Transport is the make or break issue

Published in The National Business Review

When the Government released its Decisions on Auckland Governance it announced significantly different plans for important regional infrastructure than the Royal Commission proposed.  Most of these decisions have yet to be given effect to in legislation. 

The exception is water and wastewater.  A new section 30A was inserted into the Local Government (Tamaki Makaurau Reorganisation) Act by the more recent Local Government (Auckland Council) Act.  It requires Watercare Services to manage the integration of water supply and wastewater services in Auckland and become the provider of those services.  Stormwater drainage services are specifically excluded.  Watercare Services will be a council controlled organisation owned by the Auckland Council.

The governance of other regional infrastructure remains unsettled.  This includes economic development, waterfront development, social issues, and transport.

Sensitive Issue

This is particularly controversial for transport where the government has said that there will be one Regional Transport Authority (RTA) for all local government transport functions.  The commission had also proposed a single transport authority, but one responsible only for public transport and arterial roads, with local councils having responsibility for local roads.

Transport is a particularly sensitive issue for Auckland.  It is probably the single factor that most strongly influenced the decision to conduct a review of Auckland governance and the move to the single Auckland Council.  It is continuously cited as the one regional issue on which the existing local and government organisations have failed, and as the area of infrastructure that Auckland must get right.

The remaining infrastructure issues are expected to be dealt with in the third piece of Auckland governance legislation promised by Minister Rodney Hide later this year.  But debate is under way over the extent to which the delivery of key services such as transport should be in the hands of arms length agencies rather than under the direct control of the council.  The suggestion is that without direct control over the delivery of key infrastructure the council will not have the power it needs to deliver the outcomes expected of it.

What could go wrong

It would be a disaster if the Auckland Council, having been created to revitalise Auckland, was hamstrung in its ability to do so because of the lack of direct control over matters such as transport and economic development.  The council will be able to appoint directors, and one of the principal objectives of a CCO under the Local Government Act 2002 is to achieve the objectives of its shareholders.  Those objectives must be specified in a statement of intent that must be agreed by the local authority.  A CCO is required to make all operational decisions in accordance with its statement of intent.  The shareholder council monitors each CCO's performance against the local authority's objectives for that CCO.

Although this process can occasionally lead to friction between a CCO and its shareholder council, it does make the CCO the servant of the local authority in the broadest sense.  It has to be acknowledged, however, that the relationship between local authorities and directors can be a difficult one if the statement of intent is not clear and unequivocal and if the roles of all parties are not well understood.

The problem for the proposed RTA is that it will have key elements of its statement of intent set from the outset.  It will be required to prepare a regional land transport programme funded by the Auckland Council and the NZ Transport Agency but required to be consistent with government policy on land transport funding.  This puts the control with central government rather than the  council. 

For more information, please contact:

Linda O'Reilly
Partner
t: +64 9 979 2167
e: Linda O'Reilly

Last updated: October 2009

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