KEY POINTS:
Doug Armstrong, the chairman of the Auckland City Council's finance committee, wasted no time in dismissing a staff proposal to place community services such as parks, libraries, swimming pools and zoos in a separate, commercially run holding company. His haste was unsurprising. Most ratepayers regard such amenities as the things that give the city its soul, that make it more liveable. As non-core council functions, they create an additional rates burden, but it is one people are content to pay. As long as elected councillors are responsible for the efficient running of these amenities, a strong degree of accountability is assured.
However, handing that responsibility to business-focused directors would dilute that accountability. Therein lies the flaw in the staff plan.
The city officers wanted a proposal for a holding company to manage the council's interests in Auckland Airport and the Westhaven Marina to be expanded to a vast range of community services. They believe professional directors would bring superior governance and commercial focus to that provided by Mayor John Banks and councillors. A key benefit from a holding company, they say, would be "a separation of commercial decision-making from political decision-making where appropriate".
Most ratepayers would agree that the likes of libraries and swimming pools should have as great a commercial focus as possible. They would probably agree with Mr Armstrong that "overtly commercial activities with a strong private benefit", such as the marina, are suitable subjects for such a venture. Metrowater has proved how successfully a council-owned enterprise can operate as a business. Indeed, the extraction of "charitable payments" from it in order to constrain annual rates rises provides an excellent illustration of inappropriate political decision-making.
Community activities can never, however, be viewed in such black-and-white business terms as the core council functions of supplying properties with water, waste disposal, roading and suchlike. In the case of libraries, for example, there would be friction between extracting the best commercial return and the need to promote a literate population. Similar strictures apply in the need to encourage children to learn to swim. While some efficiencies may be gained without restricting service, a drive to maximise profits would raise, for example, the spectre of higher library charges and fewer libraries. It is the threat of this, with other potential repercussions such as the end of free entry to the art gallery and free access to parks, that sparked Mr Armstrong's swift reassurance.
The plan was not only ill-considered but ill-timed. The council officers have disregarded the fact that the Royal Commission of Inquiry on Auckland Governance is due to report its findings next March. If a united Auckland is the outcome, their proposal could, in time, be put to the new governing body. But it seems absurd to be contemplating such a fundamental alteration to the Auckland City Council's mode of operation right now.
This surprising development could merely have been a final tilt at implanting a business model before sweeping change takes place. Either way, it was always doomed to failure. Ratepayers would have to be consulted before any assets were placed in a holding company. Any timeline suggests the proposal will be swamped by the royal commission's report. It would also have been submerged by ratepayer opposition. Accountability twice removed does not sit well with the many people who see the value of such community amenities as beyond measure.
