John Roughan: Brave little local body cut down by big spenders

COMMENT

Somebody should observe the passing next week of a brave little local body. Infrastructure Auckland has been lean - needing just 10 staff to administer the most valuable portfolio of assets in the hands of any New Zealand local body - and mean.

It tried to ensure that the money it earned, earmarked for the relief of Auckland's arteriosclerosis, was spent for maximum value. It tried to use public money as carefully as if it were its own. It couldn't last.

When it is wound up on Wednesday a counter-revolution will be complete. Up at the Auckland Regional Council they will be celebrating a restoration of the old order.

It is the end of an experiment that began a dozen years ago when national economic reformers stormed the ramparts of Auckland Regional House, an overpriced edifice in Pitt St that had cost the ARC its last scrap of financial credibility.

Reformers had long wanted to bring the demands of an open economy to the country's last sheltered sector - local government. What better place to start than the fat, fractious ARC, unloved by the citizens, feared and detested by the municipalities that had to feed its appetite.

When National's Local Government Minister Warren Cooper rode up one day and dismembered the monster, Auckland watched with equanimity. He stripped the council of all items of commercial value, leaving it with little more to do than monitor the environment, draw land use and transport plans, run some parks.

The port company, the buses and the other commercial assets were put under a newly constituted regional services trust which, within six years had cleared the region's debt and was beginning to bank the dividends.

It presented the Government with a delicious dilemma: what to do with a business in the black. Finance Minister Bill Birch was inclined to liquidate the trust and sell the assets, believing private shareholders are better than public bodies at keeping companies profitable, competitive and properly capitalised.

But Auckland's municipal mayors, in league now with a chastened ARC, had other ideas. Larger ideas. In fact, one large idea.

For 30 years the city had been toying with a public transport proposal called at different times rapid rail, light rail or rapid transit. It excited people on paper but the cost and limitations of a fixed transport line in Auckland were such that not even the ARC had dared put the plan to ratepayers.

Now, they realised, they might not have to. The project might be seeded by this windfall from better asset administration.

The Shipley Government was wary but agreed to put the companies and the fund under the control of guardians to be chosen by regional and municipal councils. Thus Infrastructure Auckland was born.

From the beginning it took its task more seriously than the councils had imagined. It acted like a real fund manager and a prudent investor, benchmarking itself against the likes of the ASB Trust and Infratil.

It refused to write cheques for transport proposals willy-nilly. It had developed its own cost-benefit criteria. They were fairly generous criteria, giving credit to environmental claims as well as more measurable predictions for the likes of rail patronage and road relief.

But even with some dubious loadings, the big rail projects would not stack up.

The Britomart terminal, Auckland City Council's baby, had a price-tag way out of proportion for its place in the rail scheme, and Infrastructure tried to tell the city so.

When the regional council applied for money to buy new trains, Infrastructure pointed out that rolling stock could be leased by the chosen operator and public funds ought to be reserved for elements that would not otherwise attract capital.

Once the whole integrated bus-rail scheme was wheeled up, Infrastructure studied the figures and found the railway would largely cannibalise bus patronage. The net reduction in road use would be minimal.

It asked for a proper business plan and, when that was done, it carried an admission the scheme might be economic only if it is accompanied by road tolls or other additional taxes on private travel.

None of that scrutiny endeared Infrastructure to the mayors and councils, trainspotters and others for whom money is no object and popular preferences are immaterial. Infrastructure's role, as they saw it, was to cough up on cue.

The councils purged the Infrastructure board once or twice but new appointees were no more pliant. The councils' tame Minister for Auckland, Judith Tizard, warned the guardians she would seek Infrastructure's abolition unless they were more co-operative.

In the end the guardians bowed to the inevitable. Too many cooks had a hand in Auckland's broth and the cautious ones would have to go.

Infrastructure will be replaced with two new cooks, one to hold the assets, another to make transport investments, both answerable to the ARC.

But the Auckland Regional Transport Authority, as the second agency will be called, will not be the decisive body the Government has heralded. It has not been given ultimate authority in Auckland over the national roading agencies, Transfund and Transit New Zealand, or the new state rail administrator, Trackco.

But the ARTA will build the urban railway, no questions asked. The body that asked the searching questions will be abolished on Wednesday.

It has been an interesting attempt to improve public investment, proving once again that crude political spending will eventually prevail.