More Articles like this in:
  • Environmental & Resource Management Law
  • Local Government

    Local Government Bill

    Author: Phillips Fox       

    This update is devoted to an analysis of the Local Government Bill (Bill) that was introduced just before the Christmas break 2001. We have attempted to break down the key components of the Bill into digestible pieces to assist you in making your submissions. We have assumed that you have read the Bill and therefore, have focused on those matters that we think are most important to be included in submissions. Of course there is a wealth of material that we could not do justice to in these short pages.

    The timetable for making submissions on the Bill is very tight. Submissions close on 22 February and the Select Committee is due to report back in June. It is the Government's stated intention to have the Bill passed prior to the general election.

    We have broken our analysis into 5 broad areas to make finding the relevant section easier. These areas are:
  • Purpose and powers

  • Council controlled organisations

  • Planning and reporting (including financial management)

  • Property (real)

  • Assets and infrastructure (including contracting out)

  • Regulatory


    • Introductory Comments
    The style and structure of the Bill is fundamentally different to the Local
    Government Act (Act).

    The Act is characterised by detailed prescriptive requirements that not only set out the functions of local government but also the manner in which these functions can be exercised.

    The Bill has removed the bulk of the prescription. Its key features are:
  • a general enabling power

  • clarification of the role of local government in relation to Maori and the Treaty of Waitangi

  • a significant "beefing up" of the processes to follow in relation to planning - integration of revenue, financing and planning processes.

    The Purpose & Powers
    The purpose and powers provisions in the Bill are essentially new. Although there are some words drawn from various sections of the Act the approach taken by the Bill in setting out a purpose and powers framework is entirely new.

    A quick look at the clauses is necessary. Clause 3 sets out the purpose of the Act. Clause 8 sets out the purpose of local authorities. Clause 9 sets out the status and powers of local authorities - this is the general enabling provision, it provides local authorities with the same powers as a body corporate. Clause 12 provides a number of principles that local authorities must endeavour to adhere to in performing their purpose and exercising their powers.

    As expected, the Bill gives local government a relatively broad power of competence. Although the wording of clause 9(2) which grants this power is based on section 16 of the Companies Act, this is not a true "general power of competence" in the corporate or personal sense. It is important to note that the proposed power looks wider that it actually is. The planning and accountability mechanisms (Part 5) are strong and powers to raise money through taxes, make charges for public assets, make laws and to exert coercive or restrictive authority across private, civil or property rights require special statutory authority (as set out in the Bill and elsewhere).

    Despite the obvious limitations it is important not to under estimate the level of opposition that this general power will draw. If you support this provision then you must lodge a supportive submission.

    The drafting of Part 2 is worthy of consideration. In particular, the words used, the relationship between clauses 3, 8, 9 and 12, and the impact of clause 9 on the inclusion of (and in some cases absence of) specific powers.

    Clause 3 sets out the purpose of the Act. The purpose is long and somewhat confusing. For example, subclauses (b), (d), (e), (f), (g) and (h) do not appear to be necessary as they are essentially subsets of subclauses (a) and (c).

    The purpose of local authorities is set out in clause 8 and states:
    The purpose of local authorities is to enable local decision making, by, and on behalf of, individuals in their communities, to democratically promote and action, their social, economic, environmental, and cultural wellbeing in the present and for the future.

    Whilst a broad purpose clause is important clause 8 may not be as broad as first impressions would suggest. It is arguable that the clause 8 purpose is limited to the democratic decision making processes of local government. It is therefore arguable that the provision of works and services by local authorities is not covered by this stated purpose. This is to be compared to the current purpose of local government in s37K of the Act that includes:
    ...
    (e) For the operation of trading undertakings of local authorities on a
    competitively neutral basis
    (f) For the delivery of appropriate facilities and services on behalf of central government

    As there is no "functions" section in the Bill (compare s37S and s37T of the Act) clause 8 assumes even greater importance - which is why the wording of it needs to be absolutely clear. Clause 12 sets out a number of principles local authorities must endeavour to adhere to. Clause 12 is likely to led to confusion in terms of, what "endeavour" means, and how these principles relate to the other matters in Part 2 and to the prescriptive planning process provisions in Part 5.

    The wording of clause 9 is clumsy and will lead to difficulties in interpretation. For example, the circular nature of clause 9(2) - "for the purposes of performing its purpose". Because clause 9 is stated to be a general power many specific provisions that currently exist in the Act have been repealed. In considering both the general power and the specific provisions that remain (mostly in Part 7 of the Bill) you must ask the following question - "are the powers of a body corporate (ie a company) sufficient or does the council need a specific power? Is there a specific power?"

    We comment on some of these in later sections of this analysis.

    Checklist for submissions:
  • Support for the general power

  • Redrafting of Part 2 - you will need to provide actual words

  • Request for the inclusion of specific powers that are missing - provide the words.


    • For more details contact:Helen Atkins or Chris Mitchell
    Email helen.atkins@phillipsfox.com
    Email chris.mitchell@phillipsfox.com

    Council Controlled Organisations
    The present definition of a local authority trading enterprise (LATE) is a company in which one or more local authorities hold or control 50% or more of the voting rights; or an organisation (which includes a partnership trust or other arrangement) which operates a trading undertaking with the intention or purpose of making a profit, and which is also subject to significant control directly or indirectly by one or more local authorities.

    The Act requires that the principal objective of every LATE is to operate as a successful business and every LATE must produce a statement of corporate intent and comply with certain monitoring provisions. There are also a number of provisions in the Act which place certain restrictions on local authorities in their dealings with LATE's, for instance a local authority cannot lend to a LATE on favourable terms and is not permitted to guarantee or indemnify a LATE.

    The Act does not prescribe any requirements or place any similar restrictions on other organisations that are controlled by local authorities for instance a trust controlled by a local authority that does not carry out a trading undertaking with an intention or purpose of making a profit. The Bill does away with the concept of a LATE and in its place introduces the new concept of a "council controlled organisation" with a distinction being drawn between:

  • council controlled profit organisations; and

  • council controlled non-profit organisations.


    • Prior to the establishment of all council controlled organisations (profit or non-profit)
    the local authority is required to:
  • undertake consultation before being established;

  • produce performance statements:
    - council controlled profit organisations must produce a statement of corporate intent;
    - council controlled non-profit organisations must produce a written performance agreement.


    • New provisions are also introduced to require local authorities to manage council controlled organisations by:
  • establishing policies to identify and appoint directors including trustees managers and office holders to all council controlled organisations;

  • establishing processes for the approval and endorsement of directions, strategies, planning outcomings, activities, financial and non-financial targets and outcome measures;

  • regular performance monitoring.


    • In addition:
  • statements of corporate intent and performance agreements for both profit and non profit organisations must be made publicly available;

  • Parts I to VI of the Local Government Official Information and Meetings Act 1987 will apply to all council controlled organisations, and

  • the Auditor General is required to be the auditor of all council controlled organisations in accordance with the requirements of the Public Audit Act 2001.


    • The Bill essentially introduces a new code for the governance of all council controlled organisations which is applied to both profit and non-profit organisations. There are also significant new requirements for local authorities requiring them to establish policies and procedures for the appointment of directors, trustees and managers, to approve performance statements and monitor the performance of all council controlled organisations.

    The additional accountability introduced for such organisations in many cases will require a significant increase in the level of reporting and accountability for the organisations themselves not to mention the additional processes that are required be the local authorities.

    When considering submissions it may be appropriate to seek views from the organisations affected to determine how onerous the new regime is likely to be. It would also be sensible to particularly review the non-profit organisations that may be caught by the new provisions. The broad definition of a council controlled organisation may have some unintended consequences.

    The Bill adopts many of the suggestions to improve accountability signalled in the report of the Controller and Auditor-General on Local Authority Governance of Subsidiary Entities produced in March 2001. It is important to note that the restrictions in the Act preventing a local authority from lending on favourable terms or from guaranteeing a LATE are not present in the Bill.

    Checklist for submissions
  • How onerous will the new policies and processes and accountability
    provisions be for your council?

  • You need to seek views from organisations affected - particularly non-profit organisations

  • You need to consider the types of non-profit organisations that may be caught.


    • For more details contact: Linda Going
    Email linda.going@phillipsfox.com

    Planning & Reporting (Including Financial Management)
    The Bill proposes to strengthen the accountability mechanisms and planning requirements on local authorities in 2 significant respects.

  • Firstly, the foundation for planning becomes a long-term council community plan (LTCCP)

  • Secondly, the principles for decision making and consultation on these issues are set out in considerable detail.


    • The Bill also revises the financial management provisions.

    Planning
    The requirement for a LTCCP is new. This document will underpin local authority planning and financial management. It deals in detail with a 3 year time horizon, and in indicative terms with the 7 years after that. Although it replaces the current long-term financial strategy, there is, a part from the time scale (10 years in both cases), very little similarity. (see clauses 73-75 & Schedule 8 of the Bill; compare s122K of the Act)

    The requirements for an annual plan and an annual report remain. The annual plan is a streamlined version of the current annual plan and is only required only in the years when a LTCCP is not prepared. The major difference in the annual plan provision, is the new provision is closely linked to the requirement for the LTCCP.(clauses 76-77 & Schedule 8 of the Bill; s223D-223E of the Act)

    Decision-making and consultation
    The special consultative procedure remains, but it is significantly enhanced in a number of respects by the prescription of the following:
  • the principles of local authority decision making

  • the principles of consultation

  • specific requirements in relation to proposals and "significant" proposals

  • information provision requirements.

    • (clauses 66-72 & Schedule 8 of the Bill; s716A of the Act)

    The special consultative procedure must be used before:
  • adopting a LTCCP

  • adopting an annual plan

  • making a decision on a significant proposal.


    • The special consultative procedure will also be used for decisions which currently require the special order procedure.

    While the consultative requirements reflect, to a large extent at least, current and best practice at many local authorities, they are nonetheless significantly more detailed and prescriptive than those currently in s716A.

    Financial management
    The new Bill tidies up some aspects of financial management and integrates with the changes to the rating system in the Local Government (Rating) Bill.

    The Bill retains the general purpose for financial management - "to promote prudent, effective, and efficient management by local authorities" (clause 80 of the Bill; s122B of the Act). The Bill explicitly requires local authorities to maintain a balanced budget - unless a decision is made that it is "financially prudent" to do otherwise (clause 81). The general principles of financial management are retained, that is:
  • adequate and effective provision for expenditure needs

  • the requirement to assess costs and benefits for different options.


    • Specific criteria to be considered when deciding which revenue and funding mechanisms are most appropriate are retained with some modification (clause 82; s122C of the Act)

    There are some changes to the financial policies which must be prepared - some already required, others new. Local authorities must prepare:
  • a revenue policy

  • a financing policy

  • a policy on contribution to joint ventures or other private sector initiatives

  • an asset management policy

  • a liability management policy

  • an investment policy

  • rates remission and postponement policies (mandatory for Maori freehold land, but optional for other land).

    • (clauses 83-90 of the Bill; cf ss122O-122S of the Act)

    All of the financial management policies must relate to the LTCCP.

    Borrowing and security
    The borrowing and security provisions are largely revised versions of the existing provisions. The new general power of competence, however, means the previous general power to borrow is omitted. The prohibition on borrowing in overseas currency remains though (clauses 91-97; ss122Z-122ZP of the Act)

    Comments on the new regime
    The quid pro quo for the general power of competence is the strengthening of the planning and accountability processes. The financial management regime has been tweaked to allow some flexibility to avoid some anomalies which have been created from strict compliance with the previous requirements.

    The requirement to identify community outcomes and priorities and to prepare a LTCCP is new, but no doubt simply formalises the processes already undertaken by many local authorities. The requirement in the LTCCP that local authorities outline how they will work with other organisations and the private sector to achieve the community outcomes and priorities is sensible and should mean better integration and co-ordination of services.

    The determination of whether a proposal is "significant" will itself be very significant as local authorities will need to use the special consultative procedure. The Bill sets out specific proposals which are deemed to be significant but also sets out generic criteria for other proposals to be measured against (including the requirement to develop a policy on such matters). Many of the deemed significant proposals are uncontroversial. The wording of one, however, is far too broad (clause 70(c)). Any decision to begin to or cease delivering any activity or to change the "person by whom an activity is to be delivered" is caught.

    Much of the financial management regime is not new - the regime debuted in the 1996 reforms - but aspects of it have been tidied and some greater flexibility has been introduced. The emphasis on transparency and community participation to ensure accountability has been strengthened.

    There are a few aspects which need some comment:
  • The financial management principles have been revised slightly to avoid anomalies caused by the need to adhere strictly with the previous rigid principles. While the emphasis on prudent financial management is retained, there is now the flexibility to, for example, explicitly decide not to run a balanced budget for the financial year or not to fund depreciation on infrastructure assets, etc. This change is sensible.

  • The current financial management principle which requires local authorities to consider the mix of public and private benefits when deciding how an activity is funded is retained - with some minor modifications. Somewhat oddly, the Bill, however, does not retain the principle that local authorities can charge those who impose costs or negative effects on the community (ie the exacerbator principle).

  • The Bill retains the prohibition on borrowing in overseas currency. This prohibition sits uncomfortably with the new general powers and flexibility in the Bill and arguably is no longer necessary.


    • The Bill requires that local authorities produce numerous plans, reports, and policies. While this is sensible for the transparency and accountability of local government, logistically many local authorities may become overwhelmed by these requirements and may have difficulties completing these requirements in the specified timeframes. Consideration must be given to the value of all these reports when weighed against the significant resources which will need to be committed to complete them.

    Checklist for submissions:
  • support overall planning, delivery, and accountability regime, including LTCCP

  • query timeframes for and resources needed to prepare plans and reports

  • consider threshold for requirement to use special consultative procedure

  • support revisions to financial management regime

  • oppose removal of exacerbator principle and retention on prohibition of borrowing in overseas currency.


    • For more details contact: Chris Mitchell or Dean Knight
    Email chris.mitchell@phillipsfox.com
    Email dean.knight@phillipsfox.com

    Property
    The Bill contains a broad power that empowers local authorities to acquire the property that they need for their purposes (clause 9(2)). In addition, the Bill authorises local authorities to purchase or take land under the PWA for the purposes of or in connection with any work they were empowered to undertake before 1 July 2003 (clause165).

    Under the Act and the Public Works Act 1981 (PWA) local authorities are empowered to acquire and maintain property that is necessary for the efficient and effective performance of their functions (sections 225(2) and 247F of the Act, section 16 PWA).

    Clause 165 of the Bill is confusing. It can be interpreted to limit the scope of the broad power so that local authorities can only purchase land for public works. Also, the reference to what could be done before 1 July 2003 may create difficulty in the future as local authorities will have to refer back to what could be done at that time. In addition, the PWA itself is the subject of review. So there may not be any body of precedent under any new legislation as at 1 July 2003.

    Under the PWA, local authorities may acquire land for any "local work"; a local work means:
    A work constructed or intended to be constructed by or under the control of a local authority, or for the time being under the control of a local authority.

    That definition and section 16 PWA provides a wide power for local authorities to use the PWA for works. Therefore, clause 165 seems to be unnecessary because the PWA power exists independent of it. In addition, the review of the PWA will deal with the extent to which local authorities can compulsorily acquire land and what they must do when they wish to dispose of public works land. There is no need to bring those issues into the Bill.

    Where local authorities need to acquire land for non-public works, local authorities' full capacity would enable them to acquire land in the same manner as anyone else.

    Purchasing land by installments unchanged
    Section 228 of the Act entitles local authorities to acquire land by installments. The full capacity provided in the general power will continue to allow local authorities to do this.

    Local authorities have full capacity to sell land subject to restrictions
    Local authorities currently have the power to sell land, subject to the passing of a resolution following public notice (s230). The power to sell is restricted by the procedures and requirements of various other statutes, eg PWA and Reserves Act 1977. In addition, local authorities may develop and sell property held for commercial or industrial purposes (s572). This power to sell is not subject to the PWA.

    The Bill gives local authorities full capacity to dispose of land. However, there are restrictions, as follows:
  • local authorities are prevented from delegating the power to purchase or dispose of assets, other than in accordance with the long-term council community plan (schedule 5, clause 31(1)(c)).

  • restrictions on the disposal of parks (clause 126).

  • restrictions on the disposal of endowment property or land held on trust (clause 128). Note: clause 128 is more liberal than section 230 of the Act as the Minister may approve other uses of such property. Local authorities can still sell such property unless the instrument of endowment or trust prohibits this. The Act requires local authorities to apply the proceeds to the purchase of other land. The Bill entitles a council to apply the proceeds to another purpose identified by them as long as they attempt to contact the donor of the land and ascertain their views, and the council has notified its intention to dispose of the property in its long-term council community plan.

  • the PWA and Reserves Act processes.


    • Leasing powers essentially the same
    Local authorities have a general leasing power (s231), which also constitutes local authorities as leasing authorities under the Public Bodies Leases Act. This has the effect of making the Public Bodies Leasing Act apply to Council leases, unless otherwise stated.

    The full capacity provision in the Bill will enable local authorities to lease land (except for roads which are subject to sections 341 and 345 of the Act). However, the full capacity will be restricted to the extent of provisions in trust or endowment instruments.

    Local authorities will cease to be leasing authorities under the Public Bodies Leasing Act from when the Bill comes into force. However, the Public Bodies Leasing Act will continue to apply to existing leases under that Act, and renewals of those leases.

    The specific powers of leasing in section 45 PWA and the Reserves Act will continue to apply, as will the leasing provisions of the Burial and Cremation Act 1964.

    Council power to grant easements unchanged
    Local authorities have power to grant easements under section 235 of the Act. Also, the Act (s338) provides the power to grant easements under road for conduits for petroleum and other purposes.

    The Bill's full capacity will enable local authorities to grant easements which will be restricted by specific provisions of the Reserves Act and PWA, and any specific provisions of trust or endowment instruments. Further, Part XXI of the Act is not repealed (s338 will continue to apply).

    The specific provisions in the Act relating to development and use for particular purposes have been replaced by the general power In general, the Act contains a number of specific provisions relating to
    development and use of land for such things as housing, commercial and industrial purposes, farming and forests, recreation and community development, and urban renewal.

    The full capacity provided by clause 9(2) of the Bill will enable local authorities to carry out development and use of land that is necessary for the efficient and effective performance of their functions.

    The change to delegations allows more flexibility in dealing with reserves
    Generally, reserves are dealt with under the Reserves Act. The Act does not enable Reserves Act powers to be delegated and as such, council resolutions are required for dealings with reserves.

    The Bill (schedule 5, paragraph 31) entitles local authorities to delegate, to a committee or other person, any of its responsibilities, duties or powers unless expressly provided otherwise in the Bill or any other Act. As such, dealings with reserves can be delegated.

    The change to the delegations provisions are welcomed and will allow what are often administrative matters to be dealt with in committee or by the CEO without the need for a full Council resolution (assuming the appropriate delegations are in place).

    Checklist for submissions:
  • Support freeing up of prescriptive provisions in relation to land dealings

  • Recommend deleting clause 165

  • Consider restrictions on selling land - must be identified in long-term council community plan

  • Support freeing up of delegations in relation to dealing with reserves


    • For more details contact: Gray Thompson or Mel Easton
    Email gray.thompson@phillipsfox.com
    Email mel.easton@phillipsfox.com

    Assets & Infrastructure

    The key areas where change is proposed are:
  • the obligation to continue to provide water and wastewater services and to plan for the future needs of the community

  • the restrictions on dealing with the assets, including divesting and contracting out

  • the powers to provide for infrastructure and services (water, drainage, wastewater etc)


    • There are a number of issues where no change is proposed - ie the Act is retained. These are dealt with at the end of this section.

    The obligation to maintain and plan for water supply and wastewater services.
    The Bill places a new obligation on territorial authorities that provide water supply or wastewater services within its district to continue to do so and to maintain its capacity to do so.

    In addition to the planning requirements in Part 5, the Bill requires each territorial authority to make an "assessment" of water supply and wastewater services in its district. The assessment is detailed and the matters it must cover are included in clauses 121 and 122. These matters have a particular environmental focus. In addition a further assessment of "other sanitary services" (which is a wide term taken from the Health Act 1956 and includes cemeteries, public toilets, swimming baths (and dressing sheds) and works for the disposal of refuse) is required.

    The assessment may be included in the long-term council community plan, or the annual plan. If it is not included then it must be done by following the special consultative procedure.

    Although asset planning has long been a part of best practice for many local authorities the prescriptive nature of the provisions is likely to impose a significant burden. In addition there is also no link to the requirement to have an asset management policy (clause 85).

    Restrictions on divesting water supply and wastewater assets - and contracting out generally
    There are significant controls on a territorial authority divesting or transferring the ownership of significant assets (not defined) involved in providing water supply or wastewater other than to a council controlled organisation. Council controlled organisations can also not divest. The only exception on divesting is if assets are no longer required to maintain the capacity to provide water supply or wastewater services.

    The controls also do not allow management contracts (for all of the system as a whole for more than 15 years) and place limitations on the nature of any joint venture arrangement.

    The prohibition on exit is not supported by local government generally, and certainly will be opposed by the private sector. The limitations imposed on management raise the question as to whether some infrastructure contracts currently operating around New Zealand could have been entered into under the proposed regime.

    There is no obstacle to new entrants supplying water and using the existing infrastructure, although a territorial authority would need to consent to the use of the water supply network, with its actions being subject the Commerce Act. The Commerce Act implications do not appear to have been considered.

    The provision of infrastructure

    Water supply and water races
    Control over the water supply in the district s378 of the Act has been amended slightly so that it is clear that the control is for the purpose of reticulated water supply (clause 131).

    The power to do a wide range of activities necessary to construct, purchase and maintain works for water supply in s379 is intended to be replaced by the general power. This must be looked at carefully as some of the existing powers (for example to power to use the road corridor or alter any drain, pipe, cable etc that is owned by another network utility operator) cannot be assumed - in particular in the absence of any finality on the roading provisions.

    Waterworks constructed or purchased by the local authority will no longer vest in the local authority. Processes will need to be put in place to ensure that ownership of any new waterworks is clear.

    The power to undertake works on private land (under s 708 and the 16th schedule) has been maintained under clause 149 and the 10th Schedule. Likewise the power to undertake waterworks outside the district or on roads outside of the Council's control is maintained by retaining the 14th Schedule.

    The Bill includes a number of coercive powers to prevent the waste of water, to stop water supply, and that mirror the Act (see ss 382 and 397 and clauses 132 and 133). These powers are in turn supported by the offence provisions in clauses 180-182.

    It is noted that the Bill contemplates that Council's will continue to have water supply bylaws. These or specific water supply agreements will be the primary tool for governing the relationship between the Council and the customer.

    The general power, in combination with clause 149 and the 10th Schedule, will adequately provide for water races. There is no requirement to maintain a level of service, no restriction on exit and no requirement to prepare specific "assessments".

    Sewerage and Stormwater drainage and Trade Wastes
    The specific powers in the Act to provide and maintain all drainage works necessary for the efficient drainage of the district are not specifically provided for - unless the works are on private land (clauses 149 and the 10th Schedule) or involve covering a watercourse (clause 145). Most activities will be able to be undertaken in reliance of the general power, however there is doubt over the ability to use the road corridor. There will no longer be a requirement to make a drainage map - although a prudent local authority will continue with this practice.

    There is no provision for drains to vest in the local authority which again highlights how clear the local authority will need to be about the intended ownership of drains at the time of construction. The provisions requiring owners of land to provide private drains in the Act (ss 459 and 460) are maintained in clauses 147 and 148. So are the rights of the owner of a private drain that passes over land owned by another party (s461 of the Act and clause 461).

    The Bill has done nothing to clarify the distinction between public and private drains - despite continuing to use the terminology. It has retained the ability to declare a drain public (s 462 of the Act and clause 152), but removed the "20 year deeming" provision in s441 of the Act. Arguably, a drain will not be public through "control", and a more deliberate act of "ownership" is required. The Bill has missed an opportunity to clarify this issue.

    There is no longer a need for a specific power to dispose of trade wastes, so the only provisions of note that remain in the Bill in this topic are the regulatory powers given to local authorities to make and enforce bylaws (see the regulatory section that follows).

    The Bill has maintained the coercive powers under the Act to require owners to do work on their land to protect public drains (clause 153 - clearing tree roots).

    Development Contributions
    The Bill includes development contributions. They are payable on any development (including subdivision) for costs associated with infrastructure and the contribution to reserve funds.

    The new provisions are in addition to the financial contribution provisions in the RMA, but cannot be charged if a financial contribution has already been imposed as a condition on a resource consent.

    While the reinstatement of development contributions will be welcomed by local authorities that have found the RMA provisions difficult to work with and are still 'bogged' in the district plan process, the provisions themselves need significant work. A key area of concern (particularly to the development community) is the absence of any appeal provision.

    "No change" - the Act retained
    The existing roading, waste management, and land drainage and rivers clearance and divestment provisions are retained. This means that any "big picture" decisions will be subject to the increased planning and accountability provisions in the Bill - and the detail will still be dealt with under the Act.

    If the roading provisions do not "catchup" with the Bill there are likely to be operational difficulties. Corridor management issues, in particular the co-ordination with other utility operators are arguably not covered by the general power. We recommend that such practical issues be raised (using examples) in the submission process.

    The Bill has also missed the opportunity to tidy up residual legislation such as the River Boards Act 1908 and the parts of the Soil Conservation and Rivers Control Act 1941 that remain in force.

    Contracting and tendering
    The general power will authorise local authorities to tender and contract for goods and services. The statutory bias for tendering in s247E of the Act is not carried forward. However, it is likely that the underlying practical requirements around contracting and tendering will be substantially unchanged as local authorities will be prudent to comply with current "best practice standards" such as the Auditor-General's guideline "Procurement A Statement of Good Practice, June 2001" and their own internal Tender and Procurement guidelines (often contained in the delegations register).

    Local authorities are no longer subject to the Public Bodies Contract Act 1959, so all local authorities will need to address their delegations as this will not be covered by the general power.

    Checklist for submissions
  • The positive obligation to maintain water supply and wastewater services

  • The prohibition on divesting water supply and wastewater assets

  • Lack of clarity over what is meant by "significant assets"

  • The requirement to make assessments for water supply and wastewater - and in particular "other sanitary services"

  • The adequacy of the general power to authorise work on roads

  • The development contribution provisions - and their relationship to the RMA


    • For more details contact Sally Dossor or Helen Atkins
    Email sally.dossor@phillipsfox.com
    Email helen.atkins@phillipsfox.com


    Regulatory

    Bylaws
    The bylaw provisions (Part 6 of the Bill) are significantly amended from the current provisions. The focus is on the bylaw making powers of territorial authorities and regional councils appear to have less scope for making bylaws under the proposed provisions. In particular, the previous power to make bylaws regarding the control of reserves is not included (s684(1)(30) of the Act). The new provision also omits the general powers for good management and enforcement of the Act for regional councils.

    Of note, and topical at the moment, territorial authorities are given an express power to make bylaws prohibiting or regulating the consumption, possession and bringing of liquor into public places.

    Under the proposed provisions, bylaws will bind the Crown in respect of specific topics, such as open space fires, water supply, stormwater, trade wastes and solid wastes, although the Minister of Local Government can exempt the Crown from these bylaws by written notice to the local authority.

    The considerations before a bylaw is made are expanded to include the need to consider if a bylaw is the most appropriate way to address the problem, and if so, whether the particular bylaw is the most appropriate form of bylaw. There are also Bill of Rights implications.

    The process for adopting the bylaw is now the special consultative procedure (rather than special orders). There is now a review requirement for all bylaws, the first period is 5 years after adoption, then every 10 years after the first review. The bylaw will expire 5 years after the review was due if no review takes place. Bylaws in force in force when the Bill comes into effect will be deemed to be validly made under the Bill and
    must be reviewed within 5 years.

    Clause 105 provides a charging regime the mirrors section 690A of the Act. In the case of many local authority services this does not result in a change but in the case of trade wastes the charging regime will be significantly simplified.

    There is a new process for appointing enforcement officers, available to all local authorities. These enforcement officers then get warrants to authorise them to enforce bylaws and infringement offences.

    Offences - waterworks, water races and private drains, advertising and coat of arms.

    There is little change to these offences provisions.

    Offences - other (eg obstruction of official, damage to property, breach of bylaw, breach of Act)
    There are a number of clauses in relation to other offences that warrant brief consideration to assist in your submission preparation:
  • clause 189 (obstruction of official persons) is not limited to when the specified people are carrying out duties etc under the Bill which is an extension of the offence under the Act. Further, there is no longer express reference to an offence when a person refuses admittance (we assume that this would be covered by the obstruction provision)


  • clause 192 (damage to notices) and clause 193 (damage to local authority property) are both examples of some clumsy drafting which makes their intent unclear.

  • clause 198 (which makes it an offence to breach a bylaw) no longer includes the option of an injunction in the case of continuing offences.
    There is now no reference at all to continuing offences in the penalties.

  • clause 199 (a new provision creating a defence to the offence of breaching a bylaw where the act or omission was done because the person ("defendant") reasonably believed the act or omission was necessary to save live, prevent injury or protect property from damage). Of note is that there is no defence applicable to breaches of the Bill itself.

  • clause 200 (an offence not to comply with the Bill) omits the 12 month period to lay an information that was given in the original Act (the default is 6 months as provided for in the Summary Proceedings Act). Again there is no reference to continuing offences or the option of injunction.

  • clauses 201 (penalties) as already noted there is no reference to continuing offences or to injunctions for continuing offences. The penalties have been substantially increased and for the most part are $20,000 - although for breach of a trade waste bylaw the fine is $200,000.


    • Infringement Offences
    Previously only breaches of navigation bylaws were infringement offences. The new provisions open it up to any offences specified in regulations, and local authorities retain the right to keep any fines. The processes remain the same.

    Removal Orders
    The split of provisions between the main Bill and the Schedule makes it quite difficult to follow, as the Schedule does not stand alone but is referred to in almost every section in the main Bill. Given that you also have to refer to the District Court Rules to see all the requirements, this whole section is perhaps overly complicated.

    The original Act excluded an injunction being made under s698(3) in respect of non-compliance with a removal order, but this is not required in the new Bill as injunctions are not an option.

    Schedule 14 (the information required when applying for a removal order) is now only set out in the prescribed form (being Form 40I in the District Court Rules) whereas it was previously set out as a mandatory requirement in the Act itself.Whether this lessens the status of the requirements depends on how strictly the form is interpreted.

    Checklist for submissions
  • Support reduction in prescription of bylaw making powers

  • Regional councils may need to consider what the impact of the changes are to their bylaw making powers

  • Consider whether the 5 year review of bylaws made under the Bill is necessary

  • Support increase in penalties

  • Consider the impact of the removal of penalties for continuing offences

    For more details contact: Helen Atkins or Dean Knight
    Email helen.atkins@phillipsfox.com
    Email dean.knight@phillipsfox.com

    February, 2002