Part 5: Local body elections

Local government: Results of the 2014/15 audits.

The period around local body elections is usually a time of heightened tension and vigorous political debate. It is a challenging time for local authorities as they administer the elections in their districts and then induct newly elected councillors into their governance roles.

We have a role in considering whether local authorities use their resources appropriately, but we do not regulate the conduct of candidates during local body elections. We also have an interest in how elected members meet their governance responsibilities. In this Part, we discuss some matters relevant to the elections.

These matters include:

Communication during the pre-election period

The local body elections are held every three years on the second Saturday in October. In 2016, polling day is Saturday 8 October.

Nominations will open for candidates on 15 July. From then until the end of the election period, candidates are able to promote their candidacy. This includes currently elected members (sitting candidates) who have decided to stand for re-election.

To ensure that sitting candidates do not gain an unfair advantage over non-sitting candidates, local authorities must manage communications during the pre-election period. It is not the role of local authorities to promote the re-election prospects of currently elected members.

Local authorities must remain politically neutral throughout this period and ensure that ratepayer funds are not used to promote electioneering. To do otherwise would be contrary to the principles in the Local Electoral Act 2001 about promoting public confidence in local electoral processes. Local authorities must be transparent and impartial, and ensure that the electoral process produces public confidence in its outcome.

In 2004, we published Good Practice for Managing Public Communications by Local Authorities (our 2004 guide). In it, we note that it is neither possible nor practicable to stop all communications during the pre-election period and that routine local authority business needs to continue. Determining what is appropriate communication and what is communication that could be seen to be creating an electoral advantage requires careful judgement.

Our 2004 guide includes some useful principles to guide local authorities towards making appropriate decisions about communication during the pre-election period.

Principle 12 in our 2004 guide states:

A local authority must not promote, nor be perceived to promote, the re-election prospects of a sitting member. Therefore, the use of Council resources for re-election purposes is unacceptable and possibly unlawful.

An example of when a sitting candidate could use the local authority's resources to support their election prospects would be using a local authority email account to communicate with constituents. Using the local authority's mail facilities or a mobile phone supplied by the local authority for this purpose could create a perception that the local authority is supporting sitting candidates.

Even if the candidate or the local authority does not intend this, it is important not to create a false perception of support.

We advise local authorities to adopt a communication protocol setting out how they intend to manage communications during the pre-election period. This will provide clarity to staff, elected members, and the public about the boundaries and ensure that the local authority plays no role in inadvertently promoting sitting candidates.

Because elected members will often act as spokespeople for the local authority, the publicity provided by such activities can be seen as an opportunity to promote their re-election. Although elected members need to continue to fulfil their roles and responsibilities, including communicating matters of council business to the public, media releases should be limited to what is strictly necessary to communicate that business. Managers should oversee and authorise public communications during the pre-election period to manage misperceptions and minimise risks to the local authority.

Principle 13 in our 2004 guide states:

A Council's communications policy should also recognise the risk that communications by or about Members, in their capacities as spokespersons for Council, during a pre-election period could result in the Member achieving electoral advantage at ratepayers' expense. The chief executive officer (or his or her delegate) should actively manage the risk in accordance with the relevant electoral law.

Images or information that could raise the profile of a member should not be used during the pre-election period. Some local authorities adopt their annual reports in August and September and make them publicly available soon after, along with a summary annual report. This makes them available during the pre-election period. Annual reports and summaries usually contain information about the elected members, including photographs. This can lead to concerns in the community and from non-sitting candidates that the documents are an advertising opportunity for sitting members funded by the local authority. Local authorities need to ensure that they do not promote elected members who are standing for re-election and carefully consider what is appropriate in each circumstance.

Pre-election reports

Amendments to the Local Government Act 2002 in 2010 introduced a new requirement for pre-election reports. Chief executives were required to produce a pre-election report for the first time during the 2013 local elections.

Section 99A(4) of the Local Government Act 2002 states that:

the purpose of a pre-election report is to provide information to promote public discussion about the issues facing the local authority.

The pre-election report is intended to stimulate debate about funding and expenditure matters during the election. It should tell the community how the local authority is performing and what major projects it expects to carry out during the next three years. It also provides information on whether the local authority has met its self-imposed targets and stayed within financial limits set out in its financial strategy, adopted as part of the long-term plan.

The chief executive is responsible for preparing the pre-election report, which must be apolitical and contain no statements by, or photographs of, elected members.

The pre-election report must be published at least two weeks before nomination day.29 This can include placing the pre-election report on the local authority's website.

We have no role in auditing these reports. However, the retrospective financial information included in the pre-election report will come from previously audited sources, such as the annual report or long-term plan. Local authorities should aim to ensure that the current-year information reflects the information that will be included in the audited annual report as closely as possible.

The pre-election report is a useful way to be accountable to the community. The information it contains is gathered outside the political process and should contribute to informed debate by providing factual and objective information about how the local authority is performing.

We look forward to observing the positive contribution that these reports should make to the election debate in each community later in 2016.

Governance training for newly elected members

In previous reports, we have commented on the importance of having rigorous accountability, governance, and management controls. We noted that:

weaknesses in governance can often expose entities that are poorly equipped to manage uncertainties (or risk) or that are incapable of making well-founded investment decisions.30

Elected members are responsible for what the local authority does and how it does it. In the end, the people who elected them will hold them accountable for the decisions they make on the community's behalf.

Many newly elected councillors have little or no governance experience and limited knowledge of the local government environment. They must be informed quickly if they are to effectively represent their communities.

Local Government New Zealand is taking an active role in supporting local authorities to improve the governance capabilities of their elected members. Local Government New Zealand has worked with the Institute of Directors to create a series of governance workshops through its Centre of Excellence, Finance and Governance Excellence Initiative. These workshops offer professional governance training to local authorities and look at the following topics:

  • applied governance essentials;
  • leadership;
  • strategy;
  • debating and influencing skills; and
  • critical thinking.

The series of five workshops is designed to be completed during the three years between local body elections.

Also, Local Government New Zealand runs a series of workshops around the country for all elected members in the months immediately after the elections. Individual workshops, targeted at new mayors and chairpersons and first-time and returning councillors, explain what it takes to be an effective member and provide an overview of responsibilities. We have taken part in these workshops before, giving presentations on a range of topics relevant to our mandate and role in local government.

We encourage local authorities to include these workshops in their post-election induction programmes for councillors and encourage all new and returning councillors to participate. They are a valuable means of supporting and training elected members, so that they are well placed to assume the important responsibilities that come with their election to office.

Audit committees after the elections

When each new council is sworn in at the first meeting after the local body elections, the Mayor will begin considering a governance structure for the council.31 Councils can establish the committees, subcommittees, and other subordinate decision-making bodies that they consider appropriate.32 One such committee could be an audit committee.

Although there are no specific legislative requirements for a local authority to have an audit committee, the Local Government Act 2002 requires a local authority to manage its revenues, expenses, assets, liabilities, investments, and general financial dealings prudently and in a way that promotes the community's current and future interests.33 An audit committee can help a local authority to meet this requirement.

Good governance principles also encourage the use of an audit committee, which can make a useful contribution to improving the performance and accountability of the local authority. Although it is not the solution to every problem, it can add value.

An audit committee cannot replace the accountability arrangements of the council − the responsibility for good governance rests with the elected members – but it can be an important tool.

An effective audit committee helps the local authority to manage risks. Independent members with relevant skills and experience contribute their knowledge and independent perspectives. This can enhance effectiveness by helping to inform and focus the discussion of matters to be considered and decided.

In our previous reports to Parliament, we have commented on the value of audit committees.34 Our reviews of audit and risk management practices have shown that this is a needed area of focus. We acknowledge the comments of the Local Government and Environment Committee in 2015, which expressed concern that two-thirds of local government audit committees had no external members and supported us in our efforts to improve these committees.

Anyone considering the specific needs of the local authority should consider what is needed to provide the best assurance. Does the local authority have the right balance of assurance, monitoring, evaluation, and other mechanisms to determine whether it is performing well and appropriately managing risk?

No one-size-fits-all structure is effective in every organisation. Each local authority must determine its specific needs and risk framework before deciding on an appropriate structure.

In going through this process, it is useful to consider some core principles about what constitutes an effective audit committee:

  • Independence of perspective, experience, and knowledge is needed in an audit committee, and an independent chairperson is often best placed to facilitate free and frank discussion.
  • Clarity of purpose will help ensure that the audit committee is fit for purpose.
  • The committee members should have the right mix of skills and experience.
  • An effective audit committee operates in an environment of co-operation and trust, with open communication facilitated by the chairperson.

Our website has a resource on audit committees to provide a place for sharing experiences, tips, tools, and other insights. We encourage those seeking information on audit committees to use this resource. We also ask those who believe they have an effective audit committee to share their views on what has worked in their organisation.

29: Nomination day is the 50th day before polling day.

30: Controller and Auditor-General (2014), Local government: Results of the 2012/13 audits, Wellington.

31: Section 41A(3) of the Local Government Act 2002.

32: Clause 30(1) of Schedule 7 of the Local Government Act 2002.

33: Section 101(1) of the Local Government Act 2002.

34: See, for example, our February 2015 report, Local government: Results of the 2013/14 audits, page 3.