CCO support comes out of the closet

It's taken a while but finally those who - ideologically speaking - must really love the Government's CCO model for Auckland local government, have felt they had to come out in support. They've had to because the Government's usual business friendly friends have either been noisily opposed (The Chamber of Commerce), nervously opposed (the great and the good of Remuera and Meadowbank such as I heard addressing the Select Committee), or teeth-gritted and opposed on the electorate telephone ("what the hell do you think you're doing? do you seriously want to lose the next election....?").

It was very predictable that EMA (Employers and Manufacturers Association), and NZCID (New Zealand Council for Infrastructure Development) would be supportive. And lurking in the ideological background is the Property Council of New Zealand (see later in this blog).

Here's what NZCID said on the 17th February 2010:

The NZCID submission strongly endorses the overarching framework provided in the Bill for the Auckland Council to be able to operate effectively from its establishment on 1November 2010, including... arrangements relating to the governance of council-controlled organisations (CCOs), and in particular the management of transport and water supply and wastewater services.

and

"Talk that CCOs will make all decisions behind closed doors is scaremongering, Selwood says

and

"The last thing that industry can afford right now is any discontinuity in the important work of the CCOs in the delivery of key infrastructure services", Selwood says.

But I would do NZCID a dis-service by not quoting the changes it believes are essential to the legislation around CCOs. Its submissions place a touching faith in a hoped for spatial plan:

...we think there are enhancements that can be made to ensure strong alignment between the Auckland Council and the Council Controlled Organisations (CCOs) and to better define the role and authority of Local Boards....

Improvements to the Bill sought by NZCID include:

- Ensuring that the regional spatial plan has statutory authority in terms of the Resource Management Act and becomes the guiding planning framework that the Council Controlled organisations shall be required to give effect to;
- Providing for integration of the regional spatial plan with national plans such as the National Infrastructure Plan, Government Policy Statements, New Zealand Transport Strategy and other relevant national spatial planning policies and processes;
- Using Statements of Corporate Intent and a combined Executive Management Board as the primary vehicle to provide for consistency of purpose and clear authority, control and accountability between Auckland Council and the proposed CCOs;
- Requiring strong integration between central government and the Auckland Council, especially in the development and implementation of the Spatial Plan;
- Requiring plans of CCOs to give effect to the regional spatial plan;
- Strengthening the governance of the Auckland Transport Agency (ATA) to provide for improved alignment between central government agencies and the ATA...

You can see how much emphasis there is in these submissions around the spatial plan. A cynic would say that of course NZCID will submit like this. It will know there's not a cat's chance in hell of there being an agreed spatial plan inside 3 years. So all this stuff is just flim flam. It's disingenuous. NZCID's objective is to get all those wonderful infrastructure projects (and budgets) under the control of independent CCOs, and then contracts and money will flow into the coffers of the infrastructure planning and construction companies that make up the bulk of NZCID's membership, and whose annual subscriptions keep NZCID afloat.

Then there is EMA. What has it had to say? I checked its submission to the Select Committee about CCOs and other aspects of local government reform. Some extracts:

EMA (N) led the demands for reform of Auckland’s local governance with its “Rev up the Government” campaign (2005) and its “Fix Auckland” campaign (fixauckland.com) in 2007. Between us and the New Zealand Council for Infrastructure Development (NZCID) we consulted over 70 Auckland community, business and political organisations on what form that reform should take. The Councils in Auckland consulted no one on this. EMA (N) also held 14 meetings with its members attended by over 1600 people for the purposes of consultation....

Regional Spatial Plan
The Bill fails to provide for clear linkage between the regional spatial plan, the statutory planning processes under the RMA, and the investment programmes of the Council and the proposed CCOs: especially the water, transport and waterfront development CCOs. The Bill does set out the purpose and functions of the spatial plan but does not give the plan statutory status in terms of the RMA. Our view is that the plan would need to be given a formal statutory role under the RMA or be given legal effect through the Auckland Regional Policy Statement. Most importantly the plan should map designated utility corridors for the development of regionally important transport, energy, water, telecommunications and social infrastructure projects. As it stands the section is vague in terms of requirement for consistency of CCO and other Council plans and strategies with the overarching Spatial Plan....

Regional Infrastructure Plan needed
The new government plans to develop a 20-year National Infrastructure Plan in conjunction with local government to set a clear direction for vital national infrastructure investment, including the identification of top priority projects.... In conjunction with this it is critical that the Auckland region have its own 20 or 30 year infrastructure plan, and a strategy to fund it....

Ethos, values and guiding principles of the CCO’s
When it comes to the CCO’s culture and guiding principles, we concur with the
recommendations of the NZCID as follows. CCO ‘s Statement of Intent documents would be strengthened by including a narrative on how each CCO contributes to and/or aligns with Councils wider objectives and priorities for Auckland. Such a narrative might include the following guiding principles:

In enabling the establishment and advancement of a single, unified Auckland local
government entity, Auckland Council’s governance body and service delivery agencies
(CCOs) together with the 19 member local boards will be guided by the following desired outcomes.
• To manage, and give united leadership to, Auckland's growth in all forums local,
national and international;
• To provide leadership based on values of fairness for all, equity and sustainability;
• To work to ensure the continued ability of all Aucklanders to improve their standard of living and quality of life;
• To act positively to protect and enhance Auckland's stake in New Zealand's growth
and development;
• To ensure a fair and equitable return on the Region of Auckland's contribution to New Zealand's economic growth and development;
• To give Aucklanders an effective and united voice in Political decision making which affects Auckland.

Another tier of guiding principles seems appropriate to address a range of operating
considerations, including:
• The shared tension that could arise from the separation within Auckland’s new unitary structure between policy development and strategic planning – which resides within the Council - from delivery and implementation roles – which reside in arm’s-length CCOs.
• How CCOs, Council, Local Boards and other constituent entities – and central
government agencies - will be expected to ‘work together’ with each other;
• What accountabilities and working arrangements will exist between Council’s Chief
Executive (CEO and management team) and the CEOs (and staff) of the CCOs; and
between Councilors and CEO of CCOs. ((The issues around Council-CCO CEO
relationships should be the subject of a separate paper? – Discuss))

A point to note is that while the CCOs are required to behave in a business-like way, they are not established as stand-alone businesses as such. They are constituent parts of a single Auckland Council structure, which could be recognized in each CCOs Statement of Intent with some core principles about how this shared working partnership would be expected to operate.....

Transport Governance
Given the significance of transport issues in Auckland, this is one of the most important issues to resolve within the new governance arrangements for the city. In EMA (N)’s opinion the option actually chosen in the Bill for Auckland Transport (Option 2-Options refer to CAB Min (09) 30/10).) is not preferred. Under Option 2 the Regional Transport Authority deals only with public transport and local roads. Option 5, which included state highways, should have been chosen....

Water Governance We are generally pleased with and support the proposal for the establishment of Watercare Services as a CCO. Our long history of involvement with Watercare gives us confidence that the culture of the organisation and its experience as a responsible and efficient operator and deliverer of water and drainage services will transfer over into the new organisation and result in an outcome to the benefit of the region’s population....

The EMA demonstrates a better understanding than NZCID of how local government works, but is full of the sort of detailed implementation questions that remain unanswered about CCOs, and which expose the fundamental weaknesses in the approach at this scale. I'd like to end this summary with the EMA's submission on computer systems:

Integration of IT Systems
One of the critical success factors for the transition to the new Auckland Council will be the speed and efficiency of the integration of the IT systems of the existing Councils into one overall Auckland Council system. The ATA needs to move as quickly as possible, consistent with good practice to get the new system in place.

This is a bad joke, perhaps indicating how unaware organisations are of the complexity that is Local Government information systems. My understanding is that it will be years before the computer systems can be integrated. And maybe some systems will never be integrated simply because the cost of doing that will be too great compared to the real benefit. The bad joke of the so-called Integrated Council Information System is that it is INCIS for short (remember the Policy computer system integration project? The plug was pulled on that after some $100 million had been spent.)

And there's another outfit in this little ideological triumvirate of support for CCOs.
That's The Property Council of New Zealand.
Here's what it asked the new Government to do in its 'Briefing to the incoming Government'...:

Property Council seeks the transformation of Auckland’s governance in order unshackle the region’s economic performance, eliminate regulatory duplication and divergent planning outcomes. Property Council made the following recommendations to the Royal Commission on Auckland Governance:
move to a single regional governance body, ‘‘One Auckland’’, which operates within a defined set of statutes. One Auckland would contribute to the governance of Auckland through six portfolio areas: one transport; one water; one economy; regional parks and facilities; one regulatory plan; local democracy and Maori empowerment...

unify planning and decision making through the adoption of one Regional Spatial Plan, one Auckland Regional (District) Plan, one Long Term Council Community Plan, one Auckland Sustainability Plan, and one set of bylaws. These documents and bylaws would in turn be complemented (but not overruled) by local Community Plans....

vertically integrate water and wastewater services in the Auckland region to eliminate duplication, confused roles and unnecessary cost. Vertical integration would result in a centralised billing arrangement, one asset management plan and one agency controlling one network. Property Council endorses Watercare Services Ltd., a council controlled organisation, as the agency that should be utilised to deliver the less-cost approach to reform within the Auckland water industry....

establish a One Auckland Transport division for the Auckland region, One Transport, as a council controlled organisation (CCO). One Transport would be responsible for governance, funding and development of transport infrastructure, and would be wholly owned by One Auckland, which in turn would appoint a Board of Directors....

establish One Auckland Investments as a council controlled trading organisation (CCTO). One Auckland Investments would be a passive portfolio holder/investor. This public company should be responsible for managing One Auckland’s shareholding in: Auckland International Airport Limited; Ports of Auckland; and other property assets.

establish a Tourism Auckland as a CCO to actively engage at a strategic level with
significant public and private sector stakeholders, and manage all major tourism projects where One Auckland has a strategic interest. Tourism Auckland would comprise of three integrated arms: Visit Auckland, Major Events Auckland and Major Venues Auckland.

establish One Auckland Major Projects as a CCO. One Auckland Major Projects will actively engage at a strategic level with significant public and private sector stakeholders, and manage major projects where One Auckland has a strategic interest. Such major projects may include (but not be limited to): Rugby World Cup 2011, Americas Cup and Other international sporting events (e.g. Commonwealth Games)....

Recommendation to the Minister of Local Government:
Property Council recommends using the Royal Commission on Auckland Governance as a blueprint for local government reform elsewhere in New Zealand. However, failing a Royal Commission, a similar process could be led by an empowered Local Government Commission....

Sound familiar? The interesting thing about the Property Council's Briefing to the incoming Government is the extent to which the Government was guided by it (or ideas very like it) in terms of 'One Auckland' and 'One Transport' and 'One Water' and so on.

It might be OK for a centre-right government to count among its supporters the NZCID, EMA and Property Council of NZ, but when they are your only public supporters, and the rest of your friends desert you, or doubt you, or publicly criticise you - surely that's a signal that cannot be ignored.

The truth is that NZCID, EMA and Property Council of NZ are lobbying organisations. They are lobbying in the interests of their members. End of story. The EMA appears to have some limited knowledge of the inside workings and purpose of local government. But none of these organisations claims to have a good understanding of local government. They want conditions changed to best suit their interests. That is what their members expect after all.

At the start of this term of Government, I observed that no member of Cabinet had useful experience of local government.

So they were as happy to trash it as these advocate organisations.

The thing that has changed though, is that most members of cabinet now have a very good working knowledge of Auckland local government because many of them have sat through two Select Committees.

Cabinet now understands local government far more profoundly than when they made their first hasty reform decisions, and they can see that their proposals are far more profound and damaging to democracy and local services than they first appreciated.

Today, on radio, the only defender of the faith in these reforms was Stephen Selwood. He was responding to criticism from Local Government New Zealand which has finally entered the fray. If there's one thing that people at LGNZ understand it's Local Government. And it's one thing that Stephen Selwood still does not understand.