Strengthening Auckland's Regional Governance

Preliminary Auckland Regional Council Response

15 November 2006

Table of Contents
1. Introduction 3
2. Purpose 3
3. Background 3
4. Analysis 4
4.1 The case for change 4
4.2 Options for regional governance 8
4.3 Principle-based assessment 8
4.4 Initial response to the models 9
4.5 Summary 12
5. Preliminary arc response 12
5.1 Key elements 13
5.2 An enhanced regional council 14
5.3 Transition and transfer of functions and responsibilities 16
5.4 Regional Sustainable Development Forum 17
5.5 Transport – RLTS and ARTA 18
5.6 Water 19
5.7 Economic development 19
5.8 Potential regional role in urban renewal 20
5.9 Regional amenities 21
5.10 Representation 21
5.11 Establishment 21
5.12 Other matters 21
6. Public consultation 22

STRENGTHENING AUCKLAND'S REGIONAL GOVERNANCE - PRELIMINARY ARC RESPONSE
Report from the Auckland Regional Council: 15 November 2006
1. INTRODUCTION
This report outlines the ARC’s preliminary response to the Strengthening Auckland Regional Governance project. The discussion paper from the Joint Officials Group (JOG) was issued on Friday 3 November. Council considered the discussion paper and an accompanying officer report at an extra-ordinary meeting of the Council held on Wednesday 8 November.
This report follows Council consideration of the Options and Issues paper and reflects resolutions passed by Council at the meeting.
The report provides:
• Background to the project;
• Initial response to the three governance models outlined in the JOG discussion paper;
• A preliminary ARC response.
2. PURPOSE
The purpose of this paper is to outline a preliminary ARC response to the Options and Issues paper (Strengthening Auckland’s Regional Governance – Issues and Options, discussion paper for the councils of the Auckland region, 3 November 2006).
3. BACKGROUND
A variety of events have created a stronger impetus from various constituencies for local government reform in Auckland. The eight councils in the Auckland region have resolved to participate in the project, to strengthen regional governance. The project will deliver proposals for central government consideration in December 2006, to enable any necessary legislation to be drafted, consulted on and passed prior to the October 2007 local body elections.
The ARC is providing feedback on the discussion paper first, through this report, and will then be asked to resolve a position on a final set of proposals (by the end of November).
The Council has endorsed the ARC presentation to the Mayoral Forum on 15 September and this forms the initial basis for the response. Weekly meetings with ARC Councillors have occurred and input has been received through these meetings to assist in the development of this preliminary response. In addition, a regional forum led by the ARC involving all elected representatives of the region, mayors, councillors and community board members, was convened on 2 October and 6 November to discuss regional governance reform.
4. ANALYSIS
4.1 The case for change
The broad case for change is outlined in the discussion paper (Strengthening Auckland’s Regional Governance – Issues and Options – Discussion Paper for the Councils of the Auckland Region – 3 November 2006). There are some emerging themes that suggest local governance arrangements could be improved to:
• Provide better value for money for Aucklanders through improving service standards, efficiencies, greater consistency and reducing costs;
• Produce a coherent vision for the future, leadership and a unified approach for discussions with central government on social, economic, environmental and cultural regional issues;
• Support decision-making about interrelated issues in a more integrated way, more quickly and without relitigation;
• Better integration with Central Government achieving more certainty about funding and delivery;
• Better facilitate local democracy and helping to address emerging local social problems.
From an ARC perspective there are a number of compelling reasons that suggest changes will be necessary to meet the regional challenges facing Auckland, both today and into the future. New ways of thinking and ‘new ways of doing’ will be required.
4.1.1 One city-region – many communities
Despite the political boundaries, functionally Auckland is one city/region. Auckland works as one regional economy, one labour market, and despite multiple providers, Auckland has one transport system. Water networks cross local authority boundaries, and catchments in one part of the region have an impact on receiving environments in another.
This is not to ignore the importance of unique local communities and places. These are essential for the health and distinctiveness of the whole region. There are many issues that are best dealt with at the local level.
However, the ongoing growth, size and complexity of the Auckland region create a number of distinct opportunities. As New Zealand’s largest metropolitan urban region Auckland also has specific challenges. Auckland’s growth has major impacts on the region’s rural communities and settlements as well as the neighbouring regions of Northland, Waikato, and Bay of Plenty. The pace and cost of growth coupled with the historic underinvestment in key infrastructure means Auckland cannot afford to make poor decisions that result in a further misallocation of resources. There is a need to deal with problems that are essentially regional in nature at the appropriate scale.

4.1.2 Clarifying functions and responsibilities
The enactment of the Local Government Act (LGA) 2002 provided the opportunity for local government to reassess, through a process of identifying community outcomes, what and how it undertakes activities. The intention was to provide a more explicit rationale and a clearer linkage between activities and local authority goals and community priorities. However, in practice there has been a blurring of lines of responsibility between regional and local government with the result that the ‘division of labour’ between regional and local levels has become more ambiguous and less well defined. The strengthening regional governance process provides an opportunity to address the current ambiguity and provide a much clearer definition of responsibilities (i.e. the division of labour) between the regional and local spheres of governance.
It is also important to recognise that questions of strengthening regional governance do not simply involve the regional council and territorial authorities (TAs). Regional and local governance (including community boards) also involves citizens, non-governmental organisations, businesses, and other civil sector stakeholders who have an important role to play. Central government has an essential role and enhancing the relationship between regional and central government is critical to achieving successful public service outcomes. Providing a stronger voice for the region and creating a more effective partnership with central government and other sectors provides a far greater ability for the region to obtain the support that is needed. A stronger regional voice provides the prospect that the real issues affecting the region can be more successfully advocated and addressed.
4.1.3 Implementing the Regional Growth Strategy
It is increasingly recognised that there has also been a failure to fully achieve the outcomes intended in the Regional Growth Strategy (RGS). Since the adoption of the Growth Strategy, the majority of dwelling growth continues to occur in greenfield areas and as urban infill. Intensification has been slow to occur in the areas identified for growth. Developers indicate that there is little incentive for intensification of town centres and corridors and that they are looking for higher levels of leadership to encourage this. Fragmented land ownership has limited the ability of the market to deliver comprehensive re-development and effectively mitigate impacts on neighbours. Progress towards implementing sector agreements has been slower than programmed. It is evident that implementation of the Regional Growth Strategy has been under-resourced and efforts to align councils spending (through LTCCPs and asset management) with the Growth Strategy have been weak. Generally there has been insufficient investment in growth nodes, both in terms of infrastructure and planning.
While there are some good examples of urban development, poor built environment outcomes (e.g. aesthetically unattractive and poorly designed buildings), and development that is poorly integrated with the surrounding neighbourhood and transport, continue. Infrastructure provision is not leading or supporting appropriate development. Developers find council processes and requirements difficult to negotiate, inconsistent and uncertain. Short-term, local pressures undermine a regional long-term view and commitment to RGS implementation.

Lessons from city-regions in other parts of the world suggest that the intent of the RGS will not be implemented by zoning and regulation on their own. New approaches are being investigated in the review of the RGS (underway) and include:
• Prioritising growth centres in which significant investment, planning and other initiatives are focused;
• More active involvement in property;
• Direct investment in infrastructure;
• Establishing lead implementation agencies tasked with managing redevelopment including planning, land amalgamation, infrastructure provision and recovering costs.
4.1.4 Implementing the Regional Land Transport Strategy
Transport service delivery remains fragmented and under funded and a range of Auckland only provisions apply, for example the Auckland Regional Land Transport Strategy cannot include specific projects. Currently only ARTA is required to give effect to the Auckland Regional Land Transport Strategy. The obligations on both Transit New Zealand and the other Auckland local authorities are much weaker. At present, the ARC is unable to fully fund the implementation of the strategy. The result is that despite enjoying a very high level of support the Regional Land Transport Strategy will not be implemented in the current system of governance and funding. Ensuring the ability to both fund and implement the RLTS is a critical success factor.
4.1.5 Councillors’ responsibilities
The obligations of councils and councillors are first and foremost to act in the public interest to their local community. Section 12(4) of the LGA2002 requires that “A territorial authority must exercise its powers under this section wholly or principally for the benefit of its district”, with a similar provision in s.12(5) for Regional Councils. The ‘councillors oath of office’ (Schedule 7, Part 1, Section 14 LGA2002) echoes that obligation as follows:
“I, AB, declare that I will faithfully and impartially, and according to the best of my skill and judgement, execute and perform, in the best interests of [region or district], the powers, authorities, and duties vested in, or imposed upon, me as [mayor or chairperson or member] of the [local authority] by virtue of the Local Government Act 2002, the Local Government Official Information and Meetings Act 1987, or any other Act.”
Despite the goodwill of councillors these obligations effectively mean that city and district councils find decisions that may be in the best interests of the region as a whole, but possibly disadvantage their district, extremely difficult. This elementary conflict of obligation makes it difficult to achieve a comprehensive unified vision and plan. It places limits on the extent to which collaborative mechanisms can work in the interests of the region as a whole.

4.1.6 Objectives of the Metro Project Action Plan
The Metro Action Plan suggests that fragmented planning, decision-making and implementation are a major impediment to Auckland’s success. The implementation of several of the Metro Action Plan objectives and actions requires local government to reflect on and change the way in which it operates. There are a number of ways in which the objectives of the Metro Action Plan could be met, but some options for strengthening regional governance are more likely than others to support the objectives.
4.1.7 Reducing regional inefficiencies
The way certain regional activities are currently provided and funded highlight some of the inefficiencies that exist under current arrangements. Achieving the consensus and support of seven TAs (or all eight Councils) through a confederate approach has proven difficult, especially when it requires each Council to spend money. Examples of this difficulty are: the lengthy debate over the funding of the joint Civil Defence and Emergency Management responsibilities and the current debate over the funding of regional facilities. Apart from the very costly process of considering funding models, the net result is that a disproportionate share of responsibility often lies with certain Councils.
4.1.8 Improved funding mechanisms
The public have clearly signalled basic concerns over the magnitude and frequency of rates increases. While there is a substantial gap between the ARCs ability to fund public transport and levels of investment that are required to give effect to the RLTS there are also major financial pressures on the territorial authorities. The Strengthening Auckland’s Regional Governance project must deliver new and improved funding mechanisms and also focus on the need to achieve efficiencies if the current regional strategies are to be effectively implemented.
4.1.9 Central government’s role
In many areas where it has not been possible to effectively implement regional strategies a major factor has been the inability, or unwillingness, of central government to deliver key parts of the strategy or change either what they deliver, or the way in which they deliver it. Examples of this problem are: the current misalignment with respect to the Regional Land Transport Strategy and the Rail Development Plan including electrification of the rail network, and the failure to progress reform of the Transport Services Licensing Act. Strengthening Regional Governance may well require the Government to change the way that it acts and possibly the way in which it delivers and funds some activities.
4.1.10 Shared services
There are few legal impediments to the provision of shared services within the local government sector. Over many years a number of opportunities to realise savings and efficiencies through the provision of shared services, for instance rates billing, have been identified. Few of these have been attempted. Notable successes are the recent shared back room systems and services supporting libraries across the region, and the joint traffic management unit that has combined operational traffic management across all TAs and Transit New Zealand. There are weak incentives to realise the potential efficiencies through developing shared services.
4.1.11 National consistency
While there is a case to say that the scale and nature of the challenges of dealing with the sustainable development of Auckland may require unique approaches, there is also a strong case for national consistency. As a matter of principle it would seem that any departure from the national model of local government would need to be well considered and supported by a very strong case for an Auckland specific solution.
4.2 Options for regional governance
The JOG paper identifies 3 broad options for reform each reflecting different philosophies.
Further details are provided in the discussion paper.
The key features of Option 1 are:
• It essentially builds on the existing modes of operations;
• The independent sovereignty of each of the existing Councils remains, but this option relies on a much stronger commitment to work together;
• Participation would be voluntary.
The key features of Option 2 are:
• The agreement to create a regional assembly comprising representatives of the local authorities;
• A ceding of power (relative to the status quo) to the regional assembly;
• The binding of all local authorities to give effect to strategies adopted by the regional assembly.
The key features of Option 3 are:
• An enhanced regional body to plan, deliver and fund regional strategies;
• Reduced functions and decision-making (relative to the status quo) for territorial authorities and potentially central government.
Further details are provided in the discussion paper.
4.3 Principle-based assessment
The ARC has previously endorsed a principle-based approach to the assessment of governance models. A good governance model for Auckland should:
• Give effect to the purpose of local government to enable democratic local decision-making and action by, and on behalf of, communities; and promote the social, economic, environmental, and cultural well-being of communities in the present and for the future;
• Better enable the achievement of a unified vision and plan for the Auckland region to increase its international competitiveness and long term sustainability;
• Ensure that decisions are taken at the level of governance closest to those affected, best informed and best placed to deal with consequences, and coordinated between the different spheres of government;
• Provide for clear accountability to the public for outcomes, use of public funds and stewardship of public assets – no taxation without representation;
• Be cost efficient and effective;
• Deliver equitable impacts across the region;
• Be resilient into the future, and be able to deal with increasing uncertainty, complexity, diversity and change.
An important principle is the need to ensure that the proposal provides benefits that outweigh the costs of the reform and leads to more cost-effective services. In the time that has been available staff have not been able to undertake an analysis to quantify the likely benefits and costs of the options.
It is important to consider initial transition costs and longer term gains. This includes consideration of:
• The benefits of streamlined decision-making, including the ability to reach a final decision in a shorter period of time;
• The benefits of enhanced delivery, including the ability to take action and implement decisions in a shorter period of time;
• The likelihood of efficiencies and savings as a result of less duplication and less fragmentation;
• The benefits of more effective interface with central government and other sectors, and decision-making on regional issues that reflects the regional community of interest, and ensures better alignment of expenditure and effort.
4.4 Initial response to the models
4.4.1 Option 1 – voluntary cooperative decision-making and delivery
Advantages
The advantages of this model are that it builds collaboration and partnership efforts around the development of a common vision. It continues current democratic local decision-making.
The preparation of “One Plan” for Auckland by the Regional Development Forum, would provide overarching direction for the region and priority infrastructure investments, regional facilities and other actions required to deliver on economic, environmental, social and cultural outcomes from a regional perspective. This would provide the basis for a more unified vision.
The transition costs involved in Option 1 could be modest as it involves minimal change to the status quo. The key changes achievable in Option 1 could be the creation of new regional entities with responsibility for the vertical integration of service delivery for transport, water, economic development etc. Provided that the governance framework for these entities was strong this approach could deliver significant benefits through enhanced efficiency and more aligned decision-making.
Disadvantages
The difficulty with Option 1 is that it provides little that is different to the status quo. It therefore fails to provide a compelling solution to the problems identified above. This option does not really present a new division of labour between what is regional and what is local. It therefore fails to ensure that decisions are made at the level of governance closest to those affected and best able to deal with the consequences.
In addition to failing to solve the key problems of the status quo, Option 1 also contains an expanded confederate model for ownership and governance of regional entities. This would potentially extend the relatively weak governance structure that has applied to ARTNL and Watercare to ARTA, an expanded water authority, a regional economic development agency and an urban renewal agency. The inherent weakness in the proposed ownership model means that these new entities are unlikely to deliver the desired savings or efficiencies. Joint or club ownership may also reduce accountability to the public for outcomes, the use of public funds and the stewardship of public assets.
Because Option 1 does not adequately address the problems that are the drivers for the Strengthening Regional Governance work it is unlikely to be resilient into the future. Adopting Option 1 now is likely to lead to calls for further reform in the future.
4.4.2 Option 2 – shared binding decision-making
Advantages
This option addresses some of the current shortcomings by creating the potential for greater support for regional strategies. There is also a greater likelihood of implementation through the ability of the new regional assembly to ensure compliance with regional strategies. Accordingly, this option is more likely to deliver a unified vision and plan for the region than Option 1.
Option 2 has a ‘give effect to’ clause which addresses many of the short-comings of the current arrangements and provides a mechanism to overcome fragmentation, poor implementation and funding issues. The mechanism provides a greater likelihood of compliance and collective action in the regional interest.
This option continues much of the current framework for local democratic decision-making, however, the balance of decision-making responsibility between what is regional, what is local, and what is done jointly by the regional assembly is not clear.
Disadvantages
It is considered that the model outlined in Option 2 creates a very significant governance and accountability problem and would in fact make clear accountability to the public for outcomes, the use of public funds and the stewardship of public assets worse than the status quo. This is because the elected representatives who are members of the regional assembly will make decisions that are then imposed on councils other than their own.
This has significant implications for democratic decision-making. The model is significantly at odds with the framework of the LGA 2002 and the consultation and decision-making obligations of Councils. It could significantly alter the way in which councils set rates and constrain their ability to initiate actions. For example, the regional assembly could require councils to initiate changes to their regulatory frameworks, or require councils to make funding commitments to support a regional strategy. Councils would be left with the prospect of levying their ratepayers for actions and decisions made by the regional assembly. Accountability to the public under such a scenario becomes extremely compromised.
In practice, Option 2 would create on-going conflicts between the regional assembly and the parent institutions (i.e. TAs/regional authority), or deliver decisions that are based around the lowest common denominator agreements. Reaching agreement, or even binding majority decisions within the regional assembly could be very time consuming.
In addition it is unclear how regional priorities would be determined and how the regionally mandated body would influence those priorities. The JOG has not considered how the regional assembly would make decisions. Options include; equal representation for all eight councils, or some form of weighted representation, or weighted voting. The nature of the weighting and proportionality involved would be highly contentious. For example weighting could lead to the larger TAs being able to hold the balance of power at the expense of the smaller councils. Alternatively, equal representation could result in smaller communities exercising disproportionate influence to secure their own interests. Either way, the prospects of good decision-making that can address issues in the best interests of the whole region are less favourable than Option 3.
On balance Option 2 has the potential to deliver better decision-making and implementation than either the status quo, or Option 1. However in practice the way in which the Regional Assembly is structured means that there is likely to be a greater chance that the costs of transition and costs inherent in the problematic model of decision-making, exceed the benefits.
4.4.3 Option 3 – multifunctional regional authority (integrating strategy and delivery)
Advantages
It is considered that Option 3 has a number of advantages over both the status quo and the two other options. Option 3 creates a better defined division of labour and responsibilities (with the consequent decision-making, accountability and funding) between regional and local authorities. This option also preserves democratic local decision-making, although in a different form from the status quo.
Similarly, by ensuring that regional issues/functions are allocated to the democratically elected (and thereby mandated) regional body and that other issues are dealt with locally it ensures that all communities affected by those regional issues have a say in those issues.
Under this option, creating a unified vision for the region is made easier as overlaps between the regional and local authorities are minimised.
This is the option that also has the greatest prospect of addressing the short-comings of the current system through the alignment of tools for delivery of regional functions (planning, funding, ownership) in one regional organisation. It provides for better, faster decision-making and ensures that the financial consequences are considered as part of the decision. As a result, this option would make it easier to implement strategies.
Of all the models, Option 3 is most likely to be resilient in the future as it is considered to best address the underlying problems of existing institutional fragmentation and duplication, as well as provide for clear lines of public accountability for regional decision-making.
Option 3 has the greatest transition costs, but it also has the greatest scope for securing savings and other benefits. It also offers the potential for faster decision-making and implementation than the other two options. It also offers greater likelihood of realising efficiencies because of the way it combines financial responsibility with public accountability for outcomes, the use of public funds and the stewardship of public assets.
Disadvantages
The main disadvantage of this model is that it has the greatest transition costs including risks associated with its implementation. It also has the greatest impact on some of the TAs and their current operations as a shift in function to a regional body will need to be accompanied by a corresponding reduction in function at a TA level.
This option relies on the integration of strategy, funding and delivery within one regional authority. However, there would still be a major need for collaborative mechanisms to achieve the outcomes sought in regional strategies. The achievement of many aspects to regional strategies depends upon the action of Government, major private sector infrastructure providers, and the actions of individuals, groups and companies. Effective engagement with these groups would be an important success factor for the new regional authority.
4.5 Summary
On balance Option 3 provides the most attractive solution to the shortcomings of the current framework. It also stands up well across the principles that the ARC has endorsed for the assessment of governance models. However, there are some significant aspects of Option 3 that warrant further refinement or change. These are:
• The significant transition costs and risks associated with moving to Option 3 and ways in which the transition can be managed so that it does not de-stabilise decision-making and investment;
• Ensuring that the functions and responsibilities that are transferred result in efficiencies, cost savings and more robust and more timely decisions;
• Re-organising the structure of local government without providing additional funding mechanisms will not deliver the level of investment required to successfully implement regional strategies;
• Addressing the on-going role and responsibilities of community boards; and
• Ensuring that mechanisms for effective collaboration are preserved and enhanced where they are required.
5. PRELIMINARY ARC RESPONSE
The analysis of options presented above shows that whilst option 3 is the best of the three options presented in the Issues and Options paper there are still some significant aspects of Option 3 that require further refinement or change. It is therefore appropriate for the ARC to go beyond an assessment of the three options contained in the Issues and Options paper and consider an alternative response that the Council considers better achieves the objectives of reform.
This preliminary response presents an evolution of the Local Government (Auckland) Amendment Act 2002 (LGAAA) reforms with many of the features of Option 3. It also provides for an important new regional forum that is derived from Option 1 of the JOG paper. In addition, it brings together a number of related reforms that the Council has sought for some time, in particular transport reforms that are required to achieve greater value for money in the deliver of public transport services.
The proposed ARC response is therefore more in the nature of a package of reforms designed to enhance regional government than just a response to the structural options dealt with by the Issues and Options paper.
5.1 Key elements
The key elements of the proposed ARC response are:
• A strengthened regional council that continues a strong collaborative approach with the regional integration of strategy, funding and delivery for transport, water and economic development. There is also the potential for a regional role in urban renewal;
• The development of a new Regional Sustainable Development Forum to provide the inclusive collaborative environment with city and district councils to develop one plan for the sustainable development of the region, integrating strategies and actions across all aspects of the well-being of the region. The role of the regional council’s delivery agencies is to give effect to the sustainable development plan;
• The need for stronger national level policy guidance together with greater levels of national funding for Auckland’s regional infrastructure. In particular the need to develop national policies, including a National Policy Statement on population, growth and development for New Zealand;
• A staged transition process that establishes the strengthened regional authority with appropriate regional functions, and at a later stage the transfer of appropriate functions from other agencies, if this is considered desirable and mutually agreed;
• Retaining the present system of democratic representation across the local government sector including community boards, local councils (TAs) and the regional council;
• The provision of new funding mechanisms (a regional fuel tax and regional development contributions) to support the strengthened regional council and ensure that it has the financial capability to match its responsibilities;
• Targeted shared services across all of the local authorities in the region (shared rates billing), and stronger incentives to achieve cost-savings and efficiencies through shared services in other areas;
• A regional forum open to all elected representatives of the region, Mayors, Councillors and Community board members to meet periodically to discuss matters of regional significance (note the ARC has already convened two of these to discuss regional governance);
• The inclusion of the whole of Franklin District Council in the Auckland region;
• The civil defence emergency management service as a responsibility of the regional council;
• The funding of agreed regional amenities and services such as, regional surf life saving, Auckland Philharmonia, etc.
• The tidy up of a small number of legislative anomalies and inconsistencies in a range of Auckland specific legislation, including the Local Government Act 1974, LGA 2002 and the LGAAA 2004;
• Some broader transport reforms, including completing of the reform of the Transport Services Licensing Act and the related review of Land Transport New Zealand’s procurement procedures relating to passenger transport.
5.2 An enhanced regional council
The broad structure of the proposed strengthened regional council is shown in
Figure 1. The enhanced regional council would continue to deliver all of the current responsibilities and functions of the ARC including regional parks, environmental and coastal protection and management, regional policies and regional plans. In addition it could progressively take on, subject to further analysis, integrated strategy, funding and delivery responsibilities for transport, water, economic development and potentially urban renewal.
Each of these responsibilities is further discussed overleaf.
The proposed ARC approach targets integration of strategy, funding and implementation in those areas which:
• Are best understood;
• Have the potential through integration to significantly enhance the delivery of services, better align investment decisions and deliver considerable efficiencies and savings through combined operation;
• Or, in the case of Economic Development and Civil Defence Emergency Management, where there is recognition that current efforts across the region need to be enhanced.
This provides the initial scope of regional council functions and activities. In the future, work could be undertaken to assess further functional transfers against the principles agreed in the regional governance project. The transfer would need to satisfy certain criteria set out in legislation. This process should identify the quantifiable costs of reform and savings achieved by reducing duplication and transactions inherent in fragmented delivery.

Figure 1: Strengthened Regional Council

This future work should focus on the following functional areas which involve activities undertaken by a range of other agencies:
• Transport responsibilities;
• Water responsibilities;
• Economic development;
• Urban renewal.
Water and transport infrastructure are key strategic assets that provide for the day-to-day health and well-being of the people of the region. They are also key public investments that shape the nature and form of our city-region. Given the significant and legitimate public concern over the strategic and public importance of both transport and water infrastructure it is of fundamental importance to have stronger provisions securing public ownership of these assets than is provided for in the LGA 2002.
The potential for a regional role in urban renewal is new and discussed separately below.
5.3 Transition and transfer of functions and responsibilities
The magnitude of the change involved is potentially very far reaching. It is desirable that as far as possible, candidates standing for office in the October 2007 elections have a clear understanding of the expected scope of the strengthened regional authority and the mechanism by which change would occur. On the other hand, while the case for some of the reforms is already compelling, significant further work is required before many of the changes that could be desirable can be finally decided upon. It is essential that adequate time be provided for this work to be done properly, while maintaining the momentum for change and a process that ensures necessary decisions will be made. Further, once reforms have been decided on, it is key that they be implemented in a way that ensures the achievement of the benefits sought.
Accordingly a staged change process is recommended. The first stage would establish the strengthened regional authority with a breadth of functions, which could be at a later stage be built on with the transfer of related functions from territorial authorities and/or central government, if this is considered desirable once having gone through a legislated investigation process.
This first stage would require legislation to be passed prior to October 2007 to:
• Put in place the first set of reforms to create an enhanced regional authority undertaking the existing functions of the ARC, including governance of ARH and ARTA, plus:
- Ownership and governance of Watercare Services Ltd;
- The powers to levy a regional fuel tax to fund transport, and regional development contributions for growth related regional infrastructure.
• Remove any legislative barriers to effective regional decisions and action and to enable voluntary further change. This would include amendment of:
- The Transport Services Licensing Act and Land Transport NZ passenger transport procurement rules;
- The Local Government Auckland Amendment Act to enable the Regional Land Transport Strategy to define projects and ARC to govern ARTA subject to standard CCO provisions;
- The relevant water legislation to enable Watercare ownership to be transferred and to enable other future change;
- The Local Government Act 1974 to provide status to the Regional Sustainable Development Forum in place of the Regional Growth Forum.
• Establish a framework that provides the opportunity for the region to explore whether further reform by way of transfers and vertical integration of the functions identified above (transport, water, economic development, urban development) is desirable. This legislation would signal:
- The scope, process and timetable for investigating further reforms and reporting to central government for decision;
- The criteria that would need to be satisfied in order for a transfer to take place (based on the governance principles);
- That transfers can be completed without residual liabilities and without tax consequences;
- That as responsibilities shift from one agency to another their respective rates take is seen by the public to decrease and increase by the cost of the responsibilities that are transferred. Any transfer of rating burden must be fiscally neutral;
- A set of principles to ensure that any transfers not be frustrated by unreasonable behaviour.
• The first stage would also involve some non-legislative actions such as:
- Establishing a Regional Sustainable Development Forum, with representatives from all the local authorities, to develop ‘One Plan’ for the Auckland region;
- Enhancing AucklandPlus’s functions to take on activities recommended by the Metro Project Action Plan;
- Investigating establishing the new regional urban renewal function;
- Investigating shared services, for example rates billing.
5.4 Regional Sustainable Development Forum
A proposed new Regional Sustainable Development Forum would be used to provide an effective interface for central, regional and local spheres of government.
Like the current Regional Growth Forum, it would be a statutory standing committee of the strengthened regional council. It would involve representation from all councils in the Auckland region (similar to the existing RGF). The Regional Sustainable Development Forum would develop a single sustainable development plan for the region that delivers a vision, and the actions required to achieve it, across all dimensions of well-being (environmental, social, cultural and economic). This One Plan for Auckland would bring together into a single vision, a set of objectives, goals and targets already articulated in existing regional strategy documents, but placed within a sustainable development framework. It would also need to address gaps where significant regional issues are not currently being addressed.
The role of the Regional Council’s subsidiary delivery agencies would be to give effect to the One Plan for Auckland.
The Regional Sustainable Development Forum would replace the existing Regional Growth Forum and its creation would result in the repealing of existing Growth Forum provisions (LGA 1974 (1998 amendment no 89)).
5.5 Transport – RLTS and ARTA
The proposed ARC response is firstly to improve democratic decision-making by seeking changes that enable the RLTS to identify strategic projects and to bring the governance of ARTA in line with standard CCO provisions. Secondly, to improve services to the Auckland public, there is a need to further integrate public transport infrastructure into ARTA. The ARC also supports retaining a Regional Land Transport Committee.
The RLTS is the primary vehicle for democratic decision-making about the future of the Auckland’s transport system, but without the ability to include strategic projects it has caused unnecessary confusion and duplication at the ARTA/TA level. The Auckland only restriction (section 36, LGAAA 2004) makes the Auckland RLTS different from those of other regions for no apparent reason. Some projects are of fundamental strategic importance to the region, and need to be specified in the RLTS to ensure the integration of land use and transport and the range of outcomes intended. This is especially important to signal to other agencies (i.e. Transit and Central Government) the preferred regional approach. This simple change would provide multiple benefits.
Making ARTA subject (as far as possible) to standard CCO provisions will improve public accountability for the use of public funds and provide further incentives for performance. The ARC provides ARTA with over half of its rates funding and almost all of the funds generated by ARH. The LGA 2002 holds the ARC accountable to the public for the use of these funds. The existing provisions place ARC in the position of having political accountability and funding responsibility for ARTA but with limits on its ability to govern.
Despite the intent of the LGAAA the region has not yet been able to integrate public transport infrastructure into ARTA. The transition of ARTNL assets and functions into ARTA is not yet complete, and the Government’s decisions relating to the role of OnTrack have continued a multi-organisation approach to the delivery of the rail system in the region. The experience in dealing with ARTNL assets and functions shows that negotiated transfers are extremely difficult to achieve even when the key organisations agree on the broad principles of the change.
Further integration of public sector public transport infrastructure could considerably enhance the development and delivery of the public transport system and the seamless delivery of services to the public. The further integration of transport responsibilities within ARTA could provide real opportunities to implement the RLTS in a meaningful way and could lead to genuine regional priorities for transport investment and the integration of land use and transport decision-making.
Accordingly, it is considered that transport function is a key area that requires further exploration through a future reform process, supported by legislation, as outlined above.
Lastly, it is proposed that the funding capability of the strengthened regional council should be enhanced by the ability to utilise a regional fuel tax and regional development contributions under the LGA 2002.
5.6 Water
As a first step to a more regionally integrated approach to the provision of water services and infrastructure investments, the ARC proposes the return of Watercare to regional ownership and governance. Further integration could then be considered through the staged reform process outlined above.
ARC already has a position that signals its support for Watercare returning to regional ownership and governance under the ARC. Returning Watercare to regional governance will provide stronger, broader and more certain oversight than can currently be achieved through the current fragmented ownership by the company’s customers, including the ability to foster both environmental and cost minimisation objectives. It provides the ability to achieve stronger links and alignment between water infrastructure investment decisions and urban form through the RGS. The reform will create the framework for more efficient pricing of water services and as a consequence more environmentally and economically sustainable infrastructure decisions. This includes the ability to deliver both large scale infrastructural solutions and demand management, reuse, smaller-scale community based investment with supporting use of economic incentives/pricing mechanisms.
There has been considerable work over many years suggesting that there could potentially be significant savings that could be achieved from the vertical integration of water management within the region. The Parliamentary Commissioner for the Environment has presented a compelling case for integrated management of the three waters in order to deliver sound environmental and sustainable development outcomes.
Consequently, it is considered important that water responsibilities within the region are given further consideration through the future reform process outlined above.
5.7 Economic development
The proposed ARC response to improve regional level coordination and facilitation through an enhancement of Auckland Plus, to take on coordination of economic development activity across the region, and the delivery of the innovation, skill, regional brand and investment attraction components of the Metro Action Plan.
The ARC as the lead agency in the partnership based Metro project, is now in a position to build on the wide public interest and engagement in the Metro Action Plan, and to now focus efforts on achieving successful implementation that builds on the energy, spirit of cooperation and aspirations that Metro has generated. The shift to establish a stronger regional delivery agency for economic development in Auckland would also reflect the comparative success of the Canterbury Development Corporation and recent moves in Wellington to consolidate regional economic development delivery within the Wellington Regional Council.
The enhanced regional Economic Development Agency could become a subsidiary of the ARC and would be required to give effect to the region’s sustainable development plan and regional economic development strategy. Enhancing existing arrangements will generate a number of benefits, including improved coordination and delivery at the regional level that overcomes existing fragmentation and a lack of alignment, along with an enhanced ability to secure external funding from central government and the private sector.
5.8 Potential regional role in urban renewal
The ARC supports further consideration of a regional role in urban renewal and the potential for a new urban renewal agency to be established. The underlying premise for a new regional role in urban renewal would be a strong commitment to sustainability, this means a commitment to demonstrating excellence in achieving environmental standards and by stimulating innovation and quality outcomes in design and construction, while building on the compact city approach. It also includes consideration of ways to include improved social outcomes through urban development.
Further work is required to clarify the objective of the regional level of involvement, including what the regional agency could offer that is distinct from other parties, and the relationship between the regional function and the property corporations already operating at the local authority level. There are also strong connections with the waterfront redevelopment.
It is increasingly recognised that one of the key policy areas where the existing local government framework has failed is in the implementation of the RGS. In addition to deficiencies resulting from an over-reliance on regulatory approaches, the market has struggled to deliver sensitive and comprehensive urban renewal. Redevelopment within the MUL has tended to be infill, or focused on sites that have become available and been developed despite potentially negative impacts on the surrounding community and neighbours. Work on both the monitoring of the implementation of the RGS and its current review shows that one of the biggest impediments to appropriate intensification is the inability to aggregate titles to provide for comprehensive re-development.
New approaches are needed including a greater ability to achieve land use changes that reinforce public transport investments that can shape and influence design and development outcomes ‘on the ground’.
The proposed response is to further explore a regional role and mechanisms that enhance the regional council’s ability to achieve high quality, sustainable urban redevelopment. This in turn will provide for a more comprehensive and integrated approach to development, along with an enhanced capability to implement regionally significant projects. Further consideration is needed to facilitate comprehensive and sensitive redevelopment by way of overcoming land fragmentation through aggregating titles (through for example providing the Regional Council with powers of compulsory purchase for urban renewal (under defined criteria) that were available to TAs under the LGA 1974 but were repealed with the passage of the LGA 2002).
5.9 Regional amenities
The ARC recognises that there are funding issues and a number of complications around the ownership and governance of a number of facilities and organisations that provide recreational, cultural and other benefits to the regional community.
The ARC is concerned that there are significant risks for ratepayers whilst the criteria to define ‘regional’ in the context of regional facilities and amenities remains ill-defined and ambiguous. There may be an unrealistic expectation amongst certain venues and groups that they will receive substantially more money in contributions from ratepayers. Any new or enhanced role for the regional council therefore requires careful consideration and a commensurate shift in funding for the facility or amenity from the local level to the regional level.
The ARC would be concerned to ensure that any changes result in providing higher quality services and opportunities to the people of Auckland and service delivery aligned to agreed regional priorities, whilst minimising the potential impact on ratepayers.
5.10 Representation
The ARC’s position is that the representation arrangements for the enhanced Regional Council be those currently applying to the ARC, including a Chairman elected by the Council, as per Schedule 7 LGA 2002.
The ARC has just been through a constituency review that favoured the status quo with a close link to TA boundaries. The ARC’s review demonstrated that the status quo arrangements work well and enable the effective representation of both rural and urban communities in decision-making.
5.11 Establishment
The ARC’s position is that the enhanced regional entity should be established from the existing ARC with the retention of its existing name. A complete disestablishment / establishment process for the ARC would be excessive and would have a profound effect on the ability to continue to deliver during the transition process. Such an approach would generate significant costs and disruption.
5.12 Other matters
Shared Services
The ARC strongly supports looking at ways to improve consistency through the provision of shared services across the region. The ARC considers that this provides a major opportunity for cost savings and efficiencies that will benefit the ratepayers and public of Auckland. The reform project should consider legislation to support a shared services approach. A key opportunity for improvement is the delivery of a single property valuation system and billing system for rates across the region.
Inclusion of Franklin District Council
Franklin District Council is currently split between the Auckland region and the Waikato region. For transport, civil defence and economic development purposes the south of Franklin is dealt with as part of the Auckland region, but for all other purposes it is part of the Waikato region. The main reason for the south of Franklin to be part of the Waikato region is flood management, however, in many other respects the south of Franklin is increasingly exposed to the same sort of peri-urban pressures that affect the north of Franklin, rural Manukau and Rodney. It is suggested that, to further integrate management and to deliver administrative simplicity, the whole of Franklin district be included in the Auckland region.
Civil defence emergency management (CDEM)
Recent reviews have highlighted the existing arrangements are not working effectively and compromise the ability to deliver a well-coordinated regional emergency response. To address these concerns it is proposed that Civil Defence Emergency Management and regional emergency response become a responsibility of the stronger regional entity.
The benefits of this change would be to deliver a more effective regional emergency response, provide a clear responsibility and mandate and address the shortcomings of the Civil Defence Emergency Management Act 2002. The change is likely to reduce transaction costs that result from the joint provision of a CDEM response by 8 local authorities.
6. PUBLIC CONSULTATION
The small window of opportunity provided by the central government legislative timetable and next year’s local body elections have placed significant constraints on the potential reform timetable. This has consequences on the scope and timing of public consultation in the policy development process.
There have been two regional fora with elected representatives across the region. There has also been initial discussion with iwi on the governance project.
It is important to note that the ARC will not have an ultimate decision-making role in this process – that is subject to the discretion of Central Government. Central Government will ultimately decide on the role, function, strategic asset and service delivery implications for all local authorities in the Auckland area. The ARC will be in a position to consult and to undertake a special consultative procedure once the intentions of central government are made clearer. This would form an important part of preparing the ARC submission to any Select Committee process on any draft legalisation central Government may propose – and at that point in time the ARC will be in a position to have a detailed proposition that communities will be able to respond to.
However, as noted in an earlier report the ARC is committed to ensuring as open and inclusive a process as possible is undertaken, within these constraints. Council has resolved to hold an additional Council meeting in advance of the ARC making final resolutions on its position to facilitate public input.
A meeting has been convened to hear public feedback on the ARC’s regional governance proposals on Saturday 25 November at the Auckland Regional Council. To support this process, this paper and the resolutions from 8 November Council meeting will be made broadly available to interested parties and the public.

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