continue to be allocated based on an equitable formula.

Greater Wellington Transport The Wellington and Wairarapa regions’ transport networks are clearly connected. While integration benefits have not been studied as extensively as for water services, we have no doubt that they will arise. Like water services, the benefits are probably more from expanding scope rather than scale.

Our proposal is that a new company, Greater Wellington Transport, be formed for this purpose. 16 This structure is compatible with the principles outlined by the New Zealand Transport Authority (NZTA) in their letter to TDB (attached as Annex 5 of the TDB report).

The model for this company would be similar to that of Wellington Water and Auckland Transport. The main differences from Wellington Water would be that it would cover the entire Wellington and Wairarapa regions from day one and, given the central government’s key role in planning oversight, prioritisation and funding of regional roading, the joint venture would include the central government (as is the case for Auckland Transport). This is desirable because, unlike the water networks, transport networks are physically interconnected across the two regions.

15 PricewaterhouseCoopers (2012), Delivering Water Services to the Wellington Region: Report to Capacity Infrastructure Services Limited. 16 Greater Wellington Transport is not to be confused with the company recently disestablished by GWRC that also had this name.

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The public transport assets held by GWRC (either directly or via a number of current and former CCOs) would be transferred to Greater Wellington Transport. This includes the shareholding in Greater Wellington Rail.

It is worth noting that decisions around service levels would remain with the unitary councils as Greater Wellington Transport would deliver to agreed outcomes under contractual arrangements.

The Greater Wellington Regional Committee would perform the key governance roles for the regions in regard to transport, such as adopting key regional transport planning documents. The Committee would be supported by expert transport-related advice from the Greater Wellington Transport Board and staff, and by general strategic and operational advice from the support office based in Greater Wellington Shared Services. This will provide a helpful tension between transport-related objectives and the overall plans and priorities of the regions as related in the Greater Wellington Regional Strategy and Spatial Plan.

Grow Wellington The councils of the region are already committed to a regional approach to economic development. The role of Grow Wellington in this regard has recently been confirmed and the associated Wellington Regional Strategy refreshed. The Wellington Regional Strategy and Grow Wellington receive region- wide ratepayer support of $5m per annum.

Each council in the Wellington and Wairarapa regions has a direct stake in Grow Wellington, as is proposed in this application through shareholding and funding arrangements.

Currently Positively Wellington Tourism is funded and owned by Wellington City Council. The organisation produces regional benefits and we recommend that it become regionally owned and funded in the same manner as Grow Wellington.

Greater Wellington Shared Services Greater Wellington Shared Services would be a new company established to proactively deliver shared services to the four unitary councils and other participating organisations on a case-by-case basis. A strategy for shared services would be adopted by the Greater Wellington Regional Committee and Greater Wellington Shared Services would be responsible for its delivery. As with many current regional activities, the work of Greater Wellington Shared Services would be supported by the chief executives and senior officers of the Wellington and Wairarapa regions.

CentrePort We propose the GWRC’s shareholding interest in CentrePort (via Port Investments) be allocated to the four unitary councils based on their estimated respective populations.

Wellington Regional Stadium Trust Shareholding interests and loan funding in Wellington Regional Stadium Trust would be transferred to the Wellington Council. This is due to the physical location and for simplicity purposes.

Investment in We propose that WCC’s shareholding interest in the Wellington Airport continues to be held by the Wellington Council. While the airport itself is an asset of significant importance to the Wellington and Wairarapa regions, WCC’s shareholding interest is a minority one (34%) and more in the nature of a portfolio investment than one which carries control over corporate strategy. Nevertheless, when matters of regional significance are considered, such as a potential runway extension or attraction of direct international flights, the Greater Wellington Regional Committee and Grow Wellington have a potential role to play. There may be instances when a subsidy or other form of investment is warranted due to benefits extending beyond the commercial interests of Wellington Airport Limited.

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Property services Hutt City Council currently has a property company providing services covering facilities management, property development and social housing ownership. This proposal recommends retaining this company and its existing scope of service provision.

However, there is a potential opportunity for a region-wide property services company or business unit to support all four unitary councils. We recommend that this be one of the first areas investigated by Greater Wellington Shared Services by preparing a business case for consideration by the new councils and their communities.

Management of water areas and catchments Under the proposed four unitary authorities option, the arrangements for the management of catchments and watersheds for RMA purposes would be as follows.

Wairarapa Council would have responsibility east of the main divide including for the following rivers and streams.

. lower Wairarapa Valley

. Tauherenikau River

. upper

. Waiohine River

. Waingawa River

. Waipoua River

. other Wairarapa rivers and streams.

To the west of the Rimutaka Ranges, the Hutt Valley Council would have responsibility for the Hutt River catchment system, rivers and streams.

The Wellington Council would have responsibility for other Wellington rivers and streams. Currently HCC, PCC and WCC have responsibility for parts of rivers and streams that drain into . Amalgamation of PCC and WCC will rationalise this overlap in respect of rivers and streams that drain into the southern end of Porirua Harbour. However, the situation for rivers and streams draining into the Pauatahanui Inlet would remain as at present requiring cooperation between Wellington Council and Hutt Valley Council, as currently happens between HCC, PCC and GWRC.

In the Kapiti area, the proposed Kapiti Council would have responsibility for:

. Otaki River

.

. other rivers and streams.

This proposed scheme of arrangement enables catchment-based flooding and water management to be dealt with effectively by the respective unitary authorities with limited need for agreements between the neighbouring authorities, and then only in respect of smaller waterways. There are streams that rise within the Belmont Regional Park and would cross the boundary between Hutt Valley Council and Wellington Council before draining into the Porirua Harbour. There would need to be cooperation between the unitary authorities in respect of these waterways, as at present. Each of the proposed unitary authorities would have the capability and capacity to plan and manage water issues within their respective boundaries. Since each of the major catchments and floodways within the Wellington and Wairarapa regions are technically different, this calls for a level of specialisation that is appropriate to

31 the local setting. Thus the proposed boundaries are consistent with logical water management areas as well as natural flood zones and the natural physical boundary created by the Rimutaka Ranges.

Coastal areas Porirua Harbour is entirely within the proposed Wellington unitary authority boundary. Responsibility for environmental management of coastal areas enclosed by Wellington Harbour would sit with Wellington Council and Hutt Valley Council in respect of the coastal areas adjacent to their own territories.

Maritime transport responsibilities It is proposed that the harbour and water navigation responsibilities (under the Maritime Transport Act 1994) of the GWRC in respect of Wellington and Porirua harbours and their respective approaches be transferred to the new Wellington Council.

It is noted that wharves and identifying lights in Wellington Harbour are operated and maintained by either CentrePort or the local council of the area in which the wharf is located. This arrangement would be unaffected by the proposal to form unitary authorities.

Commercial berths operated by CentrePort are located at Thorndon Container Wharf, Aotea Quay, Rail Terminal and Seaview tanker terminal.

Point Howard Wharf, adjacent to Seaview, and Eastbourne Wharf are no longer in commercial use and are administered by HUTT CITY COUNCIL, as is the Wharf which is in regular use by the harbour ferry, and the seldom used Petone Wharf.

Catchment-based flooding and water management issues are discussed further in Section 7.3.4 of this application.

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6. LEVELS OF COMMUNITY SUPPORT

6.1 RELEVANT REQUIREMENTS OF THE LOCAL GOVERNMENT ACT 2002 This Section of our application addresses the following requirements of the Local Government Act 2002:

Schedule 3, Clause 8(1) requirements:

“If the Commission decides to assess a reorganisation application, the Commission must first be satisfied that there is demonstrable community support in the district or each affected territorial authority for local government reorganisation in the affected area.”

Schedule 3, Clause 5(1) requirements:

“(f) Information that demonstrates that the application has community support in the district of each affected territorial authority.”

In this Section we have summarised key evidence in relation to community support for this proposal and key alternative options. The emphasis in this Section is not on anecdotal evidence, or listing individuals or groups who support any proposal, as this is prone to selective manipulation. Rather we have summarised the results of surveys and submissions to provide the Commission with firm evidence to support their decision-making.

Refer to Appendix 5 for a summary of the surveys undertaken.

6.2 INITIAL REGION-WIDE SURVEY – COLMAR BRUNTON, JUNE 2012 The first important demonstration of community support was the region-wide Colmar Brunton survey. Colmar Brunton undertook a telephone survey of 3,300 adults in the Wellington and Wairarapa regions. The sample was designed so that it included 400 respondents in each district and 500 in Kapiti.

The four options tested were:

(i) no boundary change, but more shared services;

(ii) a three unitary council model;

(iii) a two unitary council model; and

(iv) a two-tier supercity model.

Under options two, three and four the GWRC would be abolished.

Some key conclusions can be drawn from the results:

. 58% of respondents wanted no changes to current local council boundaries;

. only 31% of respondents supported council mergers of any type;

. 12% preferred option two (three councils for the regions);

. 9% preferred option three (two councils for the regions);

. 9% preferred option four (one council for the greater region);

. 2% of respondents preferred another option of their own; and

. 10% of respondents were undecided.

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Community support for change was shown to be even lower in the Hutt Valley:

. 61% of respondents in Lower Hutt wanted no change to current local council boundaries;

. 71% of respondents in Upper Hutt wanted no change to current local council boundaries;

. only 30% of respondents in Lower Hutt supported council mergers of any type; and

. only 21% of respondents in Upper Hutt supported council mergers of any type.

Community support for change was shown to be stronger in the Wairarapa, particularly in regard to a united Wairarapa council. When asked to review three change options:

. 28% preferred more shared services (without local council boundary changes);

. 60% preferred a single Wairarapa council;

. 8% preferred a single authority for the greater Wellington region;

. 3% said “other/something else”; and

. 1% said “don’t know”.

6.3 SUBMISSIONS MADE DURING INITIAL COUNCIL CONSULTATIONS

6.3.1 Wellington City Council Consultations – May 2012 A total of 1,209 submissions were received by WCC during its initial consultations. Submitters were invited to state whether they wanted the current system to change or not. Of the 1,209 submitters, 1,092 (90%) responded to this question. Of those that responded, 23% (252) stated “no change” and 77% (840) stated “change”.

Submitters were asked for their views on four governance options for the greater Wellington region:

. Option 1: retain existing councils but with shared services;

. Option 2: merge all existing councils into three unitary councils;

. Option 3: merge all existing councils into two councils – a Wellington council and a Wairarapa council; and

. Option 4: merge all councils into one council for the greater region.

Of the approximately 1,000 submitters who voted for a change option:

. 252 voted for option 1 (note that this is not the same 252 that stated “no change”, although there was some overlap of about 60 submitters);

. 147 voted for option 2;

. 296 voted for option 3;

. 234 voted for option 4; and

. 68 chose “another option”.

Seven hundred and forty-five submitters chose options 2, 3, 4 or another option, meaning that around 60% of all 1,209 submissions voted for these options and around 40% did not.

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6.3.2 Upper Hutt City Council Consultations – June/July 2012 A total of 1,409 submissions were received by UHCC during its initial consultations. Submissions showed that the public view was strongly in favour of retaining the status quo.

Submitters were invited to state whether they wanted the current system to change or not; of the 1,409 submitters, 1,383 (98.2%) responded to this question. Of those that responded, 75.8% (1,049) chose “remain the same” and 24.2% (334) chose “change”.

Submitters were then asked that if change was inevitable, to select an option for change (or describe their own option); of the 1,409 submitters, 1,397 (99.1%) responded to this question.

. 962 (68.8%) chose Option 1 – shared services (of the 962 responses favouring this option, 835 selected “remain the same” and 127 selected “change”);

. 277 (19.8%) chose Option 2 – three unitary authorities;

. 50 (3.5%) chose Option 3 – two unitary authorities;

. 33 (2.3%) chose Option 4 – the supercity option;

. 53 (3.7%) chose “another option”;

. 22 (1.5%) selected “do not know”; and

. 12 (0.8%) respondents did not select an option (six of the 12 chose “remain the same”).

6.3.3 Hutt City Council Consultations – September/October 2012 A total of 973 submissions were received by HUTT CITY COUNCIL during its initial consultations. The options surveyed were:

. status quo with more shared services;

. three separate unitary authorities – Wairarapa, Hutt Valley and rest of Wellington;

. a single unitary authority for the greater Wellington region; and

. a different idea.

Of the 973 submissions, 45% preferred the modified status quo; 30% preferred three unitary authorities; 3% preferred a supercity; and 2.7% had an idea of their own to put forward.

6.3.4 Hutt City Council and Upper Hutt City Council Survey – Colmar Brunton, June 2013 Colmar Brunton undertook a telephone survey of 1,002 adults in the Hutt Valley (501 in Lower Hutt and 501 in Upper Hutt) in June this year.

The three options tested in the survey were:

(i) the enhanced status quo;

(ii) a Hutt Valley unitary authority; and

(iii) a supercity.

The key conclusions that can be drawn from the results are:

. 50% preferred the enhanced status quo;

. 28% preferred a Hutt Valley unitary council; and

. 18% preferred a supercity.

Most people felt strongly about their preferred option, but strength of feeling was strongest among those who supported the status quo (87% felt very strongly or strongly about their preferred option).

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If the status quo was not an option, 76% of those who supported the status quo would prefer a united Hutt Valley (option two). Seventy-one per cent of those who supported a united Hutt Valley would prefer the status quo if a united Hutt Valley was not an option.

6.4 OTHER SURVEYS CONDUCTED IN THE REGIONS This Section summarises other surveys that have been commissioned by local councils within the Wellington and Wairarapa regions.

6.4.1 Wellington City Council – Colmar Brunton survey – April 2013 Colmar Brunton undertook an online survey of 503 Wellington City residents for the Wellington City Council in April 2013.

The three options tested were:

(i) the status quo;

(ii) a two-tier model; and

(iii) a single-tier model

Residents did not have the opportunity to vote for the multiple unitary authorities option.

The key conclusions from the survey were:

. 52% of residents said they either strongly agreed or agreed that the current structure of local government in Wellington should change. These residents hold this view because they thought there are currently too many councils and an amalgamated council could offer financial efficiencies. Only 15% disagreed that the structure needed to change and 30% were neutral;

. 43% of residents preferred the single-tier model, 37% preferred the two-tier model and 18% preferred the status quo. Those residents who preferred the single-tier model tended to hold their preference more strongly (25%) than residents who preferred the two-tier model (5%);

. if change was inevitable (in other words, if residents had to choose an option apart from the status quo), 50% of residents said they would prefer the single-tier model, 46% would prefer the two-tier model and 4% would prefer another model entirely;

. belief in the importance of economic development and key infrastructure drove the desire for change, whereas belief that “local voice” is important was strongly associated with a desire for the status quo; and

. almost one half (49%) of Wellington residents said they thought the Wairarapa should be excluded from a reformed local government structure (only 29% said they thought it should be included and 22% were unsure).

6.4.2 Kapiti District Council – SIL Research survey – May 2013 SIL Research undertook a telephone survey of 1,500 Kapiti district residents in May this year.

The three options tested were:

(i) the status quo;

(ii) a two-tier model; and

(iii) a single-tier model.

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The key conclusions from the survey were:

. status quo versus “single city” option: across all respondents, 54.7% preferred the status quo option and 42.9% preferred the single city option. A further 2.5% stated “other”, with these respondents undecided at the time;

. single city tier preferences and other options: of those respondents who indicated that they would prefer a move to a single city option, 51% stated that they would prefer a two-tier council and 44.5% indicated preference for a single-tier council. A further 4.5% stated “other”, the majority of which indicated that they were undecided at that time;

. other council structure options: across all respondents surveyed, 78.9% indicated that there was not another option they preferred and 21.1% stated that there was. When probed for an explanation, almost half of those stating “yes” to an “other” option could not offer one; and

. importance of community boards: across all respondents, almost two-thirds (65.4%) stated that community boards are “very or somewhat important”.

6.4.3 Porirua City Council – Versus Research survey – June 2013 Versus Research undertook a telephone and online survey of 501 Porirua district residents in June this year.

The three options tested were:

(i) the status quo;

(ii) a two-tier model; and

(iii) a single-tier model.

The key conclusions from the survey were:

. change in local government structure for greater Wellington region and Porirua area:

o 51% supported change (supportive (38%) or strongly supportive (13%));

o 24% were neutral; and

o 19% opposed change (opposed (12%) or strongly opposed (7%)); . preferred option:

o 41% supported two-tier;

o 31% supported single-tier;

o 22% supported status quo; and

o 7% responded “don’t know”; . preferred option if local government had to change:

o 63% chose two-tier;

o 15% chose single-tier; and

o 22% responded “don’t know”. . importance of a locally elected body to make decisions on Porirua community issues:

o 87% supported this statement.

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6.5 SUMMARY OF HUTT VALLEY COMMUNITY CONCERNS Based on the submissions Hutt City has received and the surveys it has commissioned, Hutt City concludes there is widespread concern amongst Hutt Valley residents arising from proposals to create a supercity. Residents are concerned that they will lose control and influence over matters of local importance if there is a supercity. They are also concerned that their debt burden and rates will increase under a supercity model:

. they know Auckland rates continue to increase despite the talk of savings from the supercity; and

. they know their current councils have been frugal, have delivered modest rates increases and minimised borrowings over a sustained period.

6.6 LETTERS OF SUPPORT Hutt City Council has received a number of letters in support of this application from important groups and organisations in the community. We respect the opinions of the people and groups within Hutt City and the letters of support we attach to this application are just a small sample of the level of support in the Hutt City community for this application.

Attached to this application are letters of support from:

. Friends of Belmont Regional Park (Appendix 14)

. Grey Power Hutt City (Appendix 15)

. Grey Power Wainuiomata (Appendix 16)

. Hutt Valley Chamber of Commerce (Appendix 17)

. Te Rira Puketapu and a meeting of the seven marae of Lower Hutt (Appendix 18)

. Normandale Residents Association (Appendix 19)

. Petone Working Men’s Club (Appendix 20)

. Masterton District Council (Appendix 21)

. Youth Infusion (Appendix 22)

. Maungaraki Communication Association (Appendix 23)

6.7 CONCLUSIONS Residents of the Hutt Valley have been absolutely clear: they do not want a supercity. They have been told repeatedly by the government that one will not be forced on them. This message has come directly from members of parliament, government ministers and the Prime Minister.

Residents in other districts in the Wellington and Wairarapa regions have similar views. Overall, the enhanced status quo is favoured, as indicated by the surveys conducted by six of the eight councils.

Most of the councils in the greater region are acting in line with the wishes of their communities and support the status quo or the multi-unitary model.

Specifically, the three Wairarapa councils have supported a separate unitary authority for their district after extensive analysis and consultation. KCDC is supporting the status quo, in line with the views of its community. Upper Hutt City Council and Hutt City council also remain firm in their commitment to support the wishes of Hutt Valley people. This proposal by Hutt City Council is part of that commitment.

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To restate: our first preference is for no boundary changes in the Wellington region, but this application for four unitary authorities is presented as a sound, viable option if further change is to occur. Having four unitary authorities will retain as much local democracy as possible while still delivering significant regional efficiencies. It is the only substantial option for change that may achieve more than 50% support in a poll of residents. For this reason, and many others explained further in this document, we present it for serious consideration by the LGC.

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7. ANALYSIS OF OPTIONS

7.1 RELEVANT REQUIREMENTS OF THE LOCAL GOVERNMENT ACT 2002 This Section of our application addresses the following requirements of the Act: Schedule 3, Clause 11 requirements – Commission to identify reasonably practical options

“(5) The Commission must be satisfied that any local authority proposed to be established or changed under a reasonably practical option will –

(a) have the resources necessary to enable it to carry out effectively its responsibilities, duties, and powers; and

(b) have a district or region that is appropriate for the efficient performance of its role as specified in Section 11; and

(c) contain within its district or region 1 or more communities of interest, but only if they are distinct communities of interest; and

(d) in the case of a regional council or unitary authority, enable catchment- based flooding and water management issues to be dealt with effectively by the regional council or unitary authority.”

Schedule 3, Clause 12 requirements – Commission to determine preferred option

“The Commission must be satisfied that its preferred option -

(a) will best promote, in the affected area, the purpose of local government as specified in Section 10; and

(b) will facilitate, in the affected area, improved economic performance, which may (without limitation) include:

(i) efficiencies and cost savings; and

(ii) productivity improvements, both within the local authorities and for businesses and households that interact with those local authorities; and

(iii) simplified planning processes within and across the affected area through, for example, the integration of statutory plans or a reduction in the number of plans to be prepared or approved by a local authority.”

Schedule 3, Clause 5(1):

“(e) a description of the potential improvements that would result from the proposed changes and how they would promote good local government as described in clause 12.”

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7.2 THE GOVERNANCE OPTIONS Three main governance options have been assessed in preparing this alternative application:

Option 1, The Enhanced Status Quo = no changes to local government boundaries in the Wellington region, the establishment of a Wairarapa unitary authority and increased emphasis on shared services;

Option 2, Four Unitary Authorities = four unitary authorities as outlined in Section 5 of this application;

Option 3, A supercity = a single unitary authority of either one or two tiers and either including or excluding Wairarapa.

Our analysis of these three options has been made in three steps to align with the Local Government Act:

. firstly (in Section 6 above), we assessed the level of community support for the options (as noted above, the Commission must first be satisfied that there is demonstrable community support before it decides to assess a reorganisation application);

. next (in Section 7.3 below), we assess the options in terms of the Commission’s criteria for identifying the reasonably practicable options; and

. finally (in Sections 7.4 and 7.5), we assess the practical options in terms of the Commission’s criteria for determining its preferred option.

7.3 THE REASONABLE PRACTICAL OPTIONS The Commission is required to identify the reasonably practical options having regard to four key criteria. These criteria are the extent to which the governance options result in structures that:

. have the resources necessary to enable it to carry out effectively its responsibilities, duties and powers;

. have a district or region that is appropriate for the efficient performance of its role;

. contain within its district or region one or more communities of interest, but only if they are distinct communities of interest; and

. enable catchment-based flooding and water management issues to be dealt with effectively (for regional councils or unitary authorities only).

The governance options are assessed in terms of these four criteria below.

7.3.1 Necessary resources It is important that local councils are of sufficient size to take on the scope and depth of work demanded of them and to remain financially viable into the future. The Commission wants to ensure that local councils can carry out their responsibilities, duties and powers. One of the most important factors in this criterion is whether a council is large enough to attract the necessary specialist skills required to carry out the more complex services it provides.

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The three options are assessed in terms of their ability to ensure the councils have the necessary resources in the table below.

ENHANCED STATUS QUO FOUR UNITARY AUTHORITIES A SUPERCITY

Smaller councils sometimes The four councils would be A Wellington supercity would have difficulty attracting among the largest councils in the be a very large organisation specialist skills. However, the country and would be among the and should have no difficulty proposals for region-wide largest employers in their attracting specialist skills. entities for transport and water respective districts. services address much of this concern.

Smaller councils can have more They should all have no difficulty difficulty supporting and funding attracting specialist skills and major projects. resources to fulfil their responsibilities.

Shared services can alleviate these challenges to some extent

The ability to meet this criterion will mostly improve with council size: the four unitary authorities option to perform less favourably than the supercity and the enhanced status quo to be the least preferred option on this criterion. With the largest budget and the most resources available, a supercity is likely to be best at attracting and retaining specialist expertise and taking on large-scale projects. Nevertheless, we believe all the councils under an enhanced status quo, which includes an amalgamated Wairarapa and some shared services, to be of sufficient size to carry out their responsibilities.

The review of the New Zealand evidence undertaken by TDB and NZIER (attached as appendices 7 and 10 respectively) found economies of scale for councils with populations up to around 50,000 but beyond that scale there is little evidence of further scale efficiencies for councils as a whole. All councils under the enhanced status quo (with the Wairarapa councils amalgamating) are close to reaching or exceed the 50,000 population-base threshold.

With regard to the four unitary authorities option, the Morrison Low report (attached as Appendix 12) concluded that the Wellington, Hutt and Kapiti unitary authorities would have the financial resources necessary to enable them to carry out the responsibilities, duties and powers of a unitary authority effectively, while the Wairarapa unitary would have a funding deficit. The three Wairarapa district councils have determined that there would be substantive benefits for the communities of the Wairarapa resulting from the formation of a Wairarapa unitary council. They are also of the view that the new Wairarapa unitary council would be in a position to make decisions about the appropriate types and levels of service for the Wairarapa, and to put in place cost structures to allow the Wairarapa Council to become financially sustainable.

7.3.2 Efficient performance As well as estimating the relationship between scale and cost (the “cost-curves”) for councils’ activities as a whole, TDB modelled cost-curves for each of the councils’ main functions. Only five council functions showed signs of reducing costs with increased size: these functions were generally the large-scale, complex, capital-intensive services like roading and water. It is for these functions that cost savings can be expected through amalgamation.

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The two figures below show the cost-curves modelled by TDB for roading and water supply. The two curves indicate most savings are to be found in the amalgamation of councils that serve up to around 50,000 people. They begin to flatten out at higher levels of population served, indicating that the benefits of amalgamation become less significant as council populations become larger.

Water supply Roading

TDB estimated possible savings from council amalgamations based on the modelled cost-curves. The following scenarios were examined:

. Wellington City Council and Porirua City Council merge;

. Hutt City Council and Upper Hutt City Council merge;

. Carterton District Council, Masterton District Council and South Wairarapa District Council merge; and

. a supercity is formed where all eight local councils within the Wellington and Wairarapa regions are combined.17

Based on the populations served by the current territorial authorities in the Wellington and Wairarapa regions, TDB estimated the efficiency gains that could be expected from the mergers based on the cost savings that could be expected from amalgamations of average-performing councils of the same size as those in the Wellington and Wairarapa regions. TDB’s estimates are detailed in the table below.

Potential synergy benefits from council amalgamations

WHOLE WELLINGTON CITY HUTT CITY AND CARTERTON, MASTERTON REGION AND PORIRUA UPPER HUTT AND SOUTH WAIRARAPA

Population 492,526 255,700 145,320 40,346

Overall ‘savings’ 3% 0% 4% 14%

TDB’s analysis indicates population is not a major driver of a council’s per capita costs. Although some cost savings are expected, a variety of other factors will impact per capita costs to a greater extent than population (as described in Section 6.4 of TDB’s report in Appendix 8). The cost-saving

17 Data was available for territorial councils only.

43 estimates could change if a richer analysis was undertaken. However, such a task would be very difficult as many of the influences cannot be measured or quantified. The above estimates do not account for the time delays and transition costs associated with council amalgamations.

The table below summarises our assessment of the three options in terms of the Act’s criteria of improving council efficiency.

ENHANCED STATUS QUO FOUR UNITARY AUTHORITIES A SUPERCITY

This option targets areas where This model includes the savings TDB estimate that a supercity efficiency gains are most likely. estimated to result from could result in savings of around amalgamating the Wairarapa. 3%.

Amalgamation of the Wairarapa It is also estimated that there However, these savings are councils could result in a cost could be some cost savings as largely driven by the savings saving of around 14%. a result of a Hutt City and Upper that could result from Hutt amalgamation in the order amalgamating the councils in of 4%. the Wairarapa and in the Hutt Valley.

Amalgamation of appropriate There do not appear to be any There is some indication in the services (land transport and savings associated with a international literature that very water services) rather than Wellington City-Porirua City large councils become less entire councils will result in the amalgamation. efficient as the inefficiencies most accessible efficiency gains associated with bureaucracies being realised without incurring negatively impact cost- the cost of full-scale council effectiveness. amalgamation.

Consideration needs to be given There will be large to the significant transition costs amalgamation costs if a associated with the formation of supercity is formed and these four unitary authorities in the costs need to be taken into regions. account.

Large savings can be expected from amalgamating councils serving very small populations, such as in the Wairarapa, and from merging capital-intensive network operations like roading and water. However, in the case of the other functions that councils perform, there is little or no evidence that efficiency gains are likely to materialise as a result of amalgamation. For this reason, on this criterion we favour the enhanced status quo that takes advantage of the most accessible efficiency gains while avoiding the amalgamation costs of complete reorganisation as our most preferred option. If further change is required, we favour four unitary authorities over a supercity as a supercity would involve large transition costs on its set-up and inefficiencies could well creep in to such a large organisation over time.

The TDB report attached in Appendix 8 provides further details on the efficiency gains likely under the different alternatives.

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7.3.3 Communities of interest The Act requires that communities of interest are aligned with the local councils that represent them. Specifically, the Commission must be satisfied that any newly amalgamated local authority “contain[s] within its district or region 1 or more communities of interest, but only if they are distinct communities of interest”.

The table below summarises our assessment of the three options in terms of the Act’s criterion of aligning council structures with communities of interest.

ENHANCED STATUS QUO FOUR UNITARY AUTHORITIES A SUPERCITY

This option provides a good This model results in improved A supercity would amalgamate alignment between local alignment with communities of communities of interest that government boundaries and interest in the following have clearly distinct and communities of interest. respects: separate characteristics.

. the community of the Hutt Valley; . the community of the Wairarapa; and . removing the unclear boundary between WCC and PCC.

Arguably there is some scope There would be perceived Many communities would feel for amalgamation without disadvantages due to significantly less represented by undermining community amalgamating: a single unitary authority in the representation. regions. . the separate communities of Upper Hutt and Hutt City. . the separate communities within the Wairarapa.

The boundaries of both local authorities and communities of interest are somewhat arbitrary. However, an enhanced status quo and the four unitary authorities options seem to coincide reasonably well with perceived communities of interest in the Wellington and Wairarapa regions. A supercity will represent a large area and within it a variety of communities of interest. It is difficult for different preferences across the regions to be met by a single organisation and therefore hard to avoid a decline in local democracy as a result. The supercity performs least favourably on this criterion.

7.3.4 Effective catchment-based flooding and water management The Local Government Act requires the LGC to have regard to the extent to which applications for unitary authorities to be formed is consistent with effective catchment-based flooding and water management.

The recognised water management areas within the Wellington and Wairarapa regions are:

. Wairarapa,

. Hutt,

. Kapiti, and

. Other.

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The Wairarapa area, which is in the east of the Rimutaka Ranges, is distinctly separate from the catchments to the west of that divide. The easterly catchments and their associate rivers and streams lie entirely within the boundary of the proposed Wairarapa unitary authority.

Within the Western zone, the Hutt River and its tributaries form the major floodway in its lowest reaches. The Waiwhetu Stream and other streams and rivers fall within the boundaries of the proposed Hutt Valley Council. Management of that catchment would rest entirely within the boundaries of the proposed Hutt Valley Council.

In the Kapiti area, the proposed Kapiti Coast Council would have responsibility for two major rivers, the Otaki and Waikanae, as well as the other streams within its boundaries.

The principal focus for management of other streams and rivers are those that drain into the Porirua Harbour. Some of these arise inside the proposed Hutt Valley unitary authority boundary and in their final stages cross the boundary into the proposed Wellington unitary authority. These will require cooperation between the respective authorities and their management. But for this anomaly, there is a close alignment between the proposed unitary authorities’ boundaries and catchments within the region.

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The table below summarises our assessment of the three governance options in terms of the Act’s criterion of ensuring effective catchment-based flooding and water management.

ENHANCED STATUS QUO FOUR UNITARY AUTHORITIES A SUPERCITY

There are two councils involved This option provides the best The supercity will be in each catchment area, except alignment between councils and responsible for multiple for the Hutt Valley where there catchments and floodways. catchments including potentially are three councils and the catchments on both sides of the Wairarapa where there a four Rimutakas. councils.

There will only be one council The supercity would have responsible for each water greater ability to retain specialist management area (i.e., water management staff in- Wairarapa, Hutt Valley, house. Wellington (including Porirua) and Kapiti (Otaki and Waikanae Rivers).

Hutt City and Wellington City unitary authorities would have a seaward boundary within the confines of the Wellington Harbour. This poses no practical issues for effective management of the coastal areas and water-to-water discharges, although it may seem to be awkward from a presentational perspective.

The supercity would be responsible for multiple catchments including potentially catchments on both sides of the Rimutaka Ranges.

The four unitary authorities option provides the best alignment between councils and catchments as there will only be a single council responsible for each of the major catchments and floodway systems. In contrast, a single unitary authority would be responsible for multiple catchments across the Wellington and Wairarapa regions. The supercity would have greater ability to retain specialist water management expertise in-house but the four unitary authorities could readily contract for such expertise in the same way that similar-scale regional councils do in other parts of the country.

As noted above, we propose that under the enhanced status quo and four unitary authorities options that responsibility for managing the delivery of “three waters” services where there is an integrated water network – i.e., Wellington and Hutt Valley – rest with a single entity, Wellington Water. This would result in considerable efficiency gains for the area.

It is also noted that under the proposal to establish four unitary authorities, the Hutt Valley Council and Wellington Council would have a seaward boundary within the confines of the Wellington Harbour. Each unitary authority would have Resource Management Act responsibility for coastal management from their mutual boundary near and for water-to-water discharges. This poses no practical

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issues for effective management of the coastal areas and water-to-water discharges, although its apparent awkwardness is only presentational.

There are two places within enclosed coastal areas where boundaries exist between councils exercising the responsibilities of regional councils:

. in the ecologically sensitive Waimea Inlet in Tasman Bay lies the boundary between the Council and the Nelson City Council. Both councils cooperate together, and with the Department of Conservation in the Waimea Inlet Management Strategy; and

. in the Firth of Thames is the boundary between the Regional Council and the Auckland Council. This boundary was established in 2010 as a result of the formation of Auckland Council.

As a practical matter, given the Lambton wharves contain the commercial infrastructure that generates most commercial traffic within the harbour and in its approaches, it is appropriate that responsibilities under the Maritime Transport Act 1994 rest entirely with the proposed Wellington Council.

Our investigation has shown no legal impediment to the environmental management of the coastal area being organised in this way. Indeed it seems consistent with the general scheme of the Local Government Act.

7.4 OVERALL ASSESSMENT OF THE PRACTICAL OPTIONS Overall, in terms of the legislative criteria for assessing the practicality of the options:

. all three options result in councils with the resources necessary to enable them to carry out effectively their responsibilities, duties and powers (although some changes in efficiency, expenditure or rates would be required for the Wairarapa unitary authority);

. the enhanced status quo is the preferred option in terms of efficiency as it achieves the efficiencies in the most obvious areas without incurring the same transition costs as the other options. Four unitary authorities would also result in efficiency gains with fewer transition costs than a supercity and is the second-preferred option in terms of efficiency;

. the enhanced status quo is the preferred option in terms of aligning communities of interest with the four unitary authorities the second-preferred option. The supercity scores particularly poorly on this criterion as it amalgamates communities of interest that have clearly distinct and separate characteristics; and

. the four unitary authorities option would enable catchment-based flooding and water management issues to be dealt with most effectively as it aligns council structures with the natural water catchments in the Wellington and Wairarapa regions.

Overall, therefore, the four unitary authorities option as described in this alternative application more than meets the legislative criteria for being a practicable option.

7.5 THE PREFERRED OPTION The Commission is required to identify its preferred option having regard to the criteria in the Act. These criteria are the extent to which the governance options:

. will best promote, in the affected area, the purpose of local government. That is:

“(a) to enable democratic local decision-making and action by, and on behalf of, communities”; and

“(b) to meet the current and future needs of communities for good-quality local infrastructure, local public services and performance of regulatory functions in a way that is most cost-effective for households and businesses”

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. “will facilitate, in the affected area, improved economic performance, which may (without limitation) include:

o efficiencies and cost savings;

o productivity improvements, both within the local authorities and for businesses and households that interact with those local authorities; and

o simplified planning processes.” The governance options are assessed in terms of these criteria below.

7.5.1 Best promote purpose of local government The Act requires the LGC to ensure that its preferred option best promotes the prescribed two-fold purpose of local government: enabling local decision-making and action, and efficiently and cost- effectively ensuring the needs of local communities for local public services are met. This Section explores the extent to which an enhanced status quo, four unitary authorities and a supercity will meet these criteria.

7.5.2 Enabling local democracy We expect a smaller council to have greater flexibility in the range and quality of services it provides to its local community. It is more difficult for a large council to tailor services, service levels and appropriate rates to small subsections of its jurisdiction. Increased size naturally leads to increased distance between the council and the individuals it represents. The larger a council becomes, in general, the less approachable it becomes as the distance between councillors and constituents increases.

ENHANCED STATUS QUO FOUR UNITARY AUTHORITIES A SUPERCITY

Decisions are made close to Slightly greater distance Some minor decisions made businesses and people. between businesses and people locally by community boards or and decision makers. local boards, but all important matters (e.g. funding allocations) made centrally.

Businesses and people have Somewhat less opportunity for Businesses and people would regular opportunities to interact face- to-face interaction feel they had less influence over face-to-face with those making between businesses and people the decisions affecting their decisions about the future of and those deciding the future of community. their communities. their communities.

Although local boards may go some way to alleviating the loss of local democracy under a supercity, we consider that smaller councils will generally better enable local decision-making. In terms of enabling democratic local decision-making, the enhanced status quo is our preferred option, followed by four unitary authorities. A supercity is our least-favoured option due to its size. The limitations of local boards in effectively representing local interests are discussed in more detail in Section 8 below.

7.5.3 Promotes cost-effective service delivery and improved economic performance The second part of the purpose of local government is “to meet the current and future needs of communities for good-quality local infrastructure, local public services and performance of regulatory functions in a way that is most cost-effective for households and businesses”. In assessing the options

49 on this criterion, we assess which of the local council structures could produce a given set of council functions at least cost. In selecting its preferred option, the Commission will also have regard to the option that best facilitates economic performance. The following three areas have been identified in the Act as key areas of impact in assessing the effects of reorganisation:

. efficiencies and cost savings;

. productivity improvements, both within the local authorities and for businesses and households that interact with those local authorities; and

. simplified planning processes (we address this issue in the Section below).

ENHANCED STATUS QUO FOUR UNITARY AUTHORITIES A SUPERCITY

Procurement savings are There are some modest There are some modest already available through all-of- additional savings possible in additional savings possible in government contracts and comparison to the status quo. comparison to the status quo. regional joint tendering. Primarily these are through Primarily these are through savings on elected member and savings on elected member and senior officer salaries and could senior officer salaries and could be about 3% of local amount to about 3% of expenditure. expenditure.

Some further savings are It would probably take about It would probably take about possible through shared three to four years before four to five years before savings services. savings covered the additional covered the additional costs of costs of transition. transition.

The most significant Research indicates councils of Creating one large monopoly opportunities are through the size created by this model service provider for local establishing a vertical and are typically more efficient than government services in the horizontally integrated water larger or smaller councils (refer regions removes choice and services (refer to the attached NZIER report, Appendix 11). competitive pressure to drive PwC report on savings in efficiencies. Appendix 13) and a land transport authority. It has not been possible to progress the water services CCO to date because of a refusal by GWRC to join unless they take full control of the operation. Other councils are prepared to share control of a joint entity.

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ENHANCED STATUS QUO FOUR UNITARY AUTHORITIES A SUPERCITY

Under the existing Decisions relating to regional Decisions relating to regional arrangements, councils have productivity could be made productivity could be made most worked well together to make more efficiently under this efficiently under this model with regional decisions to improve model with four councils instead only one council involved. productivity. Examples are the of the existing nine involved. Wellington Regional Strategy, Grow Wellington, Regional Land Transport Strategy, the newly established regional Civil Defence Emergency Management operation

Reaching regional agreement Some non-optimal regional The two-tier model would lead can be time-consuming and decisions may still be made by to decisions to protect the local some compromises may compromising to achieve patch unless local boards are in prioritise local district concerns agreement. reality impotent on matters of over regional benefit. importance.

Regional priorities are more likely to be compromised by party or ticket politics.

As identified in the TDB report (Appendix 8), there are limited areas where an increase in the scale of council operations leads to efficiency gains. We consider the areas best suited to amalgamation are the small Wairarapa councils, and land transport and water services where the networks are interconnected. All three of these changes are captured in the enhanced status quo option. Beyond these reorganisations, the evidence for any further efficiency gains from amalgamation is inconclusive at best. There is some evidence that suggests the smallest and largest councils are less efficient. For this reason, we prefer the four unitary authorities option over a supercity. We favour an enhanced status quo over the four unitary authorities option because councils are sufficiently large under the status quo after a Wairarapa amalgamation for further amalgamation to bear little fruit but potentially large costs. Some small savings may be possible but these must be weighed against the cost of reorganisation.

The greatest potential to enhance productivity and boost economic performance in the region would come from the reforms to the governance of land transport and water services as described in this alternative application. Regional integration of land transport and water services would also be achieved under a single unitary authority. However, we consider separate CCOs owned and controlled by the local authorities preferable to having these functions part of a single unitary authority. The CCO structure is preferable as it enables local government services to be delivered within a commercial operating approach.18 It also permits commercially skilled people to be appointed to the boards of the enterprises. The CCO would be accountable to the local council that owns it and that appoints the

18 Local Government Infrastructure Efficiency Expert Advisory Group (2013), “Report of the Local Government Infrastructure Efficiency Expert Advisory Group”, Department of Internal Affairs, Wellington.

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members of the board. Having the CCO owned by territorial authorities (under the enhanced status quo) or by the four unitary authorities would facilitate more direct accountability to the people in the local area.

Section 7.3.2 above and the TDB report in Appendix 8 provide further details on the scope for efficiency gains from the different options.

7.5.4 Simplified planning processes There are currently eight territorial authorities in the Wellington and Wairarapa regions and a regional council. As a result, multiple entities are creating their own district and regional plans, and multiple consents are needed across the greater region. The table below assesses the three organisational options based on the extent to which they simplify planning processes.

ENHANCED STATUS QUO FOUR UNITARY AUTHORITIES A SUPERCITY

Issues with the current structure The Regional Committee would Planning would be simplest under include: govern the Regional Strategy one supercity as decisions can be and be responsible for more easily managed within one . the Wellington Regional producing a spatial plan that organisation. Strategy lacks authority; would be adopted and applied

. there is no spatial plan for by the four unitary councils.

the greater Wellington Strong leadership commitment Strong leadership commitment and region; and compromise would be compromise would still be required . regional and district plans required by members of the by members of the supercity council are prepared by different Regional Committee to make to make effective planning entities; effective planning decisions for decisions for the regions. . consents are needed from the regions. multiple entities; and

. litigation can arise between levels of local government.

Regional policy statements, Larger councils do not automatically regional plans and local district lead to planning documents that are plans would all be combined easier for the public to use. For into a single unitary plan for example, the entire draft Auckland each of the four new councils. Plan including appendices amounts to close to 5,000 pages. For most property owners and investors, it is debatable whether this in an improvement compared to dealing with smaller, locally based documents.

A supercity would likely lead to the most simplified planning processes. A single entity would be creating regional and district plans, and issuing consents across the Wellington and Wairarapa regions. Although some internal council conflict is quite possible under a single unitary authority, it is unlikely that this would delay decision-making to the same extent as conflict between different councils. In terms of planning processes, there are some benefits to having a regional council under the status quo and some benefits associated with fewer, larger councils as is the case under the four

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unitary authorities option. We therefore favour a supercity over the enhanced status quo and four unitary authorities when it comes to simplified planning processes.19

Further detail on the extent to which planning processes would be simplified under the different options is provided in Appendix 4.

7.5.5 Other issues Other issues – including the asserted benefits of having a single voice and the possible implications of the options for rates and debt levels in the affected areas – that are outside the specific requirements of the Act are discussed in Section 8 of this report.

7.6 OVERALL ASSESSMENT OF THE PREFERRED OPTION Overall, in terms of the legislative criteria for determining the preferred option:

. the enhanced status quo is clearly favoured in terms of best promoting local democracy. The four unitary authorities option is ranked second and a supercity a distant third. In fact, the supercity may well be unworkable under the legislation because of the very strong likelihood that it will be defeated by a poll of electors in the Wellington and Wairarapa regions;

. the enhanced status quo is also favoured under the criterion of cost-effectiveness of economic performance as it takes advantage of the easily accessible efficiency gains while avoiding the large costs of transition; but

. the supercity provides the best opportunities for efficiencies in planning. However, the apparent advantages may be offset by several factors:

o the four unitary authorities model would have a clearly defined structure and process to determine regional issues and this would establish regional leadership and vision; and

o there are inherent political risks associated with large council structures. The risks include the increased presence of party politics and decisions being determined by tickets that exclude councillors representing large districts within the Wellington and Wairarapa regions.

In conclusion:

. We consider Option 1 – the enhanced status quo – is the preferred option. It offers the greatest potential for achieving efficiency gains – by establishing single entities for roading and the “three waters” and through the amalgamation of the very small Wairarapa councils – without incurring unnecessary transition cost and without undermining local democracy.

. We consider Option 2 – four unitary councils – is worth careful consideration by the LGC and ultimately the people of the Wellington and Wairarapa regions if change beyond Option 1 is to be seriously considered. Having four unitary authorities represents an effective compromise option that the community may well be prepared to support. It provides improvements to regional leadership and efficiency without fundamentally diminishing local decision-making; and

. We consider Option 3 – a supercity – to be the most effective option in terms of simplified planning processes but we do not believe the costly transition process and the impacts on local decision- making and communities of interest are worth incurring. The survey results indicate the option lacks support of people in the region.

19 The councils could currently have a joint district plan, as the three Wairarapa councils do.

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8. OTHER ISSUES

There are a number of other issues that are outside the specific requirements of the Act that have received, or are likely to receive, considerable attention in the context of debate around governance reorganisation in the regions. These issues are discussed in turn below.

8.1 RESILIENCE The earthquakes and recent earthquake swarm have re-emphasised the importance of infrastructure resilience as part of disaster preparedness. It has also highlighted Wellington’s importance as a critical national transport node for the different modes of transportation such as road, rail, aviation, shipping and information.

Wellington’s geography dictates and constrains the operation of transport nodes, networks and demand. This is why it is important that resilience (also called reliability and risk management) is addressed at a level that allows the system to accommodate variable and unexpected conditions without catastrophic failure. These concepts have many implications for planning in general, and transport planning in particular.

Resilience can be evaluated at various levels:

. at an individual level it means that people can move from home to work, school or play even under unusual and unexpected conditions;

. at a community level it means that the transport system can safely and efficiently accommodate unusual conditions, including construction, emergencies and special events, and provide accessibility to people with special needs;

. at a design level it means that facilities can withstand extreme demands and unexpected conditions, including major equipment failures, disasters and technological change (e.g., electric cars);

. at an economic level it means that transport can be provided if, for example, fuel prices rise suddenly; and

. at a strategic planning level it means that a transportation system can meet long-term economic, social and environmental goals under a wide range of unpredictable future conditions.

The value of resilience explains why people and communities are often willing to support options that they currently do not use.

Resilience increases if a system has diversity, built-in redundancy and strength in its critical components. This allows the system to operate if a critical link ruptures. Perhaps the most important aspect of resilience is mobility. This is because mobility permits movement of people away from adverse conditions or of support and assistance towards areas of need. A strong and efficient transport system is therefore an important contributor to community resilience.

Resilience is affected by a community’s ability to collect and distribute critical information under unusual or extreme conditions. Resilience increases if there are effective ways to identify potential problems, communicate with affected people and organisations, and to prioritise resources.

This discussion points to the two key aspects of resilience being land transport planning and operation, and information management such as currently provided on a cooperative basis by the regions’ councils through the Wellington Region Emergency Management Office (WREMO). The proposed Greater Wellington Transport entity provides an appropriate and workable model in which key decisions about the Wellington and Wairarapa regions’ transport resilience can be improved over time.

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8.2 FINANCIAL IMPLICATIONS OF THE REORGANISATIONS The analysis undertaken by TDB (attached as Appendix 8) considered the financial implications of reorganisation of governance in the Wellington and Wairarapa regions. TDB provided a high-level indication of potential changes in average rates and debt-servicing costs across the territorial authorities for the various options. The analysis considered the impacts for each existing council area. The results are summarised below.

8.2.1 Rates implications of reorganisation TDB’s rates analysis estimated the impact on rates by merging two or more territorial authorities and indicates at a high level the broad impacts from a reorganisation. The analysis showed there are likely to be significant re-distributional impacts from amalgamations of the Wellington and Wairarapa councils.

Each council currently has differing revenue and cost structures. In addition, the rating base differs, and average capital values differ quite noticeably across the regions. TDB’s analysis assumed that a standardised rating methodology based on capital value would be adopted across merged territorial authorities, as has occurred in Auckland. The analysis also assumes that the current GWRC cross- subsidy to the Wairarapa is removed and that efficiency gains of around 3% are achieved under a single unitary authority and around 3% on local expenditures for four unitary authorities. No allowance has been made for the costs of amalgamation.

The estimated impacts on average rates in each territorial area (TA), relative to the status quo, are detailed in the table below.

Average rating impacts by current TA as a result of reorganisation

KCDC PCC WCC HCC UHCC Wairarapa

Single unity % change* 5% -16% -10% -7% 11% 26% authority $ change $2.2m ($7.6m) ($24.6m) ($6.5m) $3.2m $11.2m

Four % change* 0% -12% -5% -7% 11% 16% unitary authorities $ change ($0.1m) ($5.6m) ($12.8m) ($6.2m) $3.3m $6.8m

Note: percentage change figures are calculated as a percentage of current total rates.

Assuming, as is likely, that any new council sets its rates uniformly across its region (albeit after some transition), territories like Porirua that currently have relatively high rates per dollar of capital value are likely to see their average rates reduce in relative terms, while territories like Upper Hutt with relatively low rates per dollar of capital value are likely to see their average rates increase in relative terms.

Under a single unitary authority Porirua, Wellington City and Hutt City are expected to benefit from somewhat lower average rates, with Porirua the most significant winner in terms of percentage change. Kapiti Coast, Upper Hutt and the Wairarapa are expected to be adversely impacted (Wairarapa in particular). In percentage terms, the impacts on all councils are reasonably significant. There is generally an effective transfer from the smaller council areas to the larger council areas.

Under the four unitary authorities option, Porirua, Hutt City, Wellington City and Kapiti (marginally) are expected to benefit on average while Upper Hutt and the Wairarapa are expected to see an increase in average rates (relative to the status quo). The impacts of the two reorganisation options are generally similar: Kapiti is the only area where the direction of change is different under a supercity

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and four unitary authorities and the difference is small. The impacts on Wellington City and the Wairarapa become noticeably less pronounced under a four unitary authorities model.

Looking ahead, there are significant differences between the current councils’ plans for future expenditure and therefore increases in rates. In particular, Hutt City is projecting rates increases well below the average for the greater Wellington region. Therefore, if Hutt City became part of a supercity, the residents of Hutt City are likely to face much greater rates increases assuming, as is the case in Auckland, the new single unitary authority adopts a uniform rating policy across its region.

It is important to note that the above discussion on the possible rates impacts of the different amalgamation options is a high-level indication of the potential average impacts. A variety of detailed considerations – such as the differences in current revenue policies, different debt levels and rates projections, regional differences in property types and capital values, and the extent to which the changes in rates are smoothed over a transition period – will affect the exact magnitude of any impacts over time in practice. The extent and timing of reallocations of GWRC costs and revenues must also be considered, as well as potential cost savings and transition costs associated with amalgamation. Refer to the TDB report in Appendix 8 for further detail.

8.2.2 Debt implications of reorganisation There will also be re-distributional impacts on the average level of council debt and therefore debt- servicing costs across the regions from the amalgamations. TDB assumed that a merger of two or more territorial authorities would result in the standardisation of debt (and therefore debt-servicing costs) across the new organisation. The Commission could take a different approach: with debt in particular, it could choose to “ring-fence” the debt burdens to the current territorial authorities. The analysis below should be viewed as a possible scenario if debt burdens are allocated as assumed by TDB.

The councils’ current debt-servicing costs are typically around 3% to 7% of their operating expenditure, with the exception of Kapiti Coast District Council where debt-servicing costs are around 13.5% of operating expenditure. The table below indicates the impact on debt-servicing costs by current territorial authority as a result of the possible reorganisations.

Debt-servicing cost impacts by current TA as a result of reorganisations

KCDC PCC WCC HCC UHCC MDC CDC SWDC

Single % change* -31% 12% -22% 85% 104% -7% 76% 89% unity authority $ change ($2.9m) $0.5m ($5.6m) $4.8m) $2.2m ($0.2m $0.5m $0.8m

Four % change* 0% 35% -6% -3% 8% -23% 46% 56% unitary authorities $ change $0.0m $1.5m ($1.5m) ($0.2m) $0.2m ($0.8m) $0.3m $0.5m

Note: percentage change figures are calculated as a percentage of current debt-servicing costs.

Assuming that debt burdens are uniformly reallocated across the regions under a single authority, councils with high debt levels such as Kapiti and Wellington City are likely to benefit. Low debt regions such as the Hutt Valley will bear the majority of these reallocated costs.

The analysis indicates that establishing a single unitary authority could result in a significant reduction in debt-servicing charges for Kapiti and Wellington, and to a lesser extent Masterton. Porirua could see a relatively small increase in debt-servicing costs while it is estimated that Hutt City, Upper Hutt, Carterton and South Wairarapa could each see debt-servicing costs rise by over 75%.

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Under the four unitary authorities option, the redistribution effects are generally less pronounced as Kapiti is modelled as an isolated entity and only Porirua takes on Wellington City’s debt. Porirua therefore faces a greater increase in debt under this option than the single authority option, whereas the impact on Hutt City, Upper Hutt, Carterton and South Wairarapa is significantly reduced. In fact, Hutt City experiences a marginal reduction in its debt-servicing costs, along with Wellington City and Masterton.

8.2.3 Qualifications As noted above, the TDB analysis is indicative only and is subject to the qualifications noted in the report. There are many possible ways that rates and debt could be managed – for example, debt could be ring-fenced against specific investments or locations, and rates changes could be gradually introduced over time. These would be decisions for the new organisation(s) to make. Nevertheless, it is clear that there would be significant impacts from a uniform rating policy and a spreading of the debt-servicing burden and these impacts are likely to make rates and debt a point of contention in any reorganisation.

8.3 ESTABLISHING A REGIONAL LEADER Having a “regional leader” is not a requirement or a criterion in the Act for evaluating the options before the LGC. Nevertheless, the concept of a “single voice” has received considerable attention in some quarters. In particular, the current local government arrangements in the Wellington and Wairarapa regions have been criticised for not providing clear regional leadership. The criticisms have some validity particularly given:

• the lack of authority given to the Mayoral Forum and the chair of that forum;

• the confusing mix of responsibilities, structures and processes that sit under the GWRC, yet have regional membership;

• the political agendas that inherently arise from a two-tier governance model; and

• the large number of councils in the regions.

A supercity model may address these issues by establishing one mayor for the regions. However, in our view, the advantages of this potential change have been overstated. There is a benefit to central government and others in being able to identify and communicate directly with one leader for a region on matters where central and local government interact, but:

• large councils significantly increase the chance of party political councillors and mayors being elected, regional interests being subordinate to party agendas and relationships with central government deteriorating;

• the Hutt Valley councils have been very well supported by central government to date. Government ministers regularly attend functions and discussions in the Hutt Valley, meet with council representatives and support local council initiatives. The Hutt City Council (Graffiti Removal) Bill is a recent example of that support; and

• it is misleading to suggest that, by itself, clarifying regional leadership will result in an economic transformation for Wellington.

Our model is designed to bring the benefits of clear regional leadership where it matters without the loss of local democracy that comes with a supercity. In particular, we propose establishing a single entity on land transport issues, the area where the Wellington and Wairarapa regions get most funding from central government and the area, therefore, where having a “single voice” to deal with central government most matters. Central government has significant investment planned for the state highway network, which has knock-on effects at a local level. Upcoming is another investment in

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commuter trains. It is in this area that a good-quality dialogue between the greater region, acting regionally, and central government officials and ministers is important to influence public policy and resource allocation decisions.

The proposed Greater Wellington Transport – constructed as a joint venture as has been done in Auckland – provides an appropriate and workable model by which key decisions about the greater Wellington region’s land transport can be made with full accountability to both the central government and to the communities that elect the councillors who appoint directors to the board. The model gives the greater Wellington region a single voice on the topic that matters to its economic and social future and that can only be planned and operated effectively at a regional level.

Leadership in the greater region across other matters will be evident by confirming the mayor of Wellington as chair of the Greater Wellington Regional Committee, as the spokesperson and leader on regional matters. These regional matters would be publicly specified and are noted in Section 5.4 of this report.

This leadership position would be far more than a token one. The Greater Wellington Regional Committee would carry real power and influence on regional matters due to the decision-making ability of this committee.

The mayors of each unitary authority would lead on all local matters relating to their districts.

8.4 THE ROLE OF LOCAL BOARDS The critical importance of maintaining local democracy in the design of regional governance structures is noted in Sections 4.3 and 7.5.2 above.

Under a supercity, attempts can be made to maintain that local connection through community or local boards. While such boards can form a useful forum for community connection and advocacy to the governing council, experience shows it is difficult and very rare for genuine decision-making powers of substance to be delegated. Ultimately, resources, staffing and power reside in the governing council.

The GWRC states in its application to the LGC that:

. “the powers, duties and functions of local boards are mandated and protected under law” (p.10 of the GWRC application); and

. “local boards have a mandate under law with guaranteed funding” (p.19 of the GWRC application).

We consider that the GWRC has overstated significantly the degree of independence the local boards will have:

. the Local Government Act 2002 contains principles for allocating decision-making functions to the local boards, but the decision on whether to delegate any such decisions (and whether to withdraw them subsequently) rests solely with the council (s17 of the Act); and

. the boards’ funding is not guaranteed, but established by the council as part of the long-term planning process (s19 of the Act).

The local boards will derive their functions and funding from the unitary council that they are a part of and this will limit their scope to represent the interests of residents and ratepayers.

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Further, even if the local boards are granted a degree of independence, they are likely to have only a relatively minor role in resource allocation, with current indications in the greater Wellington region suggesting that they are likely to be responsible for only around 5% or less of total council expenditure.20 Overall, when it comes to maintaining local democracy in the Wellington and Wairarapa regions, we consider local boards to be a poor substitute for the current arrangements where independent territorial authorities have clear statutorily based powers, including the power to regulate, rate and borrow.

20 Wellington City Council (2013).

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9. MAORI ENGAGEMENT AND SUPPORT

Open and honest communication between council and Māori is an important step in strengthening relationships. Hutt City has engaged actively with local Māori in developing this application.

HUTT CITY COUNCIL recognises those who have mana whenua, or inherited rights of land ownership. Within Hutt City, these rights are vested in the Port Nicholson Block Settlement Trust (the Trust) which is the entity representing Whānui ki te Upoko o te Ika (Taranaki) within the Port Nicholson Block rohe (region).

Iwi represented by the Trust are Te Atiawa, Taranaki, Ngāti Ruanui and Ngāti Tama. The Trust also has a kaitiaki (guardianship) role in respect of Ngāti Mutunga.

We also consult with:

. Nga Tekau o Poneke – the Wellington Tenths Trust as a mana whenua trust;

. Te Runanganui o Taranaki Whanui ki te Upoko o te Ika a Maui Inc.; and

. the seven marae in Hutt City being:

o Koraunui Marae;

o Te Mangungu Marae;

o Wainuiomata Marae;

o Te Kakano o te Aroha Marae;

o Waiwhetu Marae (aka Arohanui ki te Tangata);

o Te Tatau o te Po Marae;

o Keriana Olsen Trust-Kōkiri Marae; and . other Māori as part of the council’s normal business.

Hutt City Council currently has the following arrangements in place:

. a service level agreement with the Port Nicholson Block Settlement Trust;

. a memorandum of understanding with Te Runanganui o Taranaki Whanui ki te Upoko o te Ika a Maui Inc.;

. a funding agreement with each of the seven marae in Hutt City; and

. formal community plan/annual plan meetings with all of the above.

In addition to this, the Minister for Treaty of Waitangi Negotiations, the Hon. Christopher Finlayson, has recently written to this Council regarding the Crown’s settlement with Toa Rangatira Trust and there will be a possibility of a formal relationship with this entity in the future.

We have met with mana whenua iwi leaders regarding the proposal to establish a unitary authority.

We have also met with representatives of all local marae and the view from that meeting was that they favoured a Hutt Valley unitary council over other options. A letter of support reflecting this view is attached in Appendix 18.

As this application is filed, Hutt City Council’s engagement with Māori leaders and Māori communities on the question of governance structures for the greater region is continuing. Like other councils in the region, we support the Commission engaging with Māori communities as it formulates any draft reorganisation proposal for the region.

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10. TRANSITIONAL ARRANGEMENTS

This alternative application has also been developed in the expectation that electors throughout the Wellington region participate in a poll on whether or not the reorganisation option proposed by the LGC will proceed.

Thus it is unlikely that reorganisation could take practical effect until after the 2016 local authority elections when new councillors would be elected to the new councils.

Transitional issues that arise as a result of this alternative proposal fall into two broad categories, as follows:

. matters that the Commission must determine as part of the proposed reorganisation; and

. matters that could be left for the succeeding councils to decide.

We address those two categories of issue in turn below.

10.1 MATTERS FOR THE COMMISSION TO DECIDE There are a number of transitional matters that the LGC would need to determine in its reorganisation scheme. These issues could include, among others:

. disestablishing the GWRC and transfer of its statutory functions where appropriate to the four new unitary authorities;

. establishing the boundaries of the four new unitary authorities; and

. transferring the statutory obligations to the new entities: e.g., in respect of responsibilities for public transport, roading and maritime transport.

Also to be transferred (based on the estimated populations of the four new unitary authorities) will be the residual property of the regional council including its shareholding in CentrePort and its residual debt.

The bulk water assets (and related debt) currently owned and operated by GWRC would be transferred to Capacity Infrastructure Services Limited in joint ownership of the proposed Hutt Valley Council and Wellington Council (and Kapiti Council if it wants to join the joint venture).

Statutory obligations under the Maritime Transport Act 1994 would be transferred to Wellington Council (in respect of Wellington and Porirua harbours and their respective approaches).

Regarding land transport, the Commission would need to ensure the establishment of the proposed Greater Wellington Transport entity (GWT) with shareholdings and rights to appoint and co-opt directors based on the populations of the four unitary authorities. The following would be transferred to GWT:

. statutory obligations for public transport;21

. statutory obligations for roading from the councils;

. public transport and roading-related assets and debt (the regional council’s public transport assets are held in a CCO);

• shares in Greater Wellington Rail Ltd currently held 100% by WRC Holdings Ltd (100% subsidiary of GWRC);

21 Consequential changes will be needed to the Regional Land Transport Strategy (RLTS) 2010-2040 – which is a statutory document prepared under the Land Transport Act 1998 – and subsidiary and related plans such as the Wellington Regional Rail Plan.

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. management and staff sufficient to staff the new entity; and

. existing outsourced supplier and provider contracts.

The various parts of the greater region have partially interconnected transport and water infrastructure networks. These proposals complete the integration of regional services where these matter in terms of efficiency and cost-effectiveness while maintaining local community input into the overall planning and strategic direction.

Other statutory obligations to be reassigned from the GWRC to the unitary authorities include those relating to:

. the Soil Conservation and Rivers Control Act 1941;

. the Civil Defence Act 1990;

. reserves vested in regional councils under the Reserves Act 1977;

. pest management under the Biosecurity Act 1993;

. hazardous waste under the HSNO Act 1996; and

. dams safety under the Building Act 2004.

Where appropriate, the changes arising from the reorganisation would be implemented by Order in Council.

10.2 MATTERS FOR THE NEW COUNCILS TO DECIDE A number of transitional matters will also need to be determined by the succeeding councils as part of the establishment of the four unitary authorities. These issues could include, among others:

. the names of the four succeeding councils, their branding and the locations of their respective headquarters, and “front office” and “back office” service centres;

. internal administrative arrangements for each council including the appointment of a CEO and senior executive management and staff;

. changes to statutory planning arrangements including the necessary changes to the Regional Policy Statement and Plan;

. transitional management arrangements to ensure maintenance of business as usual in council services as well as integration of the antecedent council operations;

. rating policies including:

o maintaining pre-existing rates until the new long-term plan is approved; and

o the future basis for rating (if this needs to change); . debt-management issues including:

o where pre-existing debt will be secured by targeted rates or bundled up;

o any impact on credit rating; and

o relationships with lenders; . asset-management issues including:

o transfers of assets; and

o transfers of shareholding in CCOs;

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. CCOs including:

o the transfer of assets and liabilities to the CCOs; and

o readjustment of shareholdings; and . changes to accountability documents and arrangements.

These are all standard issues that arise and need to be addressed with any council amalgamation(s).

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11. CONCLUSIONS

Local government is under continuing pressure to evolve and reform in order to address challenges such as financial sustainability, changing community needs and expectation, metropolitan growth, shifting relationships with central government, etc.

On the basis of the work undertaken as part of this application, including the surveys of its community, Hutt City council strongly favours the enhanced status quo. As part of the enhancements to the status quo, Hutt City supports amalgamation where the evidence indicates there are likely to be gains from amalgamation. In particular, Hutt City favours:

. amalgamating the three small councils in the Wairarapa region and the establishment of a unitary council for the Wairarapa as proposed in the Wairarapa district councils’ application; and

. establishing a single specialised entity for land transport for the Wellington and Wairarapa regions and a single specialised entity for the “three waters” for the Wellington region. There is a good case for such infrastructure networks being managed in an integrated way and not separated by local political boundaries.

Hutt City Council does not support amalgamation of other councils in the Wellington region as there is no compelling evidence there will be material gains from such amalgamation to offset the inevitable costs of restructuring and the losses of local democracy associated with bigger and more remote councils.

However, if the LGC is to propose boundary changes and amalgamations beyond those presented in the enhanced status quo (as described above), Hutt City favours the disestablishment of the GWRC and establishing four unitary authorities rather than a single unitary authority for the Wellington and Wairarapa regions. Hutt City Council considers that, of the unitary authority model options being considered, the four unitary model best promotes good local government by balancing the need to preserve local democracy, while delivering service efficiency, improved economic performance, simplified planning and strong regional leadership.

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APPENDIX 1: DETAILED DESCRIPTION OF CURRENT LOCAL GOVERNMENT ENTITIES IN THE REGIONS

Council Members Basis of National rank Pop. 2011 Pop. 2021 Revenue Community boards Companies and trusts election by population $m 2013

Greater 12 FPP 3rd largest 487,760 515,790 $215 None WRC Holdings Wellington councillors regional Greater Wellington Infrastructure Regional (crs) Greater Wellington Transport + chair Greater Wellington Rail Pringle House Port Investments CentrePort Grow Wellington Creative HQ Wellington Regional Stadium (50%) Wellington City 14 crs STV 3rd largest TLA 200,200 219,200 $413 Tawa Positively Wellington Waterfront + mayor Makara/Ohariu Positively Wellington Tourism Wellington Venues Wellington Museums Wellington Cable Car Trust (part) Capacity (62.5%) Wellington Regional Stadium (50%) Wellington International Airport (34%) Chaffers Marina (11.45%) Wildlife Sanctuary (part) Porirua City 13 crs STV 17th largest 52,700 54,600 $66 None None + mayor TLA

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Council Members Basis of National rank Pop. 2011 Pop. 2021 Revenue Community boards Companies and trusts election by population $m 2013

Kapiti Coast 10 crs STV 18th largest 49,800 53,000 $63 Otaki None District + mayor TLA Waikanae Paraparaumu/Raumati Paekakariki Hutt City 12 crs FPP 7th largest TLA 103,000 104,600 $127 Petone Urban Plus + mayor Wainuiomata Seaview Marina Eastbourne Capacity (37.5%) Community Facilities Trust

Notes: Population figures are Department of Statistics medium projections from the October 2012 update The regional water levy is removed from the regional revenue total ($25m)

Key regional forums Membership Comments

Wellington Region Mayoral Forum 8 mayors + GWR chair Formed to discuss matters of regional interest and make related recommendations to councils.

Supported by the work of Chief Executive Group (CEG) and the Supporting Officers Resource Team (SORT).

Wellington Regional Strategy Committee 8 mayors + GWRC chair + 5 A committee of GWRC, but formed subject to agreement of and periodic review by the independent members region’s TLAs.

Formed to govern and lead the Wellington Regional Strategy.

Grow Wellington is the primary delivery organisation.

Administrative support by the WRS Office within GWRC.

Further guidance by CEG and SORT.

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Key regional forums Membership Comments

Regional Transport Committee 8 mayors + GWRC chair + GWRC A committee of GWRC. deputy chair + NZTA representatives + Responsible for the Regional Land Transport Strategy and the Regional Land Transport 6 other independent members Programme.

Civil Defence Emergency Management 8 mayors + GWRC chair A body as described in the CDEM Act 2002. Group Works together with emergency services and other organisations to ensure an efficient and effective CDEM capability.

Supported by the CEG, which is also recognised in the CDEM Act.

Hutt Valley Flood Management Sub- 5 GWRC crs + 3 HCC crs + 3 UHCC A sub-committee of GWRC. Committee crs + Port Nicholson Block Settlement Responsible for oversight of the development, implementation and review of Hutt River Trust representative flood plain management plans.

Council-controlled Governance Purpose Operational funding from council? organisations

Wellington Regional Council

WRC Holdings Limited 100% owned by GWRC (appoints all Investment holding company. GWRC is purchaser (of services) or shareholder / (established 1987) directors, including 4 councillors). owner. No separate funding required.

Greater Wellington 100% owned by WRC Holdings Limited Purpose was to hold GWRC's interest in Entity deregistered in 2013. Infrastructure Limited (appoints all directors, including 4 the trolley overhead network. (established 2006) councillors).

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Council-controlled Governance Purpose Operational funding from council? organisations

Greater Wellington 100% owned by WRC Holdings Limited Purpose was to hold GWRC's interest in Entity deregistered in 2013. Transport Limited (appoints all directors, including four transport infrastructure assets other than (established 2006) councillors). rail rolling stock and the trolley bus overhead network.

Greater Wellington Rail 100% owned by WRC Holdings Limited Owns investments in metro rail assets. Receives operational grants for rolling stock and station maintenance Limited (established (appoints all directors, including four 2006) councillors). Receives capital grants for rolling stock and station purchase and upgrades

Pringle House Limited 100% owned by WRC Holdings Limited Owns and operates the GWRC centre at See WRC Holdings Limited. (established 1985) (appoints all directors, including four Wakefield Street, Wellington. councillors).

Port Investment Limited 100% owned by WRC Holdings Limited Investment holding company. Owns See WRC Holdings Limited. 76.9% of CentrePort. (established 1991) (appoints all directors, including four councillors). Note that CentrePort is a commercial port company that is excluded from the council-controlled organisation definition in the Local Government Act 2002.

CentrePort Limited GWRC owns 76.9% shareholding through Port company. No. WRC Holdings Limited and Port Investment Limited.

Grow Wellington Limited 100% owned by GWRC. Acts as an economic development GWRC is funder (operational grants). agency to implement the regional (established 2007) strategy.

Creative HQ Limited 100% owned by Grow Wellington Limited Acts as an incubator to support growing See Grow Wellington Limited. companies. (established 2009) (Grow Wellington appoints all directors).

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Council-controlled Governance Purpose Operational funding from council? organisations

Wellington Regional Established by WCC and GWRC under Owns, operates and manages the Westpac No operational funding. Stadium Trust Wellington Regional Council (Stadium Stadium. Loans of $15 million from WCC and $25 million from Empowering) Act 1996. All trustees are GWRC. jointly appointed by WCC and GWRC.

The board includes one councillor from each council.

Wellington City Council

Wellington Waterfront WCC is 100% shareholder and appoints Implements the Waterfront Development Yes, management fee paid by WCC. all directors (includes one councillor). Limited (established Project. 1987)

Positively Wellington All trustees appointed by WCC (includes one Markets Wellington as a visitor destination Yes, WCC provides operational grants and Tourism (Partnership councillor). nationally and internationally. purchases minor services. Wellington Trust) (established 1997)

Positively Wellington WCC is the 100% shareholder and appoints Wellington Venues Limited began trading Yes, WCC purchases minor services. on 1 February 2011, merging the Venues (Wellington directors (includes two councillors). operations of the St James Theatre Venues Limited) Charitable Trust and the Wellington (established 2011) Convention Centre.

Wellington Museums All trustees appointed by WCC (includes one Promotes and manages the City Yes, WCC provides operational grants and Gallery Wellington, the Museum of purchases minor services. Trust (established 1995) councillor). Wellington City & Sea, the Colonial Cottage Museum, Carter Observatory, Capital E, the Wellington Cable Car Museum, and the New Zealand Cricket Museum.

Wellington Zoo Trust All trustees appointed by WCC (includes one Manages the assets and operations of Yes, WCC provides operational grants and (established 2003) councillor). Wellington Zoo. purchases minor services.

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Council-controlled Governance Purpose Operational funding from council? organisations

Wellington Cable Car WCC is 100% shareholder and appoints all Maintains and operates the cable car and Yes, WCC purchases services. Limited (established directors. trolley bus overhead wires. 1991)

Basin Reserve Trust The Trust was jointly established with Cricket Manages and operates the Basin Reserve. Yes, WCC is funder (operational grants). (established 2005) Wellington. There are four trustees, of whom two are appointed by WCC (including one councillor) and two by Cricket Wellington.

Capacity (Capacity WCC and HCC have equal voting rights, Manages the provision of water services Revenue is received from councils for contracted Infrastructure Services and between them appoint all of the board (water supply, storm water and services (currently WCC, HCC and UHCC). Limited) (made up of two councillors (one from each wastewater) to residents and businesses (established 2003) council) and four independent directors) on behalf of WCC, HCC and UHCC. WCC owns 63% of the shares and HCC owns 37%. PCC is considering joining the company as both a customer and shareholder. UHCC will soon join as a shareholding council. Each council continues to own its respective assets and determines the standard of services.

Wellington International WCC owns 34% shareholding (remaining Airport company. No. Airport Limited 66% is owned by New Zealand Airports Limited).

Chaffers Marina Wellington Waterfront Limited holds 11.45% Holding company for Chaffers Marina No. Holdings Limited of the shares in this company. Limited, which owns and manages Chaffers Marina.

Karori Wildlife Sanctuary WCC appoints three of the seven trustees Manages Zealandia native wildlife Small operational grant and interest free loan from Trust including the chair. sanctuary. WCC.

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Council-controlled Governance Purpose Operational funding from council? organisations

Hutt City Council

Seaview Marina Limited HCC is the 100% shareholder and appoints Owns, operates and develops the marina. No operational funding. HCC provides a loan on (established 2004) all directors. commercial terms.

Urban Plus Limited HCC is the 100% shareholder and appoints Owns and operates a portfolio of rental Yes, HCC purchases services under contract. (re-established all directors. housing, develops property in preparation 2007) for sale or lease, and manages council property and building assets.

Community Established by HCC, who also appoints all Leads the long-term redevelopment of key Yes, HCC provides operational funding and capital Facilities Trust trustees. community facilities in Hutt City. grants to partially fund major redevelopment projects.

Upper Hutt City Council

Expressions Arts and All trustees appointed by the UHCC. Manages the Expressions Arts and UHCC is funder (operational grant). Entertainment Centre Entertainment Centre. Trust (established 2003)

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APPENDIX 2: DETAILED DESCRIPTION OF PROPOSED LOCAL GOVERNMENT ENTITIES FOR THE REGIONS

Council Members Basis National Population Population Revenue est. Community boards Companies and trusts of rank by 2011 2021 $m 2013 election population

Wellington 16 crs STV 3rd largest 252,900 273,800 $596 Tawa Positively Wellington Waterfront + mayor council Makara/Ohariu Wellington Venues Wellington Museums Wellington Zoo Wellington Cable Car Basin Reserve Trust Wellington International Airport (34%) Chaffers Marina (11.45%) Karori Wildlife Sanctuary (trustee appointment)

Kapiti Coast 12 crs STV 17th largest 49,800 53,000 $78 Otaki + mayor council Waikanae Paraparaumu/Raumati Paekakariki

Hutt Valley 14 crs FPP 5th largest 144,500 148,000 $210 Petone Urban Plus + mayor council Wainuiomata Seaview Marina Eastbourne Community Facilities Trust Expressions Art & Entertainment Centre

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Council Members Basis National Population Population Revenue est. Community boards Companies and trusts of rank by 2011 2021 $m 2013 election population

Wairarapa 10 crs FPP 28th largest 40,560 40,990 $81 Masterton None + mayor council Carterton Greytown Featherston Martinborough

Totals 56 487,760 515,790 $966 14 community boards 13 companies and trusts members (+ 10 jointly held companies below)

Notes: The revenue estimates in this table are for indicative purposes only, using a population based pro-rata of GWRC revenue excluding water levies. A representation review would be undertaken during the first triennium of the new regional structure. A key part of that process would be to determine the future of community boards throughout the region. Note that all community boards would be funded by targeted rate of the area represented.

Key regional forums Membership Purpose

Greater Wellington Regional Committee Four mayors + four deputy mayors. A committee established by statute for the Wellington and Wairarapa regions.

Chaired by mayor of Wellington. Binding decision-making powers in specified areas of responsibility.

Wellington members carry three votes Can form sub-committees with co-opted members to assist. each, Hutt Valley members carry two2 Responsible for: votes each, and Kapiti Coast and Wairarapa members carry one vote . greater Wellington spatial plan each. . greater Wellington regional strategy . greater Wellington transport strategy and programme (including public transport) . regional amenities funding decisions.

Civil Defence Emergency Management Four mayors + plus one cr from each Continues to operate in the same way as at present. Group council.

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Jointly held companies/trusts Governance Purpose

Existing entities

Wellington Water Shares held by Wellington and This is a restructured Capacity, delivering a horizontally and vertically integrated Hutt Valley councils. A and B operation covering water supply, wastewater, storm water and flood protection services class shares may be issued to to the two shareholding councils. separately allocate governing Decisions around service levels would remain with the two councils as Wellington Water and financial interests to best would deliver to agreed outcomes under contractual arrangements. effect. Asset ownership would reside with individual councils, with the exception of shared bulk water assets, which would be held by the company with cost being allocated based on an agreed equitable formula.

Kapiti Coast and Wairarapa water services would be owned and operated by the two unitary councils.

These councils would have the option of joining Wellington Water as customer and shareholder.

Greater Wellington Rail Shares held by the four councils. Operate as before but with new shareholding and funding arrangements. A and B class shares may be issued to separately allocate governing and financial interests to best effect.

Port Investments Shares held by the four councils. Operate as before but with new shareholding arrangements. A and B class shares may be - CentrePort issued to separately allocate governing and financial interests to best effect.

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Wellington Regional Stadium Shares held by the Wellington Operate as before but with new shareholding and funding arrangements. Council. Loan funding would be provided entirely by the Wellington Council.

As an asset of regional significance, support from the four unitary councils across the region would be considered and potentially provided though the regional amenity fund.

Grow Wellington Shares held by the four councils. Positively Wellington Tourism is currently separately owned and funded by WCC. This A and B class shares may be proposal recommends the organisation be controlled by Grow Wellington and regionally - Positively Wellington Tourism issued to separately allocate funded. - Creative HQ governing and financial interests to best effect.

New entities

Greater Wellington Transport Shares held by the four councils. Not to be confused with the similarly named company now disestablished by GWRC. (2) A and B class shares may be A new company to deliver transport services across the Wellington region. It would own issued to separately allocate all public transport assets previously held by GWRC and subsidiaries, including shares governing and financial interests in Greater Wellington Rail. Local transport assets such as roads would be owned by the to best effect. four unitary councils.

Would provide advice to the Wellington Regional Committee in relation to regional transport planning responsibilities.

The unitary councils would remain responsible for determining and funding local transport services under contract with Greater Wellington Transport. Prioritisation would remain subject to regional planning and NZTA decisions.

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Greater Wellington Shared Shares held by the four councils. A new company to proactively deliver shared services to the four unitary councils and Services A and B class shares may be other participating organisations on a case-by-case basis. issued to separately allocate Contains the Greater Wellington Regional Committee support office providing governing and financial interests administrative services and advice to the Committee and to individual councils and to best effect. includes:

. a CCO monitoring unit; . regional planning staff; . regional amenities funding administration.

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APPENDIX 3: SUMMARY OF LOCAL GOVERNMENT SERVICES

Activity Current provision by Proposed provision by Comments

Museums Six local councils Four unitary councils

Wellington Museums Trust Wellington Museums Trust

Expressions Arts and Entertainment Centre Expressions Arts and Entertainment Centre Trust Trust

Libraries Eight local councils Four unitary councils

Aquatics Eight local councils Four unitary councils

Recreation programmes Eight local councils Four unitary councils GWRC

Sportsgrounds Eight local councils Four unitary councils

Basin Reserve Trust Basin Reserve Trust

Parks and reserves Eight local councils Four unitary councils

GWRC

Venue management and facilities Eight local councils Four unitary councils With the exception of Community Facilities Trust (Hutt Valley), the CCOs would be Communities Facilities Trust Communities Facilities Trust owned by Wellington Council. Wellington Zoo Trust Wellington Zoo Trust

Positively Wellington Venues Positively Wellington Venues

Wellington Cable Car Limited Wellington Cable Car Limited

Wellington Regional Stadium Trust Wellington Regional Stadium Trust

Karori Wildlife Sanctuary Trust Karori Wildlife Sanctuary Trust

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Activity Current provision by Proposed provision by Comments

Other property Eight local councils Four unitary councils The proposal anticipates that it will be possible to disestablish Pringle House (includes facilities management, GWRC Urban Plus Limited Limited and any associated assets will social housing and property Urban Plus Limited transfer to Wellington Council. development) Pringle House Limited An opportunity to establish a regional property services CCO should be explored in the future.

Economic development Grow Wellington Limited Grow Wellington Limited Regional activity undertaken by Grow Wellington in the context of the Wellington Creative HQ Creative HQ Regional Strategy. Eight local councils Four unitary councils Various local initiatives would continue to be supported by local staff and funding.

Tourism and events Eight local councils Four unitary councils Positively Wellington Tourism to be transferred to ownership by Grow GWRC Positively Wellington Tourism Wellington Limited and regionally funded. Positively Wellington Tourism Events to be undertaken regionally and locally.

Community development Eight local councils Four unitary councils

Public transport GWRC Greater Wellington Transport Limited Asset ownership and service delivery would be provided by Greater Wellington Greater Wellington Rail Limited Greater Wellington Rail Limited Transport Limited and its subsidiary Greater Wellington Rail Limited.

Roads Eight local councils Greater Wellington Transport Limited Road asset ownership would remain with the unitary authorities. GWRC

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Activity Current provision by Proposed provision by Comments

Water supply – bulk Four local councils Two unitary councils Wellington Water would own assets and supply services to Wellington and Hutt GWRC Wellington Water Limited Valley councils only, but Kapiti and Wairarapa councils would have an option of joining if there was community support.

Water supply – local Eight local councils Two unitary councils Local water supply asset ownership would remain with the unitary councils. Capacity Infrastructure Services Limited Wellington Water Limited Wellington Water would service Wellington and Hutt Valley councils only, but Kapiti and Wairarapa councils would have an option of joining if there was community support.

Wastewater Eight local councils Two unitary councils Local wastewater asset ownership would remain with the unitary councils. Capacity Infrastructure Services Limited Wellington Water Limited Wellington Water would service Wellington and Hutt Valley councils only, but Kapiti and Wairarapa councils would have an option of joining if there was community support.

Storm water and flood protection Eight local councils Two unitary councils Local storm water and flood protection asset ownership would remain with the GWRC Wellington Water Limited unitary councils. Capacity Infrastructure Services Limited Wellington Water would service Wellington and Hutt Valley councils only, but Kapiti and Wairarapa councils would have an option of joining if there was community support.

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Activity Current provision by Proposed provision by Comments

Solid waste Eight local councils Four unitary councils

Airport Wellington International Airport Limited – Wellington International Airport Limited – Shareholding held by Wellington Council. minority interest minority interest

Harbour management GWRC Wellington Council

Port Port Investment Limited Port Investment Limited Shareholding to be apportioned across the four unitary councils. CentrePort Limited CentrePort Limited

Marinas Seaview Marina Limited Seaview Marina Limited Shareholdings held by Hutt Valley and Wellington councils. Chaffers Marina Holdings Limited Chaffers Marina Holdings Limited

Emergency management Civil Defence Emergency Management Civil Defence Emergency Management Staff would be employed by Greater Group Group Wellington Shared Services Limited.

Regional planning decisions GWRC Greater Wellington Regional Committee

(includes Greater Wellington Various regional committees and forums Regional Strategy, regional such as Mayor Forum, Wellington Regional transport planning) Strategy Committee, Wellington Regional Transport Committee

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Activity Current provision by Proposed provision by Comments

Spatial planning Eight local councils Greater Wellington Regional Committee There is no region-wide spatial plan at present and an inconsistent approach is GWRC taken across the region. Wellington Waterfront Limited (a CCTO) The Greater Wellington Regional Committee would produce a spatial plan for Wellington.

Local urban design Eight local councils Four unitary councils Local community plans would support the regional spatial plan. Wellington Waterfront Limited Wellington Waterfront Limited

District and regional Six local councils (six district plans) Four unitary councils (four unitary plans) environmental planning (RMA) GWRC (five regional plans)

Environmental management GWRC Four unitary councils More efficient delivery by incorporating in (biodiversity, environmental management of related activities such as monitoring and reporting, reserves, wastewater, landfills, etc. biosecurity)

Environmental consents Eight local councils Four unitary councils Current proposals being advanced by central and local government may result in (resource and building consents) GWRC greater centralisation of these services.

Greater Wellington Shared Services could form an appropriate entity to deliver a regional consenting service.

Other regulatory services Eight local councils Four unitary councils

(animal services, trade waste, health inspections, parking)

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Activity Current provision by Proposed provision by Comments

Long-term and annual planning Eight local councils Four unitary councils

One regional council

Regional amenities funding Eight local councils Greater Wellington Regional Committee An inconsistent approach is being taken across the region at present. GWRC

Support services Eight local councils Four unitary councils

(includes strategy and planning, GWRC Greater Wellington Shared Services limited information technology, HR, Various CCOs Various CCOs communications, finance, customer services, legal, secretariat)

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APPENDIX 4: PLANNING PROCESSES UNDER THE THREE REGIONAL GOVERNANCE OPTIONS

Simplifying planning has been identified as an important consideration for the LGC when considering reorganisation proposals. This is a priority for the Government and is a key element of the Better Local Government reform programme.

CURRENT PLANNING FRAMEWORK

The following diagram provides an overview of some key elements of the current planning framework in Wellington:

Wellington Regional Strategy

Regional Policy Statement Five Regional Plans Regional Coastal Freshwater Soil Air Quality Land Discharges

Local Nine sets of Asset Management Plans Six District Plans

Nine Long Term Plans and Annual Reports

Nine sets of supporting Strategies, Policies and Bylaws

The Wellington Regional Strategy (WRS) has been in place for several years and has recently been refreshed. Its primary focus is on economic development through the CCO Grow Wellington. The WRS Committee oversees the WRS and is established within the GWRC structure. It suffers from some key weaknesses:

. the WRS lacks teeth. It needs to be supported by a region-wide spatial plan to provide an additional strategic context to local area plans;

. the governance debate has distracted the majority of the WRS Committee’s members. Meetings have become less frequent and are now generally for information or administrative purposes. Few, if any, major decisions are made to support our economy; and

. it is supported by GWRC staff who may be in a conflicted situation if GWRC objectives differ from those of other councils in the region;

Having separate regional and district plans, and the associated consenting processes, creates inefficiencies. Developers and businesses need to consult multiple documents and deal with multiple organisations to progress plans on a single property.

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ENHANCED STATUS QUO

There are some opportunities to improve the planning framework under an enhanced status quo model. The proposed framework under this model is outlined below.

Wellington Regional Strategy

Wellington Spatial Plan

Regional Policy Statement Regional Regional Plan

Local Six sets of Asset Management Plans Six District Plans

Six Long Term Plans and Annual Reports

Six sets of supporting Strategies, Policies and Bylaws

Establishing a comprehensive Wellington spatial plan should be a priority to provide a regional overlay and maximise opportunities for efficient regional growth. In theory, a spatial plan could be established under the current local government structure. However, tensions and overlapping responsibilities in the existing two-tier structure would make this difficult. These difficulties could remain under the enhanced status quo model.

The five current regional plans would be merged into one cohesive document. We understand GWRC are currently investigating this possibility.

The merger of the Wairarapa councils would reduce the number of planning documents in the region.

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FOUR UNITARY AUTHORITIES

Amalgamating the current two-layer, nine-authority model into four unitary authorities creates further opportunity to implement a simplified integrated planning framework for the region, one that aligns with plans of both central government and neighbouring authorities where appropriate.

Our proposed model provides a simpler and more effective planning framework.

Wellington Regional Strategy

Wellington Spatial Plan Regional

Local Four sets of Asset Four Unitary Management Plans Plans

Four Long Term Plans and Annual Reports

Four sets of supporting Strategies, Policies and Bylaws

The Wellington Regional Committee membership would represent four unitary councils instead of the existing WRS Committee’s nine councils with overlapping responsibilities. This should significantly reduce tension. Providing the Committee with statutory empowerment over the Wellington Regional Strategy and spatial plan will ensure that these documents can be efficiently developed, approved and implemented.

Establishing a comprehensive Wellington Spatial Plan would be a requirement of the reorganisation. It should be able to be implemented more effectively under this model.

Having four unitary plans in place of the current 11 regional and district plans will be a significant improvement. The most important benefit is the removal of the current two-layer approach to environmental planning. Developers will be able to consult one document and seek one resource consent per property, instead of having to deal with two councils, multiple regional plans and a district plan on each occasion.

SINGLE UNITARY AUTHORITY

The planning framework would at least on the face of it be simplest under the supercity model. The supercity provides for the greatest reduction in planning documents, and being managed by one organisation lessens the possibility of inefficient compromises being made.

Risks would still remain through the ward-based bias of elected members, the greater risk of party politics playing a part in decisions, and the possibility of documents becoming overwhelmingly large and unwieldy.

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The framework proposed under this model is outlined below:

Wellington Regional Strategy

Wellington Spatial Plan Regional

Local Asset Management Plans Unitary Plan

Long Term Plan and Annual Report

Supporting Strategies, Policies and Bylaws

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APPENDIX 5: RESULTS OF THE SURVEYS OF COMMUNITY OPINIONS

Who Who When How Who was surveyed? commissioned? conducted? conducted? conducted:

Hutt City Council and Colmar Brunton June 13 Telephone survey 1,002 adults in the Hutt Valley (501 in Lower Hutt Upper Hutt City and 501 in Upper Hutt). The maximum margins of Council error are +/- 4.4% in both council locations. The maximum margin of error for the total Hutt Valley sample is +/- 4%.

Kapiti Coast District SIL Research May 13 Telephone survey 1,500 residents across the four wards randomly Council selected and the scores weighted according to age and genders spread across the district. Poll results are reported at a 95% confidence level +/- 2-2.5%.

Eight territorial Colmar Brunton June 12 Telephone survey 3,300 adults were surveyed. The sample was authorities (ex- designed so that it included 400 respondents in GWRC) each district and 500 in Kapiti. Regional margin of error of +/- 2%.

Wairarapa Councils Colmar Brunton June 12 Telephone survey 1,200 adults were surveyed (400 Carterton; 400 Masterton; 400 Wairarapa).

Wellington City Colmar Brunton April 13 Online survey Representative sample of 503 Wellington city Council residents. The sample includes both ratepayers (68%) and non-ratepayers (30%; a further 2% were unsure if someone in their residence paid rates). All subgroup differences mentioned in this report are statistically significant at the 95% confidence level.

Wellington City May 12 Public consultation Received 1,209 submissions. Council / submissions

Porirua City Council Versus Research June 13 Telephone and A random selection of 501 Porirua residents. The Limited online survey achieved sample delivers a margin of error of +/- 4.4% at the 95% confidence interval. The results are weighted to correct age skews.

Upper Hutt City June/July 12 Public consultation Received 1,409 submissions. Council / submissions

Hutt City Council September/October Public consultation Received 973 submissions. 12 / submissions

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Who commssioned? What was asked?

Hutt City Council and Which option do you prefer? Option 1 (enhanced status quo), Option 2 (Hutt Valley unitary authority), Upper Hutt City Council Option 3 (supercity), Don’t know.

How strongly do you feel (about your preference?)

What is your second preference? (if first choice was not available)

Kapiti Coast District “Firstly, there are two options: (status quo and single city options rotated). A SINGLE CITY OPTION: Council consisting of Hutt Valley, Wellington, Porirua and Kapiti. This could be expanded to include the Wairarapa.” Respondents were then asked which they preferred. An ‘Other’ option was added in the event a respondent couldn’t or refused to choose between ‘Single city’ or ‘Status quo’.

Those indicating a Single City option was preferred were then presented with the following question: “You mentioned you would prefer a single city. We are consulting on TWO possible structures; they are … (two-tier and single-tier council options rotated).”

All respondents were then asked the following: “Is there another option not mentioned that you would prefer?”

Lastly, all respondents were asked the following question: “You may be aware that NEITHER single city option GUARANTEES community boards. In light of this, how important are community boards to you using this scale?”

Eight territorial “Do you think the way councils in the Greater Wellington region are organised should remain the authorities (ex-GWRC) same/change/don’t know?”

Respondents were then asked their views of various options, including one council for the region, two councils (one for Wairarapa and one for the balance of the region) and three councils. No details were provided for these options and there was no reference to a two-tier local board option.

Wairarapa Councils Wairarapa respondents were presented with the following options: No change to council boundaries but more shared services; a single district council (TA) for Wairarapa with a separate Regional Council; a single Wairarapa unitary council; one authority for the wider Wellington region that includes Wairarapa.

Wellington City Council The questions in the survey were a replication of the Council’s submission document and adapted for use as an online survey by Colmar Brunton.

“How much do you agree or disagree that the current local governance structure needs change?”

“Which model do you prefer for local government in the Wellington region? (single-tier, two-tier, status quo, other)”

Further questions on awareness and Wairarapa.

Wellington City Council Submitters were invited to state whether they wanted the current system to change or not. Submitters were asked for their views on four governance options for the Wellington region:

Option 1: retain existing councils but with shared services Option 2: merge all existing councils into three unitary councils’ Option 3: merge all existing councils into two councils, a Wellington council and a Wairarapa council; and Option 4: merge all councils into one council for the whole region.

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Who commssioned? What was asked?

Porirua City Council “Which of the following best describes how you feel about a change in local government structure for the Wellington region and Porirua area? Are you…?” (Strongly supportive, supportive, neutral, opposed, strongly opposed, unsure)

“As per the information sheet we sent out there are three options: a single-tier option, a two-tier option and the status quo. Thinking about these options which one do you most prefer to see in place for the Wellington region and the Porirua area?”

“If local government HAD to change one of the two options available which one would you most prefer to see in place for the Wellington region and the Porirua area?”

“If local government reform was to occur, how important do you think it is for Porirua to have a locally elected body to make decisions on Porirua community issues? Would you say it is…?” (Very imporant, important, neutral, not important, not important at all)

“Lastly, how would you rate the overall performance of Porirua City Council in the last 12 months. Would you say their performance has been?” (Very good, good, average, poor, very poor, don’t know)

Upper Hutt City Council Submitters were invited to state whether they wanted the current system to change or not.

Submitters were then asked that if change was inevitable, to select an option for change (or describe their own option). The options surveyed were the same as those used by Wellington City.

Hutt City Council The options surveyed were:

a) Status quo with more shared services

b) Three separate unitary authorities – Wairarapa, Hutt Valley and the rest of Wellington

c) A single unitary authority for Wellington region

d) A different idea

Who commssioned? What was the response?

Hutt City Council and Which option do you prefer? Total Hutt Valley (50% enhanced status quo; 28% Hutt Valley unitary Upper Hutt City Council authority; 18% supercity; 4% Don’t know)

How strongly do you feel? Most people feel strongly about their preferred option but strength of feeling is strongest among those who support the status quo.

Second preference: Three-quarters of those who support the status quo would prefer a united Hutt Valley if the status quo was not an option. Seven in 10 of those who support a united Hutt Valley would prefer the status quo if a united Hutt Valley was not an option. Two-thirds of those who support a supercity would prefer a united Hutt Valley if the supercity was not an option.

Kapiti Coast District Status quo v. single city option: 54.7% preferred the status quo, 42.9% the single city Council Single city option: Of those respondents (42.9%) who preferred a single city option, 51% preferred a two-tier council, 4.5% stated other

Importance of community boards: Across all respondents, 65.4% stated community boards are ‘very or somewhat important’.

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Who commssioned? What was the response?

Eight territorial Change or no change: 49% of respondents said “remain the same”; 41% of respondents said authorities (ex-GWRC) “change”; 9% said “don’t know”

First choice options: 58% of all respondents wanted no changes to current local council boundaries; 30% wanted changed boundaries in some form (12% preferred Option 2 [three councils for the whole region. These would be a) Wellington city, Porirua and Kapiti, b) Hutt and Upper Hutt, and c) Wairarapa]; 9% preferred Option 3 (two councils for the whole region. These would be a) Wellington city, Porirua, Kapiti, Hutt and Upper Hutt, and b) Wairarapa); 9% preferred Option 4 (one authority for the whole Wellington region)); 2% preferred another option of their own which was not on the list of options; 10% were undecided.

Wairarapa Councils Wairarapa as a whole: 45% did not (initially) favour any boundary changes (no change or more shared services); 41% wanted a single Wairarapa council; 5% wanted Wairarapa to be part of a single Wellington authority (supercity); 7% did not know.

Wairarapa residents were asked to review three possible ‘change’ options (i.e. stay the same was not an option): 28% preferred more shared services (without local council boundary changes); 60% preferred a single Wairarapa council; 8% preferred a single authority for the whole Wellington region; 3% said ‘other/something else’; 1% said ‘don’t know’.

Wellington City Council Need for change: More than half of residents (52%) agreed that the structure of local governance needs change. (These residents hold this view because they think there are currently too many councils (33%) and an amalgamated council could offer financial efficiencies (30%)). 15% disagreed it should change (residents fear a loss of ‘local voice’ or local perceptive (30%) or believe the current structure is working fine (29%)) and 30% were neutral.

Which model: When asked if change was inevitable, 43% of respondents supported the single-tier model, 37% supported the local board model, and 18% supported the status quo. When asked if change was inevitable and the status quo was not available, 50% supported a single-tier model, 46% supported a local board model.

Awareness: Those who have some awareness of the models tend to prefer the single-tier model (47%) over the two-tier model (35%). Whereas, residents who are unaware of the models prefer the two-tier model (42%) over the single-tier model (34%).

Wairarapa: Almost one half (49%) of Wellington residents say they think the Wairarapa should be excluded from a reformed local government structure (only 29% say they think it should be included and 22% are unsure).

Wellington City Council Want/Don’t Want Change: Of the 1,209 submitters, 1,029 (90%) responded to this question. Of those that responded, 23% (252) stated ‘no change’ and 77% (840) stated ‘change’.

Submitters were then invited to select an option for change (or tell us their own): Of the approximately 1,000 submitters that voted for a change option – 252 voted for Option 1 (all councils remain in place but with more shared services and collaboration (note that this is not the same 252 that stated ‘no change’, although there is some overlap of about 60 submitters)). 147 voted for Option 2 (three unitary authorities). 296 voted for Option 3 (unitary authorities for Wairarapa and Wellington). 234 voted for Option 4 (a single unitary authority covering both Wairarapa and Wellington). 68 chose ‘another option’.

Porirua City Council Change in local government structure: 51% supported change (supportive (38%) or strongly supportive (13%)); 24% were neutral; 19% opposed change (opposed (12%) or strongly opposed (7%)).

Preferred option: 41% supported two-tier; 31% supported a single-tier; 22% supported a status quo; 7% responded ‘don’t know’.

Preferred option if local government HAD to change: 63% chose two-tier; 15% chose single-tier; 22% responded ‘don’t know’.

Importance of a locally elected body: 87% supported this statement.

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Who commssioned? What was the response?

Upper Hutt City Council Submissions showed that the public view was strongly in favour of remaining the same, with no structural change.

Change/No Change: Of the 1,409 submitters, 1,383 (98.2%) responded to this question. Of those that responded, 75.8% (1,049) chose ‘remain the same’ and 24.2% (334) chose ‘change’.

Preferred Option: Of the 1,409 submitters, 1,397 (99.1%) responded to this question. 962 (68.8%) chose Option 1 (of the 962 responses for this option, 835 selected ‘remain the same’ and 127 selected ‘change’); 277 (19.8%) chose Option 2 – three unitary authorities; 50 (3.5%) chose Option 3 – two unitary authorities; 33 (2.3%) chose Option 4 – the supercity option; 53 (3.7%) chose ‘another option’; 22 (1.5%) selected ‘did not know’; 12 (0.8%) respondents did not select an option (6 of the 12 chose ‘remain the same’).

Hutt City Council Of the 973 submissions, 45% preferred modified status quo, 30% preferred three untiary authorities, 3% preferred a supercity and 2.7% had an idea of their own to put forward.

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