Book News: June 1st, 1997

The Audit Commission has turned its attention to New Zealand in the continual search for better value for money. It found that in terms of specific VFM tools and techniques, there is little that the UK can learn from New Zealand, but some initiatives merit UK consideration.New Zealand local government underwent both structural and organisational change in 1989 and 653 existing authorities were restructured into 86 new authorities . The chief executive became the sole employee of the council and all other employees work for the chief executive. Reforms to improve the accountability, visibility and value for money of New Zealand councils include:

  • voluntary benchmarking, which councils ‘own’, but which is selective in application;
  • ‘contestability’ (competitive tendering) which is not compulsory, except as a criterion for government subsidy;
  • performance management, where some New Zealand councils have becomemarket leaders, aided by the discipline of the annual plan process; and
  • democratic scrutiny which, although weak at investigating detailed cost efficiency, is strategically powerful, because of the rigours of annual rate-setting.

Initiatives which merit UK consideration include:

  • strategic financial planning: New Zealand councils must plan their programmes over not less than 10 years, ensuring that they are fiscally sustainable;
  • asset maintenance: Accounts must state the extent to which current maintenance/sinking fund provision is ensuring that assets are maintained;
  • beneficiaries: The council must consider the extent to which every spending programme provides a general public benefit or benefits to identifiable groups in society. In the latter case, it must consider whether to make a ‘user charge’ and
  • state any reasons for not doing so.

Such ideas could not be transposed naively to the UK. British local government delivers a far wider range of services than New Zealand and is predominantly funded by central government. However, visibility and accountability are common principles. New Zealand’s initiatives could provide a framework within which current (or future) financial freedoms in UK local government could be exercised .

The full report is available from:

Audit Commission Publications

Bookpoint Ltd

39 Milton Park

Abingdon OX14 4TD