Don’t be squeamish about devolution – be Squamish

Opinion: New Zealand has one of the world’s more centralised governments. Most taxation, regulation, and spending happen at the central government level.
The case for a more localist approach is straightforward. So long as there are differences across places, national-level policies will not take much account of local needs and circumstances.
That much is intuitively obvious. In economics, that intuition is formalised through Oates’ decentralisation theorem, which shows the merits of letting provision vary when needs differ. And well-established principles of subsidiarity explain which sorts of issues are best handled by which levels of government. In short, decisions should be made at the lowest level that covers the decision’s costs and benefits.
But decentralisation and localism doesn’t just have to be about relations between councils and central government.
Iwi and hapū can be closest to their communities. Though there has been ample discussion of centralised co-governance approaches, there has been far too little thinking about devolution to iwi and self-governance alternatives.
Canada’s relationship with its indigenous peoples is far from perfect. But First Nations in Canada have secured stronger recognition of tino rangatiratanga, though they obviously do not use that term.
On land designated as Indian Reserves, First Nations have autonomy. They can set building and land use regulation as they wish. They can opt into becoming tax authorities and can use rates collected on reserve land to back infrastructure debt. It unlocks a lot of potential.
When five hectares of land near downtown Vancouver was returned to Sḵwx̱wú7mesh Úxwumixw, the Squamish Nation, they could develop the land as they wished. They did not need planning permission from anyone but themselves when they decided to build apartment towers to provide 6000 homes. But they did need to negotiate an extensive services agreement with the City of Vancouver.
The Squamish were able to move from concept to construction far more quickly than usual. Vancouver’s chief planner commented that “We might be able to learn something from them.”
Indigenous-led localism in Canada is not limited to land use planning.
For a little over a decade, British Columbia has had the country’s first and only First Nations Health Authority.
The Canadian government, by treaty, funds an extensive set of health services specifically for First Nations peoples. In British Columbia, responsibility for those health services was devolved to First Nations, at their request.
In March, the insurance company nib hosted a study tour to Vancouver to learn about Canada’s indigenous-led health devolution. In New Zealand, nib has partnered with a small number of North Island rōpū for health services for whānau and kaimahi. The tour group included representatives from Ngāti Porou, Ngāti Whātua Ōrākei, and Ngāti Awa.
Nib asked me to tag along to write up what I learned, and perhaps to provide translation where needed between Canadian and New Zealandish. We met the First Nations Health Authority, Pacific Blue Cross, which partners in claims administration with the FNHA, and with two of the communities they serve.
I will be talking about that trip as part of a panel discussion at the Health Innovators’ Summit in Auckland on Wednesday. Here is a short travelogue from the trip.
Canada’s health system context is very different from New Zealand’s, primarily because of the accessibility requirements of the Canada Health Act. Each province provides provincial health insurance. Services covered by those schemes cannot draw user charges or extra billing. Only services that are not covered by the province’s insurance scheme can be provided on a fee-for-service basis.
So whereas the private system complements New Zealand’s public healthcare system, it has a much more limited role in Canada.
The set of services not covered by provincial health insurance overlaps substantially with the services that Canada funds by treaty for First Nations.
Devolved responsibility for those services has enabled a more localist approach in determining and meeting community needs. Localist approaches particularly matter in British Columbia, where the First Nations Health Authority is accountable to local chiefs and leaders across some 200 communities spanning 26 cultural groups and 34 languages.
The First Nations Health Authority faces a considerable governance task in coordinating health services across those broad communities in coordination with provincial and central government. It has developed substantial capabilities in evaluating its work. It also commands substantial resources: in 2023, it secured a 10-year $8.2 billion funding agreement with an automatic cost escalator.
To put the funding differences into context, the First Nations Health Authority’s 2023 budget amounted to over CAD$6,000 per person of registered or treaty status, not including hospital services covered through the province’s health insurance programme. The now-disestablished Māori Health Authority’s 2023 budget was the equivalent of just under NZD$700 per person, using the 2023 estimate of the Māori population. Vote Health overall, in 2023, amounted to about $5,000 per capita.
The First Nations Health Authority has had some considerable successes, particularly in improving real access to health services. While central government funded many services for First Nations before the First Nations Health Authority, providers had to deal with central government’s billing processes. Those processes made First Nations patients more cumbersome for health service providers to deal with, contributing to racism within the health system. First Nations Health Authority’s partnership with Pacific Blue Cross led to a surge in uptake of dental care – a mark of improved access.
The more localist approach also found ways around some obvious bureaucratic difficulties in the prior regime. And it holds much promise over its coming second decade.
But as the tour group headed to the airport to return home, we wondered whether indigenous approaches to healthcare need necessarily build a centralised authority first, like the now-former Māori Health Authority, or whether they could instead build up from localism. Under a building-up approach, iwi taking up devolved responsibilities or forging ahead using their own resources would partner regionally where it makes sense, and then discover where coordination across regions may add the greatest value. Some of that work is already underway.
There is a lot of merit to localist approaches. And it’s time the conversation broadens beyond councils.
Dr Eric Crampton is Chief Economist with The New Zealand Initiative, a business-funded think-tank. Its members are listed on its website here.
Disclosures and notes: nib is a member of the NZ Initiative and funded the study tour to Canada. The Health Innovators Summit is a members-only event in Auckland on Wednesday. Eric’s travelogue, “Local cures”, is available on the NZ Initiative’s website.