Erecting a new dysfunction

BY ROD ORAM
Last updated 05:00 21/03/2010
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Photo montage: Fairfax
Weak and woolly: Not how Rodney Hide is selling the new Auckland Super City CCOs, but a likely outcome of the government's flabby plans.

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OPINION: THE GOVERNMENT promises its super city designs for Auckland will end all the local infighting and inefficiency that have long hobbled the region.

However, its weak and woolly designs for council-controlled organisations sow all the seeds for infighting and inefficiency between the CCOs. Inter-CCO conflict will flourish because the government is denying the Auckland Council adequate powers to set strategy for the CCOs and then make them sufficiently accountable to local politicians and voters for delivering it.

So we'll merely end up trading in political dysfunction for a quasi-commercial dysfunction forced on us by the National-led government.

This, of course, is not how the government is selling the CCOs. For example, Rodney Hide and Steven Joyce, ministers of local government and transport, wrote in a March 10 newspaper opinion piece that: Auckland already has lots of CCOs; the new ones will look just like them; local politicians will have the same control over them as central government does over Crown Entities; and this is just what the Royal Commission proposed.

They are dead wrong on all four points. First, they wrote that there were "currently over 300 council-owned and council-funded entities with some form of corporate or business-like structure spread over the existing eight councils of Auckland". In fact, there are only about 40 CCOs and council-controlled trading organisations, the government-appointed Auckland Transition Agency says in its CCO discussion paper.

Second, the seven CCOs proposed are far bigger in scale, complexity and powers than the existing ones. Auckland Transport, for example, will control all the way across road corridors from the property boundary on one side to the other, above and below ground. It will have power to decide between competing uses such as roads, footpaths, cycleways, utilities, berms, trees, outdoor dining and recreation, also devising bylaws and handing out parking fines. Its operations will consume 54% of rates revenue raised by Auckland Council.

Worse, while the Auckland Council is tasked with devising the transport strategy it is far from clear it will have the resources to do the job. As the governance design stands so far, most of the skills and staff to devise those plans will be in the CCO not the council. This means the CCO will not simply be the deliverer of council strategy, as the government portrays it, but rather a semi-autonomous body with considerable power to dictate what transport we get.

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It is certain, though, that most of the skills and staff to devise those plans and turn them into strategy will be in the CCO, not the council. This means the CCO will not simply be the deliverer of council strategy, as the government portrays it, but rather a semi-autonomous organisation with considerable power to dictate what transport we get. Under the current system, Auckland Regional Transport Authority, a statutory entity created by parliament, works to a land transport strategy set by Auckland Regional Council. It has vastly fewer powers and a much smaller budget than the new CCO will have.

Third, local politicians will have far less control over the CCOs than central government has over Crown Entities. Joyce, for example, has powers to direct and persuade Geoff Dangerfield, chief executive of the Transport Agency, that the mayor of Auckland could only dream of with the CEO of Auckland Transport. Moreover, the government appoints and removes the chairs of such entities, whereas the CCOs will choose their own.

Fourth, the Royal Commission argued for a strong council and subservient CCOs, not vice versa.

In principle and practice, CCOs can be excellent organisations. Properly structured, tasked and monitored, they can deliver services more efficiently than councils. But crucially this only works in a strong system in which the council sets the strategy and has adequate power over CCOs to ensure they deliver.

The government, however, has built a fatal flaw into its design for Auckland governance. It has put a naive faith in the region devising a robust, comprehensive land use plan. From this "one plan" for Auckland, it expects subsidiary plans on transport, economic development and waterfront revitalisation to flow, and the CCOs to "give effect" to the plans.

But this approach will trigger four deeply undesirable outcomes. First, as essential as a spatial plan is to ensure Auckland develops sensibly over coming decades, this is a radically more structured and prescriptive approach than has prevailed since the RMA replaced the Town and Country Planning Act more than 20 years ago.

It will take politicians and bureaucrats a long time to develop relevant skills and for the public to buy into the process. Moreover, the lean, mean council structure the government is implementing will leave the council seriously under-resourced for the job, whereas the CCOs will be very well resourced.

Thus the CCOs will have a lot of power, in ways subtle and not, to shape the spatial plan and its subsidiary plans. Politicians and public beware.

Second, the government's vague and weak plans for the CCO talk only of "giving effect" to the plans and of the likes of CCOs' Statements of Intent as tools for keeping them on task. Yet, having heavily influenced the strategies, CCOs will be able to influence the monitoring agenda also.

Third, it will take local politicians, central government, bureaucrats, CCO employees and the public a long time to flesh out, bring to life and adjust to the radically new governance structure. The ATA reckons it will take 12-18 months. But, in fact, it will take far longer. For example, the council needs three years to get its own nominees on to the boards of the CCOs to replace the initial ones appointed by Wellington.

Fourth, the CCOs will have a head start on politicians when the new structure kicks off on November 1. Watercare is already long-established and will maximise its additional powers as soon as it gets them.

Likewise, the government has already decided to set up Auckland Transport as a statutory entity approved by parliament rather than as a CCO set up by the new council; and the ATA will have it ready to roll. Of the seven proposed CCOs, Watercare and Transport, the biggest and most important, are not in ATA's discussion document seeking public comment by next Friday.

So, the CCOs will jump into this power vacuum, boots and all. Each will seek to maximise its power and influence. Expect, for example, Auckland Transport to create its own strategy and policy team. Each CCO will maximise its opportunities under the plans inherited from the old councils and operational until the new council devises new ones.

Imagine, for example, the chaos on a particular stretch of waterfront: The waterfront CCO might want more green housing; the economic development CCO more boat-building; the major facilities CCO a sports stadium; the property CCO quick profits from council land sales; the transport CCO more land for the next harbour crossing; Watercare more networked stormwater and sewage treatment for new developments rather than local processing wanted by the waterfront agency to tout its sustainability credentials; and the investment CCO refusing to give up more port land to make this happen.

Meanwhile, the council is trying to devise a spatial plan to lift Auckland's growth and sustainability to a whole new level. But it lacks the resources, powers or skills to do that because they largely reside in the CCOs. And it lacks power to pull the CCOs together in the common cause of Auckland's progress.

The government could stop this disaster happening by drastically amending its third Auckland governance bill to give the council: much stronger powers and resources to set strategy; real control over the CCOs; and flexibility to change CCOs by making them publicly owned companies rather than locking in their functions by making some of them statutory entities (such as Auckland Transport) or trusts.

These moves would create a more appropriate and productive balance between politics and commerce on the crucial issues of input, decision-making and accountability.

If the government won't budge, it clearly doesn't trust us to elect competent local politicians. That's OK. We'll show it at the next election we're good at booting out incompetent politicians who foist disastrous local government change on us.

- Sunday Star Times

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