Labour Party

Royal Commission on Auckland Governance

17.04.2008

In 1989 restructuring reduced some 800, sometimes very expensive and inefficient local authorities to approximately a hundred. As a part of the restructuring was the establishment of Community Boards and the requirements for councils to have Annual Plans.

At that time Sir Brian Ellwood, chair of the Local Government Commission, described the Community Boards as a mix of elected Councillors and community representatives as the crux of the new system. It was hoped that there would be more women and ethnic people involved in local government. Sir Brian Ellwood said the commission's concept was one of ward committees but the government's drive was to spread representation throughout local government.

Community boards were seen as a sop by many Councils. The Local Commission saw the need to recognize small communities. However, most Community Boards do not have any real power on the decision-making roles that impact on the lives of their citizens. Many Councils use Community Boards to keep its citizens at arm's-length. Councils used Community Boards as a moat around the Council castle, in other words direct access to Council's leaders became harder. Some Councils find it convenient to hide behind their decisions when it suits.

Many of the Community Boards do not have any real power or sufficient income to make significant changes to their communities. While it is true that some Community Boards have been to a degree successful, the vast majority have been just an expense for ratepayers without any significant gains.

Many of Auckland's Councils and Mayors have been calling for larger Councils as a way of fixing Auckland's problems. Needless to say they see some or all of the City Councils remaining, but outlying District Councils being eliminated. This will not solve Auckland's problems.

Auckland's problems are about infrastructure, planning, transport and water. To date Councils have been spectacularly failing to address these issues as a way of solving many of their problems. Central Government must also share the blame for appointing new boards and committees to try and solve the problems. This is not a new issue. Back in the early 1990s Auckland‘s Mayors were wanting to see Auckland as the outstanding city of the South Pacific. They and many other Mayors were not concentrating on Auckland's transport problems, or its planning problems, and today people are suffering from infrastructure that is not meeting current demands. It seems amazing that much of the debate that is happening currently is about having a Lord Mayor.

There has been, over a number of years going back well into last century, some real difficulties in developing a shared united vision for Auckland. Auckland has failed to have a co-operative approach to economic development and residential growth, especially when it comes to the planning process. This has lead to large amounts of litigation between the Auckland Regional Council and territorial authorities and this can be hugely expensive to ratepayers as their local Councils and the Regional Authority end up in Court to determine growth areas. The lack of co-operation was also seen in the area of co-ordinating public transport. For example, the Auckland city ratepayers had to meet the cost of the Britomart Centre without contributions from other Councils, the result being a facility was built that is clearly not going to meet future demands. Regional assets, for example the Zoo and Art Gallery should administed and funded regionally.

It seems to me that planning for the Auckland region should be carried out by the Auckland Regional Authority with local Councils looking after the planning of local roading, building controls, environmental health including liquor licensing, etc.

Some Councils think that by enlarging their boundaries they will solve Auckland problems. They should however, be looking at the functions that regional and local Councils have. I believe that the economies of scale start to dissipate when Councils serve populations of more than 150,000 - 250, 000. Smaller Councils have many advantages. They:

Have better knowledge conditions and public feelings so they can better target services;

Smaller Councils are seen by residents as being more in touch and in tune with local needs. This is particularly true with Auckland being a multi cultural mix where there are developing fairly defined ethnic groups.

Economic theory clearly recognises that, while there are economies of scale, there is also dis-economies of scale. However, a large number of people believe in the value of smaller authorities where the public have more direct ways of inputting their ideas. Any local Government reform should recognise two key fundamental realities, administrative and political.

At the administrative level the effectiveness and efficiency of the local Council is not a function of size. There is much empirical evidence that suggests that big is not better when it comes to local Government. It is a political reality that many people believe small is beautiful. Their focus is on Council looking after their neighbourhood. People identify with distinct localities rather than regions. People want their local Councils to address the micro issues at street level. But they expect regional Government to address wider regional issues and to set future planning visions and strategies for them.

Since the 1989 Local Government reforms the 7 Mayors of the Auckland area together with the Chairperson of the Auckland Regional Authority formed a body named the ‘Mayoral Forum'. The Mayoral Forum (I was formerly a member) had no power or any real defined role. It still exists today and there is virtually no evidence that it has had a significant impact on addressing the overall planning of Auckland.

Auckland may be better served with the abolition of Community Boards and with up to 10 Local Councils servicing a population of between 150,000, - 250,000 and to look after local needs. This would see the word ‘local' being put back into Local Government. At the same time addressing the regional problems in a more co-ordinated manner. It would also mean that Auckland would have fewer local body politicians than they do currently. This I'm confident will be popular with the rate-payers.

In line with my view that territorial councils should be established that deal with local communities of common interest within the Auckland region, I believe there is a logical progression to regional governance. This would be through the automatic appointment to the regional body of each of the territorial Mayors, accompanied by provision for direct election to it of one person from each territorial council area. Such a regional body would then reflect the views of councils but also independent opinions from within each of the constituent areas. Elections for the regional council would be held at the same time as territorial council elections.

The regional group would then oversee regional planning, resource management (environmental responsibilities), appoint Directors to the transport and water agencies and be responsible for other regional functions in a similar manner to the existing regional council. An essential provision would be that members of the regional body and of territorial councils should be barred from holding Directorships on the boards of the transport and water agencies in line with current legislation. The aim is effective regional governance reflective of regional community views and I believe this can be achieved through such a governance system.

The first requirement for the region is one transport authority directing transport planning and delivery, including public transport provision and traffic management on arterial highways, with responsibility for infrastructure delivery. There are a number of reasons for this. The Auckland Regional Transport Authority (ARTA) which was established by the Government in 2004 was not provided with sufficient functions and powers to deliver its objectives. For example it cannot ensure that bus priority measures are put into place because responsibility for this lies with territorial councils. ARTA is responsible for preparing and prioritizing a regional land transport programme. But it is not able to ensure high priority programmes are contained in it. This is because Councils have responsibility for roading; and decisions on the application of central government funds to high priority projects ultimately lie with LTNZ. The existence of too many transport agencies in Auckland results in a low level of horizontal integration across transport modes and geographical boundaries and a low level of vertical integration between planning, funding, service delivery and infrastructure delivery and operations. Successful implementation is therefore reliant on collaboration between agencies. This increases transaction costs and time involved and allows undue time for local level political interchanges often directed at home patch advantage at the expense of regional interest. It is noteworthy, for example that, the Auckland Transport Plan is not binding on any of the parties involved. One single transport authority for the region would be in line with international best practice

The aim of establishing a single transport authority with more functions is to improve transport planning and delivery. The priority functions to be added would be arterial roads provision and maintenance and traffic management of these roads. It might well be advantageous in view of the interdependency of the roading network in the region to have the single agency also manage state highways on behalf of the responsible national body. Had one authority had management and planning functions it is doubtful Auckland would have seen the imbroglio that arose over development of an Eastern Highway in the face of considerable resistance among large sections of the community. A case can also be made for this single transport agency to operate all public transport infrastructures in order to co-ordinate region-wide facilities to best economic effect and for maximum passenger convenience. While a case could be made for this authority to have a responsibility for rail track infrastructure, my view on balance is that this is best left to the national rail agency so that the infrastructure is operated as one network.

World-wide, regional agencies generally have their own funding sources and report to an independent board linked to local/regional governance. The Translink agency in Vancouver, often referred to as a useful model of good practice, is operated as a single regional body that reports to a Board made up of territorial council Mayors. Within the Auckland context governance alternatives might include a Board comprising an elected representative of each territorial council; a representative each from the state rail agency and the state roading authority and four Directors resident in Auckland appointed by the Minister of Finance for their business, financial or infrastructure background. In this way community interests, specialist expertise and the national interest would be represented. It is essential to have representation that encompasses two components - political that can represent community views and specialist expertise that can bring high level background knowledge to transport and infrastructure debate.

The case for a vertical integration of the Auckland water system into Watercare Services Ltd, the current water wholesaler and wastewater operator is, in my view, compelling. Some 11 industry reports carried out since 1995 have shown that there is potential to achieve savings of between 10 and 20 percent in the cost of water services. It is especially significant that not one of these reports has seen merit in retaining any of the existing retail companies operated by territorial councils or in setting up an entirely new region-wide entity. The reasons are clear. Through integration there would be less cost duplication, one asset plan for the Auckland water industry and one agency operating one network from dams to tap into the region-wide sewage system.

The Three Waters project recently completed as a combined project of Watercare and Local Network Operator's demonstrated that Watercare Services Limited now has the experience, expertise and detailed local knowledge to plan and develop across territorial council boundaries, operate quality demand-management policies across the region, and cost-effectively manage the long term infrastructure needs and requirements of the area's rapidly rising population. Its handling of the Waikato River water delivery project for Auckland and the successful introduction of the new Mangere treatment plant and restoration of the inner Manukau Harbour, were demonstrative of its capability to handle the challenges of future region water and wastewater management. Why would anyone want to introduce a completely new organisation and risk the loss of this experience and expertise? Costs inherent in establishing a new organisation would represent unnecessary expense.

It is significant from a political perspective that the consultation carried out by the Combined Territorial Council's executive steering group in 2001 showed in a report to Watercare's shareholders that 68 percent of some 2300 people who were canvassed supported vertical integration as the preferred option for the future structure of regional water and waste services. They looked to a single regional service provider to provide the greatest economies of scale, less fragmentation and duplication of services and central co-ordination of planning and investment decisions.

Over recent months there have been some suggestions arising from within local network operators that it would always be useful to have two retail providers to act as a check on the efficiency of one regional distributor. Significantly, not one of the 11 independent studies made of the Auckland water industry over the past decade has suggested that retaining a retailer would contribute value above that to be achieved by integrating current retail operations into the existing wholesaler.

An important factor that must be taken into account in considering the structure of the Auckland water industry, is the capability of one vertically integrated company to effectively carry out uniform demand management practices across the region. No incentive exists for district retail operators to operate robust demand management regimes. Lower water use means lower operating income. In the case of a regional wholesale/retail supplier however, effective demand management can be utilised as a tool for conservation and resource management with the added incentive of slowing requirements for capital expenditure on new water sources and related distribution facilities.

The Parliamentary Commissioner for the Environment said in a report made in the year 2000 that solutions were needed to support more efficient water use and to recognise the important linkages between the different water services components of water supply, treatment, use and disposal of wastewater and storm-water. He considered that where there was a wholesale/retail split in water services, the absence of a requirement to undertake demand management at both regional and territorial level means that demand management can be given a lower priority except in times of drought. In respect of Auckland he believed the existing wholesale/retail split represented a lost opportunity to increase the overall efficiency of the water system.

In recent days Auckland City Council has presented its views on changed governance for the region. It canvasses change in water administration with a proposal that appears to be similar to the reforms previously carried out in the electricity industry with new layers of administration covering storage (wholesale), distribution and retail. All this with increased overheads would impose even larger cost burdens on Auckland water users and make more difficult region-wide controlled demand management.

Supporters of this model suggest that establishing retail organisations would result in opportunities to compare costings and administration to achieve best practice. This is nonsense. Each retailer would be a monopoly in its area no matter the ownership structure. Not one expert report commissioned by local authorities has ever recommended such a structure for Auckland's water industry. It should be resisted.

The list of reports made during the last 13 years that favour vertical integration include.-