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Report: Executive Summary Part 2

(Executive Summary Part 1) < Previous l Next

Local councils

47. There will be four urban councils and two rural councils. The four urban councils will have the following features:

48. The two rural local councils will be constituted as follows:

49. The boundary alignments for the six local councils are intended to separate rural land from urban land along the metropolitan urban limit. This approach is intended to achieve greater rural and urban definition and identity across the region, which was considered desirable by a number of submitters and by the Commission. It is also intended that the Auckland Council should have close planning oversight of rural areas, to ensure urban growth is appropriately managed across the region.

50. A primary objective of local councils will be to achieve better engagement with communities, using new ways to connect with people, simplifying consultation and making it more purposeful. It is also expected that there will be improved community access to councils, including better online information using self-service and information technologies.

51. In their local service delivery role, local councils will benefit from the unified service delivery model proposed for the Auckland Council, which will provide for consolidation and sharing of back-office functions, more efficient purchase and supply management, and stronger financial, human resource, and information management systems.

Central city and waterfront

52. The Commission has recommended a distinctive approach to Auckland's central city district and waterfront. The fact that Auckland's city centre has developed around a beautiful harbour gives it an immediate advantage, but the potential to showcase and enhance the harbour's natural beauty and the functional and amenity values it offers has not yet been realised fully. The city centre is shabby and easy public access to the waterfront is sorely lacking. Urgent action is required to address urban design issues and to improve the public realm, and implement much better urban management of the city centre.

53. The management of Auckland's city centre and waterfront area is not just a local issue but one of regional and national importance. The centre is the hub of New Zealand's leading firms, the focus of Auckland's education and science sectors, and of its professional, financial, business, entertainment, and creative activities. Many of the region’s key institutions, such as libraries, universities, galleries, courts, theatres, hospitals, and large businesses are concentrated in this area. Increasingly, it is also being recognised as a desirable place in which to live. It is Auckland's 'shop window' to the world, and a focus for visitors to the region.

54. The Commission has recommended

Relationship with central government

55. A key measure of the success of the Auckland Council will be how it works with central government. Central government needs to have Auckland's priorities presented to it in an accurate and consistent way. It also needs to have confidence in the ability of the Auckland Council to make good decisions and to deliver in an effective and efficient way. Having created an effective Auckland Council as the Commission proposes, central government should then allow it to influence its decision making, working in partnership for the greater good of Auckland and New Zealand. The Commission also expects that the Auckland Council will have much closer, and more productive, relationships with other regions and cities in New Zealand.

56. The Commission's report describes how a stronger relationship might be developed between central and local government in Auckland, including through the appointment of a Minister for Auckland and the establishment of a Cabinet Committee for Auckland. The Minister and Cabinet committee will oversee the transition to the Auckland Council over the next 18 months, and will work with the Auckland Council once it is established. The Cabinet committee will also keep oversight of events of international significance affecting Auckland, such as the Rugby World Cup in 2011. Over time, it is expected that a key role of this committee will be to set priorities for government spending in Auckland and to decide and coordinate the allocation of discretionary funding. The Commission has also proposed a number of shared decision-making structures involving relevant Government entities, particularly in the social well-being and transport areas.

57. In partnership with central government and the region’s businesses, Auckland’s local government must do what it can to address the impact of the economic challenges currently facing the nation as well as the region. This should include making a constructive contribution to recent central government initiatives including the development of a 20-year infrastructure plan, streamlining the Resource Management Act, and the initiatives arising from the February 2009 Job Summit.

58. However, it is important also to maintain a clear focus on what must be done over the medium to long term to enhance the productivity and competitiveness of Auckland’s businesses. It is this work that will set the region on the path of long-term prosperity. Improving Auckland’s infrastructure, particularly the development of an ultra-fast broadband network, has the potential to do this, as does a carefully planned and successfully executed Rugby World Cup event in 2011.

59. Auckland’s local governance structures must be capable of supporting and enhancing the local businesses and communities, which provide the foundation of Auckland’s prosperity. At the same time they must also be capable of addressing pan-Auckland economic development issues, including regional tourist promotion, implementation of an Auckland brand, improvements to key infrastructure networks, and rationalising duplicative and sometimes conflicting regulatory requirements. Currently, fragmented responsibility between regional and local government undercuts the ability of Auckland to perform nationally and internationally as an effective city-region.

60. The Commission also expects Auckland’s local government to set high standards for itself. It envisages focused, efficient, and productive local government, which ensures public spending is directed to the best possible use, funding high-quality services, achieving value for money, and measuring and monitoring performance in a transparent way. In the current economic environment, businesses and individual ratepayers cannot afford unjustified rates increases or overly onerous and costly regulatory compliance costs.

Planning

61. The Commission notes that the Government intends to amend the Resource Management Act 1991, in particular to make decision making on infrastructure more efficient, to reduce the costs and delays of consenting and speed up plan-making processes.

62. The Commission’s recommendations on planning address these problems from a different perspective. The reorganisation proposed by the Commission will streamline planning processes in Auckland by creating a unitary authority. Although it will take time to achieve, it is proposed that there will be one district plan for Auckland, thus simplifying planning and consenting processes. A hallmark of the new district plan, and the new regional plans to be developed and delivered by the Auckland Council, will be simplicity of language and controls.

63. The Commission also proposes that the Resource Management Act 1991 should be amended to remove the right of appeal to the Environment Court from regional policy decisions made by the Auckland Council. It is also recommended that the Auckland Regional Policy Statement be subject to a submission process similar to that which applies to national policy statements, that is, those submissions should be heard by independent commissioners. These measures, if adopted, will result in significant savings, and simplify the administration of the Act and planning processes for the Auckland Council and users alike.

Council-controlled organisations

64. In Auckland there are currently over 40 council-controlled organisations ("CCOs") under the control of the various local authorities, together with a number of council organisations covered by statutory monitoring and reporting provisions. These will be transferred to the Auckland Council on its establishment. The Commission expects that the Auckland Council will wish to rationalise a number of these entities, and introduce measures to ensure that CCOs are able to operate on an independent and professional basis. The Commission expects that, in future, the Auckland Council’s major commercial trading and infrastructure activities will be undertaken through CCOs, to enable the council to access the best commercial and engineering expertise and resources. The Commission has also made specific recommendations in relation to the future of ARTA and Watercare, outlined below.

Transport

65. The Commission proposes that a new regional transport authority be established, replacing ARTA. The authority will be a CCO reporting to the Auckland Council and will have a partnership relationship with the New Zealand Transport Agency and ONTRACK. It will have responsibilities for regional transport, including public transport, as well as for strategic planning and for regional arterial roads. It will have an oversight role in respect of local roads, which will be the day-to-day responsibility of local councils.

Water and wastewater

66. The Commission proposes that, subject to certain possible exceptions discussed in the report, all drinking water and wastewater services, both wholesale and retail, will be supplied by one CCO – Watercare – owned by the Auckland Council. The Auckland Council will determine the extent to which responsibility for the delivery of stormwater services should be shared between local councils and Watercare.

67. All water-related assets owned by the existing territorial authorities will be transferred to the Auckland Council and will remain in public ownership. Watercare will be required by legislation to promote demand management to encourage responsible water use. The current obligation on Watercare to maintain prices for water and wastewater services at minimum levels (subject to obligations to be an effective business and maintain its assets in the long term) will continue.

68. An independent services performance auditor will be appointed to oversee Watercare, and will also review CCO performance targets, and the reliability and affordability of council services.

Social well-being

69. The data outlined in the Commission’s report makes it clear that Auckland does poorly on many indicators of social well-being. In particular, within the region there are significant clusters of deprivation typically concentrated around geographical and ethnic communities. Auckland carries the costs in three ways: this untapped potential constrains economic growth; it places a significant burden on government resources; and it makes the city more divided and less safe. For Auckland to become a leading city, improved social well-being outcomes are critical. Every citizen must have the opportunity not only to reach their potential and to lead a fulfilling life, but also to contribute to Auckland’s growth and prosperity.

70. The Commission observes generally that there is a lack of clarity and consistency about how and to what extent local government should give effect to the obligation to promote social well-being. While central government has primary responsibility for social well-being, local government has an important role to play, and is already inextricably involved. All council activities (such as public transport, urban design, rate-setting, and roads and other infrastructure) have significant social consequences.

71. However, with some notable exceptions, promoting social well-being has not been prioritised as core business by Auckland councils, and the power to improve social well-being outcomes through these council activities has not been realised. These functions can and should be approached with the explicit intention of maximising their contributions to improved social well-being.

72. The annual central and local government social spend in the Auckland region is in the vicinity of $12 billion, but the results fall short. The challenge is to ensure these resources are spent more effectively, to achieve the best outcomes. To date, collaborative efforts by central and local government to align and integrate approaches have proved inadequate.

73. Accordingly, the key recommendations made by the Commission centre on achieving shared responsibility for decision making between local and central government. This is based on role clarity, clear strategic direction, access to good data and analysis, better engagement with affected communities, and strengthened accountability arrangements.

Adding up the savings

74. The operation of Auckland’s local government involves very significant amounts of public money. In 2008/09 the eight Auckland councils have budgeted to spend almost $2 billion in operating expenses and over $1.25 billion in capital expenditure. Many of the submissions made to the Commission supporting changes to the structure of Auckland’s local government were based on the view that significant cost savings should result.

75. While the Commission considers that there are other equally important issues in designing a new governance structure – primary among them achieving greater regional effectiveness – it fully accepts the importance of these financial issues. Within the time and information sources available to it, it is difficult for the Commission to estimate in detail the financial implications to Auckland local government of its proposed changes. As noted above, the Commission commissioned a report from corporate finance consultants Taylor Duignan Barry to provide a preliminary financial analysis of its preferred option of a unified Auckland Council and six local councils.

76. Preliminary analysis, which will need to be quantified in detail by the Establishment Board, suggests that adopting the Commission’s proposals for structural change will result in estimated efficiency savings in the indicative range of 2.5% to 3.5% of the total expenditure of the Auckland councils planned for 2008/09 (of around $3.2 billion). This represents estimated efficiency gains of between $76 million to $113 million per year. It should be noted, however, that securing the anticipated savings will require excellent transition and management arrangements.

77. Efficiency gains are expected from a number of operating and capital expenditure areas including savings from unified services (in areas such as procurement and back-office systems such as finance and administration, information technology, human resource management, and uniform rules and processes for service delivery). On a sectoral basis, there are potential efficiencies in water and wastewater, solid waste, transport, community assets and regulation, planning, and governance. Limited efficiency gains are expected in areas that are largely contracted out such as refuse collection, road maintenance, and public transport services.

78. The estimated integration costs have been assessed to range in total between $120 million and $240 million over a four-year implementation time frame.

79. It is important to recognise that there are wider costs associated with not taking action. Failure to take action will result in citizens and businesses continuing to incur high transaction costs in dealing with councils, in important decisions either not being made or made too late, and in central government being unable to develop an effective partnership with Auckland local government.

Transition

80. The Commission has worked on the basis that changes should be in place in time for the next local body elections in October 2010. At that time, the Auckland Council will be established, and the Auckland Regional Council and the seven territorial authorities in Auckland will be dissolved formally. Boundaries and wards for the Auckland Council will need to be determined no later than six months before the election date.

81. The anticipated 18 months’ time frame for the establishment of the Auckland Council is ambitious but achievable, and it is most important that the deadline is met. The main purpose of achieving reform over this time frame will be to maintain focus and momentum for change. Consultation by the Commission has been extensive, and there is no need to rehearse old arguments. Existing council staff will be concerned about their future. The public will want to know that council services will continue to be provided at usual locations and that democratic processes are to be maintained. For these reasons, it is essential that the whole process is well managed and the transition work gets under way quickly.

82. The Commission recommends that existing councils continue to operate effectively until the 2010 elections, with the mayors and councillors continuing to make the necessary decisions to enable council business and the delivery of services to proceed as normal. Existing councils will also have an important role in managing the impact of the transition, particularly on staff. Existing councils should refrain from making decisions that could materially affect the creation of the Auckland Council or its future activities, or that would pre-empt or constrain future decisions by the Auckland Council.

83. The Commission has recommended the appointment of an Auckland-based Establishment Board comprising a Chair and members with significant experience at chief executive level in implementing major organisational change. Its role will be to prepare for the establishment of the Auckland Council. The Commission is very clear in its report about what needs to be done to achieve this, and it expects that the board will focus on implementation of the design set out in the Commission’s report.

84. The Establishment Board will be supported in its work by a Transition Management Group, comprising the chief executives of the existing Auckland councils, Watercare, and ARTA. It will be chaired by an independent chair with significant local government experience and no vested interest in Auckland local government, who will report to the Chair of the Establishment Board. The role of the Transition Management Group will be to ensure that existing councils operate on a "business as usual" basis prior to the October 2010 elections, and to assist the transition process. This will include providing all necessary information to the Establishment Board to assist audit processes, the transfer of all assets and staff to the new organisation, and undertaking integration projects (for example, to establish aspects of the shared services arrangements).

85. The Government will have a critical role in overseeing the transition process. It will also need to undertake parallel policy processes, including securing the passage of legislation, fixing boundaries, and preparing for the 2010 elections. It is proposed that a senior Minister for Auckland and a Cabinet Committee for Auckland be established as a matter of urgency. The Establishment Board will report to the Cabinet Committee for Auckland, through the Minister for Auckland. The Secretary of Local Government will be tasked with monitoring the Establishment Board’s work to ensure deadlines are met. The Secretary will report separately to the Cabinet Committee for Auckland through the Minister for Local Government.

86. The Establishment Board should be supported by an Auckland-based Project Management Office working to the direction of the Establishment Board.

Concluding comment: Government to governance

87. Neither structures, powers, nor funding are by themselves the key to revitalisation of local government in Auckland. It is people – Aucklanders – who will make the difference. The Commission’s interest has not been confined to local government arrangements but has been more broadly focused on the question of local governance – the wider collaboration between central government, local government, and interested parties in the public, private, and non-profit sectors.

88. The Commission has been inspired during its inquiry by the passion Aucklanders have for their region, and their determination, shared by the Government, that Auckland can do more and be more than it is. The sustained effort that will be required to achieve a real shift in local government and in Auckland’s performance should not be underestimated. The Commission is heartened by its understanding that, though there are challenges for Auckland, there are also real solutions.

89. The Commission respectfully urges the Government to view its recommendations as an integrated package, which needs to be adopted with urgency so that changes can be implemented in readiness for the October 2010 local body elections. The Commission has consulted widely and believes that, overwhelmingly, Auckland is ready now for positive change.

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