Business leader Michael Barnett. Photo / NZ Herald
Business leader Michael Barnett. Photo / NZ Herald
The visitor levy proposed by Auckland's new mayor is an unfortunate distraction to where the real action to fix Auckland's big issues needs to be, argues Michael Barnett
New mayor Phil Goff has a challenging road ahead to make Auckland one of the 'world's best performing cities', says Michael Barnett, and may have to change the way some of our major infrastructure, such as Ports of Auckland.
We all know Auckland has challenges -- it has some big infrastructure issues and requires a dramatic step up in the pace of action to deal to them.
But resources (money and skills) and the culture needed for Auckland to lift its game is in short supply. We know that Mayor Phil Goff and his new council team want to be the fixer, but we still don't know how.
The new council inherited a limited additional debt-raising capacity of $1-2 billion, nowhere near the $12-20 billion-plus needed to finance infrastructure work critical to managing Auckland's projected growth over the next decade to 30 years.
It's early days, but one thing is clear -- the decades of treating general ratepayers as cash cows to raise the revenue the city needs to manage its growth are over.
Auckland Council needs a new business model if the city is to have any chance of becoming, as the mayor put it in his proposed Budget rhetoric, "one of the world's best performing cities".
The mayoral proposal gave veiled hints of council wanting to set a new direction, lift performance and get faster action on delivering infrastructure. But the "big fix" story he needs to be telling repeatedly was missing. Instead, proposals to introduce a visitor levy, a living wage for council employees, and contribution of funds to support homeless Aucklanders reflect a business-as-usual approach.
The starting point for the new council should be its agenda to improve the performance of the council organisation to become fit for purpose.
The mayor needs to make clear that he will use mayoral powers proactively while exercising a discipline taking several forms:
• Budgetary discipline: Live within your means.
• Lean staffing: A team tailored to the delivery of core services and the fixing of the big issues.
• Efficiency should be paramount: e.g. Generating savings from efficiencies across the council group. Obvious low-hanging fruit areas to tackle include rationalising commercial property (including car-parking buildings), more disciplined spending, greater back office savings in human resources, ICT and communications; and transparent contracting of "competing" private sector firms with performance-based contracts.
• Recognising that Auckland (and New Zealand) has a shortage of resources and therefore prioritising will be essential, with the emphasis on investing in projects that will lift productivity, enable employment and attract businesses and events here that will add value to Auckland's growth and development.
What Auckland needs is a council leadership group with the courage of their convictions, to motivate, lead and take, correct if unpopular decisions, and to actually implement policies designed to fix Auckland. And it should do so by going out of its way to collaborate with central government, business and community groups. It must be results-driven. Avoid complacency. And be transparent and open with Aucklanders as it goes.
The decades of treating general ratepayers as cash cows to raise the revenue the city needs to manage its growth are over.
Obviously, internal savings alone won't generate the revenue required. The new Unitary Plan suggestion for a more integrated service-driven approach, for example, in urban design and delivery of infrastructure and utilities is another area needing attention. This is not just about eliminating silo delivery by each CCO acting alone, but the whole group working in a co-ordinated business-like way in which timely delivery within specified budgets becomes the norm.
To change Auckland Council's risk-averse culture, changes at the top are needed to be able to appoint people to the CCO boards with expertise in specific project areas for limited terms, to actively seek out contestable ideas, and, as I have said, use appropriate private sector organisations to leverage, test and champion ideas.
Then we get to the real agenda for unlocking serious new funding. Council has been sitting on $500,000 consultant reports from EY and Cameron Partners for nearly a year on alternative financing other than rates. As well as recommending council look at more creative borrowing options, the consultants' reports identified asset sales. We need to see the benefits and cost details of proposals to sell down a portion of Auckland Airport shares, and restructure arrangements with Ports of Auckland to a land-lease model which most international port cities now have.
Of critical importance here is to ensure that if airport shares are sold, that this one-off can be used to deliver more revenue for council than continuing to enjoy the annual dividend stream currently generated. Measures can also be taken to ensure that any part sell-down could be ring-fenced to a limited range of NZ Inc places -- e.g. Accident Compensation Commission or NZ Super Fund.
Similarly with Ports of Auckland, leasing the land the port uses will reduce the approximate 4 per cent of rates revenue council receives annually from its 100 per cent ownership of port shares. We need to see the details to ensure a net gain for funding infrastructure.
What Auckland needs is a council leadership group with the courage of their convictions, to motivate, lead, and take correct if unpopular decisions, and to actually implement policies designed to fix Auckland.
Another revenue tool used widely overseas centres on targeted user-pays mechanisms for major new infrastructure.
Is it time for Auckland to scrap the development contribution model and look at a revenue model that better captures user-pays by all beneficiaries of major projects -- so not just developers are paying up front but there is a revenue stream through the lifespan of the development?
I am strongly of the view that Auckland doesn't need a 10-year debate before deciding on a new funding model for transport investment, as suggested in the central government and Auckland Council's Auckland Transport Alignment Project (Atap).
I sympathise with the mayor in wanting a quicker answer -- whether his regional fuel tax is it, I'm not sure. But what I do know is that Auckland's freight sector is already on a user-pays model through the RUC system which is monitored by GPS technology. Why not a implement a simple extension of this technology to the rest of Auckland's vehicle fleet?
The point: Options to unlock long-term new revenue sources that would bring the millions needed to accelerate action are available. If you agree that the speed at which Project Auckland does things is far too slow, then you should also agree that capturing the funding tools available should be at the top of the Auckland 'can do' agenda for moving the city forward.
Like it or not, Auckland's destiny is to continue to grow into a big, multi-cultural city of diverse talents and opportunities. The businesses and Aucklanders who stay deserve the support of a council that will deliver an agenda for action on Auckland's big issues so that the city becomes more productive and enjoyable to live, work and invest.
It is an indictment that Auckland Council wants to be one of the world's best performing cities, yet has an immediate problem in supplying infrastructure to (housing) growth areas such as the North Shore (see separate story) and continues to allow traffic congestion in other areas of Auckland to get worse and spread through the working day.
That is unacceptable. I am looking to Auckland Council's Year One Budget and the evidence that our new mayor and councillors are passionate to support it.
Michael Barnett is chief executive of the Auckland Chamber of Commerce
