Council-owned Oamaru Hospital is celebrated as a model for the future of local government, but it also exemplifies a newfound 'misunderstanding and mistrust' of central government.
Waitaki mayor Gary Kircher's daughter Alex was born at Oamaru Hospital. When the 57-year-old needed gall bladder surgery, that was where he was admitted. And the small 35-bed hospital holds a special place in the hearts of his community: they own it.
The Government's Future for Local Government Review has this week presented a somewhat vague and broad-brush interim report to Minister Nanaia Mahuta, but one thing it does suggest is a move away from councils running infrastructure (like roads, planning and Three Waters) to providing health and education services.
"The relationship between local and central government is characterised by misunderstanding and mistrust and needs significant work." – Future for Local Government review
Its members said they were particularly impressed by the unique Oamaru Hospital model.
But as with every other hospital, Oamaru is facing big challenges. Kircher says the council has loaned it $700,000 to help with costs like rising salaries that aren't funded through its contract with Southern DHB.
"The last few years have been difficult because as nurses have had pay rises, the DHB has been very slow and negligent in passing on funding to cover those increased costs," he said. "So the hospital's financial viability has been under threat."
It's problems like these, and the nationwide dissent over Three Waters, that help explain the biggest challenge posed in the interim report: "The relationship between local and central government is characterised by misunderstanding and mistrust and needs significant work."
Newsroom asked Local Government Minister Nanaia Mahuta about the challenge that mistrust posed, in conducting the review of the Future for Local Government.
"It will be a challenge in the current environment," she acknowledged. "As you know, the sector is already voicing its challenge around responding to the range of reform initiatives that the Government has on its agenda."
Alongside the local government review, the Government is also battling with councils over amalgamating their Three Waters infrastructure and taking over resource management processes, as well as centralising DHBs and many of schools' back office functions.
"I've not had a door closed in my face, and many things are said but the communications channels still remain open. And I think that's what's going to be required in order to progress the necessary matters for local government." – Nanaia Mahuta, Local Government Minister
"So I don't want to understate the significance of local government having to work alongside central government priorities, and vice versa," Mahuta said. "What we have to try and do is get some cut-through about how this necessary relationship can be achieved for ultimately beneficial outcomes. That will require a stronger partnership, a stronger alignment, a different way of working between government agencies and councils.
"I'm not predetermining the outcome or forecasting the temperature between central and local government, except to say I've always been committed to ensuring communications channels remain open, even on challenging issues.
"That is a far better place to be than do nothing at all."
Mahuta has used Parliament's question time to criticise local leaders like Whangārei's Sheryl Mai and Auckland's Phil Goff, whom she suggested hadn't been upfront about talks on Three Waters governance reforms.
She told Newsroom: "We're dealing with some really difficult issues, and you know that with the Three Waters space it's an exceptional set of challenges for the sector, and we have had difficult conversations.
"But I've not had a door closed in my face, and many things are said but the communications channels still remain open. And I think that's what's going to be required in order to progress the necessary matters for local government, and also for central government to see the merit in what a better working relationship can look like.
"We're going to be tested both ways, but it is what it is. That is what a partnership is. I would be more worried if councils started to close the door on the most difficult conversations and were unwilling to engage with me. I have not had that experience yet."
Jim Palmer, the former Waimakariri council chief executive who is chairing the independent review panel, acknowledged there were "some significant conversations" occurring between central and local government, coinciding with the review of the sector's future.
"Our review is really focused on what are the conditions and environment that need to be in place for the next 20 to 30 years," he said. "So while there are some current tensions we need central government, local government, iwi, business, communities working effectively to maximise community wellbeing in the future and from our perspective we need to be thinking about it through that lens."
Even the association with central government can taint some leaders and organisations. Last week Timaru District Council voted to withdraw from Local Government NZ, because of unhappiness at how closely the organisation was working with the Department of Internal Affairs on the Three Waters reforms. Timaru believed it wasn't fighting councils' corner hard enough.
Today, Local Government NZ president Stuart Crosby congratulated the government’s panel on delivering a robust scene-setting report, which canvassed many of the issues councils have been struggling with under the existing local government legislative framework.
“The report has opened a door – we want to wedge that door open even further," he said. “There is a huge opportunity to rebalance the roles of central and local government, and that means all parties have to be open to changing their roles if we want to achieve different outcomes for communities.”
Newsroom spoke with Selwyn Mayor Sam Broughton, a Local Government NZ national council member. He has been working closely with the independent review panel to make sure councils' voice is heard, and said the interim report identified "huge scope for improvement".
He characterised that as encouraging. "Meaningful change will require both central and local government letting go of some traditional roles and working far closer in many others.”
He agreed there were moves away from councils providing infrastructure like Three Waters, resource consents and roading – but greater expectations of their roles supporting community wellbeing, especially in public health and education.
“It’s great to see the Panel’s commitment to considering whether councils have the appropriate funding and financing tools to meet our responsibilities," he said.
Nearly three hours' drive down state highway 1 from Selwyn, the challenges at Oamaru Hospital highlight that funding difficulty. The council had to loan it $800,000 this year, to meet a funding shortfall in its contract with Southern District Health Board.
That has been an on-again, off-again funding battle since 1990, when the publicly-owned hospital was threatened with closure. Waitaki District Council hammered out a unique deal to take over ownership of the small secondary facility. Tertiary hospital care is provided down the highway in Dunedin.
Local Government review panel member Gael Surgenor, an Auckland Council general manager, said the panel had met councils around the country, looking at pockets of innovation. "There are things I didn't even know that local government was involved in, like Waitaki Council running a hospital. And very interested in how they can play a bigger role in the health system."
Mayor Kircher told Newsroom his council had been keen to show the panel how effectively its role in health provision was working. He hoped it might provide a model for greater council involvement in health provision – even that is seemingly at odds with the Government's centralisation of the DHBs.
"Having a good hospital, even without the full surgical services, is still an important part of the community," Kircher said. "And we can get better outcomes because we're far more motivated, at a local level, to make sure our community is going as well as possible.
"It shows the ability of local government to be flexible and to take on local problems and find solutions working alongside the community."
The hospital and council have now invested in a 180-bed retirement village overlooking the town, which is expected to ultimately return a dividend of about $2m a year to help pay for hospital care in the Waitaki community.
"Some people are concerned that this review is about councils doing less things," he said. "But it's actually about councils doing more things. It's about being flexible and connected to our communities."
