How we can save our struggling cities
How is it that Melbourne gets free trams in the inner-city, Vienna gets 60% of residents living in subsided housing, but Wellington has to choose between fixing pipes and closing libraries?
It’s because the system is failing us. Councils around the country are currently discussing their long-term plans, which set out how they are going to raise the money (rates) and how they are going to spend the money (less straightforward).
There are tough conversations going on at the council tables about what to prioritise. Unfortunately, there just isn’t enough funding to do it all. It’s very easy to forget (or never realise) the amount of things councils do. They deliver water, protect our rivers and streams, provide public transport. They support arts and sports, pave our roads, mow the parks your dog craps on.
Still, they only get a mere sliver of the public money raised compared to central government. What’s public money? That’s your taxes and rates. In New Zealand, local government spends just over 9% of all public expenditure, and receives just 6.5% of all taxes.
This is starkly different to how most other countries are set up – countries that are home to some of the world's most liveable cities.
According to the OECD, New Zealand is “among the most centralised countries” (which means that, in New Zealand, a lot of essential services are delivered by central government).
It also notes that the share of public spending happening at a local level is “well below the average”, meaning that in New Zealand, councils have a lot less to spend at a local council level.
Why does this matter? The problem with centralisation is that it doesn’t often account for different communities’ very different needs and wants. Of course, we’re a small country – meaning that some things (for example, policing), are just better being delivered centrally.
But when it comes to the unique things our local cities, districts and regions need, councils are way better placed to deliver them. They know what their locals want, and – in a dream world – they have the money to make it happen.
But alas, we don’t have that in New Zealand either. Too much money is held by the central guys, leaving far too little for our councils. And when our councils don’t have enough money, they’re forced to try to find some pocket change by, say, shutting the pool for a couple of days to pay for (part of!) a new road.
The worst part about it all? It doesn’t have to be like this! Just look at some of the world’s most liveable cities.
So, what can we learn from the cities getting it right? What do we have to do to have functioning pipes as well as great public services?
Vienna
Vienna has one of the best public housing programmes on Earth, housing over half the city’s residents, with no rent wars and decent quality housing. A two-bedroom apartment is about NZD$262 per week, compared with a modest two-bedroom apartment in Wellington on Trade Me for $695 per week. Vienna’s success is down to serious investment by their local governments.
Local elections: Every five years Public spending by local government vs central government in Austria: $0.72 in every $2
Copenhagen
Denmark is one of the most decentralised countries of the OECD. That means that their social protection, world-class healthcare and education system are delivered at a local level. In fact, local government gets more of the public spending than the central government does. It’s an amazing model to show how decentralisation of key services results in better outcomes. Key services like health, education and social protection happen at a local level.
Local elections: Every four years Public spending by local government vs central government in Denmark: $1.30 in every $2
Melbourne
It’s free trams in the city, award-winning botanic gardens, amazing events (Australian Open! Taylor Swift!) and Australia’s busiest public library for the residents of Melbourne.
Australia has federal government, state government and local government, which means most of the decisions and spending can happen at a local level (whether it be state or council). This means that education, hospitals, infrastructure as well as transport are delivered locally.
Local elections: Every four years Public spending by local and state government vs central government: $1 in every $2 collected spent
Wellington
Out of the cities so far, Wellington has the shortest elected terms, the lowest percentage of public spending and is part of one of the most centralised countries in the OECD.
Local elections: Every three years Public spending by local government vs central government in NZ: $0.22 in every
$2 collected spent
So what do we need to do? These examples point to a whole range of things that could help improve our cities – including longer terms, more of the share of public funding and less centralisation.
Other things that would help? Longerterm decision making and more control over local spending on infrastructure. You only have to look at the frustration coming out of Auckland and Wellington – as a result of central government changing its mind on massive transport and infrastructure decisions – to see that the status quo is not sustainable.
We need long-term thinking, and a commitment to decisions made, rather than constant change that only throws everyone into disarray.
These are all things local government has been calling for – for years. It’s time to give them a go.