5  New Zealand – central/regional/local government

This section addresses the roles of the levels of Government in New Zealand and mechanisms for co-ordination between and within levels.

5.1  Central control vs local discretion

As far as relationships between central and local/regional governments are concerned, the fundamental constraints include the scope within which local and regional governments can operate and the degree to which central government can intervene to modify outcomes.

Some key issues are whether local democracy is the key principle or can local government only be “trusted” within certain limits, does central government remain accountable to voters/taxpayers for the appropriate exercise of powers which it has delegated to local/regional governments, and what happens when the exercise of local powers has national implications; for example, on transport links?

It can be argued that “policy-making powers should be assigned to local government, except when this would likely be ineffective, inefficient, inimical to others, or demonstrably unnecessary” (Pelkmans and Sun, 1994).

The answer in New Zealand appears to be that central government retains ultimate control and accountability over all levels of government. In the area of funding, where central government taxes income and expenditure, while local government taxes land (the archetypal immobile asset), even that separation and the very ability of local government to tax at all, is dictated by parliament and can only be changed by parliament.

The allocation of rules and accountabilities between levels of government in New Zealand is determined not by a written constitutional framework, but by the processes of central government policy formulation within a Westminster-style unitary parliament.

This was demonstrated early on in the development of New Zealand democracy when Parliament chose in 1876 to abolish provincial governments (which had their own parliamentary structures), and in the 20^th Century to abolish the second chamber of the national parliament (1 January 1951), abolish special purpose local authorities and compulsorily merge territorial local authorities and create regional councils[2].

Local government in New Zealand tends therefore to operate (to varying degrees) as an agent of national government, administering or interpreting rules set centrally.[3] The range of discretion allowed to local government in making and implementing policy varies from nil to almost complete. Local government activities can usefully be divided into three categories of (1) prohibited (policy set and implemented nationally), (2) mandatory (policy set nationally and implemented locally) and (3) discretionary (completely local) activities.

Land transport policy is a mixture with funding arrangements operating at both national and regional/local level and sometimes overlapping. The Resource Management Act covers the full spectrum as it prescribes procedures and criteria, leaves the actual decisions at the regional/local level, but provides for central government guidance or call-in; for example, through national policy statements.

Such approaches are consistent with the discussion above on the design of federal institutions. Fundamentally, however, there does not appear to be any likelihood that the allocation of powers between central and local government in New Zealand will be other than at the discretion of central government for the foreseeable future. To do otherwise would require a comprehensive constitutional review, the discussion of which is outside the scope of this paper.

It is also not clear whether there is a way within existing constitutional constraints to simultaneously achieve, at national, regional and local levels, clear separation of roles, direct linkages between powers and funding, true accountability for each role, and effective co-ordination of delivery of governmental functions.

Within Maori society there are also multiple potential levels of governance – whanau, hapu, iwi and pan-Maori organisations. The particular issues raised as a result are not discussed in detail in this paper which is confined to state governance issues.

5.2  Inter- and intra-governmental co-ordination

In New Zealand, transfer of functions between, or joint provision by, local governments is already provided for to some degree, and likely to be more so once the current reform process is complete so that the accountability transfers along with the functions.

Between central and local government, co-ordination is much less frequent and less structured, which is likely to make firm planning and commitments more difficult. Within the New Zealand constitutional structure, any true negotiation between central and local government is likely to be limited, given the underlying reality of where the power lies.

The existence of a power of compulsion is relevant here – in the EU context it has been suggested that too much dispersion of power within a state can lead to the EU choosing to retain powers itself because national governments cannot guarantee effective action (Bermann, 1994, p343). In this case, regional empowerment within a nation can lead to national disempowerment, and presumably eventually regional disempowerment as well.

Within central government, co-ordination is more formally required and can in effect be imposed at the stage of a Cabinet decision if it has been lacking to that stage. However, when international interactions are involved, this can be more difficult as effective commitments can be entered into well before the time comes to seek formal decisions at a national level. Traditionally in most countries, co-ordination is handled through a single department responsible for foreign relations, but this is coming under more strain as the range and depth of international co-ordination increases.

The solutions available are to either create much more effective inter-departmental co-ordination mechanisms. or invest significant greater resources into departments to facilitate direct multi-departmental participation in international fora.

It can be argued that the former would have been done before if feasible at low cost, but conversely existing arrangements are likely to contain the customary degree of bureaucratic inertia. The latter is clearly undesirable, from the point of view of costly duplication alone, even without considering the likelihood of mixed messages undermining New Zealand’s negotiating position.

Beyond departmental co-ordination, there is a greater trend for direct Ministerial participation in trans-Tasman decision-making bodies, and proposals for joint parliamentary oversight of trans-Tasman regulatory bodies. This increases the need to ensure New Zealand is not committed to a position that would not have been reached if consultation between departments or Ministers had occurred. These types of regulatory co-operation are likely to require closer than ever co-ordination within New Zealand to achieve the best national outcome.

Such joint regimes are also likely to increase the pressure to bring even closer together the underlying principles of regulation between countries. The trans-Tasman regimes tend to be driven by the COAG principles which are very similar to the New Zealand Regulatory Impact Statement regime (Australian Government 1997). The New Zealand establishment of a central compliance cost unit in the Ministry of Economic Development also follows to some degree the Australian model. Further narrowing of the gaps seems likely as regulatory regimes become more harmonised.