- PDF Version (1.4M) - Print Friendly - Help

‘Clustering’ by Territorial Authorities

Appendix 1 New Zealand Research into Local Authorities Working Together

The reasons for districts working together in a ‘cluster’ to offer their services has been reviewed in New Zealand and elsewhere.

Often reviews have been occasioned by a perception that there will be benefits to be gained by amalgamating services offered by TAs, such as those accruing from economies of scale or from savings to be made by greater purchasing power or from reducing duplication of operations. In reality, any benefits of change are more dependent on the perceptions of those who will be affected by them, and their acceptance and will to change, rather than the desires of those that drive the changes.

Report findings are pertinent to any circumstance where two or more TAs determine to work closer together.

In May 2004 the New Zealand Controller and Auditor-General published the report ‘Local Authorities Working Together’ which identified that, although the opportunities for working together are many and varied, TAs often enter into a joint arrangement in response to a specific need at a particular time.

The report identified that:

• there is the potential for more opportunities that could benefit from a joint approach but which have yet to be acted on by TAs.;

• irrespective of geographical size and characteristics, population and location, legislative requirements are the same for every local authority; while community expectations and aspirations may be quite different;

• small rural authorities had sought dispensation for a simplified approach to meeting legislative requirements due to capability issues of meeting community expectations and legal obligations;

• Councils in areas of declining population and growth had not come to terms with reassessing services that may be unaffordable in the long run;

• moving forward requires understanding of the needs of the community and may require overcoming parochial interests and political hurdles;

• sharing the joint effort will become a developing trend;

• any approach towards cluster working needs to be systematic to identify and guard against wasting scarce resources or pursuing unproductive arrangements. Forums can enable councillors from different authorities to align priorities and perspectives to help reach decisions and resolve differences.

• those clusters that work best are timely, well-focused, soundly managed joint arrangements that have the support of council staff;

• the leadership and commitment of councillors are critical to the success of joint arrangements.

In 2006, Local Government New Zealand (LGNZ) commissioned a report on local government structure and efficiency from McKinlay Douglas Ltd., who carried out a literary review of outcomes from amalgamations of local government functions, both in New Zealand and internationally, to identify:

• the degree to which this contributes to efficiency;

• whether diseconomies occur over a certain size;

• the effects on representation and the ability to exit

The following summarises the findings of the report which identified:

• the evidence of savings as a consequence of large-scale amalgamation initiatives is, at best, equivocal. The findings by a reviewer of the structural reform of English local government between 1992-95 were more conclusive; anticipated gains from structural reform did not eventuate;

• substantial evidence from Canada that forced amalgamations may not have had public support either at the time or subsequently, suggesting a strong sense of attachment to the known and familiar;

• a tendency for those supporting restructuring to overlook or underestimate the impact of factors such as the incompatibility of systems; impact of change on system requirements; staff morale and the impact of the restructuring process itself;

• it is more likely that voluntary amalgamation initiated by one or more of the amalgamating councils where they and their ratepayers are in favour, will produce benefits that outweigh costs;

• a voluntary situation provides more opportunity for in-depth assessment of likely costs and benefits to present a picture of the way things might look after amalgamation;

• the need to gain community support almost certainly sets a higher barrier than in the case of forced amalgamations, where often the driving force is a national level political commitment, rather than an authority-by-authority assessment of needs and options;

• there is no debate over whether economies of scale exist; rather that the emphasis is on recognising that economies of scale for different local government services will arise at very different levels determined by factors such as customer base, geographic coverage and divisibility of inputs;

• the optimal size of government to achieve lowest per unit cost is likely to vary between services provided, making it extremely difficult to draw boundaries for generalpurpose local governments;

• municipalities too small to achieve economies of scale on their own can nonetheless accrue advantages of scale economies by joint purchasing agreements that ensure provision of the quantity and quality of services desired by their ratepayers;

• a barrier to more collaborative working can be the negative attitude of management and elected members;

• finding new and better ways of delivering services should be seen as a way of freeing up resources to cope with new responsibilities; how individuals regard their own skills and career opportunities is partly an issue of change management;

• elected members of small and medium-sized councils have a suspicion of the intentions of the largest councils in a region - a ‘big brother’ syndrome; many are more comfortable focusing on minutae rather than major strategic issues. There may also be historical tensions between territorial’s;

• larger councils can identify that having a dominant role in a region can be both a strength and a weakness when working with fellow territorial’s;

• the extent to which the power of ‘well-intentioned bureaucrats’ – bureaucrats who genuinely believe that they are acting in the public interest but also believe that their knowledge or experience is such that they know what ‘public interest’ is and act accordingly - become a potentially negative influence from a local democracy perspective, as the size of a local council increases;

• the successful approach, in Australia, of voluntarily establishing Regional Organisations of Councils – partnerships of contiguous TAs (usually) with governance provided by representatives of the constituent councils. Benefits have been identified as: worthwhile savings, enhanced performance, greater influence with other tiers of government and capacity building within individual councils. Good working relationships have lead to identifying new cooperative initiatives to improve service deliver. Limits seem to be related to political preferences – how much autonomy is prepared to be sacrificed to achieve cost savings;

• the findings from an inquiry into Council Tax in England that identified that greater public expectations, national targets for public services, a growth in entitlements to public services and a strong national media contributed to ever-stronger concerns about ‘post-code lotteries.’ This created an apparent desire for the same services, and level of service, to be delivered in all areas. The report argued that this goes against economic theory and common sense, since people’s preferences and needs and costs in delivering services, vary between areas; so the best way of spending limited resources will be different in different places;

• case studies from New Zealand indicate a wide range of collaborative activities between TAs; often ad hoc but becoming more increasingly strategic and based on long-term relationships;

• in spite of barriers – including negative attitudes (above) – level of activity continues to grow as councils recognise a need to find best means of providing expected services;

• specific measures which would enhance the development of collaboration include:

- an effective means of sharing

- knowledge and experience;

- benchmarking costs of local government services – a barrier to collaboration can be the inability of managements to demonstrate real cost of their own activity, and alternative means of delivering the same service;

- better promotion of the potential of collaboration

• a wider role for local government as the voice of the whole community and as an agent of place in ‘place shaping’ – building and shaping local identity; representing the community; regulating harmful and disruptive behaviours; maintaining cohesiveness of communities; helping to resolve disagreements; understanding local needs; providing the right services; working with other bodies to respond to complex challenges. ‘Place shaping’ will mean different things in different places, but is relevant to all sizes of councils;

• distinctiveness of place is an important component in attracting skills and investments in a highly competitive world

A form of food ‘place-shaping’ is already widely used by TAs and regional organisations throughout New Zealand to create a picture of, and promote, an area to attract tourist dollars or to encourage local people into town to enhance the local economy. Food and wine trails, farmers markets and industry training are examples of food-related activities that can receive economic support and local/regional promotion to help distinguish the area and generate further business opportunities.

The report identified that the focus of councils should be on themselves creating or facilitating the structures of the issue they seek to address. If something which is genuinely regional or subregional in scope, then the need is for a structure which has that scope. This does not necessarily need to be formally incorporated; it may be made up purely of councils, it may included other entities. If handled best at a district or sub-district level, then the issue is one of how best to engage at that level and whether through strategic partnerships, community boards or other means appropriate.

NZFSA policy should recognise activites which:

• facilitates the willing cooperation between individual TAs and between TAs and relevant regional providers;

• avoids duplication of regulatory activities;

• removes conflict in the delivery of food safety systems;

• respects professional roles.