Published 3 March 2010
The Auckland Transition Agency issued discussion documents on Monday on local boards and yesterday on council-controlled organisations – and the second of them has drawn sharp criticism, especially from politicians, for the lack of transparency.
Already, though, there is a lack of transparency after councils around the region jumped enthusiastically to the CCO concept for their business units.
The transition agency said the region had about 40 council-controlled organisations. It proposes returning a few of those business units to the direct control of the new unitary Auckland Council, which will take over governance from the present 7 territorial councils & one regional council from November.
Other existing council-controlled organisations will be grouped under 5 new organisations, for which Cabinet has given approval in principle:
Waterfront Development AgencyEconomic development, tourism & eventsProperty holdingsMajor regional facilities, andCouncil investments.
The legislation for the new Auckland governance structure already provides for 2 council-controlled organisations, Auckland Transport & Watercare Services Ltd, and Cabinet has approved the establishment of the agency for the downtown waterfront.
The transition agency is seeking feedback by Friday 26 March, in particular on:
structure & responsibilitiesthe key elements that should be included in the statements of intent between the Auckland Council & its council-controlled organisationsany reporting procedure improvements to further enhance accountability & governance arrangements, andspecific comments on the structures, entities, assets & activities defined in respect of individual organisations described in the document.
The transition agency has set out perceived benefits of placing activities in council-controlled organisations in its report, including:
improved commercial focus – operating a company with a professional board of directors with the objective of achieving a greater operating efficiencyring-fencing financial risk using an incorporated structure, to insulate a council from financial liability for an activity or venture involving other parties such as a joint ventureempowering local communities – creating a trust with a set budget funded by a council but managed by a community for a specific purpose, such as maintaining a community centre, andtax effectiveness – obtaining dividend imputation credits on the tax councils pay on dividend income.
Other benefits identified by different stakeholders included:
achieving economies of scale by aggregating similar activities of various local authorities into one regional organisationthe ability to streamline bureaucracy, andan enhanced ability to recruit & retain highly skilled professional staff, where the structures & culture of a council are seen as less attractive than those of a council-controlled organisation.
“The formation of partnerships & alliances is a further strength of the CCO model. Commonly perceived as being more commercial & flexible than council, CCOs are often able to collaborate more effectively, especially with the private sector.