The Commission has released the findings of its independent inquiry into regulatory performance in local government.

1. Summary presentation of the final report
May 2013

2. 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

3. 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

4. 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

5. Projected population growth and decline
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
Percent
Projected average annual population growth selected territorial authorities, 2006-2031 (medium
projections)

6. LG has a diverse range of regulatory
functions
Devolved powers
(Local democracy
function)
Delegated powers
(Service delivery function)
Resource
Managemen
t 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

7. 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.

8. 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

9. 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?

10. 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

11. 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

12. 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

13. 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

14. 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