Increasing CCO accountability

The 10th anniversary of the restructuring of Auckland into one Council is an appropriate time to consider what changes have worked and those that may not be delivering the best outcomes for our city. Perhaps the most contentious of the changes at the time, and still today, was the creation of seven substantive Council Controlled Organisations (CCOs). While subject to strategic direction from Auckland Council’s Governing Body, these were deliberately placed at arms-length from council control in relation to operational decisions.

Some 75 percent of the Council’s service delivery functions were placed in the hands of CCOs. CCO numbers have been reduced from the original seven to five:  Auckland Transport, Watercare, Auckland Development (Panuku), Auckland Tourism Events and Economic Development and Regional Facilities Auckland.

As the CCOs are not managed or directly governed by elected representatives, there is a concern that they are not being held properly to account by members of the public or by Council. The original legislation has either deliberately or inadvertently created the potential for CCOs to not have proper regard to concerns within the community over their decision-making and actions.

This review will be completely independent of Auckland Council and report directly to the Mayor and to the Governing Body.

PROPOSAL

To complete within 12 months of the Auckland Council elections in 2019, a full and independent review of how effectively CCOs have operated and whether the model legislated in 2010 ensures adequate accountability of the CCOs for their decision-making and actions to Council’s elected representatives and Aucklanders as a whole.

The review will be carried out by up to four individuals, selected on the basis of their competency, skill, and experience in areas relevant to the work of CCOs, and their ability to reflect community perspectives as well as central and local government interests in the performance of CCOs.

As legislative change would be needed to implement reforms, Council will consult and work closely with Government as part of this process.

Nominees will be required to fulfil their duties independent of Council staff and elected representatives and CCOs.

The reviewers will seek submissions, both written and oral, from the public and all relevant stakeholders, including local community groups and associations, mana whenua and the business community, as well as Council, Local Boards and the CCOs themselves.

  

TERMS OF REFERENCE

The following areas will be reviewed: 

  • Are current mechanisms for accountability, including Letters of Expectation from the Mayor and Councillors, the requirement to act consistently with the Council’s 10 Year Plan and Annual Plans, appointments of Board Directors by Council and report monitoring of performance and achievements of CCOs by Council committees adequate to ensure proper accountability, and where, why and to what extent have those mechanisms been inadequate

  • Does the current accountability mechanism ensure adequate and appropriate responses to the concerns and issues of the local communities and the public

  • Are lines of accountability sufficiently clear, open and transparent

  • Is the statutory framework for governing CCOs under the Local Government Act fit for purpose; if not, what legislative amendments are needed

  • Have the reasons for having CCOs at arms-length and independent in relation to operational decision-making achieved the purported intentions of legislators in 2010, being improved commercial focus, reduction of financial risk, reduced bureaucracy and the ability to recruit and retain high quality board members and staff, if not why not

  • Are the number and structure of existing CCOs fit for purpose

  • What additional costs have CCOs incurred in terms of structures and staff required to monitor their performance and duplications of functions carried out by CCOs and Council

  • Has Council fully ensured that economics of scale are achieved by removing unnecessary duplications

  • Are there adequate guidelines for when CCOs should be operating as commercial entities and when they should prioritise the public good

  • What case, if any, exists for bringing the service delivery of each CCO back into Council control, to be overseen directly by elected representatives

  • What processes could be put in place to ensure greater responsiveness by CCOs to community concerns

  • Any other issues deemed relevant

CONCLUSION

In 2010 it was accepted by legislators and the Auckland Transition Authority that there were clear benefits from establishing Council Controlled Organisations, which were operationally independent from Council, that would carry out service delivery functions in a more effective and commercial manner than if Council itself directly delivered these services.

There are clear examples where the CCOs have been effective in carrying out their roles.

Equally there have been occasions when Council and members of the public have expressed frustration at actions seen as not consistent with the expectations of elected representatives or the community, and have inadequate means by either to hold them accountable. Elected representatives have expressed frustration in CCOs not delivering key projects and strategies event mandated by the Governing Body.

Ten years on from the amalgamation of Auckland Council is an appropriate time to independently examine whether the current model is the best way to deliver services and, if not, whether that model can be improved to address any shortcomings found, or whether more fundamental change including reversion to direct delivery of those services by Council is needed.

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