Mai Chen: Review of CCOs affects every Aucklander

Auckland City Council. Photo / NZ Herald

The announcement this week that Auckland Council will review its seven council-controlled organisations matters to Aucklanders because together those organisations control a significant part of their city's assets and provide critical services to ratepayers.

They are Auckland Council Investments, Auckland Council Property, Auckland Tourism, Events and Economic Development, Auckland Transport, Auckland Waterfront Development Agency, Regional Facilities Auckland and Watercare Services.

Whether this model is really serving Aucklanders is now up for debate. This matters because often it is the CCOs, not the council itself, that do the economic heavy lifting and regulation in the region.

For example, Auckland Transport manages and regulates Auckland's roads and public transport projects. Watercare provides water and wastewater services. Others, like Auckland Council Property, manage public assets and property that is not for service delivery or infrastructure purposes. That sounds mundane, but ACPL's property portfolio is more than $900 million dollars, and includes land on which important functions, such as clean fills, are carried out.

The review is likely to result in CCOs being put on a tighter leash governing what they can do without council approval.

Eighty per cent of the changes to the CCO model are likely to be relationship driven, focusing on improving communication so CCOs better carry out the council's imperatives.

The remainder is likely to be structural reform. There may be mergers. There is pressure to bring some CCOs, such as Watercare and Auckland Transport, back into the council since they carry out core functions of local government.

Some CCOs are vying to take over the role of other CCOs. Some are asking why have Auckland Council Investments when assets like Ports of Auckland can be looked after by Watercare and Auckland Transport? The result of the review may thus affect how many CCOs there are and what they do, their performance, and their pricing.

CCOs are supposed to operate at arm's length from the council and from the direct influence of elected councillors. But they are subject to 14 accountability mechanisms including statements of intent, an annual letter of expectations, a shareholder expectation guide, board performance reviews, half-year and annual reports in print and in person, Parts 1-6 of the Local Government Information and Meetings Act, a requirement to give effect to the council's long-term plan and to act consistently with relevant aspects of other plans and strategies, and the council may appoint the CCO chair and deputy chair.

The Auckland Council debated the review's draft terms of reference, which includes questions such as: What is the rationale for delivery of an activity/function by a CCO? What is the appropriate place for strategy development, including capital priority setting, for each externally delivered activity? Are there appropriate mechanisms to ensure CCOs contribute to the development and delivery of broader council strategy and policy, including its statutory obligations to Maori and reference to the Maori Plan for Tamaki Makaurau, or appropriate mechanisms for accountability of the CCOs? Are the current mechanisms sufficient or effectively applied? Is there enough specification vs flexibility in delivery and budgeting for CCOs? Are there opportunities for further cost efficiencies through the extension of shared services? Can operational policy be aligned? Are current governance structures appropriate? Are there enough mechanisms to help solve integration issues between CCOs and the council? Are the CCOs duplicating anything? Or how should CCOs fund themselves?

The council has already conducted a current state assessment that reviewed the experience of the council and its CCOs over the past three years. The feedback from councillors was that the CCO model has been delivering for Auckland but more fine tuning could be done. Councillors were interested in how the Auckland Council could play a more important role in the strategy, objectives and policies of CCOs, how the formal accountability between CCOs and the Council could be improved and how the CCOs could work more effectively as a group. Many councillors also questioned whether the number and configuration of CCOs was optimal for Auckland's needs.

When I interviewed decision makers for my book on how the Auckland Council was created, the feedback from some was that CCOs were generally working well, so don't fix what was not broken. The magic was private sector people on CCO boards and the great staff CCOs attracted, who may not stay if CCOs were required to work under greater council direction. But others have said consolidation of CCOs is needed, and some should be brought under greater council control

The Council timetable for the review's completion is June 30. Every Aucklander has to deal with CCOs, so the time to have a say is now.

Mai Chen is a partner in Chen Palmer public law and an adjunct professor at the Auckland University business school.