Part 2: Our observations on the consultation documents

2.1
In this Part, we look at:

• how local authorities responded to the new requirement to produce a consultation document;
• how local authorities met the mandatory content requirements for their consultation documents;⁶ and
• how local authorities can improve their consultation documents.

How local authorities responded to the new requirement

2.2
2015 was the first year that local authorities were required to produce a consultation document for their LTP.

2.3
The new consultation process was intended to improve the way local authorities engage with their communities. Overall, auditors considered that all consultation documents were sufficiently "fit for purpose" to issue an unmodified audit opinion.⁷ However, there is considerable room to improve future consultation documents.

2.4
In our view, the better consultation documents:

• provided a good summary of the main elements of a local authority's financial and infrastructure strategies as context for LTPs;
• highlighted the significant issues, options, and implications and how they would affect members of the public and communities; and
• had specific questions about the options facing members of the public.

2.5
Effective consultation documents also highlighted the significant issues. When other information was also presented, this was clearly separated so that the community could identify what issues were being consulted on and therefore what to focus on.

2.6
However, many local authorities missed an opportunity to engage effectively with their communities about the significant issues facing them. These consultation documents often:

• included too much background or other unnecessary information, leading to a loss of focus;
• contained poor discussion of the infrastructure and financial strategies, so it was difficult to understand what the strategies were and how they related to the significant issues;
• were unclear about which issues the local authority had already consulted on and which were new issues for consultation; and
• had poorly drafted consultation questions, making it difficult for the community to understand what the local authority was seeking a response on.

2.7
The quality of consultation documents might have been affected by the short time frame between the amendments to the Act (enacted on 7 August 2014) and the deadline to produce the consultation document. It was also evident that some local authorities did not allocate enough resources to properly prepare their consultation document.

2.8
Some local authorities poorly managed their LTP process, allowing inadequate time for consideration of how to present their issues in the consultation document. This put time frames under pressure. This pressure was evident in some consultation documents, which looked as though they had been prepared at the last minute.

2.9
The complexity of matters facing a local authority did not appear to be a factor in determining quality. We saw strong consultation documents from local authorities facing significant and complex issues and poor consultation documents from local authorities with fewer or more straightforward issues.

How local authorities met the content requirements

2.10
The content of a consultation document must be what the local authority considers on reasonable grounds will achieve the statutory purpose of the consultation document.⁸

2.11
In auditing consultation documents, we looked for evidence that the local authority had used a suitable process to determine what to include. The use of "reasonable grounds" is an objective rather than a subjective test. It is what "an ordinary person on the street" would consider reasonable, not what the local authority considers reasonable.

2.12
On this basis, we considered whether the issues that the local authority had included or excluded were reasonable. We identified only one instance where we considered that an issue had been unreasonably excluded (see paragraph 2.16).

2.13
We also considered whether the consultation document contained the mandatory disclosures the Act requires. These are:

• a description of each issue that the local authority considers should be included in the consultation document, having regard to the local authority's significance and engagement policy and the importance of other matters to its district and community;
• the main options for addressing each identified issue and the implications (including financial implications) for each option, the local authority's proposal for addressing each issue, and the likely consequences on rates, debt, and levels of service;
• other matters of public interest in the proposed content of the local authority's financial strategy, including the quantified limits on rates, rate increases, and borrowing set out in that strategy, and the proposed content of the local authority's infrastructure strategy;
• any significant changes to the way the local authority funds its operating and capital expenditure, including any changes to its rating system;
• the effect of the proposals on rates assessed on different categories of rateable land with a range of property values; and
• the direction, scale, and nature of changes to rates, debt levels, and levels of service in the proposed content of its LTP (using graphs or charts).

2.14
A consultation document must also state where members of the public can obtain information adopted by the local authority. This includes providing links to appropriate documents. See paragraphs 2.48-2.59 for further discussion of these requirements.

The local authority's significance and engagement policy and the importance of other matters

2.15
Section 76AA of the Act requires every local authority to adopt a significance and engagement policy. The purpose of the policy is to:

• enable the local authority and its communities to identify the significance of particular issues, proposals, assets, decisions, and activities;
• provide clarity about how and when communities can expect to be engaged in decisions about different issues, assets, or other matters; and
• inform the local authority from the beginning of a decision-making process about:
  • the extent of any public engagement that is expected before a particular decision is made; and
  • the form or type of engagement required.⁹

2.16
The Act requires a local authority to assess, based on its significance and engagement policy and other relevant matters, the matters it will include in its consultation document. We noted that:

• Local authorities generally included all matters they should have.
• Local authorities also included matters that were particularly important to their community, even though some of the dollar amounts involved (as a proxy for significance) were quite small. These matters included repairs to footpaths, proposed new street lighting, proposed changes to road intersections, and toilet upgrades.
• One local authority excluded its most significant issue from its draft consultation document presented for audit, for unclear reasons. After discussion with its auditor, the local authority included the issue in the consultation document.

2.17
Some local authorities did not clearly identify the matters they were consulting on. In some consultation documents, it was difficult to know whether an issue had been included as a consultation issue or whether it was just for the public's information, because the local authority had already consulted on it.

2.18
In our view, it is better to clearly focus on the matters being consulted on and to leave out non-essential content unless it is clearly explained why the information assists the community to understand the consultation matters.

2.19
Accordingly, a consultation document needs to be clear about matters a local authority:

• has already consulted on;
• is currently consulting on; and
• will consult on in the future through a separate consultation process.

2.20
Overall, we were satisfied that local authorities exercised their discretion appropriately and included the appropriate matters.

Identifying options, implications, and consequences

2.21
An important part of each consultation document is the local authority's presentation of the options, implications, and consequences for each identified issue.

2.22
Local authorities presented their options, implications, and consequences in a variety of ways, including using tables and charts. Other consultation documents described the matters in text.

2.23
An approach that some local authorities adopted, which we thought was particularly effective, was to provide a table for each option and then set out how each option would affect rates, debt levels, and levels of service. This provided members of the public with specific information about the matters being consulted on.

2.24
This method of presentation was particularly effective when the local authority also clearly identified which of the presented options it preferred, along with the reason why. Figure 1 sets out this method of presentation.

Figure 1
Example of option presentation

Option	Impact on rates	Impact on debt	Impact on levels of service
1.
2.
3.

2.25
Some local authorities struggled to set out options, implications, and consequences in an easily understandable way. Some consultation documents:

• did not provide options for all the significant issues;
• were unclear about the costs of particular options; and
• were unclear about the effect of projects over the long term, such as the number of years until loans would be paid off.

2.26
Another challenge faced by local authorities was what they should say in their consultation documents when there is only one realistic option. Our view is that it might be appropriate for a local authority to provide only one option, but it should tell the public why it considers that there are no other realistic options. In most cases, a local authority will have at least two options available to it – "do it" or "don't do it". The Act does not require multiple options to be presented. The emphasis is on providing genuine options for the community.

2.27
For some consultation matters, the status quo is a valid option. However, not all local authorities presented the status quo option or the associated implications in their consultation documents. In many instances, we considered that the local authority omitted a possible option that the community might have views on.

2.28
Local authorities that identified the status quo as a valid option in their consultation documents were sometimes not clear what level of service they currently provided. Local authorities might have assumed that the community understood the current levels of service. However, this might not always be the case.

Proposed content of the local authority's financial strategy and infrastructure strategy

2.29
The Act requires a consultation document to include matters of public interest about a local authority's financial strategy and infrastructure strategy.

2.30
The better consultation documents often used the main elements of the proposed financial and infrastructure strategies to introduce the significant issues for consultation. For example, these consultation documents:

• provided clear and concise information about the local authority's current financial and infrastructure strategies;
• discussed any proposed changes to the local authority's financial and infrastructure strategies – such as changes to debt levels, funding renewals expenditure, and levels of service; and
• asked for feedback on the proposed options, implications, and consequences.

2.31
However, some local authorities appeared to do little more than "cut and paste" extracts from their financial and infrastructure strategies without providing very much context for the extracts. Alternatively, some consultation documents defined what a financial strategy and/or infrastructure strategy was, but were minimalistic when describing the local authority's own financial or infrastructure strategy. Neither of these approaches helped members of the public understand a local authority's financial or infrastructure strategy.

2.32
Local authorities generally included all relevant rates information. However, two rates-related limits are required by the Act – on rates increases and on total rates. Not all consultation documents clearly included both these rates-related limits.

Significant changes to the way a local authority funds its operating and capital expenditure

2.33
A consultation document must include any proposed significant changes to the way the local authority funds its operating and capital expenditure requirements, including changes to its rating system.

2.34
Some local authorities sought to change their rating systems, or elements of their rating system, and generally explained in enough detail:

• the current rating system;
• the proposed rating system; and
• reasons for the change.

2.35
Given the significance that rating changes have for members of the public, it is particularly important for a local authority to provide enough information to allow members of the public to fully understand the reasons for the changes, including costs, effects, and benefits. Arguably, some local authorities changing their rating systems could have provided more in-depth analysis of the reasons for the change.

2.36
There are detailed legal requirements for changing rating systems. In one instance, questions arose about the legality of a proposed rate change. It is important for a local authority to seek legal advice when there is any doubt about the legality of a rate change.

Effect of the proposals on rates

2.37
Local authorities generally managed well the requirement to report the effect of proposals on rates assessed on different categories of rateable land with a range of property values. That said, some consultation documents provided too much information. For example, one consultation document provided five full pages of comparative rate information. Given the purpose of consultation documents, this seemed excessive.

2.38
A further issue was whether the effect on rates for a range of property values could be shown for just the first year of the LTP or whether it needed to be shown for 10 years.

2.39
Our view is that the Act requires the range of property values to be provided for only the first year of the LTP, although a local authority could provide information for more years. This aligns with the disclosure requirements for the funding impact statement in the LTP,¹⁰ which requires rating examples information for the first year only. Transparency across the 10 years of the plan should be encouraged as a matter of good practice.

2.40
The better consultation documents disclosed the effect on an average individual ratepayer, rather than just the total cost to the community as a whole, of the options presented.

2.41
As well as the required disclosures, some local authorities referred to rates calculators either in their consultation document or on their websites. These rates calculators allow individual ratepayers to more accurately estimate what their rates would be under the proposals they are being consulted on. We consider that this is a very effective tool for a local authority to provide for their community.

Using graphs and charts to show changes to rates, debt levels, and levels of service

2.42
Most consultation documents made good use of charts and graphs, particularly to highlight rate and debt levels.

2.43
However, some of the less well-focused consultation documents used too many graphs and charts to show changes. For example, one consultation document had seven separate charts and graphs for rate changes and four for debt changes.

2.44
Using too many charts and graphs is likely to confuse readers. Local authorities need to ensure that they use charts and graphs to improve understanding and to illustrate trends and changes. It is also important that it is clear what the charts and graphs are intended to support or explain.

2.45
Local authorities generally explained changes to levels of service well – for example, by highlighting the risks of declining service levels if additional funding was not provided. Disclosing potential changes to levels of service is particularly important because it allows members of the public to understand the explicit trade-offs between costs to the ratepayer and levels of service.

2.46
There were some exceptions:

• Some local authorities defined their activities as "business as usual" but provided little or no explanation of what that level of service was.
• Some local authorities defined their status as "business as usual" and said that levels of service might be improved, without providing any information about the proposed improvements.
• Some local authorities proposed to increase rates significantly with no explanation or clarity about the effect on levels of service.
• Some proposed levels of service were poorly explained and/or difficult to understand – for example, whether additional funding was to increase levels of service or to restore levels of service to what had been previously agreed with their community.

2.47
Local authorities need to provide their communities with clear and concise information about their current levels of service and proposed levels of service in relation to issues presented in the consultation document. Some did not do this, and it should be an area of focus for the future.

Where members of the public can get further information

2.48
A consultation document is required to present the main issues that the local authority proposes to include in the full LTP document. Importantly, however, the consultation document is not intended to be a summary of the full LTP. Most of the community do not need the detailed information included in the full LTP.

2.49
A significant concern in the past has been that the size and complexity of the draft LTP made it difficult for the community to assess the important issues. The new legislation ensures that the community still has access to the underlying detail but separates out the main issues in the consultation document.

2.50
As noted in paragraph 1.14, each local authority must adopt the information relied on by the content of the consultation document and make it publicly available.¹¹ This information and the consultation document effectively give the community access to all the information that was previously included in the draft LTP.

2.51
This enables community members to develop a greater understanding of a matter or to delve into the less significant issues not in the consultation document, if they choose to do so. The local authority can provide this underlying information through links or references to the relevant supporting documents.

2.52
The underlying information must be presented separately from the consultation document. The Act specifically states that the consultation document must not have a draft LTP, a full copy of any policy or strategy, or unnecessary detailed information attached to it.¹²

2.53
Local authorities generally adopted appropriate information to support the content of the consultation document. They also indicated in the consultation document where the community could access this information. However, some local authorities did not indicate where the community could access this information as clearly as they could have.

2.54
This led some members of the community to believe that they could not obtain all the information that they had previously had access to and that local authorities were not providing the information needed to make an informed submission. We received several letters from members of the community who were concerned about the apparent reduction in available information.

2.55
It is important that local authorities clearly state what underlying information is available and how members of the community can review it.

2.56
Local authorities took different approaches to providing the underlying information:

• 26 local authorities made a draft LTP available on their website;
• eight local authorities provided an ordered collation of documentation on their website in a structure and format different to the LTP; and
• 44 local authorities provided multiple links to background papers, strategies, financial analysis, and accounting policies to go alongside the consultation document.

2.57
The Act provides flexibility and allows discretion in how to make the underlying information available. As a result, there is no right or wrong approach to the form in which a local authority provides the required information to the community.

2.58
When many documents are available separately on a local authority's website, it can become extremely difficult for a member of the public wanting to make a submission to identify the relevant documents. Local authorities need to keep this in mind when deciding how to present the required underlying information.

2.59
SOLGM's recommendation to all local authorities is to complete a full draft LTP to support the consultation document. It provided this advice because a full LTP would be the most useful format for those in the community who want to look into the detail and would also help the local authority to manage the overall workload of developing and adopting an LTP by 30 June 2015.¹³

How local authorities can improve their consultation documents

2.60
The Act requires a local authority to present its consultation document in a concise and simple manner to provide an effective basis for public participation in the local decision-making process for the content of an LTP.¹⁴

2.61
As mentioned in paragraphs 2.6-2.7, some local authorities struggled with the new requirements and might have missed an opportunity to improve engagement with their communities. In particular, some consultation documents:

• lacked clarity;
• failed to provide good summaries of a local authority's financial and infrastructure strategies; and
• had vague consultation questions that made it difficult for the community to understand the main issues.

2.62
Consequently, there is considerable room for improvement. Local authorities should consider these matters when developing their next consultation documents.

What makes a consultation document better?

A clear introduction to the significant issues facing the local authority

2.63
Most consultation documents provided an introduction to the significant issues that the local authority was seeking community feedback on. Highlighting this information at the beginning of the document is important, so the community is alerted to the main issues facing the local authority.

2.64
Some local authorities used the traditional mayor and chief executive message to convey the significant issues. Although this can be effective, there is no requirement to keep to such a traditional format. Moving away from this more traditional and formal format helped some local authorities to produce a document that was more easily readable.

2.65
The better consultation documents also signposted for the reader where relevant information about the significant issues was.

2.66
For example, one local authority consulted on five areas: rates affordability, managing debt, developing resilient communities, managing population growth, and maximising regional opportunities. Its consultation document had one page identifying the five issues that referred to the page where each issue was discussed. This meant a reader could easily identify the significant issues facing the local authority and locate the relevant discussion in the consultation document.

Information allowing the community to properly understand, consider, and assess the significant issues

2.67
The statutory purpose of the consultation document is to provide an effective basis for the public to participate in local authority decision-making.

2.68
Accordingly, it is important that the consultation document provide enough information to allow the community to fully understand and consider an issue, and provide meaningful comment.

2.69
The better consultation documents provided some background to each significant issue, discussed the advantages and disadvantages of potential options, and clearly set out the costs of each option. These documents often provided information about costs in stand-alone boxes, which was a useful way for a local authority to highlight the costs of the various options.

2.70
In contrast, some consultation documents contemplated quite significant changes without, arguably, providing enough information to allow the community to provide fully informed submissions.

Being concise but as long as they need to be

2.71
Consultation documents varied in length from 11 pages (Chatham Islands Council and Clutha District Council) to 100 pages (Christchurch City Council). The average length was 32 pages.

2.72
Consultation documents were as long, or as short, as they needed to be.

2.73
The Act provides that the consultation document must include certain information, but otherwise leaves local authorities free to determine the content and format of their consultation document.

2.74
Some of the best consultation documents were concise. They often:

• used the main elements of the proposed financial and infrastructure strategies to introduce issues; and
• clearly explained the significant issues for the local authority, including the relevant options and implications.

2.75
However, some local authorities:

• cut and pasted large amounts of text from their draft LTPs into their consultation document; and/or
• drafted the consultation document as if it were a summary LTP.

2.76
These approaches did not work very well because the consultation documents were too long, technical, and not focused on the significant issues. They were very difficult to read, and it was difficult to identify the significant issues.

Using plain English and not assuming that readers understand technical terms

2.77
As required by the Act, local authorities generally used language that was clear, concise, and easy to read.

2.78
However, some local authorities had difficulty explaining technical concepts clearly.

2.79
A common example was when local authorities sought to explain how they fund renewal work. Local authorities referred to this activity as "using depreciation to fund renewals" or "collecting funds through the depreciation of our assets", which is confusing for the general public and technically incorrect.

Using specific consultation questions

2.80
Most consultation documents included a submission form with questions that members of the public were invited to complete and return to the local authority. The better consultation documents asked specific "open" questions and also provided information relevant to the question. In this way, the community was better able to consider the issue before deciding how to respond to the question.

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6: See section 93B(a) and (b).

7: Where issues were significant in the drafts provided for audit, the issues were resolved with the local authority during the audit.

8: Section 93C(1).

9: Section 76AA(2).

10: These are set out in clause 15(5) of Schedule 10 to the Act.

11: Section 93G.

12: Section 93C(3)(b).

13: New Zealand Society of Local Government Managers (2014),Telling our Stories 2015, pages 6-7; and Jigsaw 4: Piecing it Together, pages 10-11.

14: Section 93C(3).