Summary presentation of the final reportMay 2013
Terms of Reference• A stocktake of local government regulation• Who should do what?• Is variation a problem?• How can LG and CG improve regulatory performance?• Are LG decision-making processes adequate?• How to regularly assess LG performance
Evidence baseStakeholder inputCouncil survey (94%response)Advice fromreference panelBusiness survey(1,500 businesses)EngagementMeetings (112)Stakeholdersubmissions (113)Roundtablediscussion withsenior officials fromCG agenciesQualitative andquantitative evidenceDetailed review ofprocesses used in 27decisionsReview of councilannual reportsReview of regulatoryimpact statementsaffecting councilssince 2009Analysis of StatisticsNZ data (make-up oflocal authorities)Relevant academicliterature andprevious govt.reportsCommission judgementsFindingsRecommendations
Context of LG regulation• Highly diverse circumstances– economic structure, sizes, natural resources, culturalmakeup, etc.• Increasingly complex regulatory environment– population growth vs decline– diverse communities– community expectations– technical/scientific needs– administrative and legal complexity– pressure on physical environment• Difficult trade-offs
Projected population growth and decline-1.5-1.0-0.50.00.51.01.52.02.5PercentProjected average annual population growth selected territorial authorities, 2006-2031 (mediumprojections)
LG has a diverse range of regulatoryfunctionsDevolved powers(Local democracyfunction)Delegated powers(Service delivery function)ResourceManagement ActBuildingCodeRegulations relating to dog control,liquor licencing, environmental health,food safety and hazardous substancesSome policydiscretionLimited policydiscretion• 30 pieces of primary legislation plus secondary instruments• Limited use of powers under LGA 2002 - most bylaws madeunder enabling statutes• LG/CG relationship specific to each regulatory function
A framework for allocating functionsPrinciples for allocating the regulatory policy andstandard setting roleConsider the distribution of costs and benefits:When the costs and benefits of a regulatory outcome arecontained locally, then local decision makers should havecontrol over the regulatory policy.When the costs and benefits of a particular outcome spillover outside local boundaries, then decision makers thatcover the spillover should have control over theregulatory policy.Consider who can be held accountable:Regulators should be responsible for outcomes and havethe autonomy to make policy decisions that influence thoseoutcomes.Policy-making responsibility should be given to the levelof government where the electorate has the most interest(and ability) to hold the regulator to account for thepolicies made.Regulatory regimes should be designed with theappropriate accountability mechanisms, to enable theregulatory policy maker to be held to account.Consider the desirability of local variability in outcomes:The regulatory outcomes sought should be specified asclearly as possible.Local policy making should occur when local variabilityfor a specific regulatory outcome is likely to lead tobetter regulatory outcomes.National limits and bottom-lines should be specified whena more limited range of variability is in the nationalinterest.Principles for allocating the implementation andadministration roleConsider cost:Implementation and administration of regulation shouldbe consolidated when there are significant cost-efficienciesto be gained.When implementation requirements vary significantlybetween jurisdictions, locally specific implementation isappropriate.Allocate responsibility where there is an alignment ofincentives for cost-effective delivery.Consider where capability and information is held:The implementation and administration of regulationshould be located where there is the capability toundertake the task, or where the capability can be built.Existing implementation capacity should be assessed andconsidered, with a view to achieving synergies in theadministration of regulatory functions of a similar nature.Regulatory implementation should be aligned close to thesource of the required information.Consider sources of funding:Match the service delivery funding base with theregulatory benefit distribution as closely as possible.Where there is a mismatch between service deliveryfunding and benefit distribution, explicitly considerwhether a fiscal transfer between jurisdictions is neededto achieve the objective of the regulation.
Framework - no substitute for hard work• No simple formula for allocating regulatory functions• Officials still need to think carefully about how to applythe framework• Need to ask specific questions to fit the regulation beingdeveloped• We tested the framework on LG functions under theGambling Act 2003 and the Building Act 2004
Interaction between parts of the system• Not enough focus on how the whole system works• Poor interaction between CG and LG– Inadequate consultation and engagement– Different views of the role and function of LG– LG ‘agents’ of CG or independently accountable toratepayers and voters?
Capability across the system• LG has gaps in technical, policy and management skills• CG has gaps in knowledge of LG and capability for robustimplementation analysis• Capacity of Māori does not match the requirements of thesystemIf the system relies on capability that does not exist, thedesired outcomes will not be achieved
Performance reporting across thesystem• Lack of effective feedback loops• Reporting seen as compliance exercise (not a learning tool)• Dominated by timeliness and transactional measures –little attention to outcomes or impacts• Some duplication in reporting to CG (eg, reporting buildingconsent numbers to Statistics NZ and MBIE)• Fragmented reporting – gives a limited view of theperformance of the regulatory system
CG needs to:• Recognise local authorities as ‘co-producers’ of regulatoryoutcomes• Engage meaningfully early in the policy process• Strengthen capability and incentive for rigorous policyanalysis• Ensure enforcement tools/penalties are adequate
LG needs to:• Improve analysis underpinning regulatory decisions• Develop systems to reduce internal variation• Improve monitoring and enforcement through:– more sophisticated use of risk-based compliance strategies– stronger compliance monitoring• Learn from, and appropriately apply, innovativeapproaches to Māori participation• Develop capability to implement these improvements
Jointly need to:• Develop protocol• Strengthen forums at bothpolitical and executive levels• Small jointly-supported,secretariat‘PartnersinRegulation’protocolA jointly developeddocument signed byrepresentatives fromboth local and centralgovernmentDevelops a commonunderstanding of, andrespect for, the roles,duties andaccountabilities of bothspheres of governmentArticulates an agreed setof principles to governthe development ofregulations withimplications for the localgovernment sector