Local Government Magazine

The pulse of a city: Auckland’s amalgamation five years on

On the fifth birthday of what has been described as New Zealand’s most radical local governance restructure – the creation of Auckland City, Vicki Jayne looks at what has so far been learnt from the process of creating Australasia’s biggest council.

pg-14-image-300x300px-1If size were the primary criteria of success, there’s no doubt Auckland City is a hands-down winner. Sitting on roughly $29 billion worth of ratepayer equity, operating a $3 billion annual budget and employing around 8000 staff, it’s the biggest single council in Australasia.

But bigger is not always better and critics are quick to point to steadily rising rates as an indicator that amalgamation’s promised ‘economies of scale’ haven’t exactly eventuated for them. Others are worried that the restructure has seen too much power and money disappearing behind the opaque doors of independent Council Controlled Organisations (CCOs) whose management appears neither particularly accessible nor answerable to elected members and the public they represent.

And while some laud Auckland City’s new sense of unity and cohesion, out on the periphery others harbour a sense of frustration and disenfranchisement. Rodney ratepayers reckon services have deteriorated along with the roads and they want out. In August, the Local Government Commission agreed to assess their application to break away from Auckland Council.

Cracks are also appearing on the city’s eastern fringes where Waiheke Islanders have expressed the desire to go independent – taking a few outer islands with them.

Such would-be breakaways are amongst those who believe amalgamation has knocked the ‘local’ out of local government and that its size has added complexity rather than value to service delivery. Local boards feel hamstrung by lack of budget, see local know-how sidelined in favour of centralised ‘expertise’ and lament the disconnect between what the community wants and what Auckland Council chooses to deliver.

Whether such issues are viewed as teething problems or fundamental structural flaws seems to depend on the viewer. In many ways, the product of what’s been called New Zealand’s most radical local government reform is still a work in progress.

On the positive side are a unified regional vision and a more cohesive approach to planning and transport infrastructure. Deputy mayor Penny Hulse rates these as major pluses. The Proposed Auckland Unitary Plan is the first-ever unified planning document for the whole region.

“We do now have an Auckland-wide perspective, a single vision on what we are doing. Whether people agree with it or not, I think that is a really useful piece of work,” says Penny.

A more coherent approach around transport is also a biggie as is the achievement of a single rating system. Size also earns greater gravitas in both national and global contexts. As long-time local government representative Sir Bob Harvey enthusiastically points out – size offers both strength and security. Auckland is better resourced to deal with the vagaries of an uncertain world.

Penny is equally clear that there have been many stumbling blocks and says the co-governance model with local boards is still evolving while the CCOs remain a work in progress.

“I don’t think that was well thought through when [Auckland Council] was first put together. We have already amalgamated two CCOs and I think we need to look at further change.”

So – was amalgamation the best answer to Auckland’s governance? Has it been an unmitigated success? Or was it the right answer wrongly executed? And when it comes to local government reform, what has been learnt?

The answers are to some extent tied up in its history.

Back to the future

In terms of local body reform, Auckland City’s birth was always a bit of a one-off, and its delivery – by midwives of different political leanings – inevitably affected the now five-year-old’s development.

pg-14-image-300x300px-2While the amalgamation initiative was kicked off in 2007 by a Labour government which had set up a Royal Commission to investigate how best to do it, the process actually took place under the subsequent National government and the ACT party under leader Rodney Hide became a major influence.

Then Minister for Local Government, his department followed up the release of the Royal Commission’s report on Auckland Governance with one called Making Auckland Greater. The latter influenced the subsequent legislation that provided Auckland City’s framework overriding some of the commission’s advice.

In terms of representation, for instance, the founding legislation opted for 21 local boards ahead of six local councils. Around three quarters of Auckland’s public assets were transferred into CCOs and an independent Māori Statutory Board was established to ensure the new council took the view of Māori in Tamaki Makaurau into account when making decisions.

Looking back, Rodney now says the most positive aspect of amalgamation is that it has fulfilled its purpose – a single governance structure for Auckland.

“Auckland has unique infrastructural challenges that were incapable of being addressed with multiple councils. They are now being addressed.”

He rates the biggest stumbling block as the often tetchy relationship between the fledgling city and central government.

“Local government can only work with a proper engagement with government, and central government hasn’t worked sufficiently in partnership with the Auckland Council. It’s too much of a them-and-us routine.”

Interestingly, a 2013 Productivity Commission report on local government regulation came up with a similar conclusion – not just related to Auckland but local government generally. After exploring where local government red tape might be imposing unnecessary development costs, it instead found that much of the problem could be sheeted home to central government imposing costs on its local counterparts and not sufficiently consulting them.

So both the circumstances of its birth by legislation and subsequent tetchy relations with central government could be seen as stumbling blocks. What about the success of its co-governance model? How about the efficacy of its local boards, its CCOs, advisory panels or independent Māori Statutory Board?

Missing in action

pg-14-image-300x300px-3While it would be nice to point to an independent report that answers such questions, there isn’t one. Politicians venture opinions; academics and consultants have peered down a few chosen peepholes and are undoubtedly generating reports that take into account a more global perspective on local government reform. But, in the public domain, there is a gaping information vacuum.

That, according to some commentators, is a significant gap.

Associate professor at Massey’s School of People, Environment and Planning Christine Cheyne says there are certainly lessons to be learnt from the Auckland City amalgamation.

“But the reality is very little research has been done and there are a lot of misunderstandings and incorrect assumptions. For example, when people see media comments about the increasing number or cost of staff, they think it’s a failure. But such issues need to be looked at in the context of what the city is dealing with in terms of growth and change.”

It would be useful, she suggests, to look at unique features like the local boards as they evolve; the shared governance model and issues around accountability and transparency between voters and elected representatives

“My biggest concern is that there is no independent resourcing for this. We have made this huge policy change and big new innovation and haven’t so far evaluated it…

“I think the time is ripe to do some really in-depth evaluation but we need to scope out an agenda for that.”

The Committee of Auckland agrees – and has taken matters into its own hands commissioning research that will look at Auckland five years on. Some key issues on its agenda reflect 
public concerns about transparency, accountability and responsiveness to its ratepayers and residents. It will turn a keen focus on council-CCO relationships and the adequacy of local boards to provide effective representation for the area’s diverse population.

Committee of Auckland executive Heather Shotter says the committee has no specific beefs with council performance but is concerned that, in the lack of a dispassionate review, attitudes to amalgamation are being overly influenced by other factors.

As a body originally formed because a broad section of city leadership (across business, social and not-for-profit sectors) was frustrated that Auckland’s development was being held back by lack of a cohesive vision or plan, it was an early proponent of amalgamation.

“We worked very hard to bring about the Royal Commission to investigate amalgamation in the first place… Because we have been very involved and very supportive of amalgamation we think we are in an ideal place to look at where we are up to.

“So we are looking at what was in the Royal Commission report, what subsequently informed the legislation, what came to pass, what were the expected outcomes and what has been delivered to date.”

One major concern, she says, is that in other local authorities people have been talking about not wanting to follow the “Auckland experiment” or the Auckland “disaster”.

“I ask – what disaster? Do you mean a thriving city where people want to live with a rapidly growing economy, plenty of jobs and more people wanting to live here than we can cater for? They’re kind of quality problems – not ones that communities on the decline have.”

A more dispassionate review is in order, she says. Hence the research project which pulls together a range of academic expertise from AUT, Massey and Auckland Universities. Its brief is to get the report’s first stage done before Christmas and that will be made public in the new year, says Heather.

Heading this research is Ian Shirley, professor of public policy at AUT, who has been closely involved with Auckland’s development. He wrote the draft of what became the Metropolitan Auckland Project and was a member of the Auckland Regional Economic Development Forum – but was critical of the finalised “SuperCity” structure that emerged in 2010 mainly where it diverged from what the commission had originally proposed.

At that time, he said the local boards as proposed would be “largely irrelevant in decision making” while the corporate framework that was to be established would “not gain the trust of ratepayers”.

Wider impact

So, has the “Auckland” experiment helped put the kybosh on subsequent attempts at local government amalgamation in Northland, Wellington and Hawke’s Bay?

It’s hard to say. Would Auckland City amalgamation have gone ahead had it been put to the public vote?

Opinions tend to split along political lines and many of those who could probably furnish more informed comment seem disinclined to put their heads too far above the parapet. This particular product of amalgamation may be a big target, but it’s also a weighty one – politically and economically.

Have promised economies of scale been achieved? There’s been a fair bit of criticism around cost blowouts – though in an article “Separating fact from fiction” in July’s Local Government Magazine, Auckland City chief executive Stephen Town squashed a few ‘myths’ around staffing costs. He did allow that the budget for the council’s new combined IT system has not exactly been a triumph.

Councillor Mike Lee reckons that some economy of scale opportunities have been undermined by bad decisions – such as the choices around IT or the costs of shifting headquarters to the former ASB Tower building. His own efforts to pin down staffing costs have proved a slippery exercise – the figures may or may not include Auckland Council contractors or Ports of Auckland staff, he says. “It’s a bit like a shell game.”

He also points to the debt some legacy councils brought to the amalgamation pot – Waitakere City and Rodney District in particular – as an uncounted cost of the reforms. “In the mad rush to amalgamate, insufficient consideration was given to the real costs of restructuring – and these were simply swept under the carpet.”

In general, pundits who’ve looked at the amalgamation trend in both Australia and New Zealand suggest it is always going to have winners and losers. Where it’s likely to generate most efficiencies is when a number of small local bodies are clustered in a circumscribed geographic area.

One study prepared for Napier City Council and based largely on overseas research (Bigger is Not Always Better, Dollery and Kortt) notes that forced amalgamation seldom improves the performance of local authorities, especially in non-metropolitan areas. Often, it says, the additional financial and emotional stresses on council mergers have been badly underestimated.

After combing through a range of global examples, it concluded that expectations in terms of efficiency gains and costs savings reside more in the promise than the delivery. Shared services, it suggests, offer a promising alternative.

What seems clear is that while local body amalgamation is not entirely off the agenda, it will not be mandated. Local Government Minister Paula Bennett told Local Government Magazine that has been a consistent stance.

“I’ve always said I would not force any large amalgamations on any councils and still hold by that. But I do think we need a structure to fit the purpose into the future. I’m not sure we have the right checks and balances on regional growth and infrastructure across New Zealand that we need and that the current structure supports that.”

The minister said at LGNZ’s annual conference in July that she is “as tired as our communities are of having an argument over how many mayors there should be”.

But reform is definitely still on the agenda and the minister says the Local Government Commission will be working with local authorities to look at various structure options for each region and decide what works best for them.

“We are certainly discussing CCO structures with local government – from transport through to water and even regional economic growth beyond a particular council’s boundaries. Those discussions are happening in Waikato – led by councils. Wellington is not in favour of large-scale amalgamation but they do see gains to be had in the region from more shared services and a more formal structure around that which could be a CCO.”

What seems likely is that a range of different mechanisms will be explored. Ian Shirley from AUT is one person hoping they will emerge from the specific regional context – rather than being imposed on it.

“I’m amazed that we start off by looking at structures before understanding the nature of what we’re dealing with in a particular region. What are its strengths, where can we build on regional development, build a viable community and a viable local government that is responsive to issues in the region?”

He believes the focus is put on the structure of management because it’s being thought about in cost-effective terms rather than in terms of development in that particular area.

There are others who think the cart is sometimes put before the horse when it comes to local government reform.

Strategy first

Management consultant Morrison Low is not short of expertise in the area of local government in Australasia and the company’s managing director has just one piece of advice. “Think.”

It is vital, says Malcolm Morrison, to put strategy ahead of delivery. In other words, it’s about making sure you’re doing the right thing as opposed to doing the thing right. One for instance relates to Porirua City Council which faced an issue of insufficient toilets for visitors. Talk of where and how much was subsequently gazumped by a more strategic approach: a big sign showing tourists just where the existing toilets were. It worked.

Delivery could have come up with nifty design or saved costs on materials but a shift in strategy saved a lot of unnecessary expenditure going down the drain.

“We work for virtually every council in New Zealand and hundreds in Australia and our experience tells us that more thinking first and action only when it’s all been thought through gets a better result – strategy ahead of delivery.”

Five years on, a final word on the success of Auckland amalgamation may be missing – but what’s clear is that this rather oversized infant is still very much in learning mode. A review that clobbers it with more change is probably the last thing it needs, suggests Penny Hulse.

“The overriding thing for me is that we need to be self-aware enough to work out where we need to make change and brave enough to make it. And every now and again, we just need to be prepared to say ‘hang on, some things need more time, let’s stick with it before we panic’. Between all that, it will come right.”

Both lauded and criticised as one of the primary architects of the so-called ‘SuperCity’, Rodney Hide reckons the past five years have proved that local government could rise to the occasion.
“It was the largest restructuring public or private ever attempted in Australasia and local government rose to the challenge and did a sterling job – quicker than anyone believed possible and under budget. We underestimate local government enormously. I know central government could never have accomplished such a task.”
As leader of ACT and Minster of Local Government when Auckland City came into being, he notes that Auckland was “always a one-off” with a unique set of circumstances and a Royal Commission determining what was needed for New Zealand’s biggest city by way of governance.
“I was always of the view it was a one-off reform and not a model.”
He also thinks the reform could have been better bedded in if it had retained a champion in central government.
“It was one thing achieving the restructure; the second job was to get a proper partnership between central and local government but unfortunately that wasn’t to be. However, that problem is not unique to Auckland.”
As to whether local government efficiency could be improved by means other than amalgamation, he responds that amalgamation is actually the least preferred means.
“The reform of Auckland was always about governance, not efficiency, with the savings achieved a happy by-product. The big expense of local government is central government mandating ever-increasing responsibilities and jobs to local government and forever changing the rules.
“There needs to be a proper constitutional understanding of local government’s role, clearer boundaries between the two levels of government and less central government interference.”

As a six-term mayor of Waitakere City at the time of the Auckland City amalgamation, Sir Bob Harvey was not initially a fan.
“I had enormous doubts that it could work but my outlook then was clouded by being mayor of a city I thought was a triumph and working very well with a unique point of view – being an eco-city with strong links both with the environment and with Maori.”
He thought all that would be lost – quashed beneath the SuperCity steamroller.
“So while the practical side of me thought [amalgamation] was worth a go, the emotional side sent me into a lot of grief thinking that many of the things that make cities work would be lost in the process.
“Five years down the track, I think this city is a triumph and it is the way cities in future must operate. Auckland is now a world-class city with a world-class reputation because it has taken all the very best of the [legacy] regional cities … and enhanced it.”
The “petty squabbling” and “mutual blaming” that had stopped Auckland moving forward is gone and the council has “finished things we never thought we’d finish”.
As champion for overseas investment in the mayor’s office, Sir Bob says Auckland City now has more clout offshore noting that in size terms it compares with Los Angeles. A champion for Wellington amalgamation, he says the nervousness around its proposed size was disappointing. Size offers both more certainty and security in an uncertain world.
“It makes us more robust, more capable of a common voice.”
In terms of structure, he gives a big tick to the local boards and to the CCOs but says there is still plenty of work ahead.
“It’s just starting. But what we have done in five years is construct the framework for building a magnificent city of the future.”

As someone who had been on the sharp end of inter-regional rivalry as chair of the Auckland Regional Council, Auckland councillor Mike Lee was initially a supporter of the one council concept. A fresh start based on structural cohesion and political unity was attractive.
But he reckoned it got off to a bad start “rushed through with an agenda managed by National’s Stephen Joyce and ACT’s Rodney Hide”. That led to the “emergence of a multiplicity of government-appointed CCOs dominated by appointees of the new National-led government”.
These, he says, undermine the notion of a unified region governed by one democratic organisation. While both CCOs and the unelected independent Maori Statutory Board are funded by ratepayers, they are not directly accountable to them – and they’re expanding. On top of structural flaws are issues with execution. These have led to a blowout in IT costs of “an eyewatering half billion dollars” and in Auckland Council’s accommodation costs. A decision to buy the former ASB Tower, spend $157.4 million renovating and then move straight in leaving the 15-storey Civic Building empty was uneconomic.
On the plus side, he reckons the most promising aspect of the SuperCity was the formation of local boards. “They are underpowered and under-resourced but they are an authentic representation of local communities – and that was getting lost in the legacy days.”
While the Proposed Auckland Unitary Plan provides necessary common standards, he fears it will undo a lot of environmental protection. “I hate to be negative. I did want the SuperCity to succeed but if you look at the money spent, the economies of scale are not as effective as was hoped and some have been nullified by bad decisions.”
He believes the whole thing has just got too unwieldy.
“I think it’s past critical mass to be governed efficiently. My feeling five years on is that it’s not working but I’m confident it could have worked if it had been planned more carefully.
“Its creation was not a scientific exercise but a political one and it was done in too much of a hurry. Now we have to live with the consequences.”

Minister for Local Government Paula Bennett reckons that while five years might seem like a long birthing process, it’s still a tad early to say whether anticipated benefits have been delivered or to formally review the learnings inherent in Auckland Council’s birth.
“I think it’s got a long way to go. It’s a big city with a continual influx of people wanting to live there and big challenges ahead in terms of infrastructure. I think we have yet to see the kind of efficiencies that can happen.”
The reforms, she says, need more time to bed in.
“There are always lessons to be learnt but I think they have done the best they can with the resources they had. Even getting some streamlining across the eight legacy councils was a huge job in itself.
“You are talking about eight different plans and eight different ways of doing things – that includes collecting rubbish let alone roading. In that context, it’s been a massive job to bring Auckland Council into being and I think the chief executive in particular has quite clearly got his eye on what the organisation needs to do to help Auckland perform at its best.”
As far as having the right expertise in the right jobs, she believes the CCO structure is working relatively well.
“Being able to think longer term and look at the sort of policy decisions that need to be made outside of a politic environment is an advantage. That’s not to say it’s perfect but we would not [otherwise] have the roading projects going on across the city that we have now. We do see better coordination with NZTA and central government from an infrastructure perspective.
“I think the events they attract into Auckland City are really impressive – they’re doing a great job on that. And I hope they continue on the improvements they are making.”
As to whether negative narratives about the Auckland experience have spilled over into other regions and influenced their decisions on amalgamation, the minister wouldn’t be drawn.
“I don’t know. I hear mixed things about how people think outside of Auckland. Really it’s for Aucklanders themselves to judge that.”

Deputy mayor Penny Hulse is clear about the pluses of Auckland’s amalgamation and equally clear that its birth wasn’t ideal and that the co-governance model is still a work in progress.
Topping her list of pluses are the creation of a single planning document or vision for Auckland, a more equitable unified rating system and a more coherent approach around transport.
“We have made some pretty big progress. The central city rail link has been agreed and we now have the luxury of debating the detail.”
Externally, the city can now be viewed as “one city that can look at competing internationally rather than being internally competitive”.
There are stumbling blocks – some of which might not have occurred if the amalgamation had emerged from local authority collaboration rather than central government coercion. She says the narrative around Auckland City’s birth was too much focused on managing cost and saving money.
“If it’s done with that as the driving force then it’s always going to be flawed. The question is why are you amalgamating, how to do it in a collaborative way and then how to ensure economies of scale, efficiencies and sensible outcomes.
“The co-governance model is still evolving in terms of the interface between what local boards do and what the governing body does and that will take a while to settle.”
The same applies to CCOs. She’s yet to be convinced that transport needs to be a separate CCO – that what it delivers couldn’t be done in-house with less bureaucracy.
What is important is to sort out boundaries.
“I think we need in this next term to work out what can be delivered by the CCOs, then trust them to get on with the work and stop meddling with the detail.”
She is concerned that any external review not be premised on “what’s wrong with Auckland and how can we fix it?”

  1. Planned walk and cycleway at Nelson Street off-ramp
  1. New Lynn Railway Station.
  1. Devonport library.

Photos courtesy of Auckland Council

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