Late last year, the much awaited final piece of legislation reforming the governance structure of Auckland was introduced to Parliament. Adopting the 'rolling maul' style of legislative reform, the Local Government (Auckland Law Reform) Bill substantially amends and adds to the first two pieces of 'Supercity' legislation in the drive towards the creation of one council on 1 November this year.

In this update we look at several key aspects of the Bill and some issues which may be raised as the Bill progresses through the House.

Local boards

There are no major surprises in the Bill's treatment of local boards. In our last update we supported the decision of Parliament's Legislative Committee not to specify in the Local Government (Auckland Council) Act particular non regulatory decisions which should be made 'locally'. This approach has been carried through to the latest Bill, with an initial allocation of functions to be made by the Auckland Transition Agency (consistent with the principle that decisions should be made locally unless they are decisions which are best made regionally). In undertaking this task, the Agency will be treading a fine line.

On one hand, the Agency will be very aware that local boards will be reluctant to give up functions later which they have been allocated. On the other hand, it will not want to be seen to be, from the outset, 'detuning' the role of local boards.

We assume that, initially, all local boards will be allocated the same functions but we understand that it is intended that over time different local boards will be allocated different functions. This is perhaps an area of the legislation which could be clarified.

In our previous update, we noted a range of other transitional issues regarding local boards which remained to be addressed, in particular:

  • Initial funding allocation.
  • Initial local board plans.
  • Initial local board agreements.

Regarding funding for local boards, the Bill provides that the Transition Agency must in its 'Planning Document' include 'budgets for each local board area for the 2011/12 financial year based on the cost of achieving the service levels for the local activities within each local board area and providing administration and support for each local board'. We anticipate that this is an area which will receive close scrutiny from submitters and that further amendment is likely. For example, it appears unclear what service levels are being referred to. There is also no reference to factors such as the level of dependence on local government services and the relevant rates revenue. These are factors which Auckland Council must consider when ultimately developing the local board funding policy.

At this stage, it appears that the Government is content to allow the local board plans and agreements to be developed post 1 November 2010.

Spatial Plan

The Royal Commission on Auckland Governance regarded the requirement for Auckland to have a 'spatial plan' as one of its key recommendations. It also recommended an infrastructure plan.

The Bill contains a provision requiring the Auckland Council to prepare and adopt this spatial plan (but not presently an infrastructure plan). The defined purpose of the spatial plan is similar to the purpose of the present 'Growth Strategy' (a non statutory document adopted by the region's councils in 1999) and is 'to provide an effective and broad long term strategy for growth and development in Auckland'.

The spatial plan will set the strategy direction for Auckland for a 20-30 year period and will include broad objectives, policies, priorities and land allocations that will implement the strategic direction. The plan will also visually illustrate how Auckland may develop in the future, including how growth is to be sequenced. The plan will identify the existing, and guide the future, location and mix of residential, business, and industrial activities within the region. The plan must also identify the existing, and guide the future, location of critical infrastructure services in Auckland.

The spatial plan will be the key document for guiding future development, land use, transport and provision of infrastructure within Auckland and must be prepared and adopted using the special consultative procedure. Critics may argue that this is inappropriate given it will not be subject to the robust processes and appeal rights contained in the Resource Management Act 1991 (RMA). Others are likely to submit that there needs to be greater linkages between the spatial plan and other statutory planning documents such as within the RMA and within the local government legislation itself (for example, a requirement for Auckland Transport, the new Council Controlled Organisation (CCO), to have regard to the spatial plan when undertaking its functions).

Water and Transport

Under the Bill, from 1 November 2010, all bulk and local water and wastewater services will be delivered by Watercare Services Limited (Watercare). There are a range of uncontentious provisions designating Watercare an 'Auckland Water Organisation' and giving it the powers needed to deliver local water and wastewater delivery systems (which are currently provided by a range of Councils and CCOs).

Of more interest to submitters to the select committee will be the provisions dealing with the funding structure and governance of Watercare. The Bill sets out what is to occur until 2012 when the Government has indicated that Watercare will become a CCO (because it has its own reporting requirements Watercare is currently exempted from the CCO regime). The Bill is presently silent on what is to occur after 2012 except to provide that until the end of 2015 Auckland Council must continue to own Watercare and Watercare will continue to deliver Auckland's water and wastewater services. It will then be up to Auckland Council to determine how it will provide water and wastewater services. These provisions need to be considered alongside the Government's announcements generally in respect of water supply which are aimed at facilitating the increasing use of public/private partnerships in the construction and operation of water and wastewater schemes.

Until 2015, Auckland Council will also have a role in determining Watercare's pricing. Whether or not this extends to an ability to veto pricing proposed by Watercare is presently unclear. On the one hand, Watercare is bound only to have regard to the policy of the Auckland Council. However, Watercare must also comply with any directions of Auckland Council.

A significant part of the Bill is taken up with the establishment of Auckland Transport. One key issue which we would expect to be thoroughly canvassed in the select committee process is the extent to which Auckland Council itself retains sufficient influence over policy decisions about Auckland's transport future (in particular public transport). In this regard, Auckland Council will be responsible for appointing most of the directors of Auckland Transport (one director will be appointed by the New Zealand Transport Agency). The Bill also presently permits two of the between six and eight voting directors to be elected members of Auckland Council. Further accountability and controls can be imposed through the new organisation's statement of intent and its constitution.

Potential broader CCO issues

The Bill includes proposed new provisions in regard to 'substantive' CCOs. These are CCOs that are wholly owned by the Auckland Council and that are either responsible for the delivery of significant service or activity on behalf of the Council, or that own or manage assets valued at more than $10 million.

The Bill provides that the Auckland Council may require a substantive CCO to:

  • Include narrative in its statement of intent about how the organisation will contribute to the Council's, and where appropriate the Government's, objectives and priorities for Auckland.
  • Provide additional quarterly reporting in the first and third quarters (in addition to the annual and six monthly reports required by CCOs).
  • Prepare and adopt a 10 year plan to describe how the organisation intends to (1) manage and maintain and invest its assets, (2) maintain and improve service levels, and (3) give effect to the Council's strategy, plans and priorities.

The Bill also includes a provision that would prohibit the Auckland Council from appointing members of the governing body of the Council (ie councillors) as directors of substantive CCOs.

Obviously the Bill only relates to Auckland, but given that it may signal changes that could in time be introduced more generally, or adopted as a matter of good practice, it may be sensible for other local authorities to consider the Bill's provisions in regard to any substantive CCOs that may operate in their regions. Other local authorities may also wish to think about whether submissions should be made on the Bill given that a precedent in Auckland may set a standard for subsequent broader changes in other parts of the country.

Next steps

The Bill has been referred to the Auckland Governance Legislation Committee for consideration. The Committee is currently calling for submissions which may be made up until Friday, 12 February 2010. Current indications are that hearings will then be held in late February with the Committee due to report to the House before Tuesday, 4 May 2010.

As always, we will keep you posted.

© DLA Phillips Fox

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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.