LGNZ, government task working group to look at councils' risk management

Friday 5th June 2015

Local Government New Zealand and central government will jointly fund a $1.6 million working group to investigate whether an independent agency should be set up to assist councils with risk management.

The local government body, which represents the nation's 78 local authorities, and the Crown have set up an establishment board to look at what risk management services would help councils and locally owned infrastructure. Craig Stobo, who chaired the establishment board of the Local Government Funding Agency, will chair the new establishment board, which is aiming to report back to the LGNZ and ministers in June next year on whether a new entity should be developed.

"What we're trying to establish is not just post funding ideas, but pre funding ideas, and better management of risk and understanding the consequence of that," Stobo told a conference call. "It may well be it becomes the centre of IP (intellectual property) of the sector to support every council, but ultimately not be responsible for risk management."

The initiative builds on the Stobo led review of the local government insurance market, which found there was a high degree of variability in risk reduction activity across the country and that a pan-sector approach led by LGNZ and in conjunction with the Crown would help identify issues and develop responses.

Stobo will be joined by Earthquake Commission general manager reinsurance, research and education Hugh Cowan, LGNZ president Lawrence Yule, Taranaki Regional Council chief executive Basil Chamberlain, Waimakariri District Council CEO Jim Palmer, Tauranga City Council CEO Garry Poole and two other members, who will likely come from the private sector.

The board will work with LGNZ, local authorities, and officials from the Department of Internal Affairs, Ministry of Civil Defence & Emergency Management and the Treasury to develop the report.

Yule said the complexity of the market and risks means local authorities need to rethink how they approach risk management, but that it was too early to say whether the sector was over or under insured.

Local Government Minister Paula Bennett and Civil Defence Minister Nikki Kaye also announced a concurrent review would be held to investigate existing funding arrangements between the Crown and local government to restore certain infrastructure after emergencies, such as water, wastewater, stormwater and river flood control.

The existing split sees central government reimburse councils up to 60 percent of restoration costs, a level Yule said was "developed with no scientific basis - it just sounded like a reasonable arrangement."

BusinessDesk.co.nz

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