Auditor-General's overview

E ngā mana, e ngā reo, e ngā karangarangatanga maha o te motu, tēnā koutou.

Regardless of what the future might hold for local government, councils need to ensure that they continue to deliver the services that their communities rely on every day. Many of these services rely on assets that are expensive to build and maintain and need to operate effectively for many years. Careful planning is therefore needed to ensure that services are maintained at the standards that communities expect and at a reasonable cost.

A long-term plan sets out what a council intends to deliver to its community and how the council intends to pay for it. Effective consultation with communities is therefore critical to making sure that councils develop the right plan for their community. Councils need to provide their communities with reliable and clear information about the matters proposed for inclusion in the long-term plan and the costs of these so that their community can engage with and provide feedback on this.

As Auditor-General, I am the auditor of councils' long-term plan consultation documents. This report provides my Office's observations on the third round of long-term plan consultation documents, which were first required for councils' 2015-25 long-term plans.

My overriding observation is that, as a whole, councils have realistically confronted the challenges they face and, for the most part, produced clear consultation documents. This is no small achievement at the best of times. In the middle of a pandemic and in a sector focused on significant reforms, this is an even more significant achievement.

The economic uncertainty from Covid-19 meant that many councils had to reset their existing work programmes. Councils also had to reconsider, in relatively short time frames, what they planned to include in their long-term plans and consult their communities on. The number of reforms and reviews currently affecting the local government sector are also creating considerable uncertainty about the direction of local government. Although longer-term planning in these circumstances is more challenging, it is, in many ways, even more essential.

Despite this challenging environment, councils are well placed to engage directly with their communities. Most councils have used their consultation documents to have candid conversations with their communities about the issues they face and how they plan to respond. These conversations also mean being clear on the investment required to address those challenges. I was pleased to see councils presenting financial strategies that matched the real challenges they were facing. If significant investment is required to maintain or improve service delivery, it is important that communities see this and understand how it will affect rates and/or debt.

We recognise that councils are improving their conversations with their communities on climate change matters. For many communities, this is a complicated area with many potential consequences. It is good to see councils turning their minds to these issues, even if all the implications are not yet clear.

Unlike previous rounds of long-term plan consultation documents, our auditors included more emphasis of matter paragraphs in their audit reports. An emphasis of matter paragraph does not mean that the auditor has found anything wrong. However, there were important matters to draw the readers' attention to. In most cases, the emphasis of matter paragraphs reflected the significant uncertainties faced by councils in preparing their long-term plans.

Auditors emphasised the uncertainty of:

• the impact of the Government's proposed structural reforms of three waters services;
• whether some councils can deliver their proposed capital expenditure programmes, given the scale of the programmes proposed and the various challenges in delivering them;
• the extent of some councils' condition and performance information used to inform their three waters asset renewal forecasts; and
• funding assumptions used by some councils.

We also issued an adverse audit opinion and 10 qualified audit opinions on long-term plan consultation documents. It is the first time my Office has issued qualifications on consultation documents since they were introduced in 2015. In most cases, the qualification was limited to a disagreement or a limitation in scope about an aspect of a council's consultation document or the underlying information on which it was based. However, for the council that received an adverse audit opinion this meant, in our view, the council did not present a fit-for-purpose consultation document. This is because the document did not contain a credible plan to address the challenges that the council faced. In my view, this defeats the purpose of the consultation document and limits the ability of that community to effectively engage with the council's long-term plan.

There are some excellent examples of councils using innovative approaches to engage with their communities on matters in their consultation documents, such as dedicated webpages on each matter or using social media. In many of those cases, the consultation document has not been at the centre of this engagement. It might be timely for the Department of Internal Affairs, working with the local government sector, to consider how engagement on the content of a long-term plan happens and the role of the consultation document in that process.

Although consultation documents are intended for public consultation on significant matters facing the council or the community, councils also need to make several mandatory disclosures. This can result in a long and information-heavy document, which could be daunting for people to engage with. Balancing effective consultation with effective legislative compliance is a challenge for councils.

I acknowledge the dedication, time, and effort that elected members and council officers put in preparing the 2021-31 long-term plan consultation documents, particularly during the difficult circumstances of a pandemic. I also acknowledge my auditors and wider office for their support of our audits of the consultation documents. This would have been a challenging year for both councils and auditors even without a long-term planning process. Carrying out robust long-term planning and remaining accountable to your communities in times of crisis is something for councils to celebrate.

Nāku noa, nā

John Ryan
Controller and Auditor-General

1 December 2021