Auditor-General's overview

Matters arising from the 2015-25 local authority long-term plans.

My office has a strong interest in the long-term delivery of essential public services. It is an interest we share with local authority governors, ratepayers, and Parliament. The challenges that local authorities face as they provide sustainable services to their communities are not reducing. If anything, they continue to increase.

The primary objective of a long-term plan (LTP) is to describe the local authority's proposed 10-year activities and community outcomes in an integrated and co-ordinated way, and provide a basis for accountability to the community. In doing so, the document should outline the financial and service delivery circumstances that the local authority faces and the local authority's proposed response to those circumstances.

Because of the scale and importance of the services that local authorities provide and the infrastructure they manage, it is important that local authorities plan well for how they will provide services decades into the future. In my view, local authorities have risen to this challenge – but can improve further.

A few important matters stand out from our audits of the latest LTPs, which cover the period from 2015 to 2025. Our report includes comments on:

infrastructure strategies;
financial trends and affordability;
the effect of demographic changes, including economic development; and
our audit reports issued on the LTPs.

The requirement for local authorities to produce a 30-year infrastructure strategy is a positive change. An infrastructure strategy prepared in 2015 should provide the community with a picture of how the local authority plans to provide services until 2045 and beyond.

Most of a typical local authority's spending goes on maintaining and renewing its infrastructure, including roads and water systems. Decisions about investing in infrastructure needs are not easy for local authorities, particularly as they consider demographic changes in their communities. This is not a new challenge – nor is the need for many local authorities to address a backlog of infrastructure renewals.

New Zealand's population has increased steadily over recent years. Growth puts pressure on existing infrastructure. Although many local authorities face continued population growth and the demands associated with it, some face population declines in the near future. Local authorities with declining populations need to consider how they will fund renewal of infrastructure when they have fewer ratepayers.

The population is also ageing. When an increasing proportion of the population is on a fixed income, local authorities with older populations are likely to face increasing challenges in providing community services, which rely on infrastructure.

Local authorities attempt to strike a careful balance between the need to fund services while maintaining debt levels and rates rises at acceptable and prudent levels. The financial trends reflected in the latest LTPs show similar trends to those seen in the 2012-22 LTPs. The average rates increase over the 10-year period is 4.6%. Some local authorities have decreases while others have increases. Clearly, the increases will be a challenge for some people, particularly those on lower, fixed incomes.

It is clear that the significant tension in providing services to the standard expected by the community while maintaining rates and debt at an acceptable level remains for local government and the communities they serve.

For the first time since the Canterbury earthquakes, Christchurch City Council has prepared an LTP. The Council has had to deal with significant issues as a result of the earthquakes, many of which are unresolved. This situation created a challenge for the Council as it prepared, consulted on, and adopted its 2015-25 LTP. It is good that the people of Christchurch have had the opportunity to engage with the Council about the rebuild of the city and how it is repositioned for the future.

The LTP helps people to hold their local authority to account. Three local authorities did not adopt their audited 2015-25 LTPs by the statutory deadline. In my view, such delays in providing communities with an LTP are unacceptable.

The three-yearly task of preparing an LTP requires a significant effort from the elected mayors and councillors, and management and staff of the local authorities and input from their communities. It is also considerable work for my auditors. I acknowledge the time and effort that everyone involved has committed to the 2015-25 LTPs.

Signature - LP

Lyn Provost
Controller and Auditor-General

1 December 2015