Initial allocation of local board non-regulatory decision-making responsibility

Concern was expressed that the bill does not explicitly specify the details of the functions and responsibilities of local boards, and that the Transition Agency is not required to consult existing local authorities before it makes its initial allocation of non-regulatory functions.

During our consideration of the Local Government (Auckland Council) Bill last year, we considered this issue at length. We concluded that a principle-based approach for the allocation of non-regulatory functions between local boards and the governing body would give the Auckland Council more flexibility to adapt the functions of local boards to suit changing local preferences and demographics.

While we acknowledge the concern we heard expressed, we note that submitters may have been unaware of the complexity of defining the precise decision-making responsibility of local boards. We do not consider that we have enough detailed knowledge of the extensive range of local government functions to make definitive statements about the functions of Auckland’s local boards. We note that while the allocations are still being finalised, as a result of the extensive work and expertise of the Transition Agency we can provide the following example of the functions local boards could expect to undertake.

For non-regulatory activities, local boards can expect to make decisions in the following areas:

• •Local board planning, financial and asset management: Decisions of local boards would have to deal with

  • -the content of local board plans and agreements

  • -variations to region-wide service standards for local areas and their funding

  • -local funding and operational grants

  • -local renewal works

  • -local capital expenditure, including prioritisation of projects

  • -monitoring local board agreements.

• •Governance: Decisions of local boards would deal with

  • -local civic duties, engagements, and functions, such as citizenship ceremonies and recognition of volunteers

  • -engagement with local communities and stakeholders, including the Māori Advisory board, local iwi, and the Pacific and Ethnic Advisory Panels

  • -advocacy to the governing body, CCOs, central Government departments, and other agencies

  • -local policy positions on draft regional strategies, policies, plans, and bylaws

  • -local policy positions on draft statements of intent for CCOs

  • -local matters that should be reported to the governing body

  • -submissions to the Government on legislation affecting the local board area and communities.

• •Community development, arts and culture events: Decisions of local boards would deal with

  • -local arts and culture facilities, including their location, design, and use

  • -service levels for local arts and culture facilities, such as opening hours, fees, and charges

  • -local public artwork

  • -local arts and culture programmes

  • -funding and advice to local arts and culture organisations

  • -local community facilities, including their location, design, and use

  • -service levels for local community facilities, including opening hours, fees, and charges

  • -providing community advisory services

  • -local community safety programmes and projects

  • -local community development programmes

  • -providing funding and advice to local community organisations.

• •Libraries: Decisions of local boards would deal with

  • -local library facilities, including the location and design of new facilities and upgrades to existing facilities

  • -the facilities, programmes, and events to be provided within libraries

  • -local library collections policy

  • -service levels for local libraries, including opening hours, fees, and charges.

• •Parks, sports and recreation: Decisions of local boards would deal with

  • -local parks and reserves, including the location, names and design of new parks, and upgrades to existing parks

  • -beaches and camping grounds within local parks

  • -reserve management plans for local parks

  • -service levels for local parks, including mowing frequency, planting, and weed control

  • -local sports and recreation facilities, including their location, design, and use

  • -service levels for local sports and recreation facilities, including opening hours, fees, and charges

  • -local sports and recreation programmes.

• •Economic development and town centre upgrades: Decisions of local boards would cover

  • -town centre upgrades (with the exception of significant upgrades to the CBD and regional centres), recognising that in developing any upgrade affecting the Auckland transport system the local board would need to work with Auckland transport

  • -local centre branding and marketing strategies

  • -targeted rates for local main streets and business improvement districts

  • -representation of the local board on main-street associations and business improvement district programme executive boards

  • -projects initiated by local main-street associations and business improvement district programme executive boards.

• •Environmental management, protection, and enhancement: Decisions of local boards would deal with

  • -wetland restoration and beautification of waterways in local parks

  • -local variations to region-wide refuse and recycling services, providing these changes can be accommodated in the region’s Waste Minimisation and Management Plan

  • -local waste management projects and education programmes.

Local boards would be making decisions about local bylaws to be proposed to the governing body. The governing body could also delegate regulatory functions to local boards.

Regarding transport, local boards could be delegated decisions (other than making bylaws) on such matters as

• •levels of service for local roads, footpaths, and town centres in the local area

• •proposals for transport bylaws, which have an impact on the operation of the transport network but which also have an impact on the character of the local area.

Because of the detail that would be necessary and the complexity of precisely defining in legislation the decision-making functions of local boards, we continue to consider that a principle-based approach to allocating such functions is appropriate. Local boards are intended to be highly responsive to local needs and preferences. We consider that specifying their role in legislation in detail would compromise the ability of local boards to respond to the unique and varied needs of their local communities.

We heard significant opposition to clause 17, which would amend section 19A of the Local Government (Tamaki Makaurau Reorganisation) Act. The clause would require the Transition Agency, when it was preparing the initial planning document for the Auckland Council, to make the initial allocation of decision-making responsibility for the non-regulatory activities of the Auckland Council between the governing body and the local boards according to the principles in section 17(2) of the Local Government (Auckland Council) Act.

The alternatives to the Transition Agency making the allocation under section 17(2) of the Local Government (Auckland Council) Act would be either to require Parliament to make the initial allocation, or for the governing body and local boards to commence the process after 1 November 2010. The first option would follow a similar consultation process to the current one. However, it would have constrained timeframes and reduced public input, as Parliament would require advice from the Transition Agency before it could make its decision. The second option would extend the consultation and negotiation period, during which there would be a hiatus in local governance and decision-making in Auckland. Therefore we do not recommend amending clause 17 to alter the process for the making of initial allocations under section 17(2) of the Local Government (Auckland Council) Act.

We also note that during our consideration of the bill, the Transition Agency released a discussion document on the role of local boards of the Auckland Council. While the Transition Agency still has to finalise the precise decision-making responsibility that would be devolved to local boards, the discussion document provides a useful indication of its thinking about which responsibilities should be allocated to them. The discussion document clearly states that the principles set out in section 17(2) of the Local Government (Auckland Council) Act would be applied when the Transition Agency was making its initial allocation of non-regulatory functions. In other words, non-regulatory functions of the Auckland Council would be allocated to local boards unless there was a valid reason that they should not. The Transition Agency has invited public submissions on the discussion document, and the final determination by the Transition Agency will take them into account.

However, because of the amount of public concern about this provision, and to provide certainty to communities when local boards are established, we propose an amendment to alleviate submitters’ concerns. We recommend inserting new clause 87A to provide for the initial allocation of non-regulatory decision-making responsibilities to local boards to be fixed until the Auckland Council adopts its long-term council community plan (LTCCP) for the period beginning 1 July 2012. This would give local board members, and the communities they represent, more certainty about their role and functions. Our proposed amendment would not prevent the governing body from giving local boards additional functions or making delegations under section 31 of the Local Government (Auckland Council) Act, but would prevent the governing body from eroding the non-regulatory functions that had been allocated to the boards by the Transition Agency. We note that in order to add additional non-regulatory functions the Auckland Council would need to follow the special consultative procedure prescribed by the Local Government Act 2002 to amend its LTCCP.

Membership of local boards

The initial determination of the Local Government Commission on the number of elected members of local boards was made pursuant to section 35(2) of the Local Government (Auckland Council) Act. This section specifies that there must be no fewer than four and no more than nine members on local boards.

We recommend amending clause 35 to insert new section 11(1A) into the Local Government (Auckland Council) Act, to set the statutory minimum and maximum numbers of board members at 5 and 12 respectively. This would also allow this to be applied to future representation reviews.

While the Local Government Commission’s initial determination has not resulted in any local board having fewer than five members, we consider that the possibility that only four members might be appointed to a local board could raise questions about the robustness of its decision-making. For example, a four-member board would require a quorum of only two members to make a decision. We therefore recommend that the statutory minimum number of board members be raised to five.

We note that community boards are allowed a maximum of 12 members. Since local boards would have greater responsibilities and would serve a larger population than community boards do at present, we recommend that the statutory maximum number of board members be raised to 12.

Local board plans

We recommend amending clause 40, which would amend section 20 of the Local Government (Auckland Council) Act, to extend the deadline for the completion of local board plans to 31 October in the year following each triennial local body election. Under the Local Government (Auckland Council) Act, local boards are each required to develop their local board plan by 30 April of the year following the triennial election, having followed the special consultative procedure set out in the Local Government Act 2002. To meet this deadline local boards would have to develop a draft local board plan by the end of February of the year following the election, undertake the special consultative procedure, and then adopt the plan by 30 April of that year. We are concerned that this timetable might result in inadequate consultation, and would not give new local board members enough time to familiarise themselves with the issues and their role before developing their plans.

Local board agreements

The bill as introduced does not include provisions to amend section 21 of the Local Government (Auckland Council) Act, which relates to local board agreements. We note that section 21 does not limit the scope of local board agreements to activities within the purview of local boards. We consider that the scope of local board agreements should be limited appropriately, and recommend inserting new clause 40A to insert new section 21 into the Local Government (Auckland Council) Act, to require the local board agreement to state the local activities to be provided in the local board’s area, the responsibilities, duties, or powers that have been delegated to local boards under section 31 of the Local Government (Auckland Council) Act, and matters relating to local bylaws.

We also recommend that new clause 40A require that local board plans not be inconsistent with the strategies, plans and policies, and objectives of the governing body.

Disputes resolution

Clause 45 would insert new sections 77, 78, and 79 into the Local Government (Auckland Council) Act, to set out how disputes between the governing body and local boards are to be resolved, and how such disputes could be referred to the Local Government Commission. We heard about valid concern that the statutory deadlines for the adoption of LTCCPs and annual plans (which include local board agreements and budgetary constraints) might not encourage robust dispute resolution. We therefore recommend that the dispute resolution procedure set out in new sections 77 and 78 not apply to local board agreements, and accordingly recommend amending new section 77.

We heard strong arguments that the bill should prescribe the time within which the Local Government Commission must resolve disputes. We consider, however, that to impose such a specified timeframe could be unfair, as the commission might be considering a number of disputes at the same time, and would lack the resources to resolve all the disputes effectively in the required time. Instead, we recommend amending new section 78(3) to require that when the commission is making a determination on a dispute it must treat the matter with urgency.

To ensure that disputes are resolved quickly, we also recommend amending new section 78(1) to require that when the Local Government Commission requests information from the mayor and chief executive in respect of a dispute it is deciding, it must be provided within 7 days.

We recommend inserting new section 78(7) to provide that if a dispute relates to the content of an LTCCP that has already been adopted, the plan must be modified to the extent necessary to give effect to a relevant determination of the Local Government Commission. This amendment is necessary as statutory deadlines apply to the adoption of LTCCPs, and a decision relating to the allocation of responsibilities to the local boards might have been made by the Local Government Commission, which would affect the LTCCP.

Funding arrangements during the transition period

There are three main types of contestable funding schemes for community services—council discretionary operational funding, community board discretionary funding (for example funding for arts and community programmes), and longer-term capital project partnerships (such as partnership funding for sports club facilities).

During the transition phase the Transition Agency has recommended that existing councils and community boards allocate their contestable funding for the 2010/2011 financial year before 1 November 2010. For the period between 1 July 2010 and 31 October 2010 the existing councils would be responsible for disbursing those funds; for the period from 1 November 2010 to 30 June 2011 funds would be disbursed by the Auckland Council on the basis of decisions made by the existing councils.

There are also three main types of non-contestable support provided to community groups—funding, community leases, and in-kind support.

We understand that the following approach would be taken for non-contestable support during the transition phase:

• •All non-contestable funding would be continued on their current terms and conditions until 30 June 2012, unless a relevant council determined that there were not good reasons to do so (for example, if the occupant had breached the terms of the lease).

• •All formal arrangements for in-kind support provided to community groups are to be extended until 30 June 2012 unless the relevant council determines that there is not good reason to do so (if, for example the support was for a limited time and the recipient had no expectation that the support would be continued).

Local board decisions on community funding

We note that the budgets outlined in the planning document produced by the Transition Agency would reflect any community funding that was already planned by existing councils. The funding would be allocated by the Transition Agency between the local boards and the governing body depending on whether the objectives of the funding addressed a region-wide or local need.

As local board’s become established and develop their first local board plans, we envisage that the role and influence that local boards would have in community funding would increase. We note that these local board plans would inform Auckland Council’s first LTCCP, for the period 2012 to 2022 and would also be the basis of local board agreements for the 2012/13 financial year. This would mean therefore that local boards would become responsible for decisions relating to

• •contestable funding of local community groups from 1 July 2011

• •non-contestable support of local community groups from 1 July 2012.

We consider that the advantage of the approach recommended by the Transition Agency is that it would provide continuity for community groups in the transition to the Auckland Council, while still providing flexibility for policies and plans to be developed.

Local boards would negotiate and agree the amount of future community funding available to them through the local board agreement process. The local boards would then be able to decide what local community services they provided and which local community groups they wished to fund or provide support to.

We note that a local board’s decisions would be guided by the priorities and preferences of the local board’s communities, as set out in its local board plan. In many cases, this might mean that a local board chose either to continue to provide funding to local community groups who received funding from an existing council or community board, or to fund community groups who were not currently receiving funding.

For example, we note that the following community groups are currently funded by existing councils:

• •Artworks Theatre, a community theatre at the Artworks Complex on Waiheke Island, will receive $10,000 in each of the 2010/11 and 2011/12 financial years.

• •Te Hoani Waititi Marae (in the Waitakere Ranges Local Board area) will receive approximately $60,000 in each of the 2010/11 and 2011/12 financial years to support the provision of community services.

• •The Glenfield Community Facility Trust (in the Kaipatiki Local Board area) will receive just over $44,000 in each of the 2010/11 and 2011/12 financial years to provide, deliver, and monitor community development initiatives and it will also receive funding to provide local community events.

• •Friendship House (in the Otara-Papatoetoe Local Board area) will receive $100,000 in each of the 2010/11 and 2011/12 financial years to provide community services.

• •The Tapora Community Sports Centre (in the Rodney Local board area) has a community lease agreement which is due for renewal in 2014, for which it pays an annual rent of $10.

• •The Karaka Historical Society (in the Franklin Local Board area) has a community lease agreement which is due for renewal in 2014, for which it pays an annual rent of $168.75.

We wish to emphasise that the decisions as to whether funding continues for these and other community groups that currently receive funding would be a decision that must be made by the local board.

Dissolution of existing CCOs

Clause 24 would insert new section 35B into the Local Government (Tamaki Makaurau Reorganisation) Act to set out a framework for the dissolution of CCOs. A few issues have been found with this framework; for example it is not sufficiently clear that the proposed CCO framework for the Auckland Council might require the assets, liabilities, rights, and obligations of an existing local authority or CCO to be transferred to a new CCO, rather than solely to the Auckland Council. Furthermore the bill does not provide a mechanism for the allocation of assets, liabilities, rights, or obligations to more than one receiving entity.

We therefore recommend amending clause 24 into new clause 23, to insert new subpart 3 into Part 3 of the Local Government (Tamaki Makaurau Reorganisation) Act to deal with the dissolution of existing local authorities and other local government organisations. Proposed new clause 23 would provide enough flexibility to accommodate decisions made by the Minister of Local Government regarding the initial CCO structure of the Auckland Council.

New clause 23, by clarifying section 35 of the Local Government (Tamaki Makaurau Reorganisation) Act, would make it clear that the specific provision regarding the vesting of specified assets, liabilities, rights, and obligations in substantive CCOs, set out in new section 35B (clause 24) of the bill as introduced, would override the general provision in new clause 23.

Establishment of CCOs

Clause 24 would insert new section 35G into the Local Government (Tamaki Makaurau Reorganisation) Act. It would establish a new Order in Council process to authorise the Transition Agency to constitute new non-statutory CCOs. We heard significant opposition to this provision on the basis that decisions about the council’s CCO structure should be made only by the governing body of the Auckland Council.

We understand that the purpose of new section 35G is to provide flexibility for CCOs to be established before the Auckland Council begins to operate and to allow the rationalisation of the current myriad of CCOs of Auckland’s eight existing councils. For a new CCO to be established, the Minister of Local Government would have to agree to the proposal so that an Order in Council process could be initiated. We understand that once the Auckland Council becomes operational, it will have the authority to determine the future of any CCO established under this new section.

We recommend deleting new section 35G and replacing it with new section 45 (new clause 23). This would provide for the Transition Agency to be “directed” to establish one or more CCOs by any Order in Council, rather than “authorised” to do so. The change in wording would give legal certainty to the establishment of any CCO specified by an Order in Council.

Membership of boards of CCOs

As introduced, clause 24 would insert new section 35H into the Local Government (Tamaki Makaurau Reorganisation) Act and empower the Minister of Local Government to appoint the initial directors of CCOs established under new section 35G (clause 24). The submitters who expressed concern about new section 35G also opposed new section 35H, arguing that only the Auckland Council should be allowed to make these board appointments.

To address these concerns we recommend inserting new clause 64B into Part 3 of the bill, to make it explicit that the Auckland Council would be authorised to remove, at any time, directors initially appointed to a CCO. We also understand that the Minister of Local Government intends to leave a proportion of vacancies on the boards of CCOs established under new section 35H. This would allow the Auckland Council to have a say in how these positions are to be filled, once it becomes operational. We consider that it would be a positive step if some directors of existing CCOs were considered for appointment to the new CCOs, to provide a level of continuity and retention of institutional knowledge.

Clause 45 would insert new section 76 into the Local Government (Auckland Council) Act, and would prevent an elected member of the Auckland Council from being appointed a director on the board of a substantive CCO. A number of submitters expressed opposition to this prohibition, and many suggested that the boards of these CCOs should include of a majority of elected members. We note that currently elected members are not appointed to the boards of CCO’s for the Auckland, Manukau, or Waitakere City Council. In the light of our proposed amendments to the accountability requirements for substantive CCOs (clause 45 (new sections 75AA, 75A, and 75)), which are discussed in the following section, we consider that, with the exception of Auckland Transport (where substantial expenditure of rates revenue is involved), allowing the appointment of elected members to the boards of substantive CCOs would create unnecessary duplication, and might confuse accountability requirements at both board and council levels.

However to ensure consistency with the accountability regimes of the governing body and local boards, we recommend amending new section 76 of the bill as introduced to also prevent a member of a local board from being appointed a director of a substantive CCO. The bill as introduced does not include such a prohibition.

Given that elected members of the Auckland Council may not be appointed as directors of substantive CCOs, and neither, as a result of our proposed amendment, could members of the local board, we recommend inserting new section 76A into the Local Government (Auckland Council) Act to provide that where a director of a substantive CCO has been elected to either the governing body of the Auckland Council or to a local board, that person is deemed to have resigned from the board of the CCO.

We recommend amending clause 72 to provide that a member of a local board cannot be appointed a director of Watercare. This would ensure consistency with our proposed amendment regarding the appointment of directors to substantive CCOs. As introduced, clause 72 would prevent only employees and members of the Auckland Council from being appointed directors of Watercare.

We note that currently women’s representation on CCOs is generally well below their election to local authorities. We consider that this should be borne in mind when decisions regarding the appointment of directors to substantive CCOs are being made.

Accountability requirements for CCOs

Clause 45 would insert new section 75 into the Local Government (Auckland Council) Act to allow the Auckland Council to impose additional accountability requirements on substantive CCOs.

We note that, like all CCOs, substantive CCOs would be accountable to their parent council, the Auckland Council. The standard accountability framework for CCOs applies throughout the local government sector and imposes on directors of CCOs a duty to achieve the objectives of the shareholder.

Despite this existing accountability framework, we heard some concern about the accountability of CCOs, particularly substantive CCOs. To address these concerns we recommend inserting new section 75AA (clause 45) into the Local Government (Auckland Council) Act to require the Auckland Council to have a specific accountability policy for its substantive CCOs. This policy would allow the Auckland Council to articulate more clearly its day-to-day accountability expectations regarding its substantive CCOs. These provisions would give the Auckland Council more control over its substantive CCOs than any other council in New Zealand currently has over its CCOs.

We envisage that this policy would specify Auckland Council’s expectations in respect of

• •CCOs’ contribution to, and alignment with, the Council’s and the Government’s objectives and priorities

• •the frequency and manner of reporting

• •the planning requirements of the Auckland Council

• •requirements of specific CCOs to operate as if they were subject to Part 7 of the Local Government Official Information and Meetings Act 1987

• •a definition of strategic assets, and the processes for approving major transactions involving such assets

• •the management of strategic assets.

This policy would also influence the CCOs’ statements of intent. Under the Local Government Act 2002, the statement of intent must contain information on objectives, activities, performance measures, and forecast financial information. We suggest that the Auckland Council should consider an accountability policy requiring substantive CCOs to report quarterly and publicly.

We also recommend that our proposed new section 75AA (clause 45) provide that this accountability policy must be included in the Auckland Council’s LTCCP. This would ensure that any amendments to the accountability policy are made only by way of an amendment to the LTCCP, following a special consultative procedure.

To further enhance the accountability of CCOs to the Auckland Council and to minimise the risk of fragmentation and “silos”, we recommend inserting new section 75A (clause 45) into the Local Government (Auckland Council) Act to require all substantive CCOs to give effect to all relevant aspects of the Auckland Council’s LTCCP and to act consistently with all relevant aspects of other strategies and plans of the Auckland Council, including its local boards, as specified by the governing body. We have deliberately not specified the spatial plan in this provision, as it is yet to be developed and its scope and possible legal linkages will become clearer during the second phase of reforms to the Resource Management Act 1991.

Finally, we recommend inserting new section 76B (clause 45) into the Local Government (Auckland Council) Act to allow the Auckland Council to appoint the chair and deputy chair of each of its substantive CCOs, although the Auckland Council would not be able to appoint the members of the governing body on Auckland Transport’s board as chair or deputy chair of the board. This would increase the influence of the Auckland Council over the strategic direction of the organisation.

Waterfront Development Agency

In the bill as introduced clause 18 inserts new section 19B into the Local Government (Tamaki Makaurau Reorganisation) Act to direct the Transition Agency to establish a Waterfront Development Agency. We recommend a change of wording to new s19(1) so that this entity is described as a “council-controlled organisation of the Auckland Council with responsibility for the development of Auckland’s waterfront”. This is because it is inappropriate to provide this entity with a name in statute without certainty as to its legal form.

Auckland’s waterfront has been acknowledged as a potential internationally recognised asset for New Zealand, a gateway to Auckland, and a draw-card for locals and tourists. We expect a waterfront development CCO to realise this potential. We consider that Auckland should be able to improve its economic performance and attract skilled people, tourism, and investment if its waterfront is well developed and well managed.

We note that international experience in cities such as Capetown, Sydney, Dublin, Bilbao, and Baltimore have shown that an arm’s-length organisation, such as a CCO, is the best mechanism for ensuring that a focused and capable organisation is responsible for projects such as the development of the entire waterfront area.

We consider that it would be useful if the process for establishing the waterfront development CCO were outlined in the bill, and accordingly recommend amending clause 18. This amendment addresses concern that the bill does not prescribe the role, functions, and responsibilities of the waterfront development CCO. We note that the remainder of submitters’ concerns in this regard would be addressed by the Order in Council that establishes the waterfront development CCO. It is intended that the Order in Council specify the objectives, governance structure, and other details of the structure and operation of the waterfront development CCO. We also note that our recommended new sections 75AA, 75A, and 75 (clause 45) would increase the accountability of the CCO to the Auckland Council.

Governance model for Auckland Transport

Significant opposition was raised to the establishment of a CCO to deal with transport. It was suggested that Auckland Transport should be managed as a business unit within the Auckland Council, to give elected representatives more influence over transport decision-making.

We acknowledge the concern expressed and recommend a number of amendments to the governance model for Auckland Transport. Our proposed amendments would make this model more consistent with the provisions applying to the other substantive CCOs, and would give the governing body of the Auckland Council more scope to set the operational parameters of Auckland Transport and influence the setting of its objectives, to ensure consistency with its statutory purpose, duties, and responsibilities. Our specific proposed amendments to the governance model for Auckland Transport are detailed below.

We understand that the bill as introduced was drafted on the basis that Auckland Transport would be a CCO, but would have tailored provisions applied to it in relation to how it would function. That approach was modelled on the 2004 legislation that established the Auckland Regional Transport Authority. We consider that it would be preferable to apply the standard CCO model more directly to Auckland Transport, to achieve greater consistency with the governance arrangements for other CCOs of the Auckland Council.

Accordingly, we recommend deleting new section 38(3) (clause 45) and inserting new section 38D to ensure that the standard provisions in the Local Government Act 2002 relating to CCOs would apply to Auckland Transport, with exceptions limited to board membership and the duty to produce a 10-year plan, which are already required of Auckland Transport. Using the standard CCO mechanisms, Auckland Council would then be able to draw up operating rules (which would function as Auckland Transport’s constitution) and appoint the chair and deputy chair, as well as influencing the setting of operating objectives for Auckland Transport when its statement of intent was being approved, and consider Auckland Transport’s quarterly reports. Consequential amendments would be required to new sections 44, 45, and 47 to avoid duplication with the standard CCO provisions of the Local Government Act 2002.

As introduced, new section 39 sets out the objectives of Auckland Transport. We consider that a clearer direction for the organisation would be provided if a purpose statement were set out in the bill. We recommend deleting new section 39 and inserting new section 38A to specify that the purpose of Auckland Transport is to contribute to an efficient and effective land transport system that supports Auckland’s economic, social, cultural, and environmental well-being. The change in terminology from an “objectives” statement to a “purpose” statement would help distinguish between Auckland Transport’s statutory role and the objectives that may be agreed with the Auckland Council through the statement of intent process, providing the means for Auckland Transport to give effect to that purpose and be accountable to the Council for it.

New section 48 provides that new Schedule 2 (which is inserted by Schedule 2 of the bill as introduced into the Local Government (Auckland Council) Act) would apply to Auckland Transport. New Schedule 2 sets out provisions regarding the appointment, remuneration, role and duties, conflicts of interest, and disqualifications of Auckland Transport directors. In addition to our previous recommended amendment to delete new section 38(3) and insert new section 38D to apply the standard CCO provisions in the Local Government Act 2002 to Auckland Transport, we recommend omitting new Schedule 2 and inserting new section 42C. This would enable the Auckland Council to determine rules for the operation of Auckland Transport. These rules would form a part of the constitution of Auckland Transport for the purposes of sections 6(3)(d) and 60 of the Local Government Act 2002, but they must not be inconsistent with the Local Government Act 2002.

Some provisions of new Schedule 2 need to be retained, including Auckland Transport’s power to delegate and the ability to fix the duties of directors (for other CCOs, this would be set by general legislation such as the Companies Act 1993 or the Charitable Trusts Act 1957 when dealing with legal entities). Limits are also needed on the board’s ability to delegate certain statutory powers such as bylaw making. New sections 45A and 45B would preserve these necessary provisions from new Schedule 2.

Functions of Auckland Transport

New section 41 (clause 45) outlines the functions of Auckland Transport. These include preparing the regional land transport programme, and management and control of the Auckland transport system. Some concern was expressed about the wide scope of the functions. We recommend two amendments to address this concern. Firstly, we recommend that new section 41(b) be amended to make it clear that the Auckland Transport’s “manage and control” function is to be exercised with particular reference to the transport-related functions and powers listed in new section 42. New section 43(1) provides that only Auckland Transport can exercise those functions and powers. Secondly, we recommend amending new section 43 to make it clear that the Auckland Council could continue to act as a requiring authority and to make bylaws in respect of areas that form part of the Auckland transport system, but for purposes that are not transport-related.

We recommend inserting new section 41(eb) to specify that Auckland Transport is also responsible for undertaking any functions or exercising any powers in relation to the management of the State highway system that the New Zealand Transport Authority has lawfully delegated to it under section 62 of the Government Roading Powers Act 1989 and section 73 of the Crown Entities Act 2004. This would ensure consistency with existing practice, which allows the New Zealand Transport Agency to delegate matters relating to State highways to local authorities.

We recommend a consequential amendment to insert new clause 101B into Part 3 of the bill as introduced, to provide that existing delegations of the New Zealand Transport Authority in relation to the Auckland transport system which are in effect before 1 November 2010 are deemed to be delegations to Auckland Transport and continue in effect.

New section 42 (clause 45) would confer on Auckland Transport the functions and powers of a local authority or an enforcement authority under certain specified enactments. We recommend a number of amendments to new section 42, and discuss some of the significant ones in the following paragraphs.

First we consider it important that the ownership of the roads rest explicitly with the Council, and recommend inserting new section 42(1)(c)(ii) accordingly.

Secondly, we understand that the bill is intended to place Auckland Transport in a position similar to that of the New Zealand Transport Agency regarding the procedure for acquisition and disposal of land for public works. New section 42(1)(f) would give Auckland Transport the power to acquire and dispose of land under the Public Works Act 1981 for the purpose of transport activities. However, it was drawn to our attention that this approach is inconsistent with central Government practice and provisions in the bill that provide that the legal title to roads in Auckland would remain with the Auckland Council. We recommend amending the bill to make it consistent with central Government practice, whereby acquisitions of land for State highway purposes by the New Zealand Transport Agency are made on its behalf by Land Information New Zealand and the title to the acquired land vests in the Crown. To achieve this, we recommend deleting new section 42(1)(f) and inserting new section 43A to specify that the Auckland Council would carry out acquisitions on behalf of Auckland Transport, provided that Auckland Transport had agreed to the acquisition or disposal.

Similarly, we recommend a new provision in respect of the disposal of land that is no longer required for a road. As the ownership of the land would remain with the Auckland Council, it is appropriate that the disposal decision be made by the Auckland Council after notification by Auckland Transport.

Thirdly, we recommend amending the provisions to enable Auckland Transport to act as a requiring authority under the under the Resource Management Act in respect of transport-related activities, currently provided for in new section 42(1)(g). We are advised that the appropriate status for Auckland Transport is as a network utility operator under sections 166 and 167 of the Resource Management Act. As part of that function, Auckland Transport should have appropriate flexibility in transferring designations under section 180 of that Act when financial responsibility for work transfers to another requiring authority. We accordingly recommend deleting new section 42(1)(a) and inserting new section 42A. Finally, we propose inserting new section 42(1)(ha) to recognise explicitly that Auckland Transport has the powers of a road controlling authority under the Land Transport Act 1998 and the rules made under that Act over the Auckland transport system.

Bylaws about the Auckland transport system

Clause 92 of the bill as introduced would deem existing transport bylaws to be transferred to Auckland Transport and they would remain in force until they were confirmed, amended, or revoked by Auckland Transport or they were revoked by operation of section 160A of the Local Government Act 2002. We recommend amending clause 92 to specify that any provisions within an individual bylaw and resolutions made under a bylaw are retained, but that Auckland Transport would be free to review, modify, or repeal them in accordance with any requirements of the enactments under which the bylaw was made, rather than requiring a statutory review under this legislation. We appreciate that the ability to make bylaws is fundamental to Auckland Transport’s road management function. However, our proposed amendment would recognise that when Auckland Transport becomes operational it is likely that it will need to deal with more pressing issues than the standardisation of the many bylaws that currently apply in the region.

Statutory warrants relating to transport law

We recommend amending clause 96(1)(c) to specify that statutory warrants issued by the Commissioner of Police under section 208 of the Land Transport Act are not deemed to be warrants issued by Auckland Transport. As introduced clause 96 specifies that any statutory transport warrants that are in force at the close of 31 October 2010, including those issued by the Commissioner of Police, are deemed to have been issued by Auckland Transport, and remain in force until they are revoked, confirmed, or amended by Auckland Transport. Our proposed amendment recognises that only the Commissioner of Police should have the authority to confirm, amend, or revoke a statutory warrant that he or she has issued.

Management of water under the Auckland Council

A number of submitters expressed deep concern that the bill leaves open the possibility of the privatisation of water services in Auckland after 2015. We wish to emphasise that the bill as introduced does not establish mechanisms that would allow the privatisation of water services. After 2015 the governing body of the Auckland Council would be able to decide how water supply and wastewater services are to be provided in Auckland.

Clause 65 of the bill provides that Watercare is deemed to be a local government organisation until 30 June 2012. After this date, the Local Government Act 2002 would apply to Watercare as a CCO of the Auckland Council and the deeming provision in clause 65 would no longer be necessary. Clause 73 provides that until 30 June 2015, the Auckland Council must remain the sole owner of Watercare, and ensure that Watercare does not dispose of any part of its business or any assets that are necessary for the conduct of its business.

Any decisions made by the Auckland Council after 2015 as to how water supply and wastewater services are to be provided must conform with other relevant legislation, particularly sections 130 and 131 of the Local Government Act 2002. Under section 130 of the Local Government Act 2002, any local government organisation that provides water services must not divest its ownership or other interests in a water service other than to another local government organisation. Section 131 of the Local Government Act 2002 provides a process for a local government organisation to close down a water service or to transfer a water service to an entity representing the community where 200 or fewer people are being delivered water by that service. Part of the process includes a binding referendum of those affected. The practical effect of this is that if after 2015 the Auckland Council decided that it did not want Watercare to be the water and wastewater service provider, any assets owed by Watercare would have to be transferred back to the Council or to another council organisation.

Functions of the Auckland water organisation

New section 52B provides the Auckland water organisation with a range of powers under the Local Government Act 2002 necessary to enable it to undertake its statutory functions (previously in section 63 of the bill). These powers include providing the Auckland water organisation with the power under section 181 of the Local Government Act 2002 to construct works, on private land, and on roads as long as reasonable notice was given to the owners or occupiers of the land.

We recommend amending new section 53 to make it clear that the Auckland water organisation would have the right to undertake works on public land. Giving the water organisation this right is essential to its ability to perform its statutory function.

Status of Auckland water organisation under the Public Works Act

We recommend inserting new section 49C (clause 45) to specify that an Auckland water organisation would have the functions, duties, and powers of a local authority under the Public Works Act, as if it were a local authority. The ability for Watercare, or another future Auckland water organisation, to acquire land through the Public Works Act is fundamental to Watercare’s operations, and should be provided for regarding both water supply and wastewater services. It is unclear whether Watercare, or a subsequent Auckland water organisation, would be covered by the current definition of “local authority” under the Public Works Act, as CCOs or Council organisations are not covered by the definition. We note that new section 49C is consistent with our new section 43A (clause 45) of the bill which deems Auckland Transport to have the functions and powers of a local authority under the Public Works Act.

Enforcement officers

In addition to the delivery of both wholesale and retail water supplies, it is expected that Watercare and any future Auckland water organisation would have a greater enforcement role. Under section 177 of the Local Government Act 2002, relevant local authorities are given the power to appoint enforcement officers. Given the coercive nature of enforcement functions, we consider that it is appropriate for the power to appoint enforcement officers to rest with the democratically elected body, in this case the governing body of the Auckland Council. However as Watercare, or a future Auckland water organisation, would have more information about the number of enforcement officers needed to perform its functions, it is appropriate that the Auckland Council consult Watercare, or any future water organisation, on the number of enforcement officers needed. We recommend inserting new section 59A (clause 45) into the Local Government (Auckland Council) Act to specify this consultation requirement.

Obligations on provider of water services in Auckland

Clause 66 sets out Watercare’s obligations until 30 June 2012 regarding its funding plans and arrangements, financial statements, costing and pricing policies, asset management, and consultation on its statement of intent. Submitters expressed concern about the accountability of Watercare to the Auckland Council, particularly after 2012. Watercare becomes a CCO of the Auckland Council on 1 July 2012. After this time it would be subject to the accountability provisions of the Local Government Act 2002. We consider that our recommended new sections 75AA, 75A, and 75 (clause 45) would address the submitters’ concerns by increasing the accountability of substantive CCOs to the Auckland Council.

Process for setting prices

Clause 71 of the bill as introduced prescribes how the Auckland water organisation is to set its prices. As new Part 5 sets out the powers, functions, and duties of the Auckland water organisation, we consider that it is more appropriate to delete clause 71 and amend new section 49 (clause 45) of the bill as introduced, which addresses the obligation of an Auckland water organisation.

As introduced, clause 71 requires that until 30 June 2015 Watercare must take into account the policies of and comply with directions from the Auckland Council when it is setting its prices for water and wastewater services. Submitters were concerned that this would mean that after 30 June 2015 Watercare would not be subject to Auckland Council processes or directions in setting prices for water. It was not intended that there be a specified timeframe for constraining the price the Auckland water organisation charged for water supply and wastewater services. We therefore recommend that the reference to 30 June 2015 not be included in new section 49.

We further recommend that our new section 49A refer to “an Auckland water organisation”, rather than Watercare. This would provide more flexibility in future price-setting by ensuring that the provision would cover any subsequent water organisation as well as Watercare.

We further recommend inserting new section 49A, which would ensure consistency with our recommendation that CCOs be required to give effect to the relevant aspects of the Auckland Council’s LTCCP and to act consistently with other council strategies and plans. We have done this by providing that an Auckland water organisation (even though it would not be a CCO of the Auckland Council until after 30 June 2012) would have similar obligations.

New section 49(1)(a) provides that the Auckland water organisation has a duty to manage its operations efficiently with a view to keeping the overall costs of water supply and wastewater services at the minimum consistent with the effective conduct of its undertakings and the maintenance of the long-term integrity of its assets. However, the price charged would need to reflect that the Auckland water organisation has a statutory duty to give effect to the LTCCP and act consistently with other specified plans and strategies of the Auckland Council. For the avoidance of doubt, our new section 49A specifies that Watercare would not be breaching its duty under new section 49 to keep its overall costs to a minimum merely by giving effect to an LTCCP or by acting consistently with any other Council plan.

Purpose of the spatial plan

A number of submitters argued that new section 66(2), which sets out the purpose of the plan, should refer explicitly to wider environmental, economic, social, and cultural objectives. Submitters were concerned that the emphasis in new section 66(2) as introduced on growth and development is inconsistent with local government’s statutory responsibility to promote the economic, social, cultural, and environmental well-being of communities.

While we understand that the use of the term “board long-term strategy” was intended to cover outcomes for the Auckland Council including those in the social, economic, environmental, and cultural realms, we consider that it is appropriate to amend new section 66(2) to make it explicit that the spatial plan is intended to encompass these four well-beings. We note that this amendment is consistent with the purposes of the Resource Management Act, the Land Transport Management Act 2003, and the Local Government Act 2002. It would also make it clearer that the Auckland Council should consider social, economic, environmental, and cultural outcomes in developing the spatial plan when it is setting the strategic direction for Auckland. We further recommend inserting new section 66(2A) to define the purpose of the spatial plan.

Functions of the spatial plan

New section 66(3) sets out the functions of the spatial plan. The plan would provide a mechanism through which the Auckland Council would recognise important and regionally significant matters, and to address a broad range of issues.

As introduced new section 66(3)(g) specifies that the spatial plan should identify existing critical infrastructure services and their future location. We recommend deleting new section 66(3)(g) and inserting new section 66(3)(p) to make it clear that critical infrastructure services would include services managed by network utility operators, and cultural and social infrastructure, transport, open space, water supply, and wastewater and stormwater.

We recommend that our new section 66(3)(p) also include a reference to “rural production” and “regionally significant recreation and open space areas”.

We consider that recreational activities and open space would be more effectively addressed by the Resource Management Act plans. However, we consider that nationally and regionally significant recreation areas and open space (such as regional parks) might usefully be identified in the spatial plan and recommend deleting new section 66(3)(h) and inserting new section 66(3)(q).

We agreed with submitters that the environmental function of the spatial plan is too narrow, as it is limited to identifying ecologically significant areas in Auckland that should be protected from development. We therefore recommend deleting new section 66(3)(i). Our proposed new section 66(3)(q) would expand the environmental function to include regionally significant natural environmental constraints, regionally and nationally significant landscapes, areas of historical heritage value, and natural features.

We consider that the development of a regional arts and cultural strategy and a regional recreation and sports strategy is vital to Auckland’s future economic, social, and cultural development. The purpose of the spatial plan as currently drafted would enable the Auckland Council to develop, and be informed by, such strategies.

Role of central Government in development of the spatial plan

We recommend inserting new section 66A to require the Auckland Council also to engage with central Government and infrastructure providers in developing and implementing the spatial plan. We recognise the important role central Government plays in “place-shaping” through investment and the placement of facilities, and that decisions of central Government and its entities can either reinforce the effectiveness of the spatial plan or undermine its objectives. This amendment would enable central Government to give more guidance to the Auckland Council on its priorities in developing the spatial plan and allow better coordination of central and local Government decision-making.

We were advised that the Government is conducting further investigations into the relationship between the spatial plan and other national planning instruments and policy, including resource management plans, in the second phase of reforms to the resource management urban planning.

Amendment of the spatial plan

New section 66(5) of the bill as introduced provides that the Auckland Council may make amendments to the spatial plan to reflect any significant changes from the circumstances that existed when the spatial plan was prepared. As the purpose of the spatial plan is to set out the long-term strategic direction of Auckland, we consider that allowing the plan to be reviewed frequently would risk undermining its long-term purpose. Our proposed new section 66A would allow the Auckland Council more flexibility as to when it can amend the spatial plan, by removing the qualification relating to a significant change in circumstances.

Relationship between the spatial plan and local Acts

Because of the national significance and heritage value of the Waitakere Ranges, a number of submitters questioned the relationship between clause 106(3) of the bill as introduced and section 18 of the Waitakere Ranges Heritage Act 2008. Section 18 of the Waitakere Ranges Heritage Act provides that the provisions in that Act prevail over the Auckland Regional Growth Strategy, and that when the strategy is being amended it must ensure that its provisions are consistent with the purposes of the Act. Clause 106(3) of the bill provides that the Auckland Regional Growth Strategy will have no effect once the Auckland Council adopts the spatial plan. We consider that the Auckland Council should continue to ensure that the spatial plan’s provisions are not inconsistent with the purpose of the Waitakere Ranges Heritage Act. We recommend inserting new clause 106(2)(d) to preserve the current effect of section 18 of the Waitakere Ranges Heritage Act while the Regional Growth Strategy remains in force. We recommend a consequential amendment to amend Schedule 3 of the bill as introduced in order to amend section 18 of the Waitakere Ranges Heritage Act to replace the reference to the “Auckland Regional Growth Strategy” with a reference to the “Auckland Spatial plan”.

A number of submitters also suggested that the spatial plan should be consistent with the Hauraki Gulf Marine Park Act 2000. We do not recommend amending the bill for this purpose. The Hauraki Gulf Marine Park Act provides for the management of the Hauraki Gulf as if it were a national policy statement under the Resource Management Act. This allows the Hauraki Gulf Marine Park Act to be given effect through the Auckland Council’s resource management plans. This mechanism would allow more influence over the management of the Hauraki Gulf than could be exercised through the spatial plan. We also note that the legal links between the spatial plan for Auckland and other national policy instruments, such as the management of the Hauraki Gulf through the Hauraki Gulf Marine Park Act, will be investigated in the second phase of reforms being made to the Resource Management Act.

Bylaws about waste

Clause 93 deems that any bylaws that exist or were made under the Waste Minimisation Act 2008 are transferred to the Auckland Council, and would remain in force until they were confirmed, amended, or revoked by the Auckland Council, or they were revoked by the operation of section 160A of the Local Government Act 2002. We recommend amending clause 93 to refer to “solid waste” rather than simply “waste” to avoid capturing any bylaw that mentions waste as a secondary issue.

Waste minimisation plans

Clause 109 deems existing waste minimisation plans to be those of the Auckland Council on 1 November 2010, and requires that waste minimisation plans be reviewed by 30 June 2012 in accordance with the Waste Minimisation Act. We were advised that there is a risk that Auckland Council might not be able to meet its statutory requirements because of the tight timeframes associated with the requirement that the special consultative procedure be used to adopt a waste minimisation plan.

To address the problem presented by these tight timeframes, we recommend inserting new clause 109(4C) to allow the Auckland Council to take into account any consultation work carried out by or under the oversight of the Transition Agency in determining options for waste management to be considered by the Auckland Council. For the same purpose, and to ensure that the Auckland Council can meet its obligations under sections 50(2) and 51 of the Waste Minimisation Act, we recommend inserting new clauses 109(4A) and 109(4E) to provide that any work carried out by the Transition Agency and councils in preparing a draft waste management and minimisation plan can be regarded as contributing towards discharging Auckland Council’s obligations under the Waste Minimisation Act.

Exemption from the Commerce Act 1986

We heard submissions from the waste industry that the bill should be amended to exempt the Auckland Council (and the proposed CCO) from the restrictive trade practices provisions in Part 5, section 58, of the Commerce Act 1986. These submitters argued for the exemption on the basis that they wanted to have exclusive control over waste, through the control of transfer stations and landfill sites. We consider that the current processes, whereby any council proposal that breaches section 58 of the Commerce Act can be approved by the Commerce Commission on the basis of public benefit, are the appropriate mechanisms to obtain an exemption from the restrictive trade provisions of the Commerce Act. We do not consider that the bill should be amended to include an explicit exemption.

Explanatory section

While considering the many submissions on new Part 7, we recognised that more clarity was needed about the wider legislative context in which the Auckland Council and the board would operate, the board’s requirement for independence, and the intended role of the board in ensuring that the Auckland Council fulfilled its existing Treaty of Waitangi obligations. We therefore recommend amending new section 67 and inserting new section 67A to provide

• •that the board is independent of the Auckland Council and mana whenua and mataawaka groups

• •that the board is a statutory entity whose role is to help ensure that the Auckland Council acts in accordance with existing Treaty of Waitangi provisions

• •that the board members must act in the interest of achieving the board’s purpose, and not in the interests of any other group to which they may belong.

We also recommend amending new section 73 to specify that the existence of the board would not relieve the Auckland Council of its obligations under the Local Government Acts, the Resource Management Act, and other legislation that would require it to consult with Māori.

Establishment and purpose of the board

As introduced new section 67 (clause 45) sets out the purpose of the board and specifies that the board must follow the principles of consensus decision-making when carrying out its purpose. The requirement for consensus decision-making was intended to ensure that all members of the board were canvassed as to their views and that the majority of decision-makers agreed on a particular course of action to be followed. It was not envisaged that consensus decision-making would require unanimous decisions, as this would unnecessarily restrict the decisions that could be reached. We therefore recommend deleting new section 67 to remove the requirement that decisions be made by consensus. We also recommend removing clause 14(2) and amending clause 14(9) of new Schedule 3 (Schedule 2), to provide that it is desirable the members of the board reach decisions by following the principles of consensus decision-making.

Functions of the board

We recommend amending new section 70(1) (clause 45) to clarify that the board would appoint a maximum of two people as members to sit on certain Auckland Council committees. As introduced new section 70(1) is not sufficiently clear as to the role of board members on Auckland Council committees.

Auckland Council’s duties to the board

We recommend inserting new sections 69(2) and 73(3) (clause 45) to require the Auckland Council and the board to meet at least four times a year to progress the work required to carry out their respective functions. As introduced new section 73 merely imposes a requirement for the Auckland Council to take into account advice given by the board. Our amendment would ensure continual dialogue between the Auckland Council and the board.

New Schedule 3 provisions applying to the board

Schedule 2 of the bill as introduced would insert new Schedule 3 (clauses 1–34) into the Local Government (Auckland Council) Act. It sets out the administrative requirement for the establishment, membership, operation, support, and funding of the board.

There appeared to be some confusion amongst submitters as to the meaning of certain words used in the bill as introduced, specifically “mana whenua” and “taura here”, and there was concern that the terms used would not result in all Māori in Auckland being represented on the board. We recommend amending the bill to replace all references to “taura here” with “mataawaka”. For further clarity, we recommend amending clause 30, which would amend section 4 of the Local Government (Auckland Council) Act to define the terms “mana whenua” groups and “mataawaka”.

We recommend inserting new clause 8(1AA) to specify that in order for a person to be appointed as a member of the board, the prospective appointee must consent in writing to being appointed and must certify that they are not disqualified from being a member of the board. This would ensure consistency with the requirements for appointment as a director of Auckland Transport.

We heard suggestions that the number of representatives on the board should be increased, to ensure that all major groups in the Auckland region are represented. We do not recommend increasing the size of the board, as this would increase the complexity of its decision-making and its administrative costs. Instead, we consider that the submitters’ concerns could be addressed by making the board subject to the Local Government Official Information and Meetings Act, and recommend amending Schedule 3 of the bill to make this amendment to the Local Government Official Information and Meetings Act. This would ensure that all information on the activities and decisions of the board was freely available.

To align the board’s selection process and the electoral cycle for the Auckland Council, we recommend amending clause 8(3) to require the selection body to complete the selection process at least two months before the terms of the incumbent board members end. As an additional safeguard to ensure that the business of Auckland Council can proceed without delay, we recommend inserting new clause 2(7) to allow the Minister of Māori Affairs to take the steps necessary to appoint board members if the selection body is unable to complete the process.

The bill as introduced is not sufficiently clear that the selection body would not have a continuing role in board decisions. We therefore recommend inserting new clause 2(6) to make it clear that the selection body would be disbanded once the selection process had been completed. The selection body would be re-formed should subsequent appointments be required.

Clause 9 of the bill as introduced sets out the process for the cessation of a person’s membership of the board. We recommend inserting new clause 9(2)(aa) to require that where a member of the board became disqualified from being a member under clause 5, they would immediately cease to be a member of the board.

As introduced, clause 10 sets out the process for removing a member of the board. We heard suggestions that decisions on the cessation or removal of members should be made by the selection body or the Minister of Māori Affairs. We do not support these suggestions, on the basis that either would be inconsistent with the statutory independence of the board.

To further affirm the statutory independence of the board we recommend that clause 10(1) be amended to allow the majority of the board to remove any person appointed by the board to Auckland Council committees under new section 70 (clause 45), at any time for just cause.

We recommend a number of amendments to clause 17 to address concerns about the remuneration process for members of the board. Our recommendations would ensure that a fair and independent remuneration process was applied to board members.

Clause 28 would allow the board to delegate any of its functions or powers to certain classes of people. We note that under new section 71 (clause 45) the board could consult any person who it considered likely to help it carry out its purposes. To this end, the board could establish any committees it considered necessary. We recommend amending clause 28(1)(d) to remove the requirement that the Auckland Council approve these delegations, as it could impede the board’s ability to carry out its functions under new section 71 (clause 45).

As introduced, clause 33 would provide the board with a secretariat to support it in carrying out its purpose. We recommend amending clause 33(4) to specify whom the secretariat would be accountable to; the executive officer and the staff of the secretariat would be instructed by, and carry out their roles under, the direction of the board.

Planning documents

Clause 87 of the bill as introduced provides that funding and financial policies in the planning documents prepared by the Transition Agency would have effect only within the former districts of the existing local authorities. We recommend amending clause 87 to make it clear that while such policies of existing councils would continue to apply, they would be applicable only in the former districts of the existing councils that had adopted them.

We recommend inserting new clauses 87AA and 87AAB to clarify the status and the effect of the interim planning documents prepared by the Transition Agency. Our new clauses would provide that

• •the planning document would serve in place of an LTCCP until 30 June 2012

• •the policies prepared by the Transition Agency would be the policies of the Auckland Council

• •the allocation of local board responsibilities and funding in the planning document would apply as if they had been allocated under the LTTCP

• •the planning document would serve as an annual plan until 30 June 2011

• •the Auckland Council would be allowed to amend the planning document during this period, provided that the process for amending the LTCCP was used.

We recommend inserting new clause 87D to provide that Auckland Council is responsible for completing the final reports of the existing local authorities, for the period from 1 July 2009 to 31 October 2010, and requiring that these reports be adopted by 31 March 2011. The bill as introduced was silent as to who would be responsible for the completion of such reports during this period.

Schedule 1 would insert new Schedule 2 into the Local Government (Tamaki Makaurau Reorganisation) Act to specify the mandatory content of the planning document prepared by the Transition Agency for the Auckland Council for the period 1 November 2010 to 30 June 2011. We consider that it would be useful for the planning document to also include

• •an initial investment policy for the Auckland Council

• •an initial integrated revenue and financing policy representing a compilation of the policies of the existing councils.

We accordingly recommend amending clause 4 of new Schedule 2 (Schedule 1).

Rating arrangements

Clause 78 provides for the Auckland Council to have a rates transition management policy and specifies the required content. We recommend amending clause 78 to require the policy to set out the dollar limit for each rating year. As introduced, clause 78 requires the policy to set only a percentage limit.

We also consider that it would be useful to allow the policy to specify different rates increases and decreases, but only in order to achieve a neutral outcome in overall rates revenue. We recommend amending clause 78 accordingly.

Under the Local Government (Rating) Act 2002 the Auckland Council has the discretion to determine what valuation system will be used. However the rating system to be used in the 2012/2013 financial year must be set out in legislation. We therefore recommend inserting new clause 75 to provide that the Auckland Council’s general rate in 2012/2013 must be assessed using capital value.

Clause 83 of the bill as introduced requires that a single transaction rate be set for the 2011/2012 financial year, and that a uniform percentage change be applied. The purpose of the clause is to ensure that in 2011/2012 all ratepayers face the same proportional increases or decrease in rates as they would if the rates were set by existing local authorities for 2011/2012. We recommend that the bill include a similar provision in relation to charging for wastewater services, and recommend inserting new clause 75F to postpone the introduction of direct charging for water. Instead, new clause 75F would set a separate wastewater transition charge, proportional to 2010/2011 wastewater rates. These rates should be collected by the Auckland Council, and set at a level to meet the wastewater revenue requirements for Watercare, and paid to Watercare.

Clause 84 provides a process to be used if a local board wants to propose targeted rates for the 2011/2012 financial year. As a consequence of our proposed amendment to clause 40, which would have the effect of extending the timeframe for the completion of local board plans until after the 2011/2012 rates have been finalised, we recommend deleting clause 84 and inserting new clause 75G, to provide that the local board may not propose targeted rates in the 2011/2012 financial year.

As introduced the bill provides for rates remissions and postponement policies adopted by existing local authorities to continue to apply, until 30 June 2012 or until they are replaced by the Auckland Council. The existing policies would work for the remainder of the 2010/2011 financial year, while the Auckland Council is collecting rates set by the existing councils. However it would not work in 2011/2012, because there might be inconsistencies between the policies inherited from the Auckland Regional Council and those adopted by territorial authorities; and existing policies might reflect rates for water supply, which would no longer be set. We therefore recommend inserting new clause 75D to require the Auckland Council to adopt new rates remission and postponement policies with effect from 1 July 2011. We consider that this new clause should also make it clear that these policies might include different provisions in respect of the areas of the former local authorities.

Development contributions for water infrastructure

We recommend amending clause 90 to require the Auckland Council to transfer relevant development contributions to the water organisation immediately on receipt of the funding. As introduced, clause 90 does not specify when the Auckland Council would be required to transfer development contributions to an Auckland water organisation which was undertaking capital expenditure for which a development contribution was raised. Therefore it could be interpreted that the funding did not need to be transferred to the water organisation until the project had been completed. Our recommended amendment would avoid this interpretation and the possible adverse financial consequences.

We further recommend that clause 90 provide for the Auckland Council to retain the statutory liability to refund the development contributions if the relevant expenditure does not occur or the development in respect of which the contribution was paid does not proceed. As a result of our clarification regarding the transfer of development contributions to the water organisation, the water organisation would be responsible for reimbursing the Auckland Council.

Development contributions for transport infrastructure

We recommend consequential amendments to clause 91 to reflect our previous changes to the generic development contribution provision. Clause 91 would allow the Auckland Council to continue to collect development contributions for transport infrastructure.

Introduction

This is the third and final Auckland bill. It represents the culmination of the Government’s proposals and has profound implications for the future of Auckland. It is therefore appropriate to not only address the specific measures contained in the bill, but also the context from which these measures have emerged.

Background

This may be the third bill, but it is only the second occasion that members of this committee have had an opportunity to hear and consider the views of the public. The first bill was rammed through the House under urgency. No one was consulted over the recommendations of the Royal Commission and no one was given a say over the resulting Government proposal. Legislation was tabled and passed. The second bill did come before this select committee. However, it soon became clear that the Government was not prepared to listen to the concerns voiced by submitters. The recommendation for Māori seats was dropped by the Government after the Minister threatened to resign, pre-empting the deliberation and recommendations of this committee. Government responded to the widespread public concern about the over-centralisation of power in the Auckland Council by promising to empower local boards, but this has not happened. The Government’s course has resulted in a loss of confidence, and outright opposition to its super city model, registered by Aucklanders on talk-back radio, through letters to the editor, and in a range of opinion polls. The goodwill and high expectations generated by the Royal Commission have dissipated as concern has mounted about the loss of democracy.

Missed opportunity

This process of reform was intended to free our largest city from political gridlock. Unfortunately, the focus of the Government has been so narrow as to close out the opportunity for enduring and positive change. This process was about ensuring Auckland’s future as an internationally competitive city and region. It was about ensuring the future of Aucklanders. Instead, the Government has delivered a structure that centralises power in the hands of a few.

Major concerns

Labour members of the committee agree on the need for change. The need to reform Auckland’s governance structures is obvious; the many problems that face the region are universally discussed and widely agreed. Labour agrees that a unitary authority model is the most appropriate—one council, one mayor, one plan. However, this should not come at the expense of community, transparency, and accountability.

Some of the amendments in this report will make the bill more workable. Labour members have worked to improve the bill within the strict policy constraints imposed by the Government. However, Labour still holds serious reservations concerning the policy direction adopted by the Government. That is why we have submitted a minority view.

Below are outlined the major areas of concern for Labour members of the Auckland Governance Legislation Committee.

Council controlled organisations

Aucklanders have been given no choice about which, if any, of the operations of the Auckland Council are to be run by arm’s-length commercial entities. This is unique in New Zealand local government. We remain unpersuaded that it should be done in Auckland, and believe these important decisions should be made by the first elected Auckland Council. Instead of putting in place caretaker arrangements that would allow continuity in the delivery of services, this bill corporatises much of Auckland local government with no democratic mandate.

The Government says it is simply consolidating the 41 council or council-controlled organisations (CCOs) currently operating in the Auckland region into seven CCOs: three statutory organisations created in this bill and four created by the Transition Agency. However the new CCOs will be larger than any existing CCO. For example, the operation of Watercare will be significantly extended to bulk and retail water services for the entire region. Taken together, 75 percent of council activities and assets could be kept at arm’s-length, leaving the Auckland Council and mayor with few mechanisms to address the concerns of ratepayers. As the Minister himself admits in a Cabinet paper, “CCOs will play a greater role in service delivery for the Auckland Council than for any other council in the country”.

Labour believes that mega-CCOs being created by the Government will wield much of the power in the new Auckland. The accountability mechanisms being put in place will not be sufficient to alter this fact. What is more, the approach risks replacing the decision making-silos of eight councils with one council and seven CCOs.

Auckland Transport

We have particular concerns regarding the Auckland Transport CCO. It will be larger than any existing transport body in Auckland (and larger than the one contemplated by the Royal Commission), with the power to make bylaws, and an annual budget of $1 billion soaking up 54 percent of rates. However, there is no evidence that running Auckland transport as a CCO would be any more efficient than running it in-house. No other council in New Zealand has this arrangement. These reservations were shared by four Government departments—the Treasury, Department of Internal Affairs, Ministry of Economic Development, and Ministry for the Environment—who advised against setting up the transport agency as a CCO. They argued that it lacked transparency and accountability to the ratepayers. It is also clear that the accountability mechanisms provided for in the bill are insufficient.

Powers of local boards

The Government rejected the Royal Commission’s recommendation of six local councils of sufficient size, capability, and power to be an effective counter-balance to the new Auckland Council. The Royal Commissioners argued that to retain a strong community voice and active role in place shaping the local councils needed significant decision making powers. The Government rejected this model and replaced the Royal Commission’s local councils with “local boards” that have more in common with the current community boards.

This policy choice by the Government has made the super city model unbalanced with too much power in the centre, and too little with the community. The first risk is that the 20-member Council will be distracted by too much that is local and will lose its strategic regional focus. The second is that elected councillors will be unable to adequately engage because of the sheer scale of demand, and this will increase the reliance on unelected officials, thereby further undermining democratic accountability.

The principle differences between community boards and the new local boards are that local boards exist by virtue of statute (rather than at the discretion of the territorial authority); they have a local board agreement; they have the ability to propose bylaws; and they have a binding dispute resolution process. These enhancements are of a procedural nature insofar as they set out a process whereby local boards can be given powers or can dispute the allocation. The Act does not provide for an explicit minimum set of substantive activities. The powers of local boards will be determined by the unelected Auckland Transition Agency in the first instance and then subsequently by agreement between the local board and Auckland Council, or determination by the Local Government Commission if agreement cannot be reached.

The result is an extremely weak form of subsidiarity. The local boards have no ability to make by-laws. They are likely to have little say over the operations to be corporatised as CCOs. The Local Government (Auckland Council) Act sets out the principle that the Auckland Council should delegate powers to the local boards, but at the same time enshrines broad exceptions that will give the Council discretion not to delegate if it deems decisions would better be made regionally.

We have seen from the community board experience that without clear mandates the effectiveness of these bodies is not assured. While their existence and coverage is guaranteed by statute, their powers are not. The risk that they will operate as “talkshops” is real. Local boards need real decision-making powers. They need certainty about those functions. Despite the overwhelming number of submissions calling for this, the Government has refused to act.

Privatisation risk

The Auckland Regional Council warned that by transferring Auckland’s assets to CCOs a future council could sell off strategic assets without consulting the public as is currently required under the Local Government Act 2002. This bill also removes the requirement for a referendum before selling shares in the Ports of Auckland.

The Local Government Act 2002 protects strategic assets, such as shares in ports and airports, by placing special consultation requirements on the Council before they can be sold. This protection will be circumvented by placing assets into CCOs, which (after the moratorium expires on 1 July 2012) have no obligations to consult the public before sale.

Viewed alongside measures taken in other legislation, the objective to weaken the protection of assets is clear. Aucklanders do not want to see their community assets sold off. We believe the safeguards against the sale of assets should be retained.

Māori Advisory Board

This bill introduces a Māori Advisory Board. While we have worked hard to ensure this board is more effective, we have not altered our position. Labour believes there should be Māori seats on the new Auckland Council. Like Parliament itself and the Bay of Plenty Regional Council, these seats should be allocated on the basis of the number of Māori on the Māori roll.

Under Labour’s plan there would be at least two Māori seats in Auckland. But it could be more. The number of Māori seats will depend on how many Māori there are on the Māori roll in the Auckland region.

Pacific Advisory Panel

Pacific advisory bodies exist in Manukau, Waitakere, Auckland Central, and North Shore, which Labour believes should be consulted by the new Auckland Council in order to form the proposed Pacific Advisory Panel. Labour supports the overwhelming evidence from submitters that Pacific communities should elect their own representatives on the panel based on current practices throughout the region. It should be the role of the Mayor and the Auckland Council to support, sponsor, and provide resources for the panel to conduct its new roles and functions, rather than the Mayor appointing this panel.

Ethnic Advisory Panel

Labour supports the evidence from submitters that ethnic communities have a strong contribution to make in the Auckland region and are one of the fastest growing populations. Instead of the Mayor appointing members of the panel, Labour believes the ethnic communities ought to be widely consulted to elect their own representatives. Similarly to the Pacific panel, the Mayor and the Auckland Council should support, sponsor, and provide resources to allow the panel to conduct its role and functions.

Youth participation

We agree with submitters who called for the bill to establish a Youth Council or similar mechanism to formalise youth participation in the Auckland Council. Encouraging young people to engage with local government is an important goal and we regret this proposal has not been taken up.

Campaign spending limit

This bill increases the campaign spending limits from $70,000 for a population over 250,000 to $100,000 + 50 cents for each registered voter in constituencies exceeding one million. For the mayoral race with 960,000 voters this will mean candidates will be able to spend $580,000 in the last three months. This is a very significant increase, which would benefit wealthy candidates and those with big business backing. We support a formula based on either an amalgamation of the spending limits of the current councils, or one based on the parliamentary limits. We are disappointed this report fails to address these concerns.

Lack of transparency on costs

Labour shares the concern expressed by submitters that the Government has not shared with ratepayers a cost-benefit analysis of the whole Auckland governance restructuring. Nor has it told Auckland ratepayers what the transition costs will be, and what effect the new structures will have on rates and water rates. This has reinforced the public perception that the changes are being done “to Aucklanders” rather than with or for them.

Conclusion

We agree Auckland’s governance arrangements need reform. There is no question that changes must be made. Governance gridlock and indecision have for too long plagued the city. However the Government’s approach will make Auckland’s governance less transparent, less accountable, and less responsive to Aucklanders. Labour opposes this bill because Aucklanders should be put at the centre of their local government. The Government’s proposal too often withdraws from the local to the central; it shifts from community to corporate; and replaces the transparent with the opaque. This is the wrong approach. While some of the changes detailed in this report will no doubt make the bill better, there are more fundamental concerns that remain unaddressed.

Denial of rights

The bill continues to deny Aucklanders the right to put any reorganisation proposal to the Local Government Commission until at least 2015, despite the legitimate concerns of many residents in Franklin, Rodney, and Papakura.

The bill also takes away the right that the council and/or electors in the new Auckland City would otherwise have under the Local Electoral Act 2001 to opt for an alternative to the flawed First Past the Post electoral system before the 2013 election, a right enjoyed by all other New Zealanders.

The bill does not reflect the Royal Commission’s recommendation that there be dedicated Māori seats on the new council, to ensure Māori representation and a Māori perspective in the decision-making body. This is in spite of strong representations from many submitters who supported the idea of dedicated Māori seats.

Instead the bill provides for a token, essentially powerless “advisory board” which has, among other things, responsibility to ensure the Council acts in accordance with statutory provisions referring to the Treaty of Waitangi, but gives no indication of how the board can exert any pressure on the council to ensure anything. It is also inappropriate that the Council may exercise its own discretion regarding what issues affect Māori, and on which the council must therefore consult the board.

Schedule 3 disqualifies a person from serving on the board if they have been convicted of an offence punishable by imprisonment for a term two years or more, or who has been sentenced to imprisonment, but this begs the question of why there is no such disqualifying provision in terms of any other appointee to any other role on the council or CCOs.

Democracy and accountability

We note that there is some new language in the bill as reported back that is intended to clarify and confirm that the new Council Controlled Organisations will in fact be accountable to the elected council, but remain unconvinced that there will be adequate oversight of the new substantive CCOs.

We strongly oppose the bulk of the Council’s work and assets being put into the hands of appointed rather than elected representatives, given the near certainty that the organisations will claim that commercial imperatives can override the public’s right to know how their assets are being managed.

It is almost inevitable that there will be disputes and contest between CCOs, which is likely to undermine the intended integration of policy and service provision. It is not clear that the proposed new clause requiring CCOs to give effect to the LTCCP and other council plans and strategies could prevent “silos” from forming.

We are not persuaded that the proposal to adopt a requirement that the Transition Authority be “directed” rather than “authorised” to establish new CCOs meets the objections of many submitters who wanted democratically elected local politicians to have control over the establishment of such entities.

Many submitters expressed concern that the directors of the new CCOs would be appointed by the Minister of Local Government rather than by the incoming council. We support the inclusion of a clause making it explicit that the Council may remove any director at any time, and note that the Minister has indicated an intention to leave some vacancies on the board unfilled. We would prefer that this intention were translated into a requirement in the bill that all positions are left open for the council to determine.

Every other council in New Zealand may decide whether to set up a Crown-owned company, and by whom it will be led and managed, but Auckland is having such organisations imposed on it. We oppose this level of central government interference in local choice and decision making.

The extent to which Auckland’s governance was “broken” has routinely been grossly overstated by proponents of this bill, in an attempt to justify such interference, but this denies the considerable progress the Auckland councils individually and collectively had made in recent years.

Privatisation

The majority report acknowledges the deep seated and widespread opposition to the possibility of the privatisation of water services. The reassurance that water will not be privatised has a hollow ring given the recent introduction to the House of a bill that would amend the local government legislation to allow for contracts of up to 35 years; in other words de facto privatisation of water supply and management.

Checks and balances

We remain opposed to the “strong mayor” model, which gives the Auckland mayor extraordinary powers that no other New Zealand mayor will have, and that could allow him or her to dominate the council and its agenda.

It is unacceptable that the powers, responsibilities, and remuneration of councillors have still not been spelled out, despite earlier assurances that this would be done.

Process

The major and substantive changes that are being made to this bill even at this very late stage are evidence that the whole legislative process has been rushed and so poorly conceptualised and implemented. It does not bode well for the future success of the governance model established that it is based on such deeply flawed procedural foundations.