Local Government (Auckland Reorganisation) Bill

  • enacted

Explanatory note

General policy statement

Background

Governance arrangements for the Auckland Region have been a cause of concern for at least the past 50 years. Successful government of Auckland requires the management and resolution of both regional and local issues. Having different local authorities manage these different interests has increased tension and slowed resolution of problems, particularly as the Auckland population has increased.

Auckland is home to some of the most important commercial, educational, and business organisations in the country. It is the region where nearly one third of the population of New Zealand chooses to live. However, Auckland's potential is restricted by the fragmented way the city is run. Regional issues are tangled with the competing interests of local councils and community matters are tangled within the territorial authorities' focus on the Auckland-wide issues.

A succession of Government attempts at reform, from the establishment of the Auckland Regional Authority in 1963 through to the reforms of the late 1980s, which saw widespread amalgamation and the establishment of the Auckland Regional Council, to the enhanced planning and participation provided for in the Local Government Act 2002, have failed to provide enduring solutions. Changes focused on particular sectors or aspects of the issues, for example, transport and ownership of regional assets, have not been enough to provide Auckland with the governance it needs to succeed.

The previous Government commissioned a Royal Commission on Auckland Governance. The Commission reported to the Government on 25 March 2009, recommending the concept of 1 local authority for Auckland with enhanced powers for its Mayor. The Government agreed with these recommendations, but has rejected the Commission's recommendations for 6 second-tier local councils in favour of local boards (to enhance community participation and local democracy).

Legislation is required to give effect to many of the Government's decisions on Auckland local governance. Three Bills are anticipated, with this being the first Bill.

This legislation begins the transitional process from the existing local authorities (Auckland currently has 7 territorial authorities (or local councils) and 1 regional council) to 1 unitary authority, Auckland Council. Auckland Council will create a vision for Auckland and plan and manage its assets and deliver its core services. The new local boards will link communities to the new Council. The Bill provides for the dissolution of the existing local authorities on 1 November 2010.

This Bill will also—

  • establish the Auckland Transition Agency (ATA or Transition Agency) as the body responsible for planning and managing the reorganisation of the new Auckland local governance arrangements; and

  • place safeguards and constraints on decision making by the current local authorities and their subsidiaries (council-controlled organisations and council organisations).

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 is the commencement clause. Part 2 (which establishes the Auckland Council) comes into force on 1 November 2010. Clauses 27 and 28 and subpart 3 of Part 3 come into force on 31 October 2010. The rest of the Bill comes into force on the day after it receives the Royal assent.

Part 1
Preliminary provisions

Clause 3 sets out the background to and purpose of the Bill.

Clause 4 provides an outline of the Bill.

Clause 5 is the interpretation clause.

Clause 6 sets out the relationship between this Bill and other local government legislation. This Bill prevails if there is any inconsistency between its provisions and the following enactments: the Local Government Act 2002, the Local Government (Auckland) Amendment Act 2004, the Local Government Act 1974, the Local Electoral Act 2001, and any regulations made under those Acts.

Clause 7 provides that the Act binds the Crown.

Clause 8 repeals the Act on the close of 1 November 2010. This is the day on which the legislation is effectively spent.

Part 2
Auckland Council

Clause 9 establishes a unitary authority for Auckland to be known as the Auckland Council and consequentially amends Schedule 2 of the Local Government Act 2002 (which lists all regional councils and territorial authorities) by including this Council and omitting all references to the existing local authorities in Auckland (being Auckland Regional Council, Auckland City Council, Franklin District Council, Manukau City Council, North Shore City Council, Papakura District Council, Rodney District Council, and Waitakere City Council).

Part 3
Transitional arrangements

Subpart 1Auckland Transition Agency

Clause 10 establishes the Auckland Transition Agency.

Clause 11 provides for the governing body of the Transition Agency.

Clause 12 requires the governing body of the Transition Agency to appoint a chief executive for the Agency and sets out the chief executive's responsibilities.

Functions and duties of Transition Agency

Clause 13 sets out the functions, duties, and powers of the Transition Agency during the transition period (effectively the period of its existence). The transition period is defined in clause 5(1) as being the period that commences on the day after the date on which the Bill receives the Royal assent and concludes on the close of 31 October 2010.

Clause 14 requires the Transition Agency to appoint an electoral officer for Auckland to exercise the powers and carry out the duties conferred on an electoral officer in relation to the October 2010 triennial general elections (at which the electors of Auckland will vote, for the first time, for members of the Auckland Council).

Clause 15 requires the Transition Agency to determine 2 electoral matters for the purposes of preparing for the October 2010 triennial general elections, being whether voting documents at that election be processed during the voting period and the order of candidates' names on voting documents.

Clause 16 requires the Transition Agency to appoint a chief executive to an existing local authority if a vacancy occurs at any time during the transition period.

Clause 17 requires the Transition Agency to appoint an interim chief executive for the Auckland Council. The term of the appointment may extend into the period that the Auckland Council is actually established (on and after 1 November 2010) but may not extend into that period any later than 30 June 2012.

Clause 18 sets out the interim chief executive's powers and provides that he or she may exercise the powers during the transition period as if the Auckland Council were already established.

Clause 19 authorises the Transition Agency to exercise the interim chief executive's powers under clause 18 with the agreement of that person or as the chief executive, if no person is, for the time being, appointed as the interim chief executive.

Clause 20 authorises the Transition Agency to review, and, if it thinks fit on reasonable grounds, require an existing local government organisation (as defined in clause 5(1)) to have confirmed by the Agency,—

  • any decision made by, or on behalf of, the local government organisation during the transition period; or

  • any item on the agenda for any meeting of the organisation or any committee of the organisation to be held during the transition period.

Clause 21 sets out the process by which the Transition Agency must confirm a decision that an existing local government organisation seeks confirmation of under clause 31.

Expenditure and recovery of costs

Clause 22 requires the Transition Agency to obtain the approval of the Minister of Local Government and the Minister of Finance for its budgeted expenditure for the period of its existence.

Clause 23 states that any expenses or capital expenditure that the Crown incurs in relation to establishing the Transition Agency, or for the purposes of the Transition Agency, constitute a debt due by the Transition Agency to the Crown on the terms and conditions agreed between the Minister of Local Government, the Minister of Finance, and the Transition Agency.

Application of certain enactments to Transition Agency

Clause 24 states that the Ombudsmen Act 1975 and the Official Information Act 1982 apply to the Transition Agency as if the Transition Agency were an organisation named in Part 2 of Schedule 1 of the Ombudsmen Act 1975. Accordingly, the Transition Agency will be subject to the Official Information Act 1982 for the duration of its existence.

Clause 25 applies the Public Audit Act 2001 to the Transition Agency as if the Transition Agency were an entity listed in Schedule 2 of that Act.

Clause 26 inserts an item relating to the Transition Agency into Schedule 4 of the Public Finance Act 1989. This means that the Agency will be subject to certain financial accountability requirements under that Act for the duration of its existence.

Dissolution of Transition Agency

Clause 27 dissolves the Transition Agency on the close of 31 October 2010 (being the last day of the transition period and immediately before the date on which the Auckland Council is established).

Clause 28 consequentially removes the item relating to the Transition Agency from the Public Finance Act 1989.

Subpart 2Existing local authorities and local government organisations

Clause 29 sets out the obligations of the existing local authorities during the transition period.

Clause 30 sets out the obligations of other existing local government organisations during the transition period.

Clause 31 requires an existing local government organisation to obtain the written confirmation of the Transition Agency in relation to decisions made by the organisation during the transition period that may, directly or because of their consequences,—

  • significantly prejudice the reorganisation:

  • significantly constrain the powers or capacity of the Auckland Council or any subsidiary of the Auckland Council following the reorganisation:

  • have a significant negative impact on the assets or liabilities that are transferred to the Auckland Council as a result of the reorganisation.

Clause 32 negates the requirement of an existing local authority to hold, or make decisions in relation to, the October 2010 triennial general elections.

Clause 33 applies sections 117(2) to (6), 118, and 119 of the Local Electoral Act 2001, with all necessary modifications, to any extraordinary vacancy that occurs in the office of an elected member of an existing local authority (or in the office of an elected member of a community board of an existing local authority) during the transition period. Accordingly, even if a vacancy occurs during the transition period that is more than 12 months before the October 2010 elections, the vacancy may be left unfilled or filled by the local authority (or community board) appointing a member.

Clause 34 requires the chief executive of an existing local authority to ensure, so far as is practicable, that the other employees and resources of the existing local authority are available for the purposes of co-operating with the Transition Agency and every other existing local government organisation during the transition period.

Subpart 3Miscellaneous provisions

Clause 35 dissolves each existing local authority on and from 1 November 2010 and sets out how the functions, duties, powers, assets, information, money, etc, of the local authorities must be dealt with.

Clause 36 deals with the transfer, to the Auckland Council, of persons who are employees of an existing local authority immediately before the close of 31 October 2010.

Clause 37 sets out the relationship between this Part of the Bill with any enactment that applies to any existing local government organisation.

The Schedule contains provisions relating to members, meetings, conflicts of interest, and the procedure of the governing body of the Transition Agency.

Regulatory impact statement

Executive summary

Governance arrangements for the Auckland region have been a cause of concern for at least the last 50 years. Auckland local government arrangements are important for the citizens of Auckland and the prosperity of Auckland. This Bill proposes the establishment of an Auckland Council, as a unitary authority, and the Auckland Transition Agency (ATA) to manage the reorganisation.

Adequacy statement

The Regulatory Impact Analysis Team (RIAT) considers that the proposals relating to Auckland’s future governance arrangements are economically significant. RIAT has not assessed the regulatory impact statement because it was prepared after Cabinet’s decisions were made.

Status quo and problem

Current situation

The current local government arrangements for Auckland involve the Auckland Regional Council (ARC), 7 territorial local authorities, and 30 community boards.

Problem definition

Governance arrangements for the Auckland Region have been a cause of concern for at least the last 50 years. The tension between regional and local interests has amplified the challenges associated with a large and rapidly growing urban population. A succession of Governments have attempted reform but the results have failed to provide enduring solutions. These have included both changes to governance structures and changes focused on particular sectors or aspects, such as transport and ownership of regional assets.

Royal Commission

The previous Government established a Royal Commission to address concerns about the governance arrangements for the region. It reported back to the Government on 25 March 2009 with recommendations for Auckland local governance. The Royal Commission noted 2 broad systemic problems evident in current Auckland local government arrangements—

  • regional governance is weak and fragmented; and

  • community engagement is poor.

The Royal Commission noted that Auckland's regional council and seven territorial authorities lack the collective sense of purpose, constitutional ability, and momentum to address issues effectively for the overall good of Auckland. Disputes are regular among councils over urban growth and the development and sharing of key infrastructure, including roads, water and waste facilities, and cultural and sporting amenities. Councils cannot agree on, or apply, consistent standards and plans. Sharing of services among councils is limited, yet there is scope for so much more activity in this area.

Need for structural change

The Royal Commission noted that there is no lack of good intent and noted the work done by Auckland's councils over the past 18 months to advance the One Plan—a single strategic framework and action plan, which sets a clear direction for how the region plans to achieve sustainable development, with a focus on the region’s infrastructure. In terms of regional leadership, the Royal Commission noted that regional governance should not have to rely for its success on voluntary agreements or the special skills of individual leaders, but should be built on a sounder footing.

Objectives

The primary objective is to provide for democratic and effective local government in Auckland and, in particular, to maximise, in a cost-effective manner,―

  • the current and future well-being of Auckland and its communities; and

  • Auckland's contribution to wider national objectives and outcomes.

Alternative options

Auckland Council

Broadly, there are 2 alternative approaches to the status quo. They are—

  • retain a regional council and territorial authorities and change the structures and relationships between the 2 tiers; or

  • use the Royal Commission model.

Retain regional council and territorial authorities and change structures and relationships between 2 tiers

This option would retain a regional council and a number of territorial authorities. There are a number of permutations of this option. For example, the roles and responsibilities between the 2 tiers could be changed and the number of territorial authorities could be increased or decreased.

The Royal Commission considered a range of options relating to retaining a regional council and territorial authorities. However, it decided they were not feasible because having separate council entities would not resolve existing tensions and competition between councils, and would not address the need to create a common identity and purpose for the region.

Royal Commission model: unitary authority with 6 second-tier local councils

The Royal Commission proposed a unitary authority with 6 second-tier local councils. Using a unitary model would go some way towards resolving the existing tensions and competition between councils and provide a common identity and purpose for the region. The Local Government (Auckland Council) Bill addresses the second tier for the Auckland Council.

The Royal Commission estimated that efficiency gains of between $76 million to $113 million per year could be made under this option. It noted that the gains are from having unified services (for example, back-office functions such as human resources). The Royal Commission estimated that the integration costs have been assessed to range in total from $120 million to $240 million over a 4-year implementation time frame.

The Royal Commission has not estimated the benefits to Auckland arising from its proposals for Auckland governance. However, it notes that there are wider costs associated with not taking action. Failure to take action will result in citizens and businesses continuing to incur high transaction costs in dealing with councils, in important decisions either not being made or made too late, and in central government being unable to develop an effective partnership with Auckland local government.

Preferred option

Part of Royal Commission model: unitary authority with alternative second tier arrangements

A unitary authority is the preferred overarching Auckland local governance arrangement. As noted by the Royal Commission, retaining separate council entities would not resolve existing tensions and competition between councils, and would not address the need to create a common purpose for the region.

The Local Government (Auckland Council) Bill provides for the creation of local boards as an alternative second tier of the Auckland Council. The Royal Commission's proposed second tier has significant weaknesses.

Implementation and review

The overarching timetable for implementation is—

  • enactment of first Bill in May 2009; and

  • appointment of Board of ATA as early as possible after enactment of first Bill; and

  • enactment of second Bill by 24 September 2009; and

  • introduction of third Bill in October 2009; and

  • appointment of an electoral officer by November 2009; and

  • enactment of third Bill by May 2010; and

  • local authority elections in October 2010 to elect the Mayor and councillors for the Auckland Council and members of local boards; and

  • rationalisation of, and transition to, the new core arrangements significantly completed by October 2010; and

  • establishment of structures for Auckland Council by 1 November 2010; and

  • development of a new unified rating system as part of a new planning and budgeting cycle from 2012.

Legislation

Legislation is required to give effect to the Government’s decisions on Auckland local governance. Three Bills are anticipated, with this being the first Bill.

Transition

The size and scope of the transition to the Auckland Council is very large, involving the replacement of 8 local authorities with 6 300 staff, $27.2 billion in assets, and annual revenue of $2.3 billion.

The Royal Commission's report made a number of recommendations for the transition process, some of which were supported. The Government did not accept the Royal Commission’s recommendations that the rationalisation occur after October 2010. The 4-year implementation time frame was considered too long. Tolerance for change and disruption in Auckland will only last for a short time and implementation needs to proceed at a rapid pace. The Government did not want the majority of the newly established Auckland Council’s time to be focused on transition, but rather focused on the future.

The Government considered a range of options across a spectrum from an establishment board being focused solely on change management, with no oversight of existing council business, through to full control by the establishment board of existing councils' responsibilities as well as change management.

Preferred option

The Government decided to establish a transition agency (ATA) and place safeguards and constraints on decision making by existing Auckland local authorities and their subsidiaries (that is, council-controlled organisations and similar organisations).

Councils and council organisations will retain their existing responsibilities but the scope and nature of their decision making is subject to oversight. Existing councils and other local government organisations are required to have any decision that may significantly prejudice the reorganisation or impact on the Auckland Council confirmed by the transition agency in writing before implementing the decision.

The transition agency will also monitor councils and council organisations and have statutory powers to intervene in council decision making that may adversely impact on the reorganisation itself, or the new governance entity.

Legislation is needed to establish ATA and provide it with powers to undertake its role. The key features of the transition process are—

  • the appointment of an independent establishment board to head a transition agency (known as ATA); and

  • ATA appoints an interim chief executive for the Auckland Council; and

  • ATA and the interim chief executive can, before 1 November 2010, establish the organisational structure for the Auckland Council, including appointing staff.

The key advantages of this approach are that it preserves local democracy by allowing the existing councils to continue business as usual but manages the risks of perverse behaviour, key projects are protected, and there is a shorter period of uncertainty for staff and public.

Monitoring and evaluation

ATA will report to the Minister of Local Government. There is also a Cabinet Committee for Auckland that will monitor the transition progress at a high level. In addition, the Secretary for Local Government will monitor the work of ATA and will report to the Minister of Local Government at regular intervals.

Consultation

The Royal Commission conducted an extensive consultation programme involving a public submission process, which resulted in more than 3 500 written submissions and formal hearings conducted in 9 locations throughout the region, including Waiheke Island and Great Barrier Island (these involved hearing nearly 550 submitters at over 27 hearing days). It also undertook a Māori consultation programme.

The Royal Commission carefully considered the submissions it received on Auckland governance. A summary of the submissions received by the Royal Commission is provided on its website www. royalcommission.govt.nz. The Royal Commission noted that suggestions were wide ranging, relating, variously, to the number and sizes of councils, mayoral powers, representation and participation arrangements, council administration, urban design, social and environmental responsibilities, and the role of council entities such as Watercare Services Ltd or the Auckland Regional Transport Authority. When all the combinations of views on these elements are considered, the evidence presented almost every conceivable shade of opinion for the Commission’s consideration.

Departments

A number of agencies were involved in providing advice to Ministers on the Royal Commission’s recommendations and on an initial high-level Government response: The Department of Internal Affairs led this process in consultation with the Ministries of Economic Development, Environment, Transport, and Social Development, the Treasury, the Department of Building and Housing, and Te Puni Kōkiri. All these Government agencies support the recommended transition option. The Department of the Prime Minister and Cabinet was kept informed of developments.