Part 6: Consulting the community on major issues

Matters arising from the 2012-22 local authority long-term plans.

In this Part, we discuss how local authorities consulted with their communities about the most important issues in the 2012-22 LTPs. We discuss:

  • the major issues presented for consultation in the 2012-22 LTPs;
  • the opportunity local authorities had to produce shorter, more "user friendly" LTPs after the TAFM changes to the Act;
  • the link between presenting major issues to the community and the financial strategy;
  • legislative compliance issues arising in the consultation process for the 2012-22 LTPs; and
  • our views on the need to make the LTP more accessible to ratepayers.

Importance of engaging with the community on major issues

Communities elect local representatives to make decisions on their behalf but expect to be consulted on significant decisions that affect them. Communities also expect that councillors and staff will take account of their views. The LTP is an important part of this. One of its main purposes is to:

... provide an opportunity for participation by the public in decision-making processes on activities to be undertaken by the local authority.49

Every three years, the draft LTP and summary give local authorities the opportunity to seek community views on the major issues facing the community. Local authorities must use the special consultative procedure to seek comments on the draft LTP and summary.

Each local authority can use its own judgement about how much information and detail to put in the LTP, having regard to the significance of the issues that it seeks views on and its resources. LTPs tend to be large documents, containing a great deal of detail. Local authorities need to think carefully about how to communicate the strategic and major issues, choices, and implications, so they are readily apparent to their communities.

The summary must be a "fair representation of the major matters in the statement of proposal". The summary is the key consultation document for the community. Therefore, it is essential that the summary is not only a fair reflection of the overall content of the draft LTP but also that it presents the strategic and other key issues, choices, and implications contained in the draft LTP to the community in an accessible way.

In September 2011, SOLGM issued updated guidance on preparing a good LTP summary called Telling Our Stories 2012. The key message is that the LTP summary is not an add-on or the "thing that's last on the list", but is an integral part of the process. The guidance contains examples from the local authorities that produced four of the five best LTP summaries in 2009.

The TAFM changes to the Act were partly intended to reduce the size of LTPs. Previously, the LTP had to include the funding and financial policies that a local authority had adopted under section 102 of the Act. After the TAFM changes, the 2012-22 LTPs had to include only the local authority's revenue and financing policy, although the financial strategy should reflect the more strategic elements of other policies (such as the liability management and investment policies).

The Act requires the auditor to consider the extent to which the draft LTP and final LTP comply with the requirements of the Act. As part of auditing legislative compliance, our auditors consider:

  • whether the draft LTP clearly presents strategic and other important issues, choices, and implications to the community; and
  • whether the summary fairly represents the major matters in the draft LTP.

Our auditors also consider whether local authorities have complied with the Act's consultation requirements in seeking community views on their draft LTPs.

Our auditors consider and make judgements on the following questions:

  • Are the draft LTP and summary readable and clear for a moderately informed reader?
  • Are the issues that the local authority has focused on and presented in the draft LTP complete?
  • Are these the strategic and other key issues and choices that the community needs to consider?
  • Are the implications of different options fully disclosed, including options for rates, debt, and levels of service?

This part of the audit process is strongly focused on reaching an overall conclusion based on our completed audit work. It is evaluative and relies on knowledge of the local authority and professional judgement, rather than being based on technical audit procedures.

Overall, our auditors found that the most significant issues were presented to the community. However, we noted that the way in which local authorities presented the issues, choices, and implications for how they could address the issues was less clearly set out than in either the 2009-19 LTPs or the recommendations of the SOLGM guidance and our previous reports.

Major issues presented in the 2012-22 LTPs compared with the 2009-19 LTPs

In our report on the 2009-19 LTPs, we noted that the issues that local authorities presented for community consideration were clearly affected by the global recession. A dominant theme of those LTPs was affordability, although there was optimism because it was unclear at that time how significant the recession would be.

Against this background, the specific issues raised by local authorities in 2009-19 LTPs were wide ranging. They included proposals for:

  • large infrastructure asset development and upgrades;
  • community facilities, such as stadiums and events centres;
  • relocating and renewing libraries;
  • developing and amending the approach to providing community housing;
  • creating and disestablishing council-controlled organisations; and
  • preparing policies to guide responses to the effects of climate change.

The initial effects of the global recession, as seen in 2009, did not result in local authorities significantly reducing their activities. In general, local authorities presented a strong argument to their communities about the importance of ongoing prudent management of core infrastructure and long-term, progressive development of other infrastructure and facilities.

Since the 2009-19 LTPs, there has been increasing focus by central government on financial restraint in the public sector. In the local government sector, this has led to greater focus and interest by the Government and ratepayers on the levels of expenditure, rates, and debt. It is also a reflection of community feedback on their sense of the economic constraints they feel and the need for local authority plans to consider the community's ability to pay increasing rates.

The Better Local Government reform proposals were announced in March 2012, when local authorities were finalising their draft LTPs for consultation. In introducing the reforms, the Minister of Local Government said:

These local government reforms are part of the Government's broader agenda. We are rebalancing the New Zealand economy away from the increased public spending and debt of the previous decade. We are building a more competitive and productive economy. This requires that both central and local government improve the efficiency of delivering public services. It is also critical to New Zealand's future that both government and councils take a prudent approach to public debt.50

The general environment in which local authorities were preparing their 2012-22 LTPs was one of economic restraint and close scrutiny of spending and debt. The fact that local authorities had to publish their financial strategy in their LTPs for the first time further focused them on core economic considerations.

The major issues for consultation were all inherently linked to the local authority's financial strategy. We discussed the main financial strategy issues in Part 2, including how several local authorities took what they described as a "no frills" approach in their LTPs.

This approach is understandable in the economic environment. However, "no frills" and "just in time" approaches do require very good asset management planning. Without good asset planning, the risk is that a local authority will defer necessary expenditure too long and that assets will fail or cost more to replace. This also defers problems so future ratepayers have to pay for them. Our auditors needed to consider whether the LTPs were prudent in this regard.

Consultation issues in preparing the 2012-22 LTPs

Local authorities consulted on the major issues

Auditors did not have any significant concerns that local authorities were not consulting on the major issues in the 2012-22 LTPs. Instead, auditors tended to suggest improvements to completeness or presentation rather than raise substantive issues. We partly focused on how well the LTP summary reflected the financial strategy, because the financial strategy was a new requirement.

Issues with the consultation process

The Act sets out the steps that local authorities must go through when using the special consultative procedure, specifying what they must tell people when acknowledging submissions.

The Act is very prescriptive in this regard. The steps include ensuring that a person who makes a submission:

  • is sent a written notice acknowledging receipt of that person's submission; and
  • is given a reasonable opportunity to be heard (if that person so requests).

The written notice must:

  • tell the person about their opportunity to be heard; and
  • explain how the person can exercise that opportunity.

As noted earlier, our audit report on the draft and final LTP must comment on the extent to which a local authority has met the requirements of the Act, including the consultation procedures. Auditors consider whether the local authority complies with the Act in all material respects. If so, the auditor can issue a clear audit opinion.

Some local authorities did not meet these procedural requirements in all respects. Kaipara District Council provided a submission form in its LTP summary asking people to indicate whether they wanted to be heard, and giving information about how they could exercise that right, but did not include all of the required information in the standard acknowledgement letter. There were also problems with people not receiving letters telling them about hearings. We considered that the Council had not complied with the Act in all material respects and referred to the breach of the consultation requirements in our audit report.

Wanganui District Council also included information in the LTP summary about the right to be heard, and asked people to indicate whether they wanted to be heard. Those that said they did not want to be heard received an acknowledgement letter noting that, and telling them that their submission would be considered. This was a different approach from that prescribed by the Act, but we considered that the Council had complied with the requirements in all material respects because people who had said they wanted to be heard were given that opportunity.

Using rates remissions policies to mitigate rates changes

Another legislative compliance issue that arose concerned proposed changes to rating systems and using rates remissions and postponement policies to soften the unintended effects of the proposed changes on some ratepayers. In these instances, each local authority decided to use its rates remission policy to mitigate the unintended consequences.

The issue that arose for four local authorities was whether further consultation was required on the proposed changes to the rates remissions policies, or whether changes to these policies could be made in response to comments on the draft LTP without further consultation.

In three cases, the local authorities decided on further consultation because they had not sought specific comments on their rates remissions policies in the LTP process. A rates remissions policy can be amended only by using the special consultative procedure. Two of these three local authorities did this after they adopted their LTP, and the other local authority consulted further before adopting its LTP. The fourth local authority decided not to consult further. That local authority had included some proposed changes to its remissions policy in its LTP, but not the change that it wished to make after consultation. We accepted that this approach was reasonable in the circumstances.

The opportunity to produce shorter LTPs

Not all local authorities took advantage of the TAFM changes that allowed them to produce shorter LTPs. Some local authorities kept the full policies in the LTP because they were consulting on changes to them or were integral to a consultation issue in the LTP. For others, it was not clear why local authorities kept them in. We have assumed that it might have been convenient for the local authority to partly roll over the content of the 2009-19 LTPs than to change the structure of their LTP to match the changes to the legislation, particularly if the policies had not changed. It is more challenging to produce a concise and focused LTP than a long one.

Our understanding is that the Better Local Government reform programme might lead to changes that enable local authorities to produce shorter, more focused LTPs. This should help to make the LTP document, along with the LTP summary, more suitable for consultation.

Those local authorities that made the effort to reduce the size of their LTP generally gave more accessible documents to their communities. We have already noted that Hamilton City Council produced a clear and well-presented financial strategy (see Part 2). This reflected the tone of the entire LTP, which we considered to be concise and written in a ratepayer-focused way. At 181 pages, it was one of the most concise LTPs produced and follows in the footsteps of the concise LTP prepared by the former Manukau City Council in 2009.

Accessibility of LTPs

The sector has now completed four rounds of LTP preparation and adoption. The first round in 2003 and 2004 did not require an audit but, as now required by the Act, we have audited the LTPs prepared for 2006-16, 2009-19, and 2012-22.

Since our involvement in 2006, we have considered the purpose of an LTP. In 2006, we noted the criticism by some in the sector that there was an apparent contradiction in the role of the LTP between a high level description of strategy and a document to record detailed management intentions. We commented that we considered there was a middle ground between the two roles:

This would be where the [LTP] articulates a local authority's strategy (informed by both community desires and the reality of the community's circumstances) and also provides an integrated view of the policies and actions required to support the strategy.51

Broadly, we still hold this view. However, we are concerned by the practice that has emerged where the strategy and associated plans have become focused on detail, complexity, and prescription. LTPs are documents that are largely meaningful only to well-informed and special interest groups. With some exceptions, LTPs are not focused on communicating clearly to ratepayers.

We are disappointed that few local authorities have taken the opportunity that the TAFM reforms offered to reduce the size and some of the complexity of their LTPs. We are reminded of a comment by an experienced senior corporate planning manager who prepared an LTP in 2003, who said that, if he had had another month to prepare the local authority's LTP, he would have spent it on improving the summary – that is, the information that can make the LTP most accessible to ratepayers and help them to understand a local authority's plans.

As we were preparing this report, the Local Government Efficiency Taskforce was considering the nature of the planning, accountability, and decision-making of local authorities. After four rounds of LTPs, we support this process. Further, we have offered insights consistent with the observations in this report and suggested consideration of a move to a more strategic document. We would like to see planning and accountability documents that focus on the important issues (including prospective financial information and level of service intentions), and provide access to supporting data and policies through each local authority's website.

We consider that, until the Act's disclosure requirements are based on principles and not prescription and until local authorities invest in preparing clearer and more informative LTPs, most communities will miss out on better informed and more effective consultation about their local authority's intentions.

49: Section 93(6)(f) of the Act.

50: Department of Internal Affairs, Better Local Government, Minister's foreword.

51: Matters arising from the 2006-16 Long-term Council Community Plans, page 5.

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