Have politicians lost control of big ratepayer-owned companies – or just failed to use their powers to keep them accountable to the public? Tim Murphy reports on an ‘unvarnished’ review of Auckland Council and its corporatised functions.
The deepest inquiry yet into how Auckland’s five council-owned companies are working finds major fault with guidance from elected politicians and accountability from the businesses to the public.
The independent review of Council Controlled Organisations (CCOs) was an election promise in 2019 from Mayor Phil Goff amid public disquiet at the companies’ actions, lack of communication and lack of accountability to voters.
It calls for two CCOs, Auckland Tourism, Events and Economic Development (ATEED) and Regional Facilities Auckland (RFA) to be merged, saving up to $67 million in the next decade, and it reveals poor collaboration by Auckland Transport and Watercare with the council and a lack of purpose for the property development and sales CCO, Panuku.
The review sets out legal and constitutional changes for the CCOs to make them perform better for Auckland ratepayers. The companies were established when Auckland Council formed in 2010 as a result of the Super City amalgamations of local authorities.
One of the review’s themes is the need for improvement between CCOs and local boards and communities when undertaking minor capital works – the kinds of projects that produced strong public criticism before the local body elections.
It also suggests the council should gain the right for input into the salaries paid to senior managers of the CCOs, an issue now the preserve of boards of directors. It singles out the property business Panuku for excessive overhead costs.
As part of the ATEED and RFA merger, the review says it will be critical to explore “joint management and operation of the city’s four stadiums with the [currently independent] Eden Park Trust, and for law changes to be pursued to fold both Auckland Museum and Motat into the merged entity.
Clear new strategies on water, economic development and the stadiums should be priorities.
While the CCOs are variously criticised for failing to engage properly with the council, local boards, each other and communities, elected councillors do not escape criticism.
The panel, chaired by Miriam Dean QC, finds the council has never in its 10 years in existence used its statutory power to direct a CCO to comply with the council’s strategy.
“The council has all the necessary levers at hand to ensure accountability, but it is not using them effectively.
“Its many plans, policies and strategies offer almost no practical strategic direction to CCOs …. and in some crucial areas such as water, property and arts and culture, there is no strategy at all.”
The report says: “The council’s governance of and liaison with CCOs is not working as it should.”
It criticises the paperwork and processes burdening the council-CCO relationships, noting for example there are “an incredible” 150 local board engagement plans, and wants a new emphasis on “results and away from the seemingly endless processes and procedures we encountered so much of during our review”.
Beyond the ATEED-RFA merger, the review’s 67 recommendations include streamlining funding for Auckland Transport, joint work on the regional land transport plan between AT and the council and for AT to “urgently review how it designs, consults on, funds and implements minor capital works”
“As for being accountable to customers and ratepayers, CCOs certainly understand the theory, but the practice is another matter: the feedback from the public on this score was overwhelmingly negative.
“Responsiveness to queries or complaints was slow – and complaints were frequently about the tardiness of minor works of the excessive heed paid to commercial interests over public interests – the latter hardly helped by the fact CCOs’ constitutions are silent on balancing these considerations.”
Watercare and Auckland Transport should submit their asset plans and supporting information to the council annually so it can assess how well they meet its urban growth strategy.
The report also recommends the council give CCOs guidance on “how to balance public and commercial interests and amend their constitutions to make explicit that each CCO must meet both objectives”.
Dean was joined on the panel’s eight-month review by former Manukau City Council chief executive Leigh Auton and public sector specialist Doug Martin. The panel says many of its recommendations can be implemented quickly and even those taking longer should be possible within 12 months.
Goff said: “I welcome the report from the independent panel for its unvarnished look at what we need to improve and change so that we have a more efficient city that works better for Aucklanders.
“Particularly important is the report’s recommendations on the need for strengthening the council’s ability to give strategic direction to the CCOs and to improve monitoring of their activities. The CCOs manage two-thirds of Auckland Council’s assets and spend half of its operational budget, so a strong focus on these areas is critical.”
Councillors would consider the recommendations while forming the next 10-year plan this year.
