Fixing the Big City Blues

Public policy specialist Jeff Chapman has a prescription for making Auckland work.

If, like me, you are an Auckland resident, it is very likely that we share some somewhat mixed feelings about the city. On the one hand, ours is a city with so much going for it: a magnificent harbour; beaches and bush at our doorstep; a temperate climate; a multicultural buzz that no other New Zealand city can equal. On the other, Auckland’s seeming inability to get its act together sometimes makes me despair: the grid lock on the motorways, the infrastructure breakdowns, the imbroglio around the World Cup venue... need I go on?

How is it that Auckland has ended up like this? Why does it seem that problem follows problem?

I believe that Auckland’s disarray is systemic and can be laid at the foot of the 1989 reforms of local government carried out under the direction of the Minister of Local Government in the Lange Government, the Hon Michael Bassett.

I also believe that answers lie not in rescinding his reforms, but in building on them.

When Bassett took office, the local government structure in New Zealand was a cluttered mess. There were hundreds of so-called territorial local authorities (city or borough councils in urban areas, and county councils in rural areas) and also hundreds of special purpose local authorities - such as hospital boards, power boards, harbour boards, catchment boards, pest destruction boards, river boards, drainage boards, cemetery boards and domain boards. Overlaps and inefficiencies were rife.

In place of all of this the 1989 reforms, and associated reforms in the energy and transport sectors, gave us the following:

• Twelve regional councils which absorbed the functions of catchment boards (indeed their geographical boundaries were based on the old catchment board districts) as well as the regulatory functions of harbour boards (actual operation of ports became the responsibility of port companies), regional land transport planning, regional emergency management and biosecurity (incorporating the functions of pest destruction boards).

• Seventy-four district and city councils that assumed the functions performed by the old borough, city and county councils together with the functions of all special purpose authorities except hospital boards (later to be area health boards), harbour boards and power boards (which in the energy reforms became retail power supply companies or line companies). Four of these district councils (Gisborne, Nelson, Marlborough and Tasman) also assumed the regional council responsibilities for their areas due to local geographical and political circumstances.

• Community Boards, 144 of which were created as a tier of local government to recognise existing distinct, identifiable communities that had been governed by the small local authorities now absorbed into much larger authorities. Essentially these boards provide a mechanism for their councils to consult with these communities and seek advice on projects affecting the community. The boards also assumed an advocacy role for their communities.1

The structure seems to have suited most of New Zealand well enough. So what happened in Auckland?

The problem, as I see it, is that the reforms failed to take account of the historical governance of the Auckland region.

From the days of Auckland Mayor Dove-Meyer Robinson, Auckland had had its own unique regional government in the form of the Auckland Regional Authority (ARA) which built and managed all major infrastructure projects in the Auckland region. The ARA was heavily involved in delivery of services to the region, with little formal separation of policy, regulatory services, funding and service delivery.

However, this concept did not sit well with the structure imposed by the Bassett reforms or with the public management theories of the day, which held that policy, funding and purchasing should be organisationally separated from operational service delivery. So the operational functions of the ARA were given to a new body, the Auckland Regional Services Trust, the ARA was renamed the Auckland Regional Council (ARC) and its activities were restricted to those carried out by the other regional councils. Eventually, the assets and services taken over by the Trust were either privatised or transferred to companies owned by the councils in the region.

Thus Auckland’s local government came to consist of a regional council with limited powers over regional infrastructure and seven councils, three of them district councils and four of them city councils. New Zealand’s largest city had been Balkanised.

To make matters worse, while the three district councils served distinct, natural communities of interest, the four city councils did not necessarily do so: they were created as so-called economic units.

For example, although they fall under the same unit of local government, the residents of Devonport and Takapuna have little community of interest with Northcote and Birkenhead, and even less with Albany.

While the ward system of electing councillors has helped, there is still no sense of the individual city council belonging to its ratepayers and citizens.

The creation of community boards has been the only move that has kept citizens connected to their local government.2

Nor has the current arrangement been good for the delivery of services.

The decision to reduce the old ARA to a regional council with limited powers meant that any rationalisation of infrastructure in the region could only take place with the agreement of the other councils in the region. Unfortunately these had a vested interest in maintaining the status quo. Thus we have seven different water and sewerage systems and seven different roading systems (although in the latter case the ARC has assumed responsibility for some arterial ‘regional roads’). All these infrastructure systems are local monopolies but, unlike other local monopolies, they are not subject to external regulatory regimes. This means that the consumers of these services are unprotected against predatory pricing by the councils that use their unrestricted monopoly powers. If such a regime applied to power line companies there would be outrage.

Over time, various attempts have been made to provide Auckland with the mechanisms to create long term strategies and articulate a representative voice. Take the Mayoral Forum, the Auckland Regional Transport Authority, and the Auckland Land Transport Strategy. Worthy initiatives all, they fall down because the model for the governance of Auckland is flawed.

The Local Government Act of 2002, which this Government sees as its landmark approach to local government, hasn’t addressed Auckland’s particular problems either.

So where to from here? The following is a set of moves that would effectively reform the governance of Auckland.

• Convert the Auckland Regional Council into a strategic authority with powers of direction over the other territorial local authorities on all matters other than those of a purely ‘local’ character – with either ‘local’ or ‘strategic’ being defined in statute. A corollary is that the regional body’s presiding officer would be the effective voice for the Auckland region.3

• Convert the current infrastructural systems into economic units, with pricing structures subject to regulation by the Commerce Commission in the same way that it regulates line companies in the energy industry.4

• Abolish the four city councils and replace them with local authorities serving districts with genuine common interest. These may well conform to the current boundaries for parliamentary general electoral districts. If such a model was adopted, the need for community boards as an extra tier of local government might well disappear.5

• Allocate the roading taxation collected in the Auckland region to the ARC with the stipulation that it only be spent on land transport solutions.6

• Remove Transit NZ’s responsibility for state highways in the Auckland region.7

Of course, I am not the only one to think that something needs to be done about Auckland’s governance. The Government has signaled that it will consider legislation to reform Auckland governance structures before the local authority elections in October 2007.

Well and good, you might think, but I have two reservations. The first is the likelihood that the legislation will be based on submissions received within Auckland’s current local government system – submissions that seem likely to favour the interests of those making them.

The second is the 2007 deadline. Locating the deadline in a local authority election year will almost certainly involve the sort of hurry and political horse-trading unlikely to serve Auckland’s best long-term interest.

My suggestion is that the local authority elections in Auckland be deferred for two years, allowing the current systems to carry on until suitable legislation can be passed in 2008. This time round, Auckland has to get it right.

1 The members of these boards are elected at the triennial Council elections, with 48 of the 74 city and district councils currently having one or more community boards.

2 The electorate boundaries under MMP (though these obviously weren’t around at the time of the reforms) represent more suitable communities on which to base new local authorities.

3 While not essential to satisfactory reform, a strong case can be made for this officer to be elected at large by the region’s electorate as is the case in Greater London.

4 The question of ownership of these entities (public or private) is irrelevant to this issue. Either way they are local natural monopolies where the consumer needs protection from predatory pricing policies. Public ownership of itself, without regulation, offers no such protection.

5 There are currently seven councils and 30 community boards in comparison with 19 parliamentary electorates (20 after the 2006 Census).

6 Clearly central Government will still need to specify the roading standards to be adopted for state highways and motorways, and employ some agency, possibly Land Transport NZ, to monitor compliance with those standards.

7 These last two points would make a major contribution to shifting decisions about Auckland from Wellington to Auckland. Such a shift however can only occur where the regional body in Auckland has appropriate powers to formulate and implement strategic infrastructure decisions.