Part 1: Introduction

Local authority codes of conduct.

1.1
In this Part, we explain the background to our report, what we looked at, and how we carried out our study. We also discuss the development of the Local Government Act insofar as it relates to codes of conduct, and how local authorities previously dealt with conduct issues.

Background to codes of conduct

1.2
Since 1 July 2003, each local authority has been legally required to adopt a code of conduct for its elected members.1 This is a new requirement for councils, introduced by the Local Government Act 2002 (the Act).

1.3
The Act sets out the matters that a code of conduct must provide for. Codes of conduct govern only members (that is, mayors2 and councillors). However, they are not limited to “member-to-member” matters, and so do not operate solely in the political arena. Codes of conduct also deal with, for example, the behaviour of members towards staff and the public, and disclosure of information to and by elected members.

1.4
The Act requires a member of a council to comply with the council’s code of conduct, but does not expressly provide penalties or mechanisms for dealing with breaches of a code (other than confirming that breach of a code is not an offence). It is for each council to determine any penalties for breach of its code and how alleged breaches will be considered.

1.5
Codes of conduct can be seen as part of the governance framework for councils and as a tool for encouraging good governance practices. They should help councils give effect to the governance principles specified in the Act. These principles require councils to (among other things) ensure that:

  • the role of democratic governance, and the expected conduct of members, is clear and understood by members and the community;
  • governance structures and processes are effective, open, and transparent;
  • they operate as a good employer; and
  • the relationship between members and management is effective and understood.3

1.6
Some code of conduct issues over the last couple of years have attracted a high public profile, and have involved acrimonious disputes, including challenges to either the code or the council’s procedure in dealing with an alleged breach, or its finding of breach of the code. In one such case, the complainants were members of the public. This raised the wider issue of whether codes of conduct can (or should) provide a public law remedy for use by aggrieved members of the public.

Why we looked at codes of conduct

1.7
We have an ongoing interest in governance and probity matters in public entities and many of our inquiries focus on behaviour or conduct issues. We consider that members of the public share that interest, and are particularly interested in how public resources are used and how public officials should behave. In our experience, members of the public do not wish to see resources being consumed by public entities in sorting out “behaviour” issues.

1.8
In the local government area, we have received an increasing number of queries and complaints from councils and members of the public about the application of codes of conduct to particular issues. Some of these queries and complaints indicated that there may be confusion and frustration among council members, staff, and members of the public about what purpose codes of conduct serve, and how they are supposed to be used. We were aware that a small number of councils were having problems with investigations under their codes, and that code matters were taking up large amounts of the time of councillors and senior staff. We had anecdotal evidence of some cynicism in the local government sector about the usefulness of codes, and wondered whether some councils might have approached codes of conduct as a matter of compliance (that is, adopted a code because they had to, using a standard model provided) rather than as a tool genuinely to improve governance.

1.9
We decided to examine how councils have implemented the requirement to have a code of conduct, and how codes of conduct are being used by councils, their members, and the public. As the requirement is fairly new, some councils may be breaking new ground in dealing with alleged breaches through the code enforcement process. We considered that the experiences of those councils that have used their codes, including any problems they had encountered, might be useful for other councils in dealing with conduct issues in the future or when reviewing their codes.

1.10
The Local Government Commission has an interest in the code of conduct regime, and is keen to see whether the development of codes of conduct has affected how people work together and their behaviour. The Commission supported our doing work that could help it to consider that question.

Purpose of our study

1.11
The purpose of the study was to:

  • assure Parliament that councils have properly implemented the requirement to have a code of conduct;
  • examine how councils have given effect to the requirement to have codes; and
  • report to Parliament and the local government sector on councils’ experiences in using their codes, to enhance general understanding of codes and assist councils in addressing conduct issues in the future.

What we looked at

1.12
We examined:

  • whether all councils have complied with the legal requirement to adopt a code of conduct and whether the codes meet the requirements of the Act;
  • what the contents of codes typically comprise, and whether there are gaps or areas for improvement;
  • how codes are being used by councils, their members, and the public, including:
    • whether councils encourage and enforce compliance with codes, and in particular how they deal with alleged breaches of codes;
    • whether codes of conduct are available to, and known and understood by, council members, staff, and members of the public (including whether codes of conduct are promoted by councils as a remedy, in public law terms, for use by aggrieved members, staff, or members of the public);
  • whether the sector has clear views on how codes are working so far, and
  • whether they could be improved; any problems or “lessons learned” by those councils that have used their codes; and
  • how the code of conduct regime compares with other mechanisms for managing public sector ethical and behavioural issues elsewhere in New Zealand and overseas.

What we did not look at

1.13
We have not questioned whether codes of conduct are a good or bad thing in themselves, or whether the law ought to provide for explicit and meaningful penalties for breach of a code. Our starting point is that Parliament has required councils to have codes of conduct. We therefore focused on how councils are implementing this requirement, and on what, if any, problems they have encountered in doing so.

How we did the study

1.14
To carry out our study we:

  • checked whether codes are publicly available, by obtaining the code from each council’s website or from the council directly if not available on the website;
  • examined the codes and governance statements of all 854 councils to check for compliance with the requirements of the Act;
  • analysed and recorded the sorts of matters covered by codes, and checked the extent to which a standard template had been used;
  • considered each council’s approach to compliance and enforcement, and explanation of potential penalties and the investigation process;
  • wrote to all councils about our study, inviting those we were not intending to visit to contact us with any comments;
  • interviewed a selection of members, senior staff and advisers of 12 councils,5 and asked them about their experiences with their code; including:
    • how they encourage and enforce compliance with the code, and what problems they had encountered in doing so;
    • the level of use and understanding of codes by members, staff and the public, including the council’s attitude to considering complaints from members of the public;
    • how (if at all) the council had dealt with enforcement action under the code, what process it followed, whether and how councils encourage compliance in other ways, and whether codes and the results of enforcement action are widely accepted by members;
    • whether the introduction of the code has improved ethical and governance practices of members, (including whether the code is useful in defusing potential problems before they escalate, whether the code is used in appropriate situations, and whether the code is used in inappropriate situations);
  • met with representatives of local government sector organisations (namely, Local Government New Zealand and the Society of Local Government Managers), to ask them about their overall impressions of how codes of conduct appear to be operating;
  • asked the Department of Internal Affairs about the policy rationale for the statutory requirement for a code of conduct;
  • researched and analysed published commentary about codes of conduct; and
  • compared mechanisms that apply to conduct of public officials in other areas of the public sector in New Zealand and to local government in Australia and the United Kingdom.

Reason for requiring a statutory code of conduct

1.15
The rest of this Part covers the policy rationale for requiring a code, and how councils previously dealt with conduct issues.

1.16
We were interested in Parliament’s reason for introducing a statutory requirement for a code of conduct. We wondered whether there was a concern about the conduct of council members at that time, and whether events at Rodney District Council (leading to the appointment of a Commissioner in 2000) or at other councils had contributed to a perceived need for a statutory code.

1.17
We reviewed policy papers leading up to the development of the Local Government Bill and spoke to the Department of Internal Affairs (DIA) and Local Government New Zealand (LGNZ).

1.18
The requirement seems to have been broadly supported by the local government sector, with the main issue for debate being whether penalties for a breach of a code should be provided for in the Act or left to each council to determine in its code.

1.19
LGNZ supported the introduction of a statutory requirement for a code. At the time codes were proposed, LGNZ viewed them as an appropriate method of regulating matters not covered by standing orders, and to help control the conduct of members in (among other matters) their dealings with council staff.

1.20
LGNZ had been asked for assistance in governance matters by one council around 1997 and had developed a “code of conduct” for that council. The council adopted the code, and found it helpful at that time. LGNZ told us that other councils adopted voluntary codes before the Act made it a statutory requirement. This was confirmed by some of the councils that we visited for this study, who had adopted policies or sets of “governance principles” with some elements of a code of conduct.

1.21
In policy papers, the first mention we found was in a document produced by LGNZ, the Society of Local Government Managers (SOLGM), and the DIA in 2000 entitled Vision and Strategy for Local Government in 2010. That document encouraged councils to adopt voluntary codes of conduct, codes of ethics, and citizens’ charters, to articulate levels of performance and behaviour that people could expect from councils, and also mentioned the possibility of a new Local Government Act requiring a code of conduct.

1.22
The review of the Local Government Act 1974, which commenced in March 2000, was influenced by reforms in the United Kingdom in the late 1990s that led to the Local Government Act 2000 (UK). For example, that Act empowered local authorities to do anything that promotes economic, social or environmental wellbeing in their communities, which is very similar to the general empowerment of councils that is now provided for in New Zealand’s Local Government Act 2002.

1.23
The UK Act also introduced a requirement for a statutory code of conduct for local authorities in England and Wales. One commentator has suggested that language in the Vision and Strategy document referred to in paragraph 1.21 above shows that the New Zealand local government sector was playing close attention to reforms then occurring in the United Kingdom, and that the British Government’s agenda for greater regulation of ethics and conduct of local authority members may have influenced New Zealand policy makers.6 Indeed, the commentator suggests that the policy rationale for codes of conduct in New Zealand may have been more influenced by the British agenda of local government reform than any clear New Zealand policy context.

1.24
In 2001 the DIA issued a consultation document on the review of the Local Government Act 1974. It proposed, among other things, that councils adopt a code that would cover conflicts of interest, and perhaps behaviour, mediation, sanctions, relationships, customer service, and complaints.7

1.25
A report on submissions on the consultation document8 reported considerable support for codes (of the 185 submissions that discussed the issue, 63% were clearly in favour and 11% were clearly opposed). Suggestions about codes included providing for penalties (22 submissions), setting out the standards required (14), and sending serious conflicts to a local government commissioner for resolution (14).

1.26
The DIA prepared a paper seeking Cabinet’s approval for a statutory requirement for councils to adopt a code of conduct and a corresponding statutory provision requiring members to abide by their code. LGNZ was reported as supporting codes, and proposing penalties to enable their enforcement. However, the paper concluded that the Local Government Bill should not include penalties for breach of codes. The paper said that to develop penalties in legislation potentially conflicted with the political accountability of members to the electorate and, to avoid the inherent problems of members sanctioning other members, would require some form of external and independent body.

1.27
In October 2001, the Government agreed that the Local Government Bill should require councils to adopt a code, and that it apply to all members, but that the Bill should not provide for penalties for breaches.

1.28
At the Select Committee stage, key issues from the analysis of submissions were as follows:

  • 2 councils expressed unqualified support for a code;
  • 5 councils supported it, but said it should be optional;
  • 5 councils opposed having a code. Some called it excessive. Some said standing orders regulate conduct;
  • 23 councils asked for specific penalties to be included in the Act, as did LGNZ and the Chamber of Commerce. Some mentioned suspension. Some asked for cases to be heard and determined by the Local Government Commission; and
  • 2 councils opposed penalties. Another council expressed concern about codes being used unjustifiably to persecute a member.

1.29
In advice to the Select Committee, the DIA said that it was a policy decision not to require penalties. This was said to be based on concerns about members judging each other, natural justice, and the need for appeal rights to independent bodies. The DIA suggested that councils could consider “the imposition of voluntary sanctions”. It recommended that the Bill be amended to clarify that a breach of a code is not an offence.

1.30
Some submissions suggested contents for codes. The DIA advised this should be a matter for councils to determine. In response to some submissions, the DIA recommended amending the Bill to require codes to include an explanation of laws affecting members.

1.31
The Select Committee proposed some minor amendments to the code requirement in the Bill as introduced. The version of the Bill reported back to the House expanded the list of things to be set out in codes by adding a requirement for codes to include a general explanation of the Local Government Official Information and Meetings Act 1987 and other laws applicable to members, and added a new provision, to clarify that breach of a code is not an offence.

1.32
From our review of the policy work leading to the code requirement in the Act, it is unclear as to what “mischief” codes were intended to address. There seems to be general agreement that a statutory code was a good idea. It was supported by LGNZ and many councils, and was in line with developments in the United Kingdom. However, there is no clear explanation in the policy papers of any particular concern about “conduct” issues at councils that the requirement was intended to address.

1.33
The enacted version of the requirement9 is as follows–

15. Code of conduct—
(1) A local authority must adopt a code of conduct for members of the local authority as soon as practicable after the commencement of this Act.
(2) The code of conduct must set out—
(a) understandings and expectations adopted by the local authority about the manner in which members may conduct themselves while acting in their capacity as members, including—
(i) behaviour toward one another, staff, and the public; and
(ii) disclosure of information, including (but not limited to) the provision of any document, to elected members that—
(A) is received by, or is in the possession of, an elected member in his or her capacity as an elected member; and
(B) relates to the ability of the local authority to give effect to any provision of this Act; and
(b) a general explanation of—
(i) the Local Government Official Information and Meetings Act 1987; and
(ii) any other enactment or rule of law applicable to members.
(3) A local authority may amend or replace its code of conduct, but may not revoke it without replacement.
(4) A member of a local authority must comply with the code of conduct of that local authority.
(5) A local authority must, when adopting a code of conduct, consider whether it must require a member or newly elected member to declare whether or not the member or newly elected member is an undischarged bankrupt.
(6) After the adoption of the first code of conduct, an amendment of the code of conduct or the adoption of a new code of conduct requires, in every case, a vote in support of the amendment of not less than 75% of the members present.
(7) To avoid doubt, a breach of the code of conduct does not constitute an offence under this Act.

How councils previously dealt with conduct issues

1.34
We asked councils how any conduct issues were dealt with before having a code of conduct.

1.35
We were aware that, prior to having a code, councils had penalised members for “misbehaviour”, by censuring10 a member or removing them from the role of chairing or being a member of a committee. Under the Local Government Act 1974, members were generally paid on the basis of their attendance at meetings, so loss of any position on a committee often had a financial consequence. However, under the current remuneration regime, members are often paid an annual salary instead. Committee chairs frequently receive a higher salary than ordinary members, so a member who is removed from a position as chair of a committee may suffer a financial consequence, but an ordinary member who is removed from a committee may not now suffer any financial consequence at all.

1.36
Councils that we spoke to, that had such issues prior to having a code, dealt with them informally, by either the mayor or the chief executive officer, or both, talking to the member concerned. In some cases, where an elected member had offended a staff member in some way, the matter was resolved by a meeting between the parties and an apology. Issues between elected members were harder to address, but often an attempt was made to resolve matters informally by getting the members together. This was not always possible where relationships had deteriorated. In some cases, particularly where there were political factions on the council, a more political solution was reached, with a member being voted off committees.

1.37
Without an enforcement process set out in a code, councils had to determine their own procedures for dealing with conduct issues.

1: The requirement applies to city councils, district councils, and regional councils. In this report, we use the term “councils” to refer to all 3 types of local authority.

2: The head of a city or district council is called the “mayor”, but the head of a regional council is called the “chair”. For simplicity, we use the term “mayor” in this report to refer to both mayors and chairs.

3: See section 39, Local Government Act 2002.

4: Banks Peninsula District Council was not included, as it was in the process of amalgamating with Christchurch City Council.

5: Clutha, Gore, Rodney, South Taranaki, Waimakariri, and Wanganui District Councils; Christchurch, Dunedin, Waitakere and Wellington City Councils; and Canterbury and Wellington Regional Councils.

6: Leyland, Tim, 2005, The Design and Implementation of Codes of Conduct in New Zealand Local Government 2003-2004 (unpublished research paper), pages 8-9.

7: Department of Internal Affairs June 2001, Reviewing the Local Government Act 1974: Have Your Say, Consultation Document.

8: Department of Internal Affairs October 2001, Review of the Local Government Act 1974: Synopsis of Submissions.

9: Clause 15, Schedule 7, Local Government Act 2002.

10: The penalty of “censure” is not a statutory concept, and appears to be based on practice and standing orders.

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