Tight rules to stop big spend-ups

Peter Salmon. Photo / Paul Estcourt

Stringent oversight of existing councils is recommended by the Royal Commission on Auckland Governance to prevent spending sprees in the lead-up to a mega-city of more than 1.3 million people.

Commission chairman Peter Salmon, QC, said yesterday that recommended constraints on decision-making by Auckland's eight existing councils before they are abolished in October next year were aimed at preventing excessive spending which preceded the 1989 local government amalgamations.

These included the diversion of funds into charitable trusts by the former Auckland Harbour Board in its dying days, as well as feverish spending of financial reserves by various other local bodies such as the old Newmarket Borough.

The three-member commission has recommended the Government consider formalising requirements for the existing four cities, one regional council and three district councils to fully co-operate in a transition process to be overseen by an establishment board.

These should include the specification of constraints to apply in the meantime to council decision-making, particularly anything with major financial implications.

"Existing councils should refrain from making decisions that could materially affect the creation of the Auckland Council or its future activities," the commission said in a summary of an 800-page report on the new "unitary" organisation it has prescribed for the governance of a territory reaching 125km from Mercer to Te Hana, north of Wellsford.

But it said existing mayors and councillors should continue making necessary decisions to enable the uninterrupted delivery of services until the new body takes over.

Mr Salmon said it should be business as usual for infrastructure projects already begun by existing organisations, which include railway stations under construction to support electric trains.

The commission has recommended the appointment of an establishment board with an independent chairman or chairwoman and a support group of chief executives of existing councils, Watercare and the Auckland Regional Transport Authority.

It wants the establishment board to report to a special new Cabinet committee for Auckland through a proposed Minister for Auckland.

The Cabinet committee and minister should start work immediately with the establishment board to lay the ground for the new Auckland Council's work in priority areas, including the 2011 Rugby World Cup and the rollout of broadband, the commission said.

As a basis for future decision-making by the new council, the establishment board should review whether existing local economic development programmes were delivering value for money.

The board should also determine the location of future council offices and service centres, although the commission proposes the Auckland Town Hall as the "symbolic centre" for the new structure.

The commission estimates the cost of setting up the new organisation and its six local subsidiary councils at between $120 million and $240 million over a four-year implementation period, but says it is important to recognise 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."

Mr Salmon said the commission had "heard constantly and across all sectors of the need for change and urgently".

"We respect that willingness to embrace change to address what we see as the two key problems in Auckland - weak and fragmented regional governance and poor engagement at community level."

The commission report forecasts eventual efficiency gains of $76 million to $113 million on existing annual spending by Auckland councils of around $3.2 billion.

It says all the new council's major trading and infrastructural activities should be undertaken through seven council-controlled organisations, including Auckland Regional Holdings, which it wants to manage all long-term financial assets including the $1.15 billion already under its wing in the form of the port company and other interests.

The other six council-controlled organisations are to be a reformed regional transport authority; Watercare Services; Solid Wastes; Urban Development Agency; City Centre and Development Agency and major events facilities.

Despite receiving just one property rates bill each, all Aucklanders will be required by a region-wide water services regime to pay separately for the amount of water they use and wastewater they generate.

The commission says a joint management structure should be established by the Government's Transport Agency and the new regional transport authority to oversee state highway and arterial road operations throughout Auckland.