NOTE: A full list of linked references is available at the bottom of the page.
Part 6 of the LGA, sections 76 to 90, provide the requirements for decision making and consultation, including the principles of consultation and information that needs to be provided, the reasons for the proposal, and the reasonably practicable options.
Section 76 requires that in making a significant decision, which a decision on the future management and or ownership of three waters assets will be, councils must comply with the decision-making provisions. This is a ‘higher bar’ than the “promote compliance with” that applies for ordinary decisions.
Section 77 states that councils must seek to identify all reasonably practicable options and then assess the advantages and disadvantages of each option.
Section 78 requires that in the course of making a decision a Council must consider community views, but section 78(3) explicitly says that consideration of community views does not require consultation, which is reinforced by case law.
Section 79 gives Council discretion to decide how the above Part 6 requirements are met including the extent of analysis done etc. Therefore, while a decision could be challenged, a judicial review is unlikely to be successful unless the decision made by council was manifestly unreasonable, the process was flawed or the decision was beyond its powers (as given in law, ie the council did not act within the law).
However, despite section 79 of the LGA, a decision to transfer the ownership or control of a strategic asset from the council (or to it) must explicitly be provided for in the council’s Long-Term Plan (and have been consulted on specifically in its consultation document).
Council’s existing LTP and the consultation information and process used to develop it will not suffice to meet this test, as Council did not itself have adequate information on the options and the implications earlier this year when it consulted on the LTP. An LTP amendment and commensurate consultation process on the ownership and governance arrangements and asset transfers proposed would be necessary.
There are also provisions in the LGA that relate to unlawful decisions to sell or dispose of assets, which can be investigated by the Auditor-General (as per sections 43-47 of the Local Government Act 2002).
A decision to opt-out would also be affected by the consultation and decision-making requirements set out in this report, including the need to follow a robust process that could survive a judicial review, as well as make a final decision that was not manifestly unreasonable in the circumstances.
Given the Government’s 8 week period of engagement with mana whenua and councils, commitment to explore issues such as council and community influence of service outcomes, integration with other reform proposals, spatial and local planning, request for councils to give feedback on the proposal, identify issues and solutions, and uncertainty around next steps, including whether the reform may become mandatory or legislative change will remove legal barriers to opting in, it would be premature to make a decision to opt out of the reform process and may expose the Council to litigation risk if it did so.
A Government Bill to progress reforms that could address the issues raised above, for example removing the section 130 requirements, has explicitly been raised.
At this stage no decision is required on future delivery arrangements. Based on the analysis in this report, Council should wait until it has further information before consulting on and/or deciding on the Government’s proposal.
It is recommended that the Council therefore notes the options canvassed in this report, the analysis of them and the information and decisions that are yet to be made.
If reform is not made mandatory, to ensure sufficient information is available to meet the moral and legal requirements of Council decision-making, staff would then develop the analysis of options (based on further information from the Government, advice on next steps, and regional discussions) prior to Council decision making and consultation on future water services delivery. Whether this is ultimately required will be dependent on where the Government gets to with the reform process and the decisions it makes after 30 September 2021.
