Four Northland councils have teamed up with the NZTA in a groundbreaking collaboration. Neil Cook explains.
The Northland Transportation Alliance is a collaborative arrangement between the New Zealand Transport Agency (NZTA) and the councils of Northland – Far North District Council, Kaipara District Council, Northland Regional Council and Whangarei District Council. It is a leading example in terms of the scale and scope of collaboration.
Carrot & stick
Northland, mid-2015: the Local Government Commission has announced it will not progress proposals for re-organisation “at this stage” but that it would work with the local councils on a range of collaboration workstreams.
Importantly, re-organisation was not taken completely off the table. Rather, the commission signalled that it felt “… the trends affecting local government in Northland may not be best managed by the current arrangements and the commission would like to explore other options before making a final decision…”
A stay of execution, then? It came with clear signals as to what might turn the reprieve into a ‘full pardon’.
Step back in time several months: the mayors and chairs of Northland have succeeded in their mission to get the board of the NZTA to endorse in principle the designation of an inland state highway – the Mangakahia Road; an increasingly costly freight route critical to the economic success of this region that sits near the bottom of so many socio-economic indicator tables.
The quid pro quo? NZTA gains the commitment of the councils to review their delivery of transportation activities to find ways to work more collaboratively and unlock efficiencies to achieve greater value for money – for the region and for NZ Inc.
Whilst not the entire story, these two key strategic drivers set the scene for a 12-month journey that would see Northland take a national lead in collaborative infrastructure service delivery.
NZTA and the councils engaged specialist infrastructure advisor Rationale to facilitate the development of a business case to explore options for improving transportation outcomes in Northland.
In the first of several workshops the participants identified the outcomes they would need to achieve to move Northland forward:
- A more engaged and capable workforce delivering superior asset management;
- Improved transport / customer outcomes, enabling investment and social opportunities;
- Improved regional strategy, planning and procurement; and
- More affordable transport infrastructure.
Regular feedback loops were initiated with interim reports to the CEs’ forum, the mayors’ forum and full councils to ensure a no-surprises environment and to gauge support for the various options as they were developing. Early feedback indicated the desire from each council to maintain control over their respective transportation programmes.
To that end, a range of prerequisites was adopted including that councils should retain asset ownership, set their own budgets, priorities and levels of service; and that there would be no cross-subsidisation.
Within this context of desired outcomes and ‘boundary constraints’, the full range of options was explored – from existing arrangements through to a full asset-owning CCO.
The options were assessed against a range of critical success factors and desirable outcomes and the preferred options were taken back to councils for endorsement.
The non-monetary benefits were sufficiently compelling for the preferred option to be given approval in principle by each of the councils to proceed to development of a detailed business case with full economic analysis.
By necessity, the economic analysis relied on numerous assumptions derived from knowledge of the local and regional market, as well as from experience elsewhere in New Zealand. A very conservative approach was employed and even this indicated potential efficiency gains in the order of $20 million over the 10-year analysis period.
Sensitivity analysis tested key assumptions and determined that a less than two percent efficiency gain over the 10-year period was all that was required to justify the initial investment.
As the key investment partner, NZTA’s independent review of the economic modelling provided assurance that the assumptions were reasonable and the conclusions justified.
The preferred option was for a shared services business unit, the Northland Transportation Alliance. Some key aspects of the alliance are as follows:
- Oversight is provided by the Alliance Leadership Group, consisting of the CEs of the councils and the regional director for NZTA.
- A new position of alliance manager was created to lead day-to-day operations.
- Staff remain employed by their parent organisation but would be ‘seconded’ or otherwise transferred to the alliance. The staff of the alliance would be substantially co-located in Whangarei but with a presence in the regions.
- NZTA would also co-locate but would not be part of the formalised business unit.
Perhaps the most challenging part of the Northland Transportation Alliance journey was the establishment phase. The business case gained final (unanimous) approval from the councils during the first week of May 2016. The councils’ desire was to have the alliance operational by the start of the new financial year on July 1, 2016.
A dedicated transition manager was engaged to facilitate workstreams across the range of activities required to make the ‘go live’ date a reality. Workstreams brought together staff from each of the partner organisations to take care of required actions in their areas of expertise for example HR, IT and property.
Evidence & assumptions
The most critical part of a journey of this nature is helping decision-makers navigate the uncertainty inherent in a proposal for which no precedent exists. The natural tendency to look to other examples to support a change cannot be indulged where there is no example to follow.
Councils are in a dynamic environment, making decisions they hope will create lasting value over the long term. But the evidence base for collaborative planning and service delivery is in its infancy. Where such examples do exist, they are never exactly the same; and even where they are similar they have not been in place long enough to substantiate true long-term value.
This, of course, will not change anytime soon and any councils that take an overly-cautious approach waiting for others to create the evidence will be waiting a long time.
The councils of Northland understood that their role as leaders for their communities meant they had to ensure they had sufficiently tested the assumptions being presented and carefully explored the risk profile of the options in front of them. But, above all, they had to make decisions.
The business case went to great lengths to ensure it was very clear on the underlying assumptions and that the risks were well documented.
To give an added level of surety the business case was subjected to independent peer review that concluded, inter alia, “… In summary, we consider that the business case is appropriate in terms of its analysis and provides a basis on which decisions can be made.”
This is a simple statement, but is the very essence of the assurance elected representatives are seeking. Their key question has always been: “Do I have sufficient information available for me to make this decision?”
The Northland Transportation Alliance came about through the combined efforts of the councils of Northland and the NZTA. Clear, consistent and engaged leadership at the highest levels was critical to providing direction to the officers tasked with delivery.
It was equally critical that information provided to elected representatives was presented in a way that let them understand and deal with inherent uncertainty and the associated risk profile of the proposals. The business case approach when applied by skilled practitioners enables this to happen in a consistent, structured way. Appropriate reviews both independent and internal provide further assurance for decision-makers.
- Neil Cook is a director of specialist infrastructure advisory group Rationale. firstname.lastname@example.org
This article was first published in the December 2016 issue of NZ Local Government Magazine.