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Mike Butler

The case against HB amalgamation

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Readers in Hawke’s Bay will soon vote on a proposed five-council amalgamation while readers elsewhere would know of similar proposals for the Wellington region and Northland. This is the case against the Hawke’s Bay proposal that will be voted on from August 24.

A glossy, full-colour, six-page brochure appeared in our letterbox in January of 2013 featuring a hang-glider drifting over the plains of sunny Hawke’s Bay promising “a new way for Hawke’s Bay – it’s your choice”. The group was named A Better Hawke’s Bay.

It was all about “one council not five”, “16 councillors not 49”, and “five community boards”. It promised “cost-savings for ratepayers”, “efficiencies dealing with council”, and “one shared vision”. Also listed were the phrases “choose democratically”, “ring-fenced debt”, and “empower communities”.

Fast-forward through dozens of newspaper articles, fractious submissions hearings showing 83 percent opposition, rallies, and a Consumerlink poll showing 63 percent region-wide opposition, the Local Government Commission decided to press ahead with a final proposal that could be put to a vote.

Since the final proposal is all we have to vote on, what does it say and what will it do?

The final structure, and by this I mean the structure that is described and illustrated in the final proposal booklet (1) and not the positions not detailed on the Maori board and the natural resources board, is this:

It proposes one mayor, 18 councillors, and 37 local board members. It also proposes a 20-person regional planning committee that has 10 councillors and 10 members appointed by iwi, a Maori board with numbers unspecified, and a natural resources board, again with numbers unspecified.

Already there are at least 66 positions which is just one fewer than the 67 positions on the current five councils. We still don’t know how many appointees would go on the Maori board and the natural resources board. There could be a further 20 positions, a far cry from the proposal from A Better Hawke’s Bay.

Would this new governance structure mean cost savings for ratepayers? Again no!

The likely new governance cost of this proposed 56-member-plus-appointees structure could be $3.7-million.

This compares with just over $2.5-million each year for the current 57 elected members on five Hawke’s Bay councils, according to a report in the Hawke’s Bay Today on Saturday, July 11, 2015.

Salary levels for a merged Hawke’s Bay council may be extrapolated from the level of remuneration in Auckland. A super council mayor could earn $240,000, a deputy mayor $120,000, and 18 councillors $95,000 each.

Local boards could cost a total of $1-million, while the regional planning committee, a Maori board and a natural resources board could cost $250,000 each.

Similarly, a new bureaucracy is likely to be more expensive. A single CEO of a much bigger amalgamated council would expect a much bigger salary, as would the heads of finance, corporate affairs, planning, and strategic planning, and so on down the pecking order.

The Local Government Commission is silent on the likely cost of bureaucracy. It does refer to “economies of scale, scope and management” and says that 37 percent of projected $10-million a year in savings is expected to come from reducing corporate personnel.

Projected savings from amalgamation, according to the final proposal, is $260-million over 30 years. This equates in $8.66-million in savings a year.

But the final proposal does not say and nobody in the pro-amalgamation camp bothered to look at the total annual expenditure of Hawke’s Bay’s five councils, which is $273.7-million, to see that annual savings of $8.6-million would equate to just 3.1 percent of current annual expenditure.

The pro-amalgamation group claims improved efficiencies but cannot see that the three-tier system of local boards, a council, an iwi-council regional planning committee, a Maori board, and a natural resources board, would bog down each and every decision in interminable delay.

Ring-fenced debt refers to the $80-million debt of the Hastings District Council that ratepayers in Napier, Wairoa, and Central Hawke’s Bay do not want to pay.

The final proposal “ring-fences” the Hastings debt until 2021, which means Hastings ratepayers pay towards that debt for five years, assuming councils amalgamate in 2016, then ratepayers from everywhere pay the balance owing thereafter.

This is a big no-no for ratepayers other than in Hastings.

The amalgamators are big on “one shared vision” but the final proposal has nothing about vision or how a plan to build a strong region would come about. All we have is wishful thinking.

More than that, the final proposal submerges the Napier, Hastings, Wairoa, and Central Hawke’s Bay communities of interest in a faceless super council.

Bear in mind the tyranny of distance. Napier and Hastings are 20km apart while Wairoa and Waipawa are 174km from each other, which is a two-hour drive.

Amalgamation initiatives in Hawke’s Bay, Wellington, and Northland, each had a ginger group frantically demonstrating apparent demand. Such similarities led some to conclude that it was part of a plan by central government to roll out the Auckland style amalgamation around the country.

Auckland is the only example we have of this style or merger, with council-controlled organisations managing investments, property, tourism events and economic development, transport, waterfront, regional facilities, and water

The model also provides a vehicle to entrench the bicultural vision of the National Party-Maori Party into local government via a Maori board.

An immediate likely consequence for Hawke’s Bay of a council-controlled organisation managing water would be metered fresh water with charges separated from and on top of rates.

The amalgamation drive in Northland petered out when the main proponent was voted out, and heated opposition forced the Local Government Commission to drop the Wellington proposal.

Moreover, three of the four people I presented my submission to a year ago no longer work for the Local Government commission, with the message being that they failed.

Most probably the only reason the Hawke’s Bay proposal is going to a vote is support from the pro-amalgamation Hastings mayor Lawrence Yule, who is the president of Local Government New Zealand and a staunch National Party supporter.

Nevertheless, before the vote and irrespective of the outcome, central government appears to be moving to a Plan B with local government.

Local Government Minister Paula Bennett told the Local Government New Zealand conference last week that there would be a review of the structures of council services in an attempt to boost growth.(2)

Bennett pointed to various councils having tourism, major events or economic development departments which were not necessarily cohesive. A question remains whether the failures of council involvement in event management or economic development outweigh the successes.

Tourism, major events, and economic development are the sectors cited as beneficiaries of a Hawke’s Bay amalgamation, with the implication that regional rates would be pooled and focused on super council schemes. This implies corporate welfare at local government level.

Less clear was whether Bennett wanted to boost regional growth or the growth of super councils. Auckland got bigger government, higher rates, and plans for expensive tunnels to run trains from Mount Eden to the waterfront.

A vote on the Hawke’s Bay amalgamation is four weeks away. Support for a five council merger has declined as more voters studied the proposal and see gaps and likely unintended consequences.

Our Hastings Against Amalgamation survey in March showed 63 percent region-wide opposition. There is likely to be greater opposition now, and that is before mentioning the likely prospect of Auckland-style rates rises way above the rate of inflation. We will find out on September 15, when the postal vote closes.

The message to Hastings readers is vote against amalgamation.

Mike Butler is the founder of Hastings Against Amalgamation.


1 Hawke’s Bay Local Government Reorganisation Final Proposal. http://www.lgc.govt.nz/assets/Hawkes-Bay-June-2015/Hawkes-Bay-Proposal-June-2015.pdf
2 Review could see end of some regional councils – minister. http://www.stuff.co.nz/national/politics/70426329/review-could-see-end-of-some-regional-councils–minister