5.3  The Governance of Crown/Maori Relationships [50]

There are a number of governance issues in the relationship between the Crown and Maori that warrant attention. Key issues include the adequacy of the enabling environment for collective Maori organisation, and accountability requirements for the transfer of Treaty of Waitangi settlement assets.

At present, Maori are utilising a range of legal entities to conduct their affairs, including Maori Trust Boards (under the Maori Trust Boards Act 1955), Charitable Trusts, and Incorporated Societies. However, some features of Maori kinship-based organisation do not mesh well with the presumptions of New Zealand law. For example, Maori organisations have difficulty registering as charitable trusts because the public benefit test requires that beneficiaries not be related by blood. The Maori Trust Boards Act, on the other hand, is a dated piece of legislation, under which accountability in many areas is to the Minister of Maori Affairs rather than directly to Trust Board beneficiaries. Most Treaty claimants currently use the structure of a common law trust, but there is a view amongst officials that the existence of an alternative standardised legal personality for claimant groups to incorporate under would have facilitated the Treaty settlements process.

The Maori Community Development Act 1962 is a further piece of enabling legislation, which promotes a pan-Maori rather than tribal approach. Initial work on a review of the Act by Te Puni Kokiri in 1998 concluded, inter alia, that provision should be made for Maori community groups to acquire legal status to better enable them to deliver services to local clients. The review was not completed, however, due to other Ministerial priorities.

Consideration of the continued appropriateness of these Acts, and of the overall enabling environment for Maori collective organisation, should be accorded priority.

A second important issue is whether, in requiring that Treaty of Waitangi settlement assets be transferred to accountable asset management structures, government has the balance right between a permissive approach, with very general governance requirements of recipients, and a somewhat more prescriptive approach.

As argued by Greenland, iwi governance (and Maori collective governance more generally) faces a number of unique challenges. In terms of Ostrom’s design principles for successful self-organization (Section 3 above), Maori collective organisation suffers from a lack of certainty over who has rights to draw on collective resources, a lack of clarity in who represents whom, [51] a lack of clarity in vertical relationships between hapu and iwi, inadequate legal vehicles for collective organisation and diverging and still evolving notions of the appropriate relationship between members and trustees, and a lack of participation by individual iwi members in governance.

Added to these fundamental challenges is a rapidly changing and complex mix of social, economic and cultural objectives that iwi and other groups are pursuing.

Ostrom’s empirical work also suggests that successful and enduring self-organisation is associated with users of the resources designing their own rules, rather than having them externally imposed. Developing a capacity for “share-holder activism” by iwi members is important to ensuring the satisfactory functioning of governance structures and the accountability of leaders. How iwi governance evolves in coming years and decades, and the manner in which different iwi reconcile norms of tikanga with Western democratic practice, seem likely to be an important influence on the relative performance of iwi over time. In this sense there is scope for competition between different institutional arrangements.

In this situation, one could argue that government’s role should be limited to providing minimum enabling conditions and leaving the evolution of iwi governance norms to Maori to determine (including through appeal to the courts). However, the role of iwi and other collective groups as the recipients of public resources from Treaty claims, and the need to ensure the durability of Treaty settlements, means that iwi governance is likely to continue to be an area of contested norms in New Zealand. The lack of participation by members is also a risk to the durability of Treaty settlements. [52]

The approach of the Office of Treaty Settlements (OTS) on this issue has been to review the governance structure proposed by a claimant group against broad principles including accountability, transparency and representation. Subsequently, the Treaty of Waitangi Fisheries Commission (TOKM) developed and disseminated benchmarks of good governance to ensure that when fishing quota is allocated to iwi it is to entities meeting some minimum specified measures of transparency and accountability.[53] More recently OTS has adopted a more specific, although still evolving, approach and now requires claimants to submit information in response to twenty questions on aspects of governance.[54] OTS uses this as a checklist in its assessment of the governance arrangements, although the primary aim of the twenty questions is to ensure more complete disclosure of the governance arrangements to the individual claimant group members. OTS has no explicitly stated minimum standards against which it assesses the governance arrangements. This is in contrast to the specific governance requirements developed by TOKM.

The government’s policy on the appropriate balance between a permissive and a more prescriptive approach to iwi governance is an important issue, and is one worthy of more policy attention than has been the case to date. The government might also play a more active role in building the constituency for good governance amongst iwi, for example, through facilitating the availability of emerging best practice models of community governance.

Greenland has concluded that the potential for improvements in the governance of Maori community processes to generate improvements in Maori well-being has not been well-recognised by policy-makers. He suggests that “the conjunction of the Treaty settlements process, the decentralisation of government functions and more recently the focus on capacity building [in Maori communities] offers an opportunity for government to encourage Maori interests (kin or non-kin, rural or urban) to build strong institutions characterised by robust governance, thereby building their social capability and enhancing well-being.” (Greenland, p.12).

5.4  Greater Transparency of Regulation

Regulation of the private sector remains a key instrument of government action, having important effects on economic efficiency and fairness. It is an important arena for ensuring opportunities for democratic participation in policy making. Regulation may also become increasingly attractive in New Zealand, both because of the high degree of transparency of fiscal policies, and because - in an MMP environment where governments will often be less assured of Parliamentary majorities – many regulations can be introduced without the need for Parliamentary approval. [55] Despite changes in recent years to improve the regulation making process in New Zealand, and the new business compliance cost regime that came into effect from 1 April 2001, some areas of concern remain.

One element of transparency that is lacking is the routine disclosure of proposals for regulations prior to their submission to Cabinet. (This includes legislation, Orders-in-Council and tertiary-level regulations). Routine disclosure would provide an opportunity for wider public input than might have occurred through selective consultation, and would increase the transparency of the rationale justifying new or amended regulations.[56]

A further area for consideration is the lack of clarity over accountability for a Regulatory Impact Statement (RIS). At present an RIS is prepared by the relevant department, but is attached as an annex to the Minister’s paper to Cabinet recommending a new or amended regulation. In this situation it may not always be entirely clear who is accountable for the content of the RIS. It would be desirable to clarify this.

Finally, there is a potential tension between the adoption by New Zealand of international regulatory standards, and the ability of New Zealanders to make representations to, and to hold standard setters accountable. This is illustrated most clearly where responsibility for setting standards in New Zealand is allocated to a single trans-national institution – such as the Australia-New Zealand Food Standards Authority. Where New Zealand is integrating with an international standard, there is a need to consider carefully the options for building in safeguards that provide continuing opportunity for the exercise of New Zealand voice. [57]

One way forward would be to explore the introduction of a Regulatory Responsibility Act. This might contain a statement of principles of good regulatory practice, clear assignment of accountabilities, and a disclosure regime to facilitate monitoring of compliance with the principles. This could provide a legislative safeguard against misuse of regulation-making powers by future governments, and might be seen as usefully buttressing New Zealand’s internationally recognised accountability arrangements for fiscal and monetary policy.

At the same time, the government could consider inviting the OECD to review New Zealand’s performance in this area, in line with the country review process the OECD has in place as part of its work programme on regulatory reform.

5.5  Transparency of Public Appointments Processes

The current procedures for appointment to statutory bodies are set out in a Cabinet Office Circular, and contain a number of provisions designed to ensure appointment on merit. However, the procedures have no statutory backing, and there are no specific transparency requirements – as there are, for instance, in the United Kingdom, where the independent Commissioner for Public Appointments has an oversight and audit role.

Given the size of the assets and funding under the control of statutory bodies in New Zealand, and the importance of having technically competent as well as representative boards, consideration should be given to strengthening the procedures requiring appointment on merit. For example, the appointment procedures in the Cabinet Office Circular could be codified at an appropriately general level in law. Ministers would certify as now that all the requirements have been met with respect to a particular appointment, but specific responsibility could be allocated for auditing and reporting to Parliament on compliance with the procedures.

5.6  The Role of Local Government

An obvious issue in considering the quality of governance in New Zealand is whether the allocation of roles and responsibilities between central and sub-national government is the most effective and efficient.

From a public finance perspective, the fundamental design problem in the vertical structure of government can be described as follows: efficiency of revenue collection suggests centralization, while efficiency of expenditures suggests somewhat more decentralization. [58]

In many countries, this conundrum is resolved through complex sharing of revenue bases and expenditure responsibilities, and through extensive revenue transfers from central to sub-national government. While addressing the revenue/expenditure mismatch, these approaches greatly increase complexity, and often result in blurred accountability.

In New Zealand a virtue of current arrangements is the relatively clear separation between central and sub-national roles and responsibilities. With one or two exceptions such as roading, local governments raise their revenues from their own dedicated tax base, and expenditure responsibilities are clearly allocated to either central or sub-national levels.

Key questions that the current arrangements raise, however, are:

• Is Government in New Zealand too centralized?;
• What are the relative benefits and costs of decentralization versus devolution? Decentralization involves delegating decision-making powers within central government agencies to managers in local offices, for example, the Regional Employment Commissioners in the Ministry of Social Development. Devolution involves the transfer of decision-making powers, for instance, to sub-national government, as occurred under the Resource Management Act, or to locally elected Boards, as occurred under the Tomorrow’s Schools initiative;
• What are the implications of devolution for the funding base of sub-national government? What are the implications if decision-making is devolved, but most funding is still held centrally, as in school governance?;
• Under a decentralization approach, what are the different ways in which local community views can be brought to bear in the decisions of central government agencies? One example is the Local Management Group structure set up under the Strengthening Families initiative, which brings together representatives of central government agencies, local government, and the non-government sector in discussions about local needs and service priorities for children at risk. Another example is the role of locally-elected District Health Boards in the health sector.

One implication of the above is that questions concerning the powers of local government, its funding base, and its accountability are closely connected and should be considered together.

Secondly, it would be highly desirable, should any fundamental changes in the powers, accountability and funding of local government in New Zealand be considered in future, for these to be informed by some in-depth comparative review of recent experiences in New Zealand with devolution and decentralization. An investigation of experience with the Resource Management Act (devolution), the current framework for roading (overlapping roles and mixed funding), and the Regional Employment Commissioners and Strengthening Families initiatives (decentralization) could highlight interesting features of these very different approaches, and provide important insights for policy. This could usefully be combined with some careful assessment of arrangements in selected relevant countries (including the variation across Australian States in the extent to which responsibilities are devolved below State level).