New Zealand: Auckland Governance - Facing The Challenge

Last Updated: 31 March 2009
Article by Linda Going and Iain Thain

All sectors of the economy face challenging times. However, at 2pm on Friday the Royal Commission laid down an unprecedented challenge to those involved in Greater Auckland's governance. The Commission recommended very significant changes to the region's current governance structures, and an implementation deadline of October 2010 which the Commission says 'must be met'. Whether the Commission's recommendations will all be accepted and implemented by central government remains to be seen. In the meantime, we highlight a few of the potential issues to consider as you digest the detail of the Commission's report.

Establishment Board and Transition Management Group – the busiest people ever?

If Government runs with the Commission's recommendations, and in its recommended timeframe, then the Establishment Board - charged with preparing for the establishment of the new Auckland Council - would have a very heavy workload.

Appendix 33.1 (page 728 of the report) usefully summarises the Establishment Board work streams and Appendix 33.3 (page 733) summarises the establishment recommendations.

The Establishment Board's 52 tasks include such matters as due diligence on all existing Councils and 40 CCOs, a stocktake of all bylaws and a review of existing advisory panels, preparation of draft terms of reference for new and continuing advisory panels and identifying potential candidates for those panels. In the ordinary course, to complete even just a few of the 52 tasks by October 2010 would be regarded as an achievement.

Of course the Establishment Board would not be required to act alone. Significant resources will need to be contributed by the Councils, Watercare, ARTA and others, including through the recommended Transition Management Group. However, while doing this, Council officers and others will be required to also maintain their 'business as usual' activities. Available resources may well become stretched.

Therefore, we would expect that Councils, in particular, would wish to scrutinise the work streams carefully with the Establishment Board to determine what needs to be done prior to October 2010 and what may in fact be done later. The proposed review of the value for money of local economic development agencies could perhaps fall into the latter category. The tight timeframe would certainly demand clear priorities and efficient execution of the essential tasks.

Business as usual...

An inherent tension in any significant reform process is to keep the existing wheels in motion while not undermining the reform objectives. The Commission's emphasis on maintaining 'business as usual' activities will be welcomed and come as no surprise to Councils who are already mindful of the need to manage, among other things, the effect of uncertainty on their staff and service delivery. Council staff, ratepayers, suppliers and others will need reassurance that Council activities on which all rely will be maintained during the reform process. Clear strategies will need to be implemented.

Thought will also need to be given by each Council to the Commission's direction to 'refrain from making decisions that could materially affect the creation of the Auckland Council or its future activities, or that would pre-empt or constrain future decisions by the Auckland Council'. So that this direction does not frustrate or 'chill' decision making, a consensus on exactly what it means will need to be reached quickly. The Commission recommends that the Government should 'consider formalising requirements for existing Councils to fully co-operate in the transition process, and specifying constraints which will apply to council decision making including in relation to decisions with major financial implications'. The publication of guidelines would be a helpful step.

Another issue is the extent to which various existing collaborative efforts between the Councils and others would be affected if the Commission's recommendations are adopted. We anticipate that each activity would need to be assessed on its own merits. For example, the Commission recommends work on the 'One Plan' (the single strategic framework action plan for the Auckland region) should continue and then form the basis of the 'regional spatial plan and infrastructure investment plan' to be developed by the new Auckland Council. In contrast, we expect that a number of other issues which have troubled Councils over recent years, such as allocation of liability/value in the context of shared services, would largely fall away if the recommendations of the report are adopted.

What about Council Controlled Organisations?

The Commission recommends that interests in all existing CCOs be transferred to Auckland Council. Prior to this, the Commission recommends that the Establishment Board should review all existing CCOs, prepare an inventory recording their purpose, constitution, assets, liabilities and legal status. Directors and management of CCOs should not underestimate the time and resources that may be required to assist with this process effectively.

Existing CCOs may have other issues. Many CCOs sit at the interface between local government and business. Many undertake arms-length commercial activities. Although we expect that the enabling legislation would address most consequential issues, CCOs should identify now any regulatory issues that could arise, or any arrangements with third parties that could be affected, by the transfer of their ownership. For example, arrangements governed other than by New Zealand law or with parties outside New Zealand should be considered.

The Commission also recommends establishment of a new CCO 'the Regional Transport Agency' (RTA) to bring together all elements of transport, including roading, rail, public transport, and planning for pedestrians and cyclists. RTA will be a CCO of Auckland Council and it will have a formal partnership relationship with NZTA and ONTRACK.

The report reveals the Commission's preference for at least those CCOs responsible for major commercial infrastructure to operate as independent successful businesses with clear objectives, including financial targets that do not include payment of dividends.

A number of the Commission's recommendations for CCOs potentially have broader implications. These include that Councillors and Council staff should not be able to be appointed to CCO boards, the adoption of an SOE-type appointment monitoring and performance management framework for large CCOs, statements of intent to be agreed 3 yearly (rather than annually), quarterly reporting (rather than six monthly), an independent appointments advisory panel to assist with appointment of individuals to CCO boards and a performance auditor to review the adequacy and relevance of CCO targets and the accuracy of performance reported against those targets.

No time for the dust to settle!

If the Commission's recommendations are adopted, the real challenges will of course only just be beginning on the day in 2010 when the new Auckland Council is formally established. The interplay between Auckland Council and the local councils, including the decisions as to which functions will be delegated, will have to be well managed. The private sector will look for delivery on the Commission's hopes for a simplified and streamlined planning and consenting process, to add to the momentum provided by central government's currently proposed changes to the Resource Management Act. Communities can expect positive outcomes from a shift in responsibilities for promotion of social well-being, with greater leadership from local government. All the people of the Auckland region will want to see the local councils rise to the challenge of delivering effective representation for each of their many and diverse areas and groups. And there will be an overriding expectation of at least some cost savings. As the Commission recognises in its report, there will be plenty of opportunity for innovative new ways of doing things better.

Watch this space.

At the Commission's press conference on Friday, Rodney Hide said the government planned to give its response to the report in two weeks.

In the meantime, the Commission's report is nothing if not thought provoking. It has set people, and not just Aucklanders, thinking about what is best for their communities, their cities and districts, and their regions. That debate must be positive.

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

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