invercargill · 2012. 12. 11. · 3.1 invercargill youth council annual plan moved cr lewis,...

InvercargillCITY COUNCIL

NOTICE OF MEETING

Notice is hereby given of the Meeting of theInvercargill City Council

to be held in the Council Chamber,First Floor, Civic Administration Building,

101 Esk Street, Invercargill onTuesday 11 December 2012 at 4.00 pm

His Worship the Mayor Mr T R Shadbolt JPCr D J Ludlow (Deputy Mayor)CrR LAbbottCr N D BonifaceC r T J BuckC r C G DeanCr A G DennisCr N J ElderCr I L EslerCr G D LewisCr I R PottingerCr G J SycamoreCr L S Thomas

EIRWEN HARRISMANAGER, SECRETARIAL SERVICES

0 o I

f t t1

AGENDA

Page

1. APOLOGIES

2. PUBLIC FORUM

3. MINUTES OF THE MEETING OF COUNCIL HELD ON 527 NOVEMBER 2012

4. MINUTES OF THE EXTRAORDINARY COUNCIL MEETING 11HELD ON 30 OCTOBER 2012

5. REPORT OF THE DIRECTOR OF ENVIRONMENTAL ANDPLANNING SERVICES

5.1 REQUEST FOR PRIVATE PLAN CHANGE BY H W RICHARDSON 15GROUP LTD

Appendix 1 19Appendix 2 21Appendix 3 23

5.2 JOINT AND SEVERAL LIABILITY 25

6. REPORT OF THE DIRECTOR OF FINANCE AND CORPORATESERVICES

6.1 REMUNERATION RECOMMENDATION 37

7. MAYOR'S REPORT 69

8. URGENT BUSINESS

9. PUBLIC EXCLUDED SESSION

Moved, seconded that the public be excluded from the following parts ofthe proceedings of this meeting; namely

(a) Confirming of Minutes of the Public Excluded Session of Council27 November 2012

(b) Confirming of Extraordinary Minutes of the Public ExcludedSession of Council 30 October 2012

(c) Report of the Director of Works and Services(d) Report of the Chief Executive Officer

00')

The general subject of each matter to be considered while the public isexcluded, the reason for passing this resolution in relation to each matter,and the specific grounds under Section 48(1)(d) of the Local GovernmentOfficial Information and Meetings Act 1987 for the passing of thisresolution are as follows:

General subject of each Reason for passing this Ground(s) undermatter to be considered resolution in relation to Section 48(1) for the

each matter passing of thisresolution

(a) Confirming ofMinutes − Council27 November 2012

(b) Confirming ofExtraordinaryMinutes − Council30 October 2012

(C) Contract 670 −Water SupplyRenewal

Enable any local authorityholding the information tocarry on, without prejudiceor disadvantage,negotiations (includingcommercial and industrialnegotiations)


Bluff Enable any local authorityMain holding the information to

carry on, without prejudiceor disadvantage,negotiations (includingcommercial and industrialnegotiations)

(d) A213 Yacht Race

Venture Southland



Section 7(2)(i)

Section 7(2)(i)

Section 7(2)(1)

Section 7(2)(i)

Section 7(2)(1)

004

MINUTES OF THE MEETING OF THE INVERCARGILL CITY COUNCIL HELD IN THECOUNCIL CHAMBER, FIRST FLOOR, CIVIC ADMINISTRATION BUILDING, 101 ESK

STREET, INVERCARGILL, ON TUESDAY 27 NOVEMBER 2012 AT 4.00 PM

PRESENT: His Worship the Mayor Mr T R ShadboitCr D J Ludlow − Deputy MayorCr R L Abbott (from 4.12 pm)Cr N D BonifaceC r T J BuckC r C G DeanCr A G DennisCr I L EslerCr G D LewisCr I R PottingerCr G J SycamoreCr L S Thomas

IN ATTENDANCE: Mr R W King − Chief Executive OfficerMr C A McIntosh − Director of Works and ServicesMrs P M Gare − Director of Environmental and Planning ServicesMr D J Johnston − Director of Finance and Corporate ServicesMrs M Short − Corporate PlannerMr R Pearson − Roading ManagerMs M Napper − Manager Community DevelopmentMr P Casson − Chief Executive Officer − Venture SouthlandMs L Kuresa − Committee Secretary

APOLOGIES

Cr N J Elder and Cr Abbott for lateness.

Moved Cr Boniface, seconded Cr Ludlow and RESOLVED that the apologies beaccepted.

Mr King informed the meeting of an Item in relation to the GovernanceStatement to be taken under Urgent Business.

Moved Cr Boniface, seconded Cr Thomas and RESOLVED that the Item inrelation to the Governance Statement 2010 —2013 − Delegations to Committeesbe taken under Urgent Business.

2. PUBLIC FORUM

Nil.

3. REPORT OF THE INVERCARGILL YOUTH COUNCIL

The report had been circulated.

Hadley Van Schaik and Megan Robinson were in attendance to speak to thisreport.

00

3.1 Invercargill Youth Council Annual Plan

Moved Cr Lewis, seconded Cr Ludlow that the report be received.

In response to questions, Hadley and Megan gave the following answers:

I've enjoyed my time with the Youth Council. I was a member of the YouthCouncil since Year 8 where I received a letter in the mail from my schooladvising that I had been nominated. I had no idea what it was all about andfor the first couple of years I just listened to what was going on around meand slowly I got more involved with chairing the meetings. Maybe I could besitting around the Council table one day.

2. I have been on the Youth Council for three years and it's been a greatexperience to be involved in the Youth Council.

3. We feel that our voice is heard through the Youth Council. The ideas thatwe bring to Council are considered by full Council including the feedbackthat we receive.

Hadley Van Schaik was presented with a present from the Council for his longservice of seven years as a member of the Invercargill Youth Council. TheCouncil wished him well on his future plans.

The motion, now being put was RESOLVED in the affirmative.

4. MINUTES OF THE MEETING OF COUNCIL HELD ON 16 OCTOBER 2012

Moved Cr Ludlow, seconded His Worship the Mayor and RESOLVED that theminutes be approved.

5. MINUTES OF THE MEETING OF THE BLUFF COMMUNITY BOARD HELDON 5 NOVEMBER 2012

Moved Cr Lewis, seconded Cr Boniface and RESOLVED that the minutes bereceived.

6. MINUTES OF COMMITTEES

6.1 Community Services 12 November 2012

Moved Cr Buck, seconded Cr Ludlow and RESOLVED that the minutes beapproved with the amendment that Cr Ludlow was present at the meeting.

6.2 Regulatory Services Committee 13 November 2012

Moved Cr Ludlow, seconded Cr Thomas and RESOLVED that the minutes beapproved.

6.3 Infrastructure and Services Committee 19 November 2012

Moved Cr Dean, seconded Cr Dennis and RESOLVED that the minutes beapproved.

ir,c

6.4 Finance and Policy Committee 20 November 2012

Moved Cr Boniface, seconded Cr Ludlow that the minutes be approved.

His Worship the Mayor said it was very interesting hearing all the portfolioreports from each Councillor and asked how often Council should be updated onportfolios.

The Council agreed an update on portfolios should be carried out annually.

Note: Cr Abbott joined the meeting at 4.12 pm.

Cr Dennis said that the word "floats" needed to be added after the word "horse"so it that it read, "...there's nowhere for the horse floats to park up".

The motion, now being put, was RESOLVED in the affirmative withamendment.

7. REPORT OF THE CHIEF EXECUTIVE OFFIER


7.1 Invercargill Artificial Sports Charitable Trust (IASCT)

Mr King took the meeting through the report.

Moved Cr Boniface, seconded Cr Buck and RESOLVED that the Councilappoints His Worship the Mayor, Mr Shadbolt to the Board of the InvercargillArtificial Sports Charitable Trust (IASCT).

8. REPORT OF THE DIRECTOR OF WORKS AND SERVICES


8.1 Long Term Plan − Passenger Transport System

Mr Pearson took the meeting through the report.

Moved Cr Boniface, seconded Cr Abbott and RESOLVED that Council approvesthe changes from the Long Term Plan for Passenger Transport for the bus faresand amended bus routes as contained in this report.

9. ACTION PLAN

Mr King updated the meeting on the Scottish Hall matter.

Cr Ludlow asked if Council was at fault in relation to the delays on this matter,and Mr King said the delays were not Council's fault. All he could say was that itwas a very complex situation and nobody seemed to know the answer to it.

Moved His Worship the Mayor, seconded Cr Ludlow and RESOLVED that thereport be received.

ti

10. URGENT BUSINESS

10.1 Supplementary Report − Governance Statement 2010 − 2013 − Delegationsto Committees

The report was tabled and Mr King took the meeting through it.

Moved His Worship the Mayor, seconded Cr Ludlow and RESOLVED that:

The delegations as specified in 2(i) to (iv) be revoked and for eachrespective Committee be replaced with:

• Reviews existing activity plans, policies, bylaws and strategies, and ifno longer fit for purpose, refers back to the full Council forconsideration.

Develops new or revises activity plans, policies, bylaws andstrategies for consideration by the full Council.

2. That any previous statutory hearings heard by any Council's StandingCommittees since the 2010 general election be confirmed and validated.

The report, now being put was RESOLVED in the affirmative.

11. REPORT OF HIS WORSHIP THE MAYOR

The report was tabled.

Moved His Worship the Mayor, seconded Cr Boniface and RESOLVED that thereport be received.

12. PUBLIC EXCLUDED SESSION

Moved His Worship the Mayor, seconded Cr Ludlow and RESOLVED that thepublic be excluded from the following parts of the proceedings of this meeting,namely:

(a) Confirming of Minutes of the Public Excluded Session of Council16 October 2012

(b) Receiving of Minutes of the Public Excluded Session of the BluffCommunity Board 5 November 2012

(c) Confirming of Minutes of the Public Excluded Session of the Infrastructureand Services Committee 19 November 2012

(d) Report by Councillor Norman Elder

The general subject of each matter to be considered while the public is excluded,the reason for passing this resolution in relation to each matter, and the specificgrounds under Section 48(1)(d) of the Local Government Official Information andMeetings Act 1987 for the passing of this resolution are as follows:

OG)

General subject of Reason for passing Ground(s) undereach matter to be this resolution in Section 48(1) for theconsidered relation to each matter passing of this

resolution

(a) Confirming ofMinutes −Council16 October2012

Enable any localauthority holding theinformation to carry on,without prejudice ordisadvantage,negotiations (includingcommercial andindustrial negotiations)

Section 7(2)(i)

(b) Receiving ofMinutes − BluffCommunityBoard5 November2012

(c) Confirmation ofMinutes −Infrastructureand ServicesCommittee19 November2012

(d) Inner CityRevitalisationDesignConsultantSelection

To protect the privacy ofnatural persons,including that ofdeceased naturalpersons



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Section 7(2)(a)

Section 7(2)(i)

Section 7(2)(1)

MINUTES OF THE EXTRAORDINARY MEETING OF THE INVERCARGILL CITYCOUNCIL HELD IN THE COUNCIL CHAMBER, FIRST FLOOR, CIVIC ADMINISTRATION

BUILDING, 101 ESK STREET, INVERCARGILL ON WEDNESDAY 30 OCTOBER AT4.00 PM

PRESENT: His Worship the Mayor Mr T R ShadboltCr D J Ludlow (Deputy Mayor)CrR LAbbottCr N D BonifaceC r T J BuckCr C 0 DeanCr A G DennisCr N J ElderCr I L EslerCrG D LewisCr I R PottingerCr G J SycamoreCr L S Thomas

IN ATTENDANCE: Mr R W King − Chief Executive OfficerMr C A McIntosh − Director of Works and ServicesMrs P M Gare − Director of Environmental and Planning ServicesMr D J Johnston − Director of Finance and Corporate ServicesMs E Harris − Manager Communications and Secretarial ServicesMrs M Short − Corporate PlannerMr M Manson − Manager Financial ServicesMr R Pagan − Parks ManagerMr R Pearson − Roading ManagerMr S Tonkin − Manager Building Regulation ServicesMr R Keen − Manager Engineering Services GroupMr T Boylan − Planning ManagerMr P Casson − Chief Executive Officer, Venture SouthlandMs L Kuresa − Committee Secretary

APOLOGIES

Nil.

His Worship the Mayor informed the meeting of an Urgent Item to be takenunder Public Excluded Session in relation to a Director Appointment.

2. REPORT OF THE DIRECTOR OF FINANCE AND CORPORATE SERVICES


2.1 Adoption of Annual Report and Annual Report Summary 2011/2012

Cr Boniface took the meeting through the report.

Moved Cr Boniface, seconded Cr Lewis that the Invercargill City Council2011/2012 Annual Report be adopted incorporating the adjustments,

AND THAToil

The Invercargill City Council 2011/2012 Annual Report Summary be adopted.

In response to questions from Councillors, Cr Boniface and staff gave thefollowing answers:

The rates penalties and fuel tax is reported through the finance directorbudget and at the end of the year it's allocated back to all departmentsbased on an overhead percentage for the year, based on their share ofrates.

2. The contractual problem relates to water contract. The contractor has notbeen able to meet the terms of the contract and in that particular part of thecontract it is deleted.

3. The liability is the Spey Street gas works site, which has unfortunately hadsome contamination and there may be an environmental liability in the futurewith that. It's been in the Annual Report for the last eight to eleven years.

4. Electricity Invercargill Limited is looking at introducing smart meters, sowe've joined a group of other line businesses together and we areinvestigating bulk buying the smart metres and also the service provider whois going to provide the service. There has been a liability that's beengenerated by using consultants in getting the professional advise that wehaven't paid for, so the liability has to be paid for in the future, in the nextfinancial year.

5. Age Concern will be contacted to clarify why Cr Buck, who is the Councilrepresentative, has not being invited to the Age Concern meetings.

6. The expanded note from Page 17 is on Page 150, which pertains to theother investment properties around the city.

The two matters that Councilors asked for inclusion in next year's AnnualReport were as follows:

> The rates change so it is easily accessible to a reader,To investigate if Council is able to include a column that showed GroupBudget for the financial year for comparative purposes.

Councillors questioned the reasons that rates are costing a higher percentageof Council expenditure.

Mr Johnston explained that a number of Council activities have increased feesand charges revenue compared to budget increasing realised operationalrevenues, for example water connections and passenger transport usage.However reduction in NZTA subsidies, less solid waste charges (due to morerecycling) and decreased building consents revenues have offset this.Operational costs are reduced compared to budget due to mainly a $2 milliongrant to the proposed Stadium Southland rebuild not eventuating and othersavings on operational expenditures. An unrealised investment propertydevaluation of $3.9 million has offset the effect of the increased revenues anddecreased expenditure has had against the budgeted deficit, and has reducedthe operational result against that of the 2011 year surplus.

His Worship the Mayor took the meeting through the "Mayor's Introduction" setout in the Annual Plan where he outlined all the uncertainties. He also updatedthe Council on the results of Local Government Reform, which was received acouple of hours ago.

4

Mr King said the next process was that they would report it back to Parliamentand Parliament would debate it.

The motion, now being put, was RESOLVED in the affirmative.

PUBLIC EXCLUDED SESSION

Moved His Worship the Mayor, seconded Cr Elder and RESOLVED that thepublic be excluded from the following parts of the proceedings of this meeting,namely:

(a) Report by His Worship the Mayor

The general subject of each matter to be considered while the public isexcluded, the reason for passing this resolution in relation to each matter, andthe specific grounds under Section 48(1)(d) of the Local Government OfficialInformation and Meetings Act 1987 for the passing of this resolution are asfollows:

General subject of Reason for passing Ground(s) undereach matter to be this resolution in Section 48(1) for theconsidered relation to each matter passing of this

resolution

Director Appointment− Invercargill CityHoldings Limited

To protect the privacy ofnatural person and thatof deceased natural

Section 7(2)(a)

persons

n1UL'T

TO:

FROM:

MEETING DATE:

COUNCIL

THE DIRECTOR OF ENVIRONMENTAL ANDPLANNING SERVICES

TUESDAY 11 DECEMBER 2012

REQUEST FOR PRIVATE PLAN CHANGE BY H W RICHARDSON GROUP LTD

Report Prepared by: Gareth Clarke, Policy Planner

SUMMARY

Council has received a request for a Private Plan Change from H W Richardson GroupLimited to rezone approximately 13.2 ha of land at 16 Lake Street (Section 25 Block XIXInvercargill Hundred) and 2* Station Road (Section 24 Block XIX Invercargill Hundred andLot 1 of 23 Deposited Plan 2612) from Rural Sub−Area to Enterprise Sub−Area. UnderSchedule 1 of the Resource Management Act 1991 Council must decide whether to adoptthe request as if it were their own, accept the request as a Private Plan Change, or reject therequest.

RECOMMENDATIONS

That the request by H W Richardson Group Ltd for a Private Plan Change to theInvercargill City District Plan be accepted.

That Council staff prepare the necessary documentation to have the Private PlanChange request publicly notified.

IMPLICATIONS

1. Has this been provided for in the Long Term Plan/Annual Plan?

N/A.

2. Is a budget amendment required?

No. If the request is accepted by Council the costs of the Private Plan Change areborne by the applicant.

3. Is this matter significant in terms of Council's Policy on Significance?

No.

4. Implications in terms of other Council Strategic Documents or Council Policy?

Changes to the District Plan will have effect from the point when Council makesdecisions on the Private Plan Change after hearing submissions and furthersubmissions.

5. Have the views of affected or interested persons been obtained and is any furtherpublic consultation required?

The Plan Change will be subject to a public consultation process under Schedule 1of the Resource Management Act 1991.

OI

FINANCIAL IMPLICATIONS

None.

BACKGROUND

Council has received a request for a Private Plan Change from H W Richardson GroupLimited to rezone approximately 13.2 ha of land at 16 Lake Street (Section 25 Block XIXInvercargill Hundred) and 2* Station Road (Section 24 Block XIX Invercargill Hundred andLot I of 23 Deposited Plan 2612) from Rural Sub−Area to Enterprise Sub−Area. A SiteLocation Plan is included as Appendix 1. The key points raised in the request for the PlanChange and the accompanying reports are summarised below.

H W Richardson Group Ltd is the current owner of the former Clifton Wool Scour which islocated at 5 Lake Street. The land on which this is located includes a rural block of land tothe south. H W Richardson currently operates an intermodal transport and logistics businessfrom the site.

H W Richardson Group is experiencing an increasing demand for its containerised goodsand bulk materials storage and transportation services and intends to extend the currentintermodal transport and logistics activities south into the plan change site.

Under the current zoning development of the site would be uncertain and expensive becauseeach new or expanding non−rural activity is considered a discretionary activity that requiresresource consent. The proposed Plan Change provides the opportunity for more efficientdevelopment of the land in a manner consistent with the character of the adjacent industrialarea by gradually allowing a range of current and related industrial activities to be locatedand expanded in an appropriate location, in line with an expected increase in demand for thetransportation of agricultural goods to and from Southland.

The private Plan Change request comprises three changes to the District Plan. The threechanges proposed are as follows:

The plan change site is to be re−zoned from Rural Sub−Area to Enterprise Sub−Area.District Plan Map 17 (Appendix 2) is to be updated to reflect the new zoning. Allobjectives, policies and rules relevant to the Enterprise Sub−Area would apply to theplan change site.

2. A new rule is proposed that introduces a Concept Plan which seeks to limit vehicularaccess to the plan change site via a new access road off Lake Street only. Theproposed new rule is:

4.44.4 Lake Street/Station Road Concept Plan(A) Within that part of Lake Street/Station Road illustrated on the

Concept Plans in Appendix VII:(1) All vehicular access to Section 25 Block XIX Invercargill

Hundred; Section 24 Block XIX Invercargill Hundred and Lot 1of 23 Deposited Plan 2612 shall be via a new access road offLake Street.

(2) Any activity that does not comply with paragraph 4.44.4(A)(1)above is a discretionary activity.

3. A new Concept Plan (Appendix 3) as referred to in Rule 4.44.4(A) above is to beintroduced into Appendix VII in Section 9 of the District Plan.

0i

RESOURCE MANAGEMENT ACT 1991

Clause 25(2) states that:

The local authority mayeither—(a)adopt the request, or part of the request, as if it were a proposed policy statement orplan made by the local authority itself; or

(b) accept the request, in whole or in part, and proceed to notify the request, or part of therequest

Under clause 25(4) the Council may also reject the request, in whole or in part, but onlyif−−the request or part of the request is frivolous or vexatious; or

− the substance of the request or part of the request has been considered in the last twoyears; or

− the request or part of the request is not in accordance with sound resourcemanagement practice; or

− the request or part of the request would make the plan inconsistent with Part 5 of theAct.

In this case it is not considered appropriate to reject the request. Nor is it consideredappropriate to adopt the request as this would imply that Council will bear the cost ofmanaging the Plan Change, and there does not appear to be any benefit to Council in doingso given the current District Plan Review project.

The applicant has acknowledged the potential for the proposal to be included as part of theDistrict Plan Review project, but has stated that they would prefer to keep it as a separateprocess so as to avoid being caught up in any delays and appeals affecting the District PlanReview. Accepting the applicant's request is therefore considered the most appropriate wayof dealing with the Plan Change.

CONCLUSION

The Plan Change request generally reflects consultation that H W Richardson Groupundertook with the Council's Planning staff prior to submitting the request and would fit theformat of the operative District Plan should Council decide to accept it. If the Council decidesto accept the request it will be prepared for public notification. After the public submissionprocess and any subsequent hearings are completed, the Council will be required to makedecisions on the proposed Plan Change.

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−I f l s w a c c p −.

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0 Freight Haulage − HWRP's exisiting(' Invercargill sewage treatment plan

( ' ) Sewage oxidation ponds

( ' Oyster Shell Crushing Plant

( ) Main South Railway Line

( ) Henley Industries Ltd − Plastic goods

( ' ) Unformed paper road

LEGEND

Site Boundary

Invercargill to Bluff Walkway (Stage 1)

Proposed Invercargill to Bluff Walkway extension (Stage 2)

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PROPOSED CLIFTON PLAN CHANGE − LANDSCAPE AND VISUAL ASSESSMENT − SEPT 2012 SITE CONTEXT 1.0

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PLANLAKE STREET.INVERCARGRJ.

322110

sting and ProposedRailway Siding

APPENDIX 3

Main South Railway Line

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Plan Change SiteBoundary

TO:

FROM:

COUNCIL

THE DIRECTOR OF ENVIRONMENTAL ANDPLANNING SERVICES

MEETING DATE: TUESDAY 11 DECEMBER 2012

JOINT AND SEVERAL LIABILITY

Report Prepared by:

SUMMARY

S J Tonkin − Manager − Building Regulation Services

For Councillors' information only.

RECOMMENDATION

That the report be received.

IMPLICATIONS

1. Has this been provided for in the Long Term Plan/Annual Plan?N/A.


N/A.


N/A.


No.


N/A.


Nil.

SUMMARY

The Law Commission has released a discussion document on a review of joint and severalliability.

Submissions close on 31 January 2013.

The information in this report is only for Councillors' information.

4 ,−

Council staff will not be making a submission as it is considered that this Council has not hadsufficient experience in dealing with leaky buildings.

Other councils who have borne the brunt of the leaky homes issues will be far better placedto understand the issues and make submissions.

The discussion document is available in full from Council staff.

The following sections of interest are reproduced in full for Councillors' information.

> Foreword

> Chapter 1

> Chapter 9

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O2

Foreword

One of the most difficult issues i n our civil law is how to deal with situations wheretwo or more defendants are held liable to a plaintiff for the same damage. Thepresent rule governing this situation is commonly referred to as the rule of "jointand several liability".

This rule is of considerable importance i n the day to day operation of our civil law. Itimpacts particularly on the construction sector and the leaky buildings crisis whichthe country has had to grapple with for some years now, business and professionalservices (particularly in the context of the financial crises which have had to befaced), and local government (which is often seen as the defendant of "last resort").Of course, the rule applies across all areas of civil liability, particularly in tort, notjus t in these high profile areas.

Under joint and several liability each defendant is held liable for the whole of thedamage regardless of h o w many other defendants are also liable (which often meansa race to the deepest pocket); whereas under proportionate liability each defendantis responsible for his or her or its relative level of fault, which is a regime ofcomparative responsibility.

This rule has been the subject of legal and parliamentary interest over the lastquarter of a century, not jus t in New Zealand bu t in other common law jurisdictionstoo. As recently as 1998 this Commission recommended that the rule of joint andseveral liability be retained, bu t we were particularly asked to look at the issue againin a broad way in light of the construction and financial crises of the last decade.

This Issues Paper sets out the rules, how they have come about, what their effectsare, and what the possibilities are for adjustment. We seek input from the variousindustry sectors and from the public at large before formulating our Final Reportto the administration of the day, on legal issues that are of fundamental importancewithin our present civil justice system.

Grant HammondPresident

1

i v L a w C o m m i s s i o n Issues Paper

Chapter 1Introductionto the review

INTRODUCTION

11 In 2011 the Minister Responsible for the Law Commission referred a requestto the Law Commission that it conduct a review of joint and several liability.Joint and several liability is the legal rule that currently applies w h e n twoor more defendants are held liable to a plaintiff for the same loss or damage.The Reference arose after discussions at Cabinet level and anticipated that theCommission's review would be a broad one and consider issues and includeinput from the range of sectors affected b y civil liability issues. These includebu t are not limited to the construction sector, business and professionalservices, local government and any other potential parties to complexlitigation that may involve more than one defendant. The terms of referencefor the Review are attached as an appendix to this paper.

1.2 Joint and several liability is most often compared or contrasted with analternative rule usually called "proportionate liability". The difference in thetwo liability rules can be stated quite simply:

• under joint and several liability each defendant held liable for the samedamage is liable for the whole of that damage, regardless of how manyother defendants are also liable for the damage (but may seek contributionsfrom the other defendants); whereas

• under proportionate liability each liable defendant is liable only for theproportion of the loss or damage that a court determines is just, takinginto account each defendant's relative level of fault or comparativeresponsibility.

1.3 There are nuances to these broad propositions. Joint and several liability willonly arise if the wrong−doing by each defendant caused or contributed tothe same damage. Otherwise, the concurrent defendants may be separatelyliable for distinct losses; or they may be liable on a different basis, either in

Review o f Joint and Several Liabi l i ty 3

CHAPTER 1 !nt rod i jc l ion to t h e Re vie w

contract, tort or equity depending on the nature of the relationship betweenthe plaintiff and each defendant.

1.4 The two regimes do envisage different approaches as to who should bear thecost of determining who caused the loss, and also who bears the risk of adefendant not paying. On the first point, joint and several liability requiresliable defendants to apply in Court for contribution from other defendantsif they wish to achieve fair apportionment between defendants. In contrastproportionate liability requires the plaintiff to claim and prove a percentage orshare of their loss from each defendant, who may of course contest both theirliability and the appropriate share. In addition, in joint and several liabilitythe defendants bear the risk of the insolvency or absence of any defendants. Inproportionate liability the share allocated to an insolvent or absent defendantcannot be recovered by the plaintiff unless there is a further rule to re−allocateuncollectable shares. In joint and several liability this loss can simply berecovered from other solvent defendants.

1.5 Joint and several liability therefore provides an indirect path to proportionateliability, provided all defendants are available and able to pay. When aplaintiff claims against one defendant only, that defendant may join otherpotential defendants. In practice the Court determines the proportion of thedamages to be incurred by each defendant. Usually a defendant is also ableto claim from other defendants who have contributed to the damage afterjudgment is issued.' Each defendant may be liable to other liable defendants asthe Court finds just and equitable "having regard to the extent of that person'sresponsibility for the damage"! It is only when not all of the defendants areable to pay that joint and several liability will result in a defendant bearingthe share of the loss apportioned to other defendants.

1.6 In short, there are two propositions. In joint and several liability it issufficient for the claimant to identify one or more parties who are responsiblefor the same loss. They will be able to recover the full amount of the damagesfrom any one of them, though they cannot secure more than the totalassessed. The defendant can then claim a proportionate share from all otherliable defendants who have contributed to the damage. In proportionateliability the plaintiff has to identify all the defendants and claim aproportionate share from each of them.

1 Unless the plaintiff's claim lies purely in contract. Contribution between tortfeasors has beenpermitted since 1936, see Chapter 2; and equitable contribution can be sought by one defendantagainst another in appropriate circumstances.

2 Law Reform Act 1936, s 17(2)

O ')C4 Law Commission Issues Paper

Chapter 9The case for change

JOINT AND SEVERAL AND PROPORTIONATE LIABILITY

9.1 When assessing the case for change it is appropriate to weigh the relativemerits of each option. I n doing so, we need to look beyond our localjurisdiction and consider the way in which different liability models operateoverseas. It is also important to consider whether harmonisation withAustralia is desirable in this area. CER may provide an argument for changeeven i f the options are otherwise finely balanced, because harmonisation canassist in achieving macro−economic advantages.

9.2 The current system is geared toward protecting the plaintiff. The principaladvantage of joint and several liability is that the party who has been injureddoes not bear the risk of absent or insolvent defendants. This protection restson the idea that the parties who have actually caused the harm are each fullyresponsible for the loss, irrespective of their respective contribution to thetotal loss relative to each other. Because of this, each defendant should bearthe risk of the absent or insolvent defendants, even if the result is that theybecome liable for the consequences of someone else's actions as well as theirown. The status quo therefore has an element of consumer protection, and isregarded in common law terms as "just".

9.3 This has been particularly evident in the leaky homes crisis. The claimantsare making claims because they own a damaged home. Even where theclaimant was the original owner when the house was built, they are unlikelyto have had professional skills in contracting for building services. They werenot therefore in the position to determine the relevant skills and capabilitiesof the numerous professional, trade and business providers that collectivelygo to build houses. It is the people who were contracted by the owner, plusany negligent regulator or inspector, who have individually or collectivelycaused the loss. Joint and several liability has provided the homeowner withthe best opportunity to recover their loss.

9.4 The contra argument is that contractors or regulators, who bear joint andseveral liability for losses that they have not themselves directly caused,may become risk averse. This can increase costs, or reduce the prospects ofinnovation, i t has been argued that one of the reasons that New Zealand has

030Rev iew o f J o i n t a n d Severa l L i a b i l i t y 65

CHAPTER 9 ; The case f o r change

high building costs is that large scale builders, especially from Australia, willnot enter the market when faced with increased and unpredictable costs forbuilders stemming from the joint and several liability regime. It has also beensuggested that joint and several liability gives territorial authorities strongincentives to be risk averse, and may contribute to higher than necessaryhousing costs."'

9.5 Our overall conclusion at this stage is that there are not compelling efficiencygrounds for proportionate liability. Joint and several liability andproportionate liability are equally efficient systems of allocating the total loss.It is certainly true that the two different systems lead to advantages for eitherthe plaintiff or defendant and therefore significant differences in perceivedfairness to one or the other. However, available economic analysis does notshow that one system is superior to the other. Instead the choice between thetwo systems must be based on an overall assessment of who should bear therisks of absent or insolvent defendants.

9.6 One qualification needs to be added to this analysis. This broad equivalencyin economic effects presumes that the relevant system of joint and severalliability allows liable defendants to seek contributions from other liabledefendants. As we have discussed, that is generally the case in New Zealandbut not in every case because neither contribution nor a contributorynegligence defence are available in pure contract cases. Should joint andseveral liability eventually be retained in some or all circumstances, thenperhaps it might be argued that it would be useful to consider bringingcontract cases into line with other causes of action, by allowing contractdefendants to seek contribution and plead contributory negligence whereappropriate.

9.7 In the case of joint and several liability, the risk lies with the defendants. Theplaintiff has the theoretical certainty that they will be compensated for theirloss, provided there is at least one defendant who can be brought to judgmentand can cover the full cost. Such a defendant has to bear the loss caused bymissing or insolvent defendants.

9.8 In the case of proportionate liability, the risk lies with the plaintiff, sinceeach defendant will only be liable for the proportion of loss allocated to them,according to their comparative responsibility. In the event of a missing orinsolvent defendant, this loss will be borne by the plaintiff.

9.9 Both systems lead to complex litigation, since this is a function of the numberof parties who have potentially caused the loss. In joint and several liability,defendants have the incentive to join as many other defendants as possible inorder to share the loss. In proportionate liability it is the plaintiff who has thisincentive. They need to join as many defendants as possible in order to ensureas much of the loss as possible will be covered by the various defendants inthe proportion they contributed to the loss.

140 Housing Affordability Inquiry above n 80 at 161.

00",.6 6 L a w C o m m i s s i o n Issues Paper

OTHER LIABILITY OPTIONS

9.10 The choices for reform are not limited to either joint and several liabilityand proportionate liability. Modifications to the existing system of joint andseveral liability are possible, as are modified or partial proportionate liability,or proportionate liability in some circumstances only.

9.11 The options include limiting joint and several liability to principal liabledefendants. I n this case a minor or peripheral defendant will only be liable fortheir proportionate share of the loss. As noted i n Chapter 3, the percentagethreshold between a "major" and a "minor" liable defendant will inevitablybe arbitrary. This could also lead to further complexity of litigation as variousdefendants seek to demonstrate that they are in the minor category. But sucha system may address one of the most commonly repeated complaints from,for instance, the construction sector − that a sub−contractor or someone elsewho bears only a small or minimal proportion of overall responsibility for agiven damage can end by being forced to pay the full cost.

9.12 A further modification would be to apply the principle of contributorynegligence to determine whether joint or several liability or proportionateliability should apply. In circumstances where the plaintiff had contributed tothe loss, the liability would be determined o n a proportionate basis. Wherethere was no fault on the part of the plaintiff then joint and several liabilitywould continue to apply. As noted i n Chapter 3, this would continue torecognise that the blameless plaintiff should not have to bear the risk of theabsent or insolvent defendant. Again it might be necessary to have a thresholdtest of contributory negligence before this principle should apply. It may notbe reasonable that a plaintiff should lose the protection of joint and severalliability w h e n their negligence had only made a small contribution to the loss.

9.13 Both these modifications were considered b y the Law Commission duringits last review. I n its Final Report the Commission did not recommendmodification to the joint and several regime i n the case where the plaintiff'scontributory negligence had contributed to the loss.

9.14 Any modification to the existing regime will introduce new levels ofcomplexity into a liability system that already results in complex litigation.The advantages of the reform for either the plaintiff or the defendant willhave to outweigh the disadvantages of increased complexity thatmodifications to the joint and several liability regime will inevitably cause,while also achieving a result that is as fair as possible.

ISSUES IN THE BUILDING SECTOR

9.15 A possible shift to proportionate liability raises the issue of the protectionof the consumer interests. I n the case of the building sector, the buildingowners are consumers who are making claims against the suppliers andregulators of building services. Since proportionate liability results in plaintiffhomeowners bearing the risk of absent or insolvent defendants, it is necessary

Review o f Joint and Several Liabi l i ty 67

CHAPTER− 9 The case f o r change

to have a system which ensures that defects are remedied i n the event that thewrongdoer is absent or insolvent.

9.16 The approach in Australia has been to have compulsory builders warrantyinsurance. These schemes are administered at the state level. Builders arerequired to be insured, so that i n the event that the builder fails to remedy adefect, the homeowner can claim against the policy. When the schemes werefirst developed i n the 1970s there was a wide variety of cover. Over timethe schemes have evolved, and the cover has become more similar in moststate schemes. Initially most schemes were undertaken b y private insurers,bu t since the financial crisis private companies have exited the market andthe schemes are now underwritten or r u n by state government agencies.The insurers vacated the market because the market was not sufficientlyprofitable, and arguably because the firms feared or suffered reputationaldamage i n the event of disputes. Since this was a sector where the insured didnot choose the insurer, disputes were more common than i n other insurancemarkets. Disputes may also be more likely today than under earlier schemesbecause all b u t one of state schemes since the financial crisis now provideonly a "last resort" warranty, w h e n the builder is dead, insolvent or unableto be found.'41 The same factors that have seen insurers vacate the builderswarranty market in Australia are likely to disincline insurers to becomeinvolved in a New Zealand warranty scheme. It is also doubtful whether NewZealand consumers would regard "last resort" cover as fair or adequate, giventhe Australian experience.

9.17 It is the view of the Law Commission at this stage that a shift from jointand several liability to proportionate liability can only be justified if there isadequate protection of the plaintiffs' or the consumer interest.

9.18 This has particular significance given the background of the leaky buildingcrisis. The building industry through industry bodies and the territorial localauthorities have been the principal proponents for a change from joint andseveral liability to proportionate liability. They have been of the view thatit is unfair that a defendant, who may have only contributed to a minorextent should incur liability for the absent or insolvent co−defendant. Thereis less direct evidence of the views of building owners, bu t we infer thatthey are more likely to consider that anyone who has actually caused theirloss should be responsible for compensating them for it. We are interestedi n receiving submissions and comments about the operation of the joint andseveral liability rule from persons who have experience as plaintiffs i n claimsinvolving multiple defendants, as well as from defendants who have beensubject to the rule.

141 The Queensland scheme is the exception "first resort" scheme, in that it allows complainants toseek dispute resolution assistance from the relevant state agency, with cover still available if thebuilder cannot or does not pay for assessed damage.

0336 8 L a w C o m m i s s i o n Issues Paper

9 i 9 There has been some recognition i n discussions about the operation of jointand several liability of the importance of consumer protection. LocalGovernment New Zealand has proposed that there should be a compulsorybuilding warranty scheme. This is seen as one of the necessary elements,along with the n e w regulatory regime that is being introduced to improvebuilding quality. However, the experience of the Australian states shows thata n effective warranty scheme will either have to be provided by government,or have a government guarantee. How or i f such a scheme could work inthe commercial building sector, after Spencer on Byron, is a further issue thatwould need to be resolved.

9.20 The Law Commission's present view in respect of at least the residentialsector of the building industry is therefore that a shift from joint and severalliability to proportionate liability would have to be accompanied by theestablishment of a compulsory building warranty scheme that would providecover in the event that the builder failed to rectify defects. There would needto be a clear indication from Government that a compulsory warranty schemewould be established as a n element of any changes to the liability regimethat weaken the ability of homeowners to recover fully from defendants. Itis likely that the two propositions of a change i n liability regime and theintroduction of a builders warranty scheme would need to be introduced asa package to ensure continuity of consumer protection. The package shouldalso detail h o w the interests of commercial building owners would beaddressed.

OTHER SECTORS

9.21 We also note that there are other reforms that could limit liability i n certainsectors, such as the caps imposed for the finance and audit sectors inAustralia. These industry schemes are arguably of more significance than thechange in the liability regime, since they provide certainty on the total amountat risk. Such certainty is of considerable importance to insurers, and thereforeto the insured, i n determining the level of premiums.

CONCLUSION

9.22 The Commission does not consider that a shift from joint and several liabilityto proportionate liability could be limited to the building sector. I n Australiathe shift to proportionate liability first occurred i n the building industry inthe states of New South Wales and Victoria. However, this was later extendedto all negligence/lack of reasonable care actions claiming economic loss orproperty damage. We consider that if New Zealand were to make such ashift then it should also be applied universally, to the same range of potentialactions. This would have the advantage of harmonising New Zealand lawwith that of Australia.

R e v i e w o f J o i n t a n d Severa l L i a b i l i t y 69

CHAPTER 9 The case f o r change

The insurance experience in Australia for determining risk and recentlitigation history concerning proportional liability may then be usefullyapplied in New Zealand where appropriate. 142

9.23 A n additional advantage of a comprehensive shift from joint and severalliability to proportionate liability may be simplicity. All those affected shouldonly have to deal with a single system for allocating liability w h e n thereare multiple defendants.143 This advantage, however would still apply if NewZealand retained joint and several liability. The only people who would haveto deal wi th the complexity of two liability allocation systems are those whooperate on both sides of the Tasman. This is a factor to be taken into accountin considering which liability system is most appropriate for New Zealand.

9.24 I n the end, the decision o n whether to reform the liability rules for multipledefendants must be based on an overall assessment. Key considerations willinclude the appropriate allocation of the risk for absent defendants andwhether and how each system or rule deals with known difficulties suchas the deep pockets issue. A n essential test is which rule or combination ofmeasures is most likely to produce results that are efficient, and fair to andbetween the parties. We expect that submissions in response to this paper willhelp us address these issues.

Questions

Q30 Overall, do you think that joint and several liability is a fair system?

Q31 Overall, do you think that proportionate liability is a fair system?

Q32 What, if anything, could be done to improve the fairness or efficiency ofoutcomes under joint and several liability (either to the plaintiff, the defendant, oroverall)?

Q33 If proportionate liability were to replace joint and several liability, what if anyadjustments would you consider necessary to ensure fair outcomes?

Q34 How do you think the interests of plaintiffs and defendants should be balanced ina fair system of apportioning liability? How important is avoiding disproportionateburden on some defendants, compared to ensuring that plaintiffs receive aneffective remedy?

142 But it must be noted that the exact extent or coverage of the proportionate liability regime, beyondpure negligence actions, is one of the key issues still to be harmonised between Australian states. IfNew Zealand were to adopt proportionate liability regime then it will be important to engage withAustralian state and federal authorities on the preferred outcome of harmonisation.

143 However, Australian experience shows that at least for a transitional period there could be addedcomplexity, as parties seek Court rulings on whether proportionate liability extends to a given case,e.g. arguments over whether alleged co−defendants are liable for the same or distinct damage.

O370 Law C o m m i s s i o n Issues Paper

Q35 What, if any other changes do you think are necessary or desirable to improve ourliability rules? Why?

Q36 Overall, do you think that New Zealand should retain joint and several liability orshift to proportionate liability or adopt a hybrid option? Why?

Rev iew o f J o i n t a n d Severa l L i a b i l i t y 71

TO: COUNCIL MEETING

FROM: THE DIRECTOR OF FINANCE AND CORPORATESERVICES

MEETING DATE: 11 DECEMBER 2012

REMUNERATION RECOMMENDATION

Report Prepared by: Dean Johnston, Director, Finance and Corporate Services

SUMMARY

The Remuneration Authority is seeking feeback on a new remuneration system for electedofficials.

RECOMMENDATIONS

That this report be received and guidance given on Council's response.

IMPLICATIONS

1. Has this been provided for in the Long Term Plan/Annual Plan?

Yes


No


No


No


Yes


None

REPORT

The Remuneration Authority have issued a Report about changing the ways in which theremuneration for elected members is set.

They are proposing to do away with the Remuneration pool that is allocated by Council's andgoing to a specified salary model where they set the salaries for all officials.

As part of this process, they have asked for feedback from Councils. To date, we havereceived the feedback from one Councillor and one Community Board Member.

Their feedback is summarised as:

− Setting of Base Salaries by Job Size.

Council − Yes

Community Board − No

− Comment: Time put into the role of an electedrepresentative can be just as much whether small orlarge population base.

Salary relationship reset every three years.

Council − Yes


Comment: A population can decrease and the workloadcontinues as before.

− Meeting Fees.

Council

Community Board

Yes

No

− Resource Consent hearings.

Council − Yes

Community Board − Yes

− District Plan Hearings.

Council

Community Board

− Unitary Council Loading.

Council

− 12.5% Reasonable.

Council

They should be the same as for the RMA process.

No, this shouldn't be allowed.

Yes

Yes

− Elected Officials Expense and Reimbursement Policy every three years.

Council − Yes

− Should Policies be on Websites.

Council − Yes

− Is the proposed approach for additional responsibilities for Councillors reasonable.

Council − Yes

Is the maximum total amount reasonable.

Council − No

− Comment: It should be measured on the type of workdone and be similar to market rates.

Setting of Base Community Board Salaries;

Set every three years based on Population.

Council − Yes


− Comment: Should definitely not be ruled by population.This is unfair and disadvantages smaller towncommunity boards.

Using bands so Community Boards with similar populations get the same salaries.

Council − Yes


− Comment: Population does not necessarily affectworkloads. There are still the same sort of issuesoccurring and same number of meetings to attend.

− Councils make submissions for higher Community Board Salaries.

Council − Yes

Community Board − Yes

− Are the suggested percentage additions for Chairs and Deputies reasonable.

Council − No05

Community Board −

Comment: the percentage is too low and doesn't reflectworkload or responsibility.

No

Comment: The chair puts in larger effort in addition tomeetings and makes a large time commitment in manyvarious ways in the day to day running of the area.More appropriate recognition would be two thirds to thechair and one third to the members.

Is the Use of a Size Index reasonable.

Council − Yes


− Comment: Size does not fairly reflect work involved incarrying out the job.

Is using Populations and expenses for the Size Index fair.

Council − Yes


− Comment: As above

− Transition to new system.

Council

Community Board

Yes

Yes

040

RemunerationAuthority

RemunerationSetting Proposalsfor Local Authorities2013 and Beyond

November 2012

041

jLI

REMUNERATION AUTHORITY I Remuneration Setting Proposals for Local Authorities − 2013 and Beyond

Contents

Introduction

1. Executive Summary

2.1 The components of the remuneration of each council

2.2 The Remuneration Authority's process for regular review

2.3 Allocation for positions of additional responsibility

2.4 Removal of salary/meeting fee mix

2.5 Council Remuneration in election year2.6 The process in non−election years2.7 Loading for unitary councils

2.8 Resource consent hearing

2.9 Approval of elected officials' expense and reimbursement policies

2.10 Valuation of mayoral vehicle

2.11 Community boards

2.12 Positions of additional responsibility

2.13 Matters outside this review

3. The size index

4.1 Implementation −Transition to new system

4.2 Implementation —Triennial reviews and annual adjustments

5. Timetable and Consultation

Appendix A Remuneration Authority's obligations

Appendix B Draft guidelines for additional responsibilities

Appendix C Job evaluation and the Remuneration Authority

Appendix D Community board members − Base role description

Appendix E Councillor − Base role description

Appendix F Additional responsibility − Role description

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REMUNERATION AUTHORITY I Remuneration Setting Proposals for Local Authorities − 2013 and Beyond 3

044


IntroductionIn September 2011, a discussion document was releasedby the Remuneration Authority to help review howthe Remuneration Authority goes about settingremuneration for elected members of local authorities.The aim was to ensure that the process and outcomesmet the requirements of the Local Government Act andthe Remuneration Authority Act.

The discussion document showed the existingpool system was starting to give results that werecounterintuitive, and there were indications thatthe results were not being as fair to councillors andratepayers as was desirable.

The Remuneration Authority consulted with a groupof representatives of local government, and LocalGovernment New Zealand, to add their input andinsights to the review, and would like to thank thesepeople who contributed:

The Remuneration Authority initially hoped toimplement the new regime for the 2012 financial year. Ithas decided, however, that to ensure a smooth transitionfor the sector the implementation will take place fromthe 2013 elections, with each local authority beingprovided with full details of their new remunerationframework early in 2013. This timing will give localauthorities opportunity to recommend the structure andlevel of remuneration to the Remuneration Authority intime for a new determination to come into force afterthe 2013 elections.

The Remuneration Authority believes this willsubstantially reduce uncertainty about incomes forthose standing for election in October 2013, withchanges occurring only when the position of an electedrepresentative includes additional responsibilities, orwhen an incoming council reviews and changes thestructure for such positions.

Dave Cull − Mayor Dunedin CityAdrienne Staples − Mayor South Wairarapa DistrictBrendan Duffy − Mayor Horowhenua DistrictRichard Kempthorne − Mayor Tasman DistrictKevin Lamb −Administration Manager WaimakaririDistrict CouncilBrian Lester − CEO Ashburton DistrictMick Lester− Chair, Community Board ExecutiveCommittee, Councillor Hastings District.Michael Reid − Principal Adviser LGNZ

The Remuneration Authority received many responsesto the consultation document and has determined arevised regime. It is now setting out the key features ofthe new system to allow input from the sector and tohelp the smooth implementation of the revised regime.

In the consultation document, the RemunerationAuthority focused on two options for remunerationsetting: a continuation of the current indicative poolmodel, and a specified−salary model. The proposal thatthe Remuneration Authority intends to implementdraws, it hopes, on the best of both models. Theproposal also focuses on bringing about a substantialreduction in bureaucratic and compliance requirementsof the current system whilst maintaining transparencyand ensuring local accountability to the RemunerationAuthority for the final recommendations.

Some aspects of the new system may require 'finetuning'. The Remuneration Authority is committed toworking with local authorities during implementation.Details may require further attention, but theRemuneration Authority is keen that these matters arenot seen as impediments.

This document:

1. Identifies the key components of the proposedremuneration−setting model in an executive summary

2. Discusses each component and outlines the reasonfor change

3. Explains the size index applied to each authority4. Outlines the expected implementation process,on−going

triennial reviews and annual adjustments.

The obligations of the Remuneration Authority for thesetting of salaries and allowances for elected membersof local authorities, as set out in the RemunerationAuthority Act and the Local Government Act, aresummarised in Appendix A.

The setting of remuneration for Auckland Councilelected members follows a similar approach to that inthis discussion document, but this discussion documentin not meant to cover the remuneration setting forthose members.

Remuneration AuthorityNovember 2012

O4i

REMUNERATION AUTHORITY I Remuneration Setting Proposaisfor Local Authorities −2013 and Beyond

1. Executive Summary

2.

3.

• In the year preceding the local government elections,the Remuneration Authority will conduct a full reviewof remuneration in each local authority. The first suchreview will take place in the 2012/13 financial year forimplementation from the 2013 elections.

• The Remuneration Authority will use a council'size index' based on each council's population andexpenditure, and anticipated hours of governanceand representation, to develop:

A remuneration level for mayors and regionalcouncil chairs, based on their council size indexBase remuneration for community board chairsand community board members, based on thepopulation served by the community board andlevels of responsibilitiesAn additional pool of funding from whicheach local authority can recommend to theRemuneration Authority additional paymentfor councillors or community board chairs andmembers who undertake extra responsibilities.

• Base remuneration for community board chairs andcommunity board members will be based on thepopulation served by the community board and levelsof responsibilities.

• Each council will be given the opportunity torecommend the allocation of all or part of theadditional pool (see 3 above).

• To assist local authorities in making recommendations,the Remuneration Authority will indicate the natureof the 'additional duties' that may be recognised fordeputy mayors, committee chairs, portfolio leaders,and members of specialist panels and working parties.

• The Remuneration Authority will no longer approvepools of funding for general meetings, attendance atwhich is to be expected of council members.

Incoming elected members (including thosere−elected) will be remunerated at the baseremuneration rate from the date election results areformally announced. Members elected unopposedwill receive the base remuneration rate from electionday. Councillors or community board membersreceiving additional remuneration to reflect extraduties will be remunerated at the base councillor rateuntil appointed to the positions that include those orother additional duties.

The automatic review of the relationship betweencouncil size index and mayoral, regional councilchair, and councillor remuneration will not beginuntil the year preceding the next local authorityelections (initially 2015). However, where councilsreallocate duties among members, they may applyto the Remuneration Authority to vary the way theadditional pool is allocated. In the two mid−termyears, the Remuneration Authority will reviewamounts of remuneration, taking into considerationany changes in council size indices and any generalremuneration increase. It will apply any changesautomatically to the remuneration levels set in thedetermination. Councils will be advised of any newrates to be applied no later than May in each of themid−term years.

REMUNERATION AUTHORITY J Remuneration Setting Proposals for Local Authorities −2013 and Beyond

• The Remuneration Authority will continue to apply aloading of 12.5% to unitary authorities.

Provisions will continue for councillors, localboard members and community board membersundertaking resource consent hearings, with similarprovisions applying. The Remuneration Authority isconsidering whether some recognition can be givento the extra time that some councillors spend onsome hearings for District Plan changes.

• The review and approval of allowances and expensesfor elected members will also take place only everythree years unless specific circumstances lead a councilto request an interim review.

• The adjustment to mayoral salaries to reflect theprovision of motor vehicles will be trialled to takeplace annually as at 1 July, but the RemunerationAuthority reserves the right to change this if it feelsthat it might result in unfairness to ratepayers.

These changes update the current pool system of settingremuneration for local authority elected members,which was established in 2002, after consultation withlocal authority representatives.

Under the current system, a pool is established eachyear for each local authority. The allocation of thepool to each elected−member position is determinedby the Remuneration Authority after consideringrepresentations from each authority.

Recent analysis shows a variety of salaries for differentcouncillors and community board members, in which itis difficult to see fair remuneration for work done. Thisis illustrated by information drawn from the 2010/11Determinations and included in the consultativedocument issued by the Remuneration Authorityin 2011.

The current system establishes a 'governance pool'for each authority without regard to the size of theelected governance and representative structure,creating differences in remuneration driven by the sizeof those structures rather than the requirements ofthe position. The model the Remuneration Authority isnow adopting relies on traditional ideas of job sizing todrive remuneration, and additionally reflects the hoursspent by councillors and others on their tasks. A briefdescription of the matters taken into consideration indetermining job size is included as Appendix 2.

The outcome will not be perfect, because howmuch work elected officials do is not standardisedand is largely self−driven. However, the RemunerationAuthority is confident that the new regime willsee a more equitable distribution of income forelected officials.

Finally, it is important to recognise that theremuneration for local government positions, as formany public sector positions, is not set at a marketrate. We acknowledge that those putting themselvesforward for such positions are principally driven by acommitment to their local community, and thereforeremuneration will continue to be set at modest levels.

04


2.1 The components of theremuneration of each council

• Current practice

Two figures are provided to councils each year— amayoral/regional chair entitlement and a pool showingthe funds that are available for each council to apply toremuneration of elected officials.

These figures are drawn from a relationship that takesinto consideration population, expenditure, net assetsand the rate of change in these figures.

The pools are set without reference to the number ofelected councillors, or the presence or otherwise ofcommunity boards.

This approach has seen individuals performingessentially the same job in similar− sized local authoritiesbeing remunerated differently.

The approach has also been seen as a deterrent to theexistence of community boards, creating differencesbetween councillors and community board members.

The strength, and possibly weakness, of the indicativesystem is that distribution of the pool requires anannual local debate.

There is also the opportunity for local structures ofcouncil governance to be established, and remunerationto be set according to local desires.

However, most councils apply the annual percentageincrease in the pool across all positions, and most councilstructures are constant over time.

• The future approach

At the beginning of each election year, theRemuneration Authority will set the base councillorsalary and the mayoral/chair remuneration (excludingreduction for the provision of a car) for each council.

The base councillor salary and the mayoral/chairremuneration will be based on the council's size index,which will be derived from population size and councilexpenditure (see section 3 for more detail).

The relationship between councils' size indices andbase councillor salaries, along with mayoral/chairremuneration, will be determined every three years,having regard to the job size of the positions ofcouncillor, mayor, and chair (as assessed for samplecouncils by HayGroup). Regard will also be given to theproportion of full−time work applicable to the council(as determined by survey results); and RemunerationAuthority pay scales.

The basic remuneration for each elected communityboard chair and for board members will also be setaccording to the size of the population served by thecommunity board.

Councils will be invited to make representation to theRemuneration Authority for additional remuneration for• community boards that have additional levels of

responsibility• councillor positions of responsibility (including

Deputy Mayor).

The Remuneration Authority will set guidelines forthese submissions (see sections 2.11 and 2.12).

• Features of the new approach

The change sees a move away from using statisticaldata only to measure the 'governance' element ofeach council's work, to determining the size of theresponsibilities arising from council positions, takinginto account population and expenditure and the timeneeded to carry out duties.

This will overcome the distorting effect onremuneration of the size of the elected structure.Currently there are from six to fifteen elected officials ineach local authority across the country. The differencein number comes from historical arrangements, thework of the Local Government Commission, and localadvocacy. Whilst some of the difference in numberreflects the complexity of the tasks that are undertaken,the Remuneration Authority considers that the size ofthe governance structure is currently over−emphasisedwith regard to remuneration.

Remuneration levels will still reflect the size of the localauthority and its ratepayer base, but will now regularlyinvestigate the size of the job to be done.

The long−standing tension created by councils' needingto set community boards' remuneration at the expenseof their own remuneration is removed, and it is hopedthis will have a positive effect on local democracy.

The change will have different effects on each council.To avoid significant changes to remuneration (bothup and down) for existing councillors, the transitionto the new approach will take place immediatelyafter the 2013 elections. Councils will be advised wellbefore the election of the remuneration levels to applyafter the election, so candidates will know what theirremuneration will be if elected.

t . 1r


2 .2 The RemunerationAuthority's process forregular reviewU Historically

The Remuneration Authority first established theremuneration arrangements for elected officials aftera substantive review and consultation process in 2002.This involved establishing the size of elected positions,assessing appropriate remuneration and developingan indicative pool for each council that provided asufficient amount to pay elected members appropriatelyat that time.

Results from the survey and job sizing will then beused in a review of base remuneration, with a newcouncil size index for each council. This will provide thefoundation for basic remuneration for councillors andgive indicative amounts available for positions withadditional responsibilities.

The Remuneration Authority intends to undertake sucha review approximately two years after each election,with the results available to local government at thestart of each election year.

After consideration, a process was designed thatenabled the Remuneration Authority to increasethe indicative pool each year. The increase reflectedincome changes in the broader economy, populationnumbers, expenditure and net assets, and any unusualgrowth changes.

Within the indicative pool, a specific amount wasallocated for mayoral and regional chair remuneration.

This model was used annually until 2010, whena separate evaluation of the size of mayoral andregional chair positions was undertaken. Followingthat review, mayoral and regional chair salaries wereset independently of the pool, reflecting the increasedwork required of those positions, whilst the poolapproach was continued for the other elected officials.

Over the period, the role of local government continuedto change, and with it the size of elected positions.There was no formal mechanism in the system to triggera review or assess the accuracy of the result.

U The future approach

Local government is changing rapidly, and theexpectations and accountabilities of elected officials arechanging at the same speed.

The Remuneration Authority believes regular fullreviews of amounts of work in the sector are needed.

The Remuneration Authority therefore intends toundertake a job−sizing exercise with a cross section ofcouncils every three years. The exercise will include asurvey, and assess the hours required for governanceand representative activity.

At that time, each council will be asked to makerecommendations concerning extra remunerationfor positions of additional responsibility. Suchrecommendations, if accepted by the RemunerationAuthority, will form the basis of the determinationfor the period starting from the declaration ofelection results.

In the following two years, the RemunerationAuthority will annually recalculate the size index foreach council, and automatically apply any increasethat is warranted in a 1 July determination. When anymid−term changes might lead to a reduction in baseremuneration for councillors, the changes will not takeplace during the term of council, but will be part of thenext pre−election review.

U Features of the new approach

The Remuneration Authority believes this approachensures that:• the work of local government will be reviewed

regularly• undertaking the review in the final year of the

electoral cycle will make certain elected membersfully understand the nature of their positions at thetime of the review

• reducing the number of remunerationrecommendations and discussions from four times inthe electoral cycle to one will allow more operationaltime for staff and elected officials

• Candidates standing for election will have greatercertainty about the remuneration attached to theposition

• There will no longer be any need to have temporaryreductions in councillor remuneration followingeach election.

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2.3 Allocation for positionsof additional responsibility

The future approach

Having set the base remuneration of each electedofficial, the Remuneration Authority has identifiedcommonly required additional roles. It will provideguidelines for the allocation of additional sums ofmoney for those performing additional duties. Seesection 2.12 for further discussion and Appendix B fordraft guidelines.

The Remuneration Authority will also indicate theexpected maximum from the total of the additionalamounts.

Where councils believe they have distributed dutiesto all councillors and thereby increased the baseresponsibility of all councillors, they will need to justifytheir submissions before the Remuneration Authoritywill increase the base remuneration for their councillors.

A similar approach will be taken for community boards,recognising that varying amounts of responsibility aregiven to different community boards. See section 2.12and Appendix B.

Features of the new approach

The additional pool will allow local flexibility aroundhow duties are undertaken and accountabilitiesrecognised, yet ensure the expectations of identifiedroles are clearly understood.

The new approach places the responsibility for settinghigher rates firmly on councils. If a council choosesto operate with a structure in which the council as awhole determines matters of governance, the councilcan reject the idea of additional responsibilities andremuneration.

The change also lets the Remuneration Authorityhave fewer reviews of councillor remuneration, andends the practice of reducing councillor remunerationimmediately after the election.

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10

I T h e current approach

Under current arrangements, the RemunerationAuthority allocates a total amount to pay electedofficials. Typically, 50% of the remuneration ofcommunity board members is also met from this pool.

Councils are required to recommend the allocation ofall such funds, after approval from council and (whereestablished) each community board.

When the process proceeds smoothly, theRemuneration Authority has usually accepted councilrecommendations. When councils have been unableto reach agreement, the Remuneration Authority hasdetermined an appropriate outcome.

The Remuneration Authority appreciates that councilsdo not all want a 'one−size−fits−all' approach, andtherefore provides for local needs with a pool torecognise additional responsibilities accepted byindividual elected positions. Currently some councilsoperate with a 'flat' structure, recognising only a deputymayor as undertaking additional duties; other councilsgive various committees stated roles and responsibilities.Councillors on those committees have additionalresponsibilities and time commitments.

Overtime, new roles have emerged, such as 'portfolioleaders'. Some councils have many remuneration rates,albeit with modest differences overall. It is impossibleto verify, from the information provided to theRemuneration Authority, how such variationswere established.

REMUNERATION AUTHORITY I Remuneration Setting Proposals for Local Authorities —2013 and Beyond

2.4 Removal of salary/meeting fee mixU Historical contextAt one stage, the normal practice in local governmentwas for councillors to receive most of theirremuneration for attending meetings.

The pool system enabled this practice to continue,but limited the total funds available for meeting feesby requiring an amount to be set aside out of theindicative pool.

Currently, approximately 10% of councils use ameeting−feeapproach. Each year, a number of these councils

under−spend their pool and carry funds forward.Occasionally, the pool is exhausted before the end ofthe financial year.

The council collectively has a range of accountabilities.It is unclear why attendance at meetings shouldlargely determine salary, or whether such an approachencourages behaviours that lead to good governance.

U The future

In moving to a base remuneration rate, theRemuneration Authority considered whether a featureof the system should be the possibility of reducing thebase rate to create a pool for meeting fees.

It decided, however, that such an approach wasinconsistent with the 'rate for the job size' approach ofthe new system.

The Remuneration Authority considers that acouncillor's role is more than attending meetings,and believes that idea should be reinforced, notundermined, by the remuneration regime.

It also believes that having meeting fees puts anotherbarrier in the way of ratepayers being able to assess thereal remuneration councillors receive.

From 2013, the Remuneration Authority will notapprove meeting fees for core council business.

2.5 Council remuneration inelection yearU Historical approach

Since 2004, the Remuneration Authority has set anotional remuneration rate to be applied immediatelyafter the local government election.

This rate is set at approximately 80% of the previoussalary of councillors and does not include meeting feesor recognition of additional responsibilities.

After the election, councils are required to review theirstructure and remuneration. They then forward to theRemuneration Authority proposals approved by thecouncil and, where established, by community boards.

The Remuneration Authority considers the proposalsand decides to accept the proposals or refer them backto the local authority for further work.

A determination is then issued setting new (increased)rates of remuneration backdated to the election.

Because of the time taken preparing and consideringrecommendations, councillors have often had to waitfor up to six months before receiving back pay.


The Remuneration Authority intends to leave existingrates in place until the 2013 election, without theregular review for implementation that wouldotherwise have taken place in July 2013.

Consultation with councils will take place betweenJanuary and April 2013, and a determination will beissued for the period from election day until 30 June2014.

When they make the decision to stand, electedmembers will therefore know exactly what the basicremuneration will be after the election.

Councillors elected unopposed will experience no breakin remuneration, but will revert from any higher salaryto the basic rate from election day.

Remuneration of members standing for election willend on the day before the election. If they arere−elected,

their basic remuneration will re−start on the dayafter election results are officially confirmed.

For those members who are subsequentlyappointed to positions with additional remuneration,that remuneration will apply from the date oftheir appointment.

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R E M U N E R A T I O N A U T H O R I T Y I Remuneration Setting Proposals for Local Authorities − 2013 and Beyond 11

Reconfirmation of remuneration after the electionwill not be required. No further determination will beissued until 1 July the following year unless the localauthority seeks to amend the extra amounts availablefor additional duties.

U Features of the new arrangement

This arrangement provides continuity of income tocouncillors, and certainty for those seeking election.

It reduces the number of determinations issued in thetwelve−month period from three to one, whilst retainingthe possibility of councils that genuinely choose toreview the structure and process of their work.

The Remuneration Authority believes these changes willincrease efficiency and transparency in the remunerationof councils immediately after the election, and releasecouncillor and staff time for other activities.

2.6 The process innon−electionyears

U Current practice

Each year the Remuneration Authority determinesthe pool of funding available for remuneration andthe council is required to discuss and recommend theallocation of the funds.

Most councils apply the percentage movement that isgranted, equally across positions. However, discussionand approval are required from council (and communityboards, where they exist).

The process takes considerable councillor and stafftime with, in many cases, little advantage to councilor ratepayers.


In non−election years, the Remuneration Authority will:• re−assess each council's size index based on latest data• determine an increase reflecting any changes in CPI or

general wage growth and apply the increase to eachcouncil's base remuneration for councillors, and mayoror chair remuneration, calculated using the revisedsize index

• hold remuneration at the existing amounts until thenext year, or next election, if the reassessment resultsin a decrease in remuneration

• adjust remuneration pro rata for positions withadditional responsibilities to the change in baseremuneration for councillors, for that council

• issue a determination including the updated rates.

It is possible that the Remuneration Authority coulddetermine a general increase to adjust for changes in CPIor general wage growth for mayors and chairs that isdifferent from the increase for councillors.

Councils will be able to review their structure, as in thepast, but there will be no requirement to do so.

Where a review is undertaken and change isrecommended, the Remuneration Authority willconsider the new arrangements and issue an amendingdetermination or consult further with the council.

U Features of the new arrangement

Flexibility for a council−initiated change of structure isretained, but current bureaucracy around modest sumsof money is reduced.

Processes will be required within the RemunerationAuthority and in councils to ensure increases inremuneration and amounts of remuneration are madeclear to ratepayers. Councils could choose to disclosecouncillor remuneration on their web sites.

2.7 Loading for unitarycouncilsU Current practice

Pools from which unitary councils fund councillors'and community board members' remuneration arecalculated in the same way as those for territorialauthorities. Then a 12.5% loading is applied, torecognise the wider responsibilities of unitary councils.

U The future

The same loading will be applied for the three−yearperiod from 2013.

The Remuneration Authority will review the loading inthe year preceding the 2016 council elections.

12 REMUNERATION AUTHORITY I Remuneration Setting Proposals for Local Authorities − 2013 and Beyond

2.8 Resource consent changesto District Plans hearingsThe Remuneration Authority has decided to retain thecurrent arrangements for resource consent hearings. Itwill continue reviewing the hourly rate each year.

The Remuneration Authority is considering whethersome recognition can be given to the extra time thatsome councillors spend on some hearings for DistrictPlan changes.

2.9 Approval of electedofficials'