An unprecedented merger: emerging challenges for Auckland’s single council

by the Auditor General Lyn Provost
The amalgamation of Auckland’s local authorities and regional council into a single Auckland Council (the Council) is one of the most significant public sector reforms of recent years. The scale of the change and transition to the new Council was huge. To bring together eight councils to create a new organisation with $32 billion of assets and a $3 billion annual budget, and bring together 8000 staff from councils and council-controlled organisations is unprecedented in New Zealand’s public sector history.

The Council (as a group) is among the largest and most complex entities in New Zealand. It has complex and finely balanced governance arrangements. The Council carries out many important infrastructure and regulatory services that affect the daily lives of more than a third of New Zealanders. Its strategy and planning affects our future national economic and social prosperity. Therefore, the Council’s governance and use of resources is of significant interest to me and my office.

Two years on from the Council’s establishment, I wanted to reflect on the transition and the Council’s emerging governance challenges. I hope that this report will be useful to those involved in the governance of the Council as an “outsider’s” view of the issues and challenges they told us about. I also hope that it will be useful for others contemplating such change under the Local Government Act Amendment Bill that is presently before Parliament. However, Auckland is unique and not all its changes or experiences will be relevant for others.

The Auckland Plan is giving unified and integrated regional direction

Through our work with the Council, I see that a lot is going well in the direction of the change sought from the Auckland local government reforms. Those we interviewed reflected on the unified and integrated direction that has been achieved for the Auckland region through the Auckland Plan. They told us that the enhanced Mayoral role and powers to enable regional leadership have provided vigour and an integrating focus to the large amount of planning that the Council has carried out during its first two years.

Principled leadership, being reliable, and working together to build trust

We heard that everyone is committed to making the Auckland reforms and the Council work the best they can. Although challenging, the tight transition arrangements have created momentum for the new Council. Many people we spoke to reinforced the importance of a strong and principled leadership committed to working together and to building trust among the public, staff, and partners by being reliable.

The management of the transition was described by many as exceptional although there was plenty of potential for things to go wrong. The smoothness of the transition is a credit to the leadership and management of the Chief Executive, his executive leadership team, and the managers and staff of the Council.

The immediate transition to a unitary Council has passed, and the Council is moving into optimising the value that can be gained from the initial change process. However, the Council is still a work in progress and significant challenges remain.

Tensions inherent in governance but everyone is committed to making it work

We heard many times that everyone is committed to making the two-tier governance system of the Council work as best they can. There are inherent tensions in the Council’s governance arrangements that will need to be constructively managed, and ways to strengthen governing body and local board relationships need to be found.

The Council’s governance relationships are evolving. At present, effort is being directed to providing greater guidance to council-controlled organisations about shareholder expectations. We are not confident that the Council will be able to build the more future-oriented and trust-based culture it seeks by using more formal processes and mechanisms.

Challenges for communicating, standardising policies and services, and developing systems

Because of its size, the Council will wrestle to communicate internally effectively. It will also struggle to be responsive and agile for its communities and the users of its services. The Council still needs to do significant work to understand and standardise the differing policies, regulations, service expectations, and performance it has inherited from the former councils. The Council also needs to develop a platform of systems that address its business and service management needs.

Challenges for improving decision-making information and streamlining processes

I am concerned about the huge amount of reading expected of members of governing body committees and local boards. To carry out decision-making openly and transparently, the governing body and local boards need to be supported by relevant, timely, and useful information that takes account of local, regional, and functional governance needs and perspectives.

We also heard of the complexity in operating the Council’s two-tier governance structure to carry out other requirements, such as public consultation and hearing submissions under the Local Government Act 2002 in the ways that other local authorities use. The Council and the Department of Internal Affairs should continue to liaise to consider whether legislative changes may be needed to provide for processes appropriate to Auckland’s regional scale.

The Council, with support from the Independent Māori Statutory Board, needs to continue to find the most effective and efficient ways to obtain and consider the views of Māori in its decision-making. The Independent Māori Statutory Board is working with clarity of focus and vigour on what it wants to achieve and how it thinks it can best contribute to the Council.

Acknowledgments

The Council has received support and goodwill from those who work for and with it, as well as from the public, through the momentum and the vision of the plan created for Auckland. It faces challenges to maintain that momentum, support, and goodwill. It now rests on the Council, through its services, results, and work with others, to achieve the aspirations of the plan and the intentions of the Auckland reforms.

To prepare this report, we talked to more than 50 people working for and with the Council. I express my gratitude to all those people who made their time available for us and to Kevin Brady, my predecessor, who I asked to carry out the interviews on behalf of the Office. I hope this report has done justice to the willingness of those who shared their observations with us. I wish them every success in their dedicated work to shape Auckland’s future.

This report from the Controller and Auditor-General was released on December 4.

 

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