SEP 14 2018
All Posts
SEP 14 2018
All Posts

Auckland Council's governance failure

Posted by: Aaron Drew, Economist and Rutherford Rede Investment Committee Member in finance

It looked so good on paper circa 2008. Population growth was projected – correctly – to put large pressures on the Auckland region over the coming years, and government feared that the different local bodies governing the region (the Auckland Regional Council and the region's seven Councils) would fail to co-ordinate the provision of these services. The Supercity was born on the premise it would improve Council efficiencies, and crucially, coordinate and speed up the delivery of infrastructure and housing. 

The government’s announcement that it will set up an urban development authority (UDA), with planning and consents powers, to speed up delivery of housing and infrastructure shows that something has gone very wrong. Translation of the plan to practice has not worked. If the bureaucratic machinery at Auckland Council was running smoothly central government would not have stepped in.

Some might say fault lies with Unitary Plan being too restrictive. Others on the complex and potentially contradictory set of planning rules and procedures that have been created by Auckland Council’s 700-strong Regulatory Services team. This is the team that will largely be bypassed for developments that will take place under the mooted central-government led UDA. 

But we should never forget that rules and regulations, and their interpretation, are constructs that have been established, and are manged, by people. Or that the ultimate governance responsibilities for the region lies with elected officials onto Auckland Council.  When a large complex organisation gets into difficultly usually the root of the problem is a failure of ‘governance’, and those in charge of establishing good governance. A fish rots from the head down.

There is no doubt that stronger leadership from Councillor’s would have resulted in a Unitary Plan that better caters for Auckland’s population growth. We only need to glance at Google maps to see it’s a complete myth that there is a lack of green field space. The land area “South of the Manukau” (from the Awhitu Peninsular through to SH1) is more than the Auckland and Tamaki Isthmus combined. It’s also much cheaper to develop this land given its terrain and proximity to infrastructure services than land North of Auckland, or further south in the Northern Waikato.    

When implementing the Unitary Plan is stalled by parts of the Council, as clearly occurred with planners knocking back plans to intensify Dominion Road despite it being favoured by the Council's own development arm, then the lack of coordination ultimately lies with the Council’s CEO, who is charged with Auckland Council’s operational management and service delivery. And with Councillors responsible for setting the CEO's targets and monitoring of his performance. 

The Council is a complex organisation with a complex job to do, but it is not unique in this. High performing organisations make the complex seem simple by ensuring staff have clear and measurable targets, aligned to clear and realistic plans. And holding people to account when they fail to deliver.

KEY FACTS FROM AROUND THE GLOBE

 Events 

  • The Australian Liberal party dumped Malcolm Turnbull and voted in a new Prime Minister, Scott Morrison. This maintains the dubious run that no Australian leader has served a full term since John Howard’s reign ended in 2007. 
  • It’s been a wet and cold Winter here, but meanwhile in the Northern Hemisphere Summer temperature records have tumbled.  Japan recorded over 41 degrees near Tokyo, a level never seen since records began in the 1800s. Parts of the Arctic Circle hit 32!
  • Climate change and its physical impacts are steadily getting worse. Events that were predicted to occur in the middle of this century are starting to occur today. New Zealand has been very slow off the mark to meet its obligations. Our greenhouse gas emissions continue to increase despite a commitment to reduce them from levels seen back in 2005. Time is running out.     
  • The government announced it will establish an urban development authority to fast-track housing and infrastructure developments in Auckland, taking building consents away from Auckland Council control in development areas.

 Economics

  • Global economic growth is near 4%, well above longer term trend levels.
  • In the ANZ Business Outlook Survey, New Zealand business confidence measures dropped further, with investment and employment intentions having the lowest readings since the GFC period.
  • Fonterra cut its forecast milk payout to $6.75 per kilo of milk solids on the back of increasing global supply and falling international prices.

 Markets

  • Developed equity markets increased around 3% in August, whilst Emerging Markets fell slightly. The NZ share market rose 4.3% on the back of another generally strong set of company results.
  • The NZ dollar continued to decline versus the US dollar on the back of the soft run of domestic data, hitting a low of around 65.5 cents during the month.
  • Fortune 500 added 13 new Chinese companies to its list of the world’s largest companies by revenues. China has 120 companies in the list, just behind the US with 126. US retail giant Walmart ranks number 1, while three Chinese energy companies take out positions 2 to 4.   

KEY FIGURES

Key figures




Tags: Monthly Economic Roundup, The World In Ten Minutes,

It looked so good on paper circa 2008. Population growth was projected – correctly – to put large pressures on the Auckland region over the coming years, and government feared that the different local bodies governing the region (the Auckland Regional Council and the region's seven Councils) would fail to co-ordinate the provision of these services. The Supercity was born on the premise it would improve Council efficiencies, and crucially, coordinate and speed up the delivery of infrastructure and housing. 

The government’s announcement that it will set up an urban development authority (UDA), with planning and consents powers, to speed up delivery of housing and infrastructure shows that something has gone very wrong. Translation of the plan to practice has not worked. If the bureaucratic machinery at Auckland Council was running smoothly central government would not have stepped in.

Some might say fault lies with Unitary Plan being too restrictive. Others on the complex and potentially contradictory set of planning rules and procedures that have been created by Auckland Council’s 700-strong Regulatory Services team. This is the team that will largely be bypassed for developments that will take place under the mooted central-government led UDA. 

But we should never forget that rules and regulations, and their interpretation, are constructs that have been established, and are manged, by people. Or that the ultimate governance responsibilities for the region lies with elected officials onto Auckland Council.  When a large complex organisation gets into difficultly usually the root of the problem is a failure of ‘governance’, and those in charge of establishing good governance. A fish rots from the head down.

There is no doubt that stronger leadership from Councillor’s would have resulted in a Unitary Plan that better caters for Auckland’s population growth. We only need to glance at Google maps to see it’s a complete myth that there is a lack of green field space. The land area “South of the Manukau” (from the Awhitu Peninsular through to SH1) is more than the Auckland and Tamaki Isthmus combined. It’s also much cheaper to develop this land given its terrain and proximity to infrastructure services than land North of Auckland, or further south in the Northern Waikato.    

When implementing the Unitary Plan is stalled by parts of the Council, as clearly occurred with planners knocking back plans to intensify Dominion Road despite it being favoured by the Council's own development arm, then the lack of coordination ultimately lies with the Council’s CEO, who is charged with Auckland Council’s operational management and service delivery. And with Councillors responsible for setting the CEO's targets and monitoring of his performance. 

The Council is a complex organisation with a complex job to do, but it is not unique in this. High performing organisations make the complex seem simple by ensuring staff have clear and measurable targets, aligned to clear and realistic plans. And holding people to account when they fail to deliver.

KEY FACTS FROM AROUND THE GLOBE

 Events 

  • The Australian Liberal party dumped Malcolm Turnbull and voted in a new Prime Minister, Scott Morrison. This maintains the dubious run that no Australian leader has served a full term since John Howard’s reign ended in 2007. 
  • It’s been a wet and cold Winter here, but meanwhile in the Northern Hemisphere Summer temperature records have tumbled.  Japan recorded over 41 degrees near Tokyo, a level never seen since records began in the 1800s. Parts of the Arctic Circle hit 32!
  • Climate change and its physical impacts are steadily getting worse. Events that were predicted to occur in the middle of this century are starting to occur today. New Zealand has been very slow off the mark to meet its obligations. Our greenhouse gas emissions continue to increase despite a commitment to reduce them from levels seen back in 2005. Time is running out.     
  • The government announced it will establish an urban development authority to fast-track housing and infrastructure developments in Auckland, taking building consents away from Auckland Council control in development areas.

 Economics

  • Global economic growth is near 4%, well above longer term trend levels.
  • In the ANZ Business Outlook Survey, New Zealand business confidence measures dropped further, with investment and employment intentions having the lowest readings since the GFC period.
  • Fonterra cut its forecast milk payout to $6.75 per kilo of milk solids on the back of increasing global supply and falling international prices.

 Markets

  • Developed equity markets increased around 3% in August, whilst Emerging Markets fell slightly. The NZ share market rose 4.3% on the back of another generally strong set of company results.
  • The NZ dollar continued to decline versus the US dollar on the back of the soft run of domestic data, hitting a low of around 65.5 cents during the month.
  • Fortune 500 added 13 new Chinese companies to its list of the world’s largest companies by revenues. China has 120 companies in the list, just behind the US with 126. US retail giant Walmart ranks number 1, while three Chinese energy companies take out positions 2 to 4.   

KEY FIGURES

Key figures




Tags: Monthly Economic Roundup, The World In Ten Minutes,

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