The Luxonian version of localism isn’t devolution of power, it’s just delegating tasks, argues Joel MacManus.

Prime minister Christopher Luxon has pitched himself as a champion of localism. In his speech on Wednesday at local government conference SuperLocal 24, he proved he doesn’t actually believe it. The vision for the future of local government the prime minister pitched was deeply opposed to localism and local decision making. He announced his government’s intention to strip back councils into powerless entities responsible only for infrastructure and basic services. The Luxonian version of localism isn’t devolution of power, it’s just delegating tasks.

It was an escalation of hostilities in a long-standing wrestle for power between central and local governments. Almost every council in the country is facing double-digit rate increases. Councils have long complained about “unfunded mandates”, where central government requires them to perform a number of services without providing the funding required to pay for it.

First and foremost, councils want more money. Rates are only 7% of the total tax take in New Zealand, and councils want alternative funding sources. Secondly, councils want more responsibility. They believe that they know what their local community needs better than the central government does and can be more impactful in delivering the housing, transport and economic development needs of their city.

Local Government New Zealand has been agitating for years for the central government to introduce city and regional deals, a scheme that is common in the UK and Australia, where councils are enabled to take on major infrastructure or other projects in exchange for a greater share of the tax take. At the conference, infrastructure minister Simeon Brown revealed five regional deals will be announced soon, though didn’t specify the regions.

Central government appears to be using these deals as a way to seize more power from councils. Luxon announced his government’s intention to restrict council’s independence and decision-making power: establishing performance reviews, introducing spending caps, and generally removing any ability for councils to do anything other than provide basic infrastructure and services.

Luxon’s speech at SuperLocal wasn’t a speech by someone who recognises that he represents one form of elected power, talking to another, separate form of elected power. It was a CEO giving a tongue lashing to an underperforming business unit. He treated councils like Crown agencies that he has direct control over, rather than fellow elected politicians with a mandate from their communities.

“Localism and devolution comes with rights and responsibilities,” Luxon said. He made it clear those responsibilities were specifically to cut spending on anything his government didn’t agree with. “End the projects that don’t deliver value for money,” he told councils.

His speech was scolding. It was hostile. It was tense. “Go to your room and don’t come out until it’s clean,” was how Invercargill City councillor Alex Crackett paraphrased it.

Politically, this was very intentional from Luxon. He got to run through his best economic lines: do the basics brilliantly, cut the fat, get back to core services. It’s the greatest hits, and it works for his voters. It’s also a bit of risk management; there is a building frustration around the country about the cost of rates rises. Local governments want to point the blame at central government for cutting off its funding streams, and Luxon is trying to pull an Uno reverse card and push that blame back on councils.

The speakers following him took open pot shots at the prime minister. “Localism is about communities deciding what councils deliver,” said LGNZ president and Selwyn District mayor Sam Broughton. He pointed out that large rates rises aren’t limited to the one or two councils that have more progressive politics than the government, it’s a systematic issue across the board.

WellingtonNZ chief executive John Allen threw away his notes and dove into a series of digs at the prime minister. “There are two kinds of people; look forward or go back,” he said. “Line-by-line cutting your way to a successful council, a successful community, and a successful future seems to me to be a limited and backward-looking vision.”

As an example of what he saw as wasteful council spending, Luxon pointed to the building he was standing in, Tākina convention centre. The $180 million building was a controversial project, and is reportedly falling short of revenue targets. Allen defended it, saying “the reason this place was built wasn’t to make a profit in this place, but for the spillover benefits”, like spending in bars, restaurants and hotels. The irony is, any additional economic activity Tākina is generating for Wellington is primarily boosting central government coffers through GST and income taxes from added employment. The council doesn’t see any direct benefit except the long-term flow-on effects of city growth.

Luxon’s speech was met with groans and various oral expulsions of disapproval. But there was applause too – there are plenty of conservative councillors out there who liked his message of spending restraint.

This is a battle being fought on two fronts: politics, and power. Politically, each council will have their own ideas about how to spend money based on what their voters want. Those ideas won’t always align with the government. Luxon and Brown are showing a clear willingness to override the will of councils to push through their own ideals. As politicians, that’s their prerogative – they want to achieve as much of their priorities as they can for their voters. It’s just not localism.

The second, more important conflict is about power. Local governments and central government are two separate forms of elected government, each of which can claim to represent, collectively, all the voters in Aotearoa. They are two separate and independent democratic entities, each tussling for authority. Right now, central government is by far the more powerful of the two, due to “a decades-long accumulation of power at the expense of iwi and local government”, as Justin Tipa, Te Rūnanga o Ngāi Tahu, put it.

Technically, councils get their power from the Local Government Act, which parliament has the ability to change at its will. But that’s not really where the authority lies. In reality, local governments get their power from the people and from the democratic process. People expect to be able to vote for local leaders to make decisions about local issues and projects. Councils have always had a role in building town halls, libraries and community centres, and running economic development programmes – all sorts of the stuff that Luxon described as “white elephants and wasteful spending”.

It’s not hard to imagine how this could escalate into a small constitutional crisis if a council decided to simply ignore a central government directive. If central government keeps taking away decision-making power from local governments, there will be a backlash. There is already one building.