Towards better local regulationSummary presentation of the final report

May 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 base

Stakeholder input

Council survey (94% response)Advice from reference panel

Business survey (1,500 businesses)

Engagement Meetings (112)

Stakeholder submissions (113)

Roundtable discussion with senior officials from CG agencies

Qualitative and quantitative evidence

Detailed review of processes used in 27 decisions

Review of council annual reports

Review of regulatory impact statements affecting councils since 2009

Analysis of Statistics NZ data (make-up of local authorities)

Relevant academic literature and previous govt. reports

Commission judgements

Findings

Recommendations

Context of LG regulation

• Highly diverse circumstances– economic structure, sizes, natural resources, cultural makeup,

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

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

Per

cent

Projected average annual population growth selected territorial authorities, 2006-2031 (medium projections)

LG has a diverse range of regulatory functions

Devolved powers(Local democracy

function)

Delegated powers(Service delivery

function)  

Resource Manageme

nt Act

Building Code

Regulations relating to dog control, liquor licencing, environmental health, food safety

and hazardous substances

Some policy discretion

Limited policy discretion 

• 30 pieces of primary legislation plus secondary instruments

• Limited use of powers under LGA 2002 - most bylaws made under enabling statutes

• LG/CG relationship specific to each regulatory function

A framework for allocating functions

Principles for allocating the regulatory policy and standard setting role

Consider the distribution of costs and benefits:

When the costs and benefits of a regulatory outcome are contained locally, then local decision makers should have

control over the regulatory policy.

When the costs and benefits of a particular outcome spill over outside local boundaries, then decision makers that cover the

spillover should have control over the regulatory policy.

Consider who can be held accountable:

Regulators should be responsible for outcomes and have the autonomy to make policy decisions that influence those

outcomes.

Policy-making responsibility should be given to the level of government where the electorate has the most interest (and ability) to hold the regulator to account for the policies made.

Regulatory regimes should be designed with the appropriate accountability mechanisms, to enable the regulatory policy

maker to be held to account.

Consider the desirability of local variability in outcomes:

The regulatory outcomes sought should be specified as clearly as possible.

Local policy making should occur when local variability for a specific regulatory outcome is likely to lead to better

regulatory outcomes.

National limits and bottom-lines should be specified when a more limited range of variability is in the national interest.

Principles for allocating the implementation and administration role

Consider cost:

Implementation and administration of regulation should be consolidated when there are significant cost-efficiencies to be

gained.

When implementation requirements vary significantly between jurisdictions, locally specific implementation is

appropriate.

Allocate responsibility where there is an alignment of incentives for cost-effective delivery.

Consider where capability and information is held:

The implementation and administration of regulation should be located where there is the capability to undertake the task,

or where the capability can be built.

Existing implementation capacity should be assessed and considered, with a view to achieving synergies in the

administration of regulatory functions of a similar nature.

Regulatory implementation should be aligned close to the source of the required information.

Consider sources of funding:

Match the service delivery funding base with the regulatory benefit distribution as closely as possible.

Where there is a mismatch between service delivery funding and benefit distribution, explicitly consider whether a fiscal

transfer between jurisdictions is needed to 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 apply the framework

• Need to ask specific questions to fit the regulation being developed

• We tested the framework on LG functions under the Gambling 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 to ratepayers 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 robust

implementation analysis• Capacity of Māori does not match the requirements of the

system

If the system relies on capability that does not exist, the desired outcomes will not be achieved

Performance reporting across the system• 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 building consent numbers to Statistics NZ and MBIE)

• Fragmented reporting – gives a limited view of the performance of the regulatory system

CG needs to:

• Recognise local authorities as ‘co-producers’ of regulatory outcomes

• Engage meaningfully early in the policy process

• Strengthen capability and incentive for rigorous policy analysis

• 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, innovative approaches to Māori participation

• Develop capability to implement these improvements

Jointly need to:

• Develop protocol• Strengthen forums at both

political and executive levels• Small jointly-supported,

secretariat‘Partners in Regulation’

protocol

A jointly developed document signed by representatives from both local and central

government

Develops a common understanding of, and respect for, the roles,

duties and accountabilities of both spheres of government

Articulates an agreed set of principles to govern

the development of regulations with

implications for the local government sector