Council Controlled Organisations: Reviewed if fit for purpose.

31 August 2020. By Cr Greg Sayers. An independent review, initiated by the Mayor of Auckland, of Council’s five Council Controlled Organisations (CCOs) has highlighted a number of faults, along with a lack of adequate management controls. The damning report confirms inefficiencies with the CCO model, which was created in 2010, but also concludes the model remains the right one for Auckland, provided better controls are implemented.

The five CCOs – Auckland Transport (AT), Watercare, Auckland Tourism Events and Economic Development (ATEED), Regional Facilities Auckland (RFA) and Panuku Development Auckland – run 75 per cent of Council’s services and account for 55 per cent of the Council’s operational budget. While the CCOs must operate in a commercially efficient way, the report states they are still public bodies funded by Aucklanders and need to better balance looking after public interests. The report further states that CCOs are public sector entities, not private commercial companies, and their chief executives’ remuneration should more appropriately reflect that.

The review looked at better alternatives, including merging CCOs, or bringing some of their activities back within the Council itself. For example, the RFA was recommended to be merged with ATEED, saving almost $7 million a year. An idea originating from Wellsford sheep farmer Gordon Levet received high praise. This related to the public’s inability to challenge CCO or Council decisions. It was suggested a “People’s Panel” of experienced mediators could be considered to hear and resolve complaints and disputes without needing to resort to court proceedings or complaints to the Parliamentary Ombudsman.  Other sectors have such proactive dispute resolution mechanisms.

I felt missing from the report was the original Royal Commission’s recommendation to have an independent performance auditor overseeing the Supercity’s effectiveness. Also missing was any recommendation to appoint a clerk of works to sign off on the quality of work done for the Council before contractors got paid. Unsurprisingly, the Council, especially its politicians, came in for some criticism for their failure to exert better oversight and control over CCOs. The report found that despite many  Council plans and strategies, there was almost no strategic direction given to CCOs. In some crucial areas, such as water and property, there were no strategies at all.

In a nutshell, the findings concluded Council’s governance of and liaison with CCOs was not working as it should. This included AT not being collaborative enough with the Council or Local Boards on transport strategy, and that AT’s handling of smaller projects was far from satisfactory. The reviewers found little evidence of a “Council family”, with silo-thinking appearing to prevail. The report gave very clear direction for improvement by concluding trust and confidence with the Council and CCOs was low. Emphasis should be on achieving actual results and moving away from “seemingly endless processes and procedures”, which the public have to endure and fund. It is an excellent challenge for city leaders to deliver on.

Council’s Governing Body has agreed unanimously to progress all 64 recommendations made by the independent review panel. The full report can be found at the library, Council Service Centres or can be downloaded from the Auckland Council website.