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The beginning of the end of the Manukau Way?

The beginning of the end of the Manukau Way?

By Len Brown – Manukau Mayoral Candidate

Len BrownI like CCO structures, particularly where they can be used to better manage and direct asset holdings like our Airport shares, Whitford Landfill and our land holdings. They can also be useful in handling contract management as when Manukau City Council established the LATE’s for engineering and operations.

I do not support their use for critical services such as Water or leisure services. These operations are core council services and need in my view direct political and managerial oversight to ensure transparency, accountability and strong leadership in strategic and policy direction.

Manukau City Council's Leigh Auton has made an outstanding start to his tenure as CEO of the Council. He is tasked to constantly challenge council structures and organisation, and to drive cost reduction. That he makes proposals does not mean that the political wing vacates its ultimate responsibility of finally determining the proposal on its merits. The merits of this proposal do not stack up.

Where is the business plan? The details relating to potential extra earnings is weak and /or missing. This part of the report reminds me of the report that went to council in support of the Twigg publication. Long on hope, short on detail. And this is the key part of the proposal! As there is no other structure in NZ Local Govt. like this proposed CCO, is an Audit report from UK and some not entirely relevant data from UK local Govt. applicable to Manukau’s unique circumstances? I doubt it.

The council has just terminated the specifier /provider split, a failure of management structure, and rightly corrected by Mr Auton. The primary focus of change was to keep skill and knowledge in Council, and to build a strong, unified and accountable bureaucracy. Wouldn't the greatest benefit from this change be in the development and delivery of Leisure Services?

What has happened to our keystone commitment to community development? Are the pools and recreation centres there for the health and well being of our people, and particularly our young people at this time, or are they to be extensions of our commercial enterprise. When did we as a city have that debate? Instead will the only debate we are going to have, be about what sort of “Family Brand” we attach to these facilities, that are at the heart of our communities, have been used by our people for decades and whose free use we regard as a special part of being Manukau Citizens.

Looking at the proposal from a commercial view the only way to achieve serious financial advantage is with pricing, and user charges Guarantees in the SCI are not the bulwark against the thin end of the wedge on user charges. This proposed CCO must not be the back door to that possibility. The other option is redundancies. If neither, why change, why fix something, that is not broke.

In setting up stand alone enterprises, it is essential to have an assessment of what is in the market, for us either to contract to, or compete against. Where is the market analysis? What are we benchmarking against?

As a CCO, the company’s balance sheet will go off Councils financial statement. As with the water CCO, will council separately bill for this service? If not, how will council really hold this business accountable? The renewed late review panel will have some effect, but the CCO will set the Asset management programme and direct council on asset development. These are key drivers in controlling our budgets. It is essential for Councillors to be directly responsible for the financial matters, not to unnecessarily turn them over to unelected directors.

The officer's report refers frequently to “assumptions” in cost savings. I have been taught in the law to never assume anything. That is why it is crucial to put these questions. What is most telling in the report is that at p.29 it is acknowledged, "there do not appear to be many immediately identifiable opportunities for cost savings” Further, "these savings could equally well be made without the creation of a CCO”.

And what of the meagre revenue projections presented. Potential increases of $600,000.Can anyone tell me why those increases cannot be achieved under our present structure? Do we need to set up a separate directorate and bureaucracy to make this happen? It just does not stack up.

The council has had some interesting experience in the set up costs of the water CCO. They are always greater than “assumed". Also the ongoing and increasing costs surrounding the company’s bureaucratic operation will be an increasing strain on council's resources. What are the costs for the review panel, because with the need for increasing oversight of the CCO’s, democratic costs will also increase to match.

There was not one submission during the Annual Plan, in favour of this proposal. In Councils 2005 perception survey, 30% of people felt they were not appropriately involved in council decision making process. This is not a proposal that has been promoted by the Mayor or Councillors, yet its impact on the crucial area of our city will be hugely significant.

Councillors are allowing the divestment of an increasing range of our assets and their responsibilities, to unelected directors. It is therefore making it increasingly difficult to ensure accountability and transparency, on behalf of the people who have elected them for these precise reasons. I encourage our representatives to reject this poorly thought through proposal and stay with the status quo.

There are much better targets for cost saving and revenue gain than this.

ENDS

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