Expert paper #6

Implications Of TPPA For Local Government

The latest in a series of expert papers on the  implications of the  TPPA for New Zealand, funded by the NZ Law Federation, this one dealing with the agreement's impact on Local Government  has just been released.
Below we reproduce the Key Facts section. You can download the full report here and fine the preceding 5 Expert Papers here.  

The TPPA and Local Government ~> Key Facts

As democratically elected bodies, local authorities
Download the full report
must be able to influence important decisions, be held accountable by their constituencies and have flexibility to respond to local needs and circumstances, which necessarily change over time.


Local governments internationally have found they have to exercise their mandates within strict policy and regulatory boundaries set by international trade and investment treaties they had no role in negotiating, and that decision-making is removed further from elected bodies who are responsible for the wellbeing of their regions.


The binding and enforceable rules of the TPPA go further than any previous such agreement and will impose new constraints on local governments’ authority and autonomy to regulate and make decisions.


Every local authority will have to comply with complex rules across many chapters, and decisions they make that impact adversely on foreign investors will potentially be open to challenge through the investor-state dispute settlement (ISDS) mechanism.


The chapters on investment and cross-border services that apply directly to local government have the greatest potential impact, and the protections for key areas of local authority activity are limited.


Local government is not currently bound by the government procurement chapter and most rules in the state-owned enterprises chapter, but negotiations to include them are built into the Agreement. Extending these rules to local government level requires extensive in-depth study and democratic consultation, which has not occurred to date with the TPPA.


There are piecemeal and contingent exceptions and exclusions in the TPPA, which are complex and will make it very hard for local government to anticipate the legal risks when it exercises its powers.


Municipal activities that have the greatest potential to be affected are: policy making and planning decisions; bylaws and regulations governing permitted activities; technical standards, such as property development, construction, advertising, zoning and environmental quality; activities relating to finance; public procurement contracts, including public private partnerships (PPPs); utilities; and resource management rules and decisions.


Investors from TPPA countries will have the power to challenge local government decisions that damage their commercial interests, including disputed procurement or PPP contracts, planning and consent processes, or blocking price increases for utilities like water or sanitation.


Special rights for foreign investors can be enforced through the controversial ISDS process. Even where the local government believes it is legally correct the uncertainty and costs of defending a dispute can sap a government’s resolve – known as the ‘chilling effect’.

An investor from a TPPA country can also enforce an investment contract through ISDS, eventhey are not claiming a breach of the TPPA’s investment chapter.

The text has not addressed the main objections that ISDS lacks the characteristics of a credible and independent legal process and can effectively bypass domestic courts.


The recent Bilcon v Canada dispute shows the risks of ISDS where a local authority rejects a resource application from a foreign investor because of community concerns. The dissenting arbitrator called the decision a ‘significant intrusion’ into domestic jurisdiction and a ‘remarkable step backwards’ in environmental protection.


Defending disputes is very costly. In recent Canadian disputes the government has proposed to recover the costs and any compensation from the provincial authority.


The contracting out of services, greater use of PPPs, including for water, and asset sales will intensify the exposure of local government to the TPPA and heighten the risks of investor-state disputes over disputed contracts.

.Regulations, bylaws, administrative decisions, etc that give preferences to local firms, limit the quantity of services or suppliers, or impose special restrictions or performance requirements on foreign firms, cannot be tightened unless the New Zealand government has expressly reserved the right to do so. 

.Administration of local government measures affecting services from a TPPA supplier can be challenged as not being reasonable, objective or impartial. 
The TPPA erodes the flexibility that local authorities need to promote economic development in their communities, and is not a sound basis for a progressive and sustainable 21st century economy that addresses climate change, social inequalities, environmental degradation and other challenges.

Council Needs To

Wake Up & Smell the Liniment

If You Build It, They Won’t Come

Council needs to learn from Dunedin’s
predicament before it’s too late
 The headless chooks of the Christchurch City Council (specifically the eight Councillors, including the Mayor) have allowed themselves to be stampeded by debt hysteria and an ideologically-driven Government into a panic stricken headlong rush to flog off $750 million worth of public assets.

The excuse given for asset sales is that they are necessary to pay for the city’s rebuild, and specifically for the white elephant anchor projects foisted by the Government on the people of Christchurch, under the onerous Cost Sharing Agreement signed between the Government and the previous Council (which was thrown out by disgusted Christchurch voters in 2013).

The whitest and most elephantine of these white elephants is the proposed covered rugby stadium, to which the Council is committed to paying $253 million. The justification for this is that it will guarantee Christchurch getting into the big boys’ club of international rugby venues.

No, it won’t.

For that we have the word of the most impeccable authority – the NZ Rugby Union, which is continuing its long and dishonourable tradition of treating rugby fans and the wider public with contempt.

The whitest and most elephantine of all
It has just announced the itinerary for the 2017 Lions tour of NZ. And for the first time in more a century the Lions won’t play the All Blacks in a test anywhere in the South Island.

The Rugby Union says that Christchurch’s current “temporary” rugby stadium couldn’t handle a game of that magnitude. Predictably that led to handwringing from the Canterbury Rugby Union saying this shows that we need the new covered stadium ASAP.

But, wait there’s more.

The NZ Rugby Union has not just vetoed any Lions test in Christchurch but also in Dunedin.


Dunedin has the country’s only covered rugby stadium, completed as recently as 2011, at ruinous cost to its ratepayers and amidst great public controversy. Furthermore, Dunedin is a fully functioning city, unaffected by any earthquake or similar natural disaster (not to mention the home of the current Super Rugby champions). But, no, the NZ Rugby Union says that the Forsyth Barr stadium is neither here nor there, the problem is that Dunedin itself is not up to handling an event of such magnitude. So, two Lions tests have been awarded to Auckland and one to Wellington.

Press sports writer Tony Smith says it best: “(The Rugby Union’s) rationale is proof, if ever it was needed, that All Blacks rugby is a brand, first and foremost and a sport, with all its rich traditions second. How long before Eden Park becomes NZ Rugby’s national stadium? How long until someone in a shiny suit points out ‘the England rugby team never plays outside Twickenham, so get used to the All Blacks playing all their big games in Auckland’?...Remember the movie adage: ‘If you build it, they will come’? Well, NZ Rugby has changed the script. ‘Not if you build it in Dunedin’. Dunedin’s beleaguered ratepayers have paid for the best sports stadium in New Zealand. There’s an inherent responsibility for rugby to play its part in helping Dunedin to recoup the cost of its investment” .

The Christchurch City Council needs to learn from Dunedin’s predicament before it’s too late, pull the plug on this particular white elephant, and save the ratepayers of Christchurch a cool quarter of a billion dollars. The message couldn’t be clearer from the NZ Rugby Union – “sorry, South Island, it doesn’t matter how many covered stadiums you build at your own expense, you suffer from a terminal case of ‘not Auckland syndrome’”.

The Rugby Union is a big business; let it pay for a covered stadium in Christchurch if its so keen on the idea.

KOA activists mourning the death of democracy at Its our future's "Reject TPP Rally"
 The city has got a perfectly good temporary stadium in Addington and the possibility of repairing the quake damaged Lancaster Park, the city’s famous rugby ground, which is already owned by the Council.

The City Council should see this as the perfect opportunity to renegotiate that increasingly ridiculous Cost Sharing Agreement with the Government.

And scrap the asset sales that are looking more unnecessary with every passing day.