Appendix 3 Local Government Bill 2001 - Powers of Territorial Authorities

  1. One of the main effects of the Bill is to give local authorities a power of general competence. This is a significant expansion of their existing powers and enables them to undertake a wide range of activities that were previously outside their scope. In general terms local authorities will have much the same powers as companies under the Companies Act. However, at the same time communities will have much greater control over the activities that their local authorities undertake on their behalf. This will occur through the consultation and accountability provisions of the new Bill.
  2. The Bill contains new provisions that regulate asset management planning. Under the current Act there is no specific statutory obligation to prepare an asset management plan. In practice local authorities have included asset management plans in their long term financial strategy. However, currently there is very little obligation on local authorities to be explicit with their communities about asset management planning. In practice there is no consistent approach taken to asset management planning among local authorities.
  3. Under the Bill there is now a formal requirement set out in clause 83(1) that requires that:

    4. "A local authority must, in order to provide predictability and certainty about sources and levels of funding, adopt the funding and financial policies described in subsection (3)".

  4. Subsection (3) sets out a number of different policies local authorities will be required to develop. These policies include:
    1. a financing policy;
    2. a policy on the contribution of council funds to joint ventures or other initiatives involving the private sector;
    3. an asset management policy; and
    4. an investment policy
  1. All these policies must be prepared and adopted as part of the long term council community plan which effectively replaces the long term financial strategy.
  2. Any proposal to invest in water enhancement projects would need to be consistent with the policies set out in clause 83.
  3. Clause 82 sets out certain principles of financial management. There is an emphasis on outcomes. The principles include identification of:
    1. the community outcomes for the group of activities to be funded; and
    2. the impact of any mix of mechanisms on the social, economic, environmental and cultural wellbeing of the community.
  1. These principles tie in with the new purpose of local authorities, as set out in clause 8 of the Bill which provides:

    2. "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 well-being in the present and for the future".

  2. The implication of all of these provisions is that there will be a shift to an outcome focus. The critical issue will be defining the impact that will arise from a proposed activity. Thus before investing in a water enhancement project a local authority will need to define the environmental and other outcomes which will result from the proposed investment in the water enhancement project.

The asset management programme will have quite a different focus. Primary considerations will be matters such as the social, environmental, cultural and economic outcomes.

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