Transition Agency to overrule 10-year plans
Published in The National Business Review
As Auckland councils rush to complete their 10-year plans by July 1, the Transition Agency is preparing to look over those plans – and decide whether to reject them.
As Local Government Minister Rodney Hide turns up the heat on local government generally by obtaining cabinet approval to review local government law, existing Auckland local authorities are contemplating the potential culling of their local projects by the Transition Agency.
Auckland local authorities might have hoped for a 'last hurrah' in the form of legacy projects approved in the shortly to be adopted 2009 - 2019 Long-term Council Community Plans (LTCCPS). But it is not to be.
The Local Government (Tamaki Makaurau Reorganisation) Act 2009, which came into force on May 25, requires the chief executive of each of the local authorities to ensure that a decision to adopt a LTCCP has been confirmed in writing by the Transition Agency before it is implemented. That is to say the adoption of the LTCCP has to be confirmed by the Transition Agency. Until that confirmation any decision to adopt is void and of no effect.
Since the LTCCP includes the 10-year (and sometimes longer) capital expenditure programme for each local authority, the Transition Agency has the perfect opportunity to control and limit that programme, notwithstanding that the Auckland Council will not be established until November 1, 2010.
Can't get houses in order
But the control extends far beyond the capital expenditure programme, since operational spending and all funding and financial policies are included in the LTCCPs. In fact the LTCCP, reviewed every three years, sets the direction each local authority proposes over a minimum 10-year period. If the existing local authorities hoped that there might be an interval, before their demise, to quietly get their houses in order, that hope has been dashed.
Clearly Mr Hide's intent is for the Transition Agency to seize the reins early and firmly. It is not only the adoption of the LTCCPs that must be confirmed by the Transition Agency under the Act but also a host of other decisions ranging from setting a rate to signing a contract worth $20,000 or more that will have enduring obligations beyond June 30,2011.
It should not be a surprise that the existing local authorities are constrained in their activities leading up to the takeover by the Auckland Council. The reorganisation exercise would be pointless if, upon commencement, the cupboard was effectively bare and all the key decisions already taken.
But bear in mind that the LTCCP is subject to a mandatory audit process.
It must contain a report from the local authority's auditor as to compliance with the Local Government Act 2002, the quality of and information and assumptions underlying forecast information, and the extent to which forecasts and performance measures provide an appropriate framework for assessment of service provision.
In other words, the LTCCP process was already subject to overview before the Transition Agency was required to confirm the adoption of an LTCCP.
Un-elected rule
What may be an issue for Aucklanders is the fact that democratic decision-making on local issues has effectively, for the duration of the transition period, been handed to the unelected, government appointed, members of the Transition Agency. There are other more practical issues as well, not least of which is the question of what will happen if the Transition Agency refuses to confirm a decision by one of the existing local authorities adopting its LTCCP?
Assuming some large local projects are retained in LTCCPs, what exactly will happen if the Transition Agency refuses to confirm the LTCCP? For example this week the Transition Agency Chairman has said that the agency will be focusing on new debt in its review of the LTCCPs, and implied that using debt to hold down rates would not be viewed favourably.
The act does not say what will happen if an LTCCP is not confirmed, but presumably there would be some frantic culling and re-writing to meet the Transition Agency's objection and the LTCCP would go back to the local authority for adoption in its amended form. We assume this to be the case, because the act does not tell us.
No rules set
The problem is compounded by the fact that there are limited guidelines as to the grounds upon which the Transition Agency may refuse to confirm a decision. There is reference in the act to "any" decision being subject to confirmation if it may significantly prejudice the reorganisation, or constrain the powers or capacity of the Auckland Council, or have a significant negative impact on the assets or liabilities to be transferred.
Although not expressed as criteria for the confirmation or otherwise of decisions on specified matters such as adoption of an LTCCP, in declining to confirm such a decision reasons for doing so must be given with reference to those matters.
It is interesting that an un-elected body, without particular local government expertise or experience, should have the opportunity to superimpose its decisions on those of elected local authorities that will already have considered submissions and conducted hearings on the issues contained in the LTCCP.
To top it all off, all eight of the existing local authority LTCCPs must be adopted and in force no later than July 1, 2009.
The local authorities themselves will for the most part not finish their deliberations until the final week of June, at which point the Transition Agency must confirm or otherwise. I have no idea how this logistical miracle is to be achieved but no doubt it will happen.
In the meantime local authorities outside of the Auckland region can only watch and wonder but Mr Hide’s plans are clear. He has told the cabinet of his desire to make councils more financially transparent and to force them to focus on the core activities, which he sees as transport and water services and public heath and safety.
Although Prime Minister John Key showed less enthusiasm for the project than Mr Hide, local authorities throughout the country should prepare for debate and assault on the four well-being – social, economic, environmental and cultural – embedded in the Local Government Act 2002.
For more information, please contact:
Linda O'Reilly
Partner
t: +64 9 979 2167
e: Linda O'Reilly
Last updated: June 2009
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