Monday, 25 May 2009

So who gains from city mergers?

A good rule of thumb when designing centres of political power is to imagine your political opponents are in power, and to tie up the reins of power accordingly. This sort of wisdom has been thrown to the winds however by the designers of Auckland’s new megalithic mega-authority.

Here in Auckland we have the strange situation where the proposed Auckland Super-City was first driven by the centre left, but has now been adopted by the centre right in the hope and expectation that their current control of the Auckland City Council will feed into control (for ever) of the new mega-balls-up .

Owen McShane asked Wendell Cox, an international expert on local government and governance, if large scale amalgamations were typically driven from the left or the right. The money quote in Cox’s reply is this:

The only economies of scale in government consolidation are for lobbyists.”

Here’s how he answered:

Regrettably the right and left are of virtually equal distastefulness on the issue.
In Toronto, it was a right wing government trying to kill a left wing local government and merge it with more conservative governments, hoping to move things to the right (and get rid of a socialist mayor for whom they had particular dislike . . .).
In the US, much of the consolidation movement – so far getting nowhere (there must be a God) – is pushed by the elitist left. . . Often you will find the most vocal proponents of these policies are central city business organizations and central city leftist elites.
Then, there are always the misled rightists who think that larger governments will employ fewer people per capita, not realizing that the larger the government the more personnel it needs and trade unions become even more powerful. As I like to say, the only economies of scale in government consolidation are for lobbyists. Here are my main reports on the issue:

- Local and Regional Governance in the Greater Toronto Area: A Review of Alternatives
- The Toronto Megacity: Destroying Community at Great Cost
- Growth, Economic Development, and Local Government Structure in Pennsylvania
- Are Bigger Governments Better?
New York.
- Report Debunks Myths Why Property Taxes Are So High In New York

- Government Efficiency: The Case for Local Control
- Government Consolidation in Indiana: Separating Rhetoric from Reality

Owen then asked Wendell whether the end result of such amalgamations was generally “a shift to the left or to the right.” He replied:

You can bet that the left always wins.
The left is better at power and governance (not in terms of quality but in terms of control) and thus routinely takes over the reigns of power. That much power should not be available in a municipal government.
Bureaucrats tend to be elitist and generally more left wing, so the advice the councillors and the mayor receives will be more to the left. Democracy is diluted. Taxes are raised from a larger base and spending goes up... not just on personnel.
Here is my commentary in The National Post on the 10th anniversary of the Toronto merger. Interestingly, there was not a single letter to the editor posted in response – at that point Toronto was having severe budget difficulties:

- ’Megacity fallout: Toronto's Current Financial Woes Are The Direct Result Of Mike Harris's Perhaps Vengeful Decision To Merge Municipalities

So who knows? We could end up with Mike Lee, Sandra Coney or even Russel ‘take back the bridge’ Norman as the new Super-City Mayor! How d’you fancy that, Auckland?


  1. So, do you have a counter-proposal beyond "leave it as it is"? (I mean a realistic and attainable alternative. Not a "if liberterians ruled the world" nirvana.)

  2. Yep, simply throw out the so called "power of general competence" that former Minister of Local Government Sandra Lee introduced in her new 2002 Local Government Act -- and that has powered every rate increase since.

    Better still, throw out Sandra Lee's 2002 Local Government Act altogether, and go back to what we had before.

    Realistic and attainable? That can be done within a week.

    (You can read our Libz submission on Lee's bill and the "power of general competence" it granted the petty bureaucrats to see why they both need to go.)

  3. I can imagine the reasoning behind some extra spending:

    "Right, we've got the amazing new council, we're representing the whole of Auckland, so clearly it's time to have an amazing new building, designed by some popular-but-ugly architect, with solar-powered everything and an atrium featuring millions of dollars worth of local art" etc etc, ad nauseum.

    In contrast, the old councils might have been smaller, more conservative, maybe a bit more humble, and happier with a boring old office building that didn't cost $240 million ...

  4. PC, that was an excellent submission. Simple to understand and direct to the point of what government should be. I noted that you didn't use terms such as bastard, fraud, theft, etc,... ? Why?

  5. To Nat Supporter re submission language,
    Well the submission was still ignored so how does that help your argument that we should not use terms like bastard, fraud, theft, etc.?

  6. You're missing the key part of how this pans out in the US:

    Local govt does a lot more there.

    Typically it runs the police dept, and (largely) funds the schools. If you're living in a poor urban area then chances are that the local cops there are paid less (as much as 50% less) than cops in the rich suburbs that wealthy residents commute in from. School funding likewise, though that depends greatly from state to state.

    So local govt amalgamation in the USA is often a way for for cities to stop the inequalites between rich areas and poor areas in schooling and policing.

    England's more down that direction too, with provision of health and social services being done by the local councils.

    So it's all very different than what's going on in NZ, where our local govt doesn't do very much (a very low % of out gdp passes through the hands of local govt)


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