Part 1: Introduction

Consulting matters: Observations on the 2021-31 consultation documents.

In this Part, we outline:

Why do councils prepare consultation documents?

In August 2014, the Local Government Act 2002 (the Act) was amended to require councils to prepare consultation documents. The purpose of a consultation document is to provide an effective basis for public participation in local authority decision-making processes about the content of a council's long-term plan.

Section 93B of the Act requires a consultation document to achieve this by:

  1. providing a fair representation of the matters that are proposed for inclusion in the long-term plan, and presenting these in a way that:
    1. explains the overall objectives of the proposals, and how rates, debt, and levels of service might be affected; and
    2. can be readily understood by interested or affected people; and
  2. identifying and explaining to the people of the district or region, significant and other important issues and choices facing the local authority and district or region, and the consequences of those choices; and
  3. informing discussions between the local authority and its communities about the matters in paragraphs (a) and (b)

Councils are responsible for preparing consultation documents that give effect to the purpose statement outlined in the Act. Although councils are free to decide what to put in their consultation documents to meet the Act's requirements, there are some mandatory requirements.1

The overall legislative requirements are clear. A consultation document should provide members of the public with:

  • an explanation of the important issues a council is expected to face during the next 10 years;
  • a council's options for addressing the issues; and
  • how these options might affect the financial position of a council and members of the public.

Deciding what to include in a consultation document can be challenging. What might be an important issue for some members of the community might not be for others. Elected members need to consider the issues carefully and be satisfied that what is included are the important issues facing the council and the community. They also need to be prepared to engage with members of the community on matters that are not included in the consultation document, but which the community might consider important.

A council also needs to ensure that it presents the contents of its consultation document in a way that people can engage with. This will allow them to be informed and participate in local authority decision-making. An effective consultation document will:

  • be concise and simply presented;
  • present only the most important issues;
  • display information in a way that the public can readily understand it; and
  • enable people to make informed comments and submissions if they want to.

The consultation document is not intended to summarise the full content of the long-term plan. However, it must set out the main issues that a council proposes to include in its long-term plan. A consultation document must not include a draft long-term plan or a full draft of any policy or strategy.

There is supporting information underlying a consultation document, which a council must prepare and adopt before it can adopt the consultation document. This underlying information will include the council's draft financial strategy and draft infrastructure strategy and the proposed forecast financial statements and service performance information. The consultation document must state where members of the public can access this underlying information. By making this information available before the consultation document is adopted, a council effectively provides the community with all the significant information that was previously included in the draft long-term plan.

Our audit work on consultation documents

The Act requires each consultation document to contain an audit report from the Auditor-General that provides an opinion on:

  • whether the consultation document gives effect to its purpose (as outlined in paragraph 1.3); and
  • the quality of the information and assumptions underlying the information provided in the consultation document.

Councils produced consultation documents for the third time in 2021, having first been required as part of the process for the 2015-25 long-term plans. We audited each council's consultation document to determine whether it provided an effective basis for consultation with the community (with a particular emphasis on whether the consultation document fairly represented the matters a council proposed to include in its long-term plan). We determined whether the consultation document identified and explained the main issues and choices facing a council and the consequences of those choices.

We also audited councils' underlying information to determine its reasonableness. This included considering how reliable the underlying asset information used by councils was and how well councils are reflecting this in the financial forecasts that underpinned their consultation documents.

Our role is to assess whether the consultation document is fit for purpose and covers what it needs to. We are not required to give a view on whether a council has met all the requirements of the Act from a legal perspective.

However, there is an element of legislative compliance to our role, including considering the mandatory content requirements for consultation documents. We consider whether the information that must be included has been. We do not check that every detail complies with the Act, regulations, or prescribed forms.

Our role does not allow us to comment on the merits of any policy content that councils have included in their consultation documents or in the underlying information. Policy decisions are for elected members to make. This is important because it helps maintain our independence.

Instead, our audit involves checking that the policies proposed by a council are appropriately reflected in forecasts they have prepared. In effect, we check whether councils' forecasts are consistent with what they say they will do.

Councils prepared consultation documents in challenging circumstances

Consultation documents and the underlying information set out what councils expect will happen in the future. There are always assumptions that councils need to make when planning. Our audits of the consultation documents and the underlying information focus more on the assumptions and the areas of council forecasts that are more uncertain.

At the time of preparing the 2021-31 long-term plans, there were many uncertainties facing the local government sector. We were told that these uncertainties made it challenging for councils to prepare and consult on the 2021-31 long-term plans. It also made it challenging for us to audit the consultation documents and the underlying information.

Local government is facing increased uncertainty. Proposed reforms and a ministerial review of the future for local government might change what it does and how it operates. These include the proposal to reform three waters2 service delivery, how to respond to climate change, resource management reform, regulatory reform (such as to improve the quality of drinking water), and the review into the future for local government.

At the time of preparing the consultation documents, the most significant uncertainty was the three waters service delivery reforms. Although the Government had publicly announced its proposal to reform three waters service delivery, the reform proposal had not yet been fully developed. Additionally, because the Government had made it clear that assets would still be owned by the community if this reform progressed, the local government sector considered that the community should be able to understand and comment on the important issues related to three waters services until the reforms were certain.

Taking this into account, all councils that deliver three waters services continued forecasting those services in their underlying information as if they would continue to own and manage them for the period covered by their long-term plan. We supported this approach. In our view, there was no other reasonable and supportable assumption to use in respect of delivering three waters services. We did expect councils to provide appropriate disclosure in their consultation documents about the three waters reforms. Our response to the approach councils took is set out in Part 5.

Similar principles applied in respect of the resource management reform. Although the Government had received a report from an independent review that it had commissioned, it had yet to consider its response and develop legislation to implement its decisions. Therefore, for the purposes of the consultation document and underlying information, planning on the basis of the status quo was considered a reasonable assumption.

Covid-19 also increased uncertainty. The country went into the first alert level four lockdown3 at about the same time that councils were preparing their 2020/21 annual plans. To respond to the economic downturn caused by the lockdowns, many councils provided a form of rates relief to their community by minimising the 2020/21 rates increase. Where they could, some councils also brought forward programmes of work, again with the view of supporting the local economy.

The policy decisions made by councils as they prepared their 2020/21 annual plans also affected preparation of the 2021-31 long-term plans. We observed that some councils could not continue to minimise their rates requirements without impacting the levels of service they provide.

Councils also needed to consider the impacts of Covid-19 on their forecasts, including on population growth assumptions (for example, migration forecasts were expected to change) and behavioural trends (for example, how people live and work, including how they use community facilities, what form of transport they use, and how often). As a result, Auckland Council called its 2021-31 long-term plan "our recovery budget". We discuss how councils addressed Covid-19 in their consultation documents in Part 2.

We expected councils to be considering how a changing climate would affect their operations, service levels, and planned responses. We plan to report separately on our assessment on the extent to which councils are taking action to adapt to, and mitigate the effects of, climate change.

Despite these uncertainties and the challenges that councils have faced, councils, in our view, have responded well and continued to produce informative and engaging consultation documents.

We continue to reinforce the importance of long-term planning and engaging with communities on the important choices and implications that councils and communities face. This is important to achieving accountability and transparency.

Structure of this report

Part 2 summarises our observations on the 2021-31 consultation documents.

Part 3 discusses the number and types of issues councils consulted on.

Part 4 examines how councils discussed climate change in the 2021-31 consultation documents.

Part 5 outlines the audit reports we issued on the 2021-31 consultation documents.

1: This is set out in section 93C of the Act.

2: Three waters services relate to water supply, sewerage and the treatment and disposal of sewage, and stormwater drainage activities.

3: In response to Covid-19, the Government put in place a four-level alert system. Each alert level introduces more measures to protect people from contracting or spreading Covid-19. On 25 March 2020, all of New Zealand moved into alert level four, which required many council workers to isolate and work from home.