New Zealand: Auckland Governance – One Bill, One Act, One Auckland Council

Last Updated: 28 May 2009
Article by Linda Going and Iain Thain

This month saw the Government take a major step towards the goal of a single Auckland Council with the introduction into the House of two proposed pieces of legislation, the Local Government (Auckland Reorganisation) Bill and the Local Government (Auckland Council) Bill. There were no major surprises in the Auckland Council Bill and it will be considered further through the Select Committee process. In the meantime, despite much filibustering in Parliament and some last minute changes, the Reorganisation Bill was eventually passed into law as the Local Government (Tamaki Makaurau Reorganisation) Act 2009. It received Royal Assent on 23 May. Auckland's one council proposal is past the point of no return...

WHAT DOES THE NEW REORGANISATION ACT COVER?

The Reorganisation Act does five main things. First, it will establish Auckland Council on 1 November 2010. Second, the Act establishes now the Auckland Transition Agency which will plan, manage and implement the reorganisation. Third, the Act sets out the obligations and restrictions on the existing Auckland area local authorities and local government organisations during the transition period. Fourth, the Act will dissolve each existing local authority on 1 November 2010. And finally, the new Act sets out how the functions, duties, powers, assets and information of each dissolved local authority must be dealt with.

In general terms, the Act's themes are those we noted in our previous update on the Government's initial response to the Royal Commission's report:

  • There is an absolute commitment to having an efficient Auckland Council up and running on 1 November 2010; and
  • 'One City' effectively begins now, with quite prescriptive restrictions on the activities of existing councils and their related organisations, and significant powers already effectively transferred to the new Auckland Transition Agency.

THE AUCKLAND TRANSITION AGENCY

Under the Act, the Auckland Transition Agency is required to 'plan and manage all matters in relation to the reorganisation to ensure that the Auckland Council is ready to function on and from 1 November 2010'. As we have said before, there is no doubt that this will be a big job.

The Auckland Transition Agency is a statutory body corporate with powers to employ staff, own property and enter into contracts. It will operate by a governing body consisting of Mark Ford as chairperson, together with John Waller, John Law, Miriam Dean QC and Wayne Walden. The Act allows scope for one more member to be appointed to the governing body by Rodney Hide as the Minister for Local Government.

The Auckland Transition Agency will also have a CEO, to be appointed by its governing body. The CEO will be responsible for employing the Agency's own staff.

In addition, and perhaps critically given its high workload, one of the Auckland Transition Agency's functions and duties is to second employees from any existing local government organisation. While each local government organisation (councils and their controlled organisations) will be required to comply with reasonable requests to provide secondees (who will remain on their payroll), careful consideration will be needed to ensure that resources are properly deployed across the region. The need to maintain the quality of existing services will have to be balanced against the benefits of having experienced council officers working within the new Auckland Transition Agency. And the Agency will need to bear in mind its statutory duties to exercise its powers and duties efficiently, in a cost effective and financially responsible manner, and to ensure that key local government projects in the region are not hindered or interrupted.

Once appropriately staffed, the Auckland Transition Agency is required to prepare and implement a change management plan that includes protocols and processes for managing the transition of staff, assets and presumably also liabilities to Auckland Council.

Also, the Auckland Transition Agency is required, as soon as practicable, to appoint an interim chief executive for the new Auckland Council. This role is not to be confused with the CEO of the Auckland Transition Agency. The Auckland Council interim CEO appointment will be for a term ending no later than 29 June 2012. The interim CEO will have the ability to employ staff (whose start date may be prior to 1 November 2010) and enter into contracts, leases and other agreements to enable Auckland Council to operate effectively and efficiently on and from 1 November 2010.

It is probably likely that the interim Auckland Council CEO will come from the ranks of those currently leading the existing Auckland area local authorities. Perhaps for that reason, the Auckland Transition Agency has been given the role of appointing replacement CEOs to the existing councils if any of these positions become vacant between now and 31 October 2010. Although the Auckland Transition Agency will be required to consult with the relevant existing council, the appointment decision will ultimately rest with the Auckland Transition Agency.

Another aspect of how 'One City' has already started is the range of powers the Auckland Transition Agency has relating to the monitoring and control of the existing councils. Some of these controls are discussed further below. The level of oversight contemplated by the Act is very significant and, depending on the approach actually taken by the Agency, could well amount to a major work stream in itself. A robust system to identify those issues which are truly material will be required to ensure that the Agency is not swamped in paperwork. We anticipate a mix of secondees and advisers with knowledge of a range of ongoing local government activities are likely to be of significant benefit.

RESTRICTIONS ON EXISTING COUNCILS AND ORGANISATIONS

As had been expected, existing local authorities and other local government organisations are now positively required by law to cooperate with each other and the Auckland Transition Agency to facilitate the reorganisation. Also, there are general restrictions in the Act which now prohibit the existing councils and other local government organisations from unilaterally making decisions which may significantly prejudice the reorganisation, significantly constrain the power or capacity of Auckland Council or any council organisation, or have a significant negative impact on the assets or liabilities to be transferred to Auckland Council. Any such decisions will be of no effect unless confirmed by the Auckland Transition Agency.

Perhaps more surprising (but nevertheless consistent with the general philosophy of the Act) is the detailed list of other council and council organisation activities which will require prior approval of the Auckland Transition Agency, subject to a specific exception for Ports of Auckland Limited. The list includes purchasing or selling an asset other than in accordance with the LTCCP. Amending the LTCCP is also on the list. Another example is that contracts worth more than $20,000 and which impose or will continue to impose any obligation after 30 June 2011 will require approval. Council contracts with a term of two years or more are very common so we would expect a large number of 'ordinary' procurement arrangements will require the Agency's approval.

We anticipate that existing councils and council organisations will give careful thought to the Act's approval requirement criteria, with a view to maintaining efficiency and ensuring that core activities are not prejudiced. Further guidelines may be required, either developed internally within particular councils or issued by the Auckland Transition Agency. One immediate issue for existing councils is the need to keep continued focus on obtaining value for money from procurement arrangements while resisting any temptation to structure arrangements merely to avoid the need for Auckland Transition Agency approval. It would presumably be undesirable if the new Auckland Council was faced with a massive number of contract expiries and renewals on or around June 2011. We expect the Auckland Transition Agency to design its contracts approval process with these issues very much in mind.

There is a provision in the Act which gives the Auckland Transition Agency the power to itself proactively review existing local government organisations' agenda items and decisions, to determine whether they require the Agency's approval.

EMPLOYEES OF THE EXISTING LOCAL AUTHORITIES

One of the last minute changes made as the Act was passed late on a Saturday night in Parliament was deletion of what had been clause 36 in the Bill. That clause had said that at the end of 31 October 2010 all remaining employees of the existing local authorities would have their employment seamlessly transferred to Auckland Council on the same terms and conditions and as if their employment had been continuous. There is no such provision in the Act as it is now in force. As a result, there is perhaps an increased need for the Auckland Transition Agency and the interim Auckland Council CEO to deal specifically with staffing issues before Auckland Council hits the ground running on 1 November 2010. And the costs of any redundancies are more likely to be left in the final accounts of the existing councils, rather than fall for Auckland Council to report in its first year of operation.

WHERE TO FROM HERE?

The Auckland Council Bill (the second Bill) will continue to make its way through the House and, as was made clear by the recent hikoi, we can expect vigorous debate during the special select committee process which has been established. The issues of the number of Auckland Councillors who will be elected at large rather than from wards, special representation for M-aori, and the role and functions of local boards will be to the fore. A third Bill (dealing with more detailed governance arrangements and presumably water and wastewater) is also expected to be released in the coming months.

As always, we will keep you posted.

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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