Local government focus on lifting governance and financial performance

Without good governance no organisation can hope to succeed. At the annual Local Government New Zealand conference, the delegates discussed ways to improve the governance and financial performance within their organisations.

At a session entitled “Lifting governance and financial performance,” speakers teamed up today to discuss ways to lift the game in the local government sector. The session highlighted examples from three sectors. Andrew McKenzie, Chief Financial Officer of Auckland Council spoke from local government’s point of view; Arihia Bennett, Chief Executive Officer of Te Runanga o Ngai Tahu represented Iwi views; and Craig Stobo, Chair of the Local Government Funding Agency and AIG talked from a private sector perspective.

The key message was that governance not only sets the direction for an organisation, through the articulation of goals and objectives, but it also ensures that institutional structures and the allocation of resources are aligned to the achievement of those goals and objectives.

The presenters, who have all worked on transforming the quality of governance and financial performance, shared some of the critical steps in their organisation's journey to achieve effective outcomes and the learnings that have resulted.

Ms Bennett said that Te Runanga o Ngai Tahu had a governance change in 2011 when it introduced two new senior committees, one for external communications and one for internal.

“This allowed our directors to be more deeply engaged with tribal matters and refocus efforts. We also developed governance capability because we want people to be the best they can, be engaged at the flax root with communities and know what to do in terms of governing. Governance requires specific generic competencies such as those the Institute of Directors promotes, and for us it is important we include tribal nuances and significant cultural leader practices.”

Mr Stobo said that the Local Government Funding Agency had lent more than $3.7 billion to councils since its establishment in December 2011. With 18 per cent of its funders based overseas, the Agency sees strong demand for investment in New Zealand local government.

“For good governance, it is important that we have a majority of independent directors with diversity of location and skills, and that all conflicts of interest are declared. We have a shareholder council that provides guidance and encourages accountability for our board members,” Mr Stobo says.

“Directors need to understand their roles for good governance, to know when to pull back and to entrust their management, seeking results while ensuring regular reporting. It is also important to adapt to change.”

Mr McKenzie said that when it was established, Auckland Council introduced reporting frameworks so that every month councillors would get a performance-focused report on what was happening across the Council.

“We established some basic financial parametres to report to that helped us with planning and delegations. Our auditor relationship is really important, we’ve made it a strong partnership,” Mr McKenzie said.

“We set up a concept of executive governance so that if you worked as leader in Auckland Council at any tier, you had to take responsibility for performance across the whole of Council.”

Local Government New Zealand (LGNZ) President Lawrence Yule says the sector knows that in order to deliver strong local government across New Zealand, we need to continue to raise our standards of governance and performance.

“While there are many strong performers we need to lift the bar higher. In March 2014 LGNZ launched EquiP, our Centre of Excellence, to deliver tailored services, best practice guidance, business solutions, governance and management support to strengthen the sector,” Mr Yule says.

“We are leading and supporting our members to improve governance and performance.”

This session was kindly sponsored by PwC.

The 2014 LGNZ Conference takes place 20-22 July at Nelson, with more than 550 local government delegates attending to take part in master class sessions, hear presentations from high profile speakers about significant issues and opportunities facing the sector. The theme of the conference is Powering Local Economies, Building Vibrant Communities.

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