Press Release

18 September 2019

Auckland businesses a priority for council contracts

Auckland businesses will be given preferential treatment over multinationals in regard to council procurement contracts when John Tamihere wins the mayoralty.

Tamihere said far too many contracts are given to multinational companies who “don’t pay their fair share of tax.”

In his Council Procurement Policy, Tamihere wondered why no one had been held accountable for waiving the warranties on the purchase of the $55 million 26 storey ASB Building, which required an immediate ratepayer injection of $38 million for remediation work.

“If by any form of poor performance or incompetence the ratepayer suffers a major loss contractually, there must be consequences at senior management level,” Tamihere said.

Tamihere will also open the books to disclose terms and agreements of council contractors and consultants earning $50k or more. He also warned council staff who use their authority recklessly would face serious consequences.

“The veil where people hide behind commercial sensitivity must be lifted while we reset, refresh and clean up the city in a fiscal sense,” Tamihere said.

“The biggest change of emphasis and requirement under a Tamihere mayoralty will be a stronger application to law applying to Council Controlled Organisations, such as Auckland Transport. There are six separate procurement offices running their own priorities – not the cities.”

Local businesses would also be looked upon favourably.

“An emphasis will be placed on the growth of scale for Auckland and New Zealand businesses with our annual purchasing clout, that means purchasing from Auckland and New Zealand domiciled companies,” Tamihere said.

“The number of multi nationals pulling out multimillion dollar contracts and not paying their fair share of tax must stop.”

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JT for Mayor
Procurement Policy

The 2019 Auckland Council Procurement Policy
Critical parts of the present procurement policy for the city are not applied, and in effect no Governing Body endeavouring to oversee procurement in Auckland can know whether the policy is being applied to achieve the intentions and outcomes of the law and the policy as set out below.

The Law
Section 10 of the Local Government Act 2002 (amended in 2012) states that all councils must meet the current and future needs of communities in a way that is most cost-effective for households and
businesses. That does not necessarily mean selecting the lowest price bid.

Section 14.1 (H of the Local Government Act 2002) states that
Auckland Council should take into account the social, economic and cultural interests of people and communities and the reasonably foreseeable needs of future generations.

Section 58 Local Government Act states
The principal objective of Council Controlled Organisations (CCOs) is to achieve the commercial and non-commercial objectives specified by Council in the statement of intent.

Application of the Law and Auckland Council Procurement Policy
Clearly the Governing Body does not have control of the purchasing decisions of 75% of its business. The
present 6 CCOs have been allowed to strike out on their own, purchasing contracting and procurement programmes. In effect there are now 7 separate purchasing and procurement models across the city.

• Over $1 billion has been spent in IT software and consultants alone, and we still do not have an information platform where all of council can talk to one another.

• We presently have 6 separate types of waste systems deployed across the city, requiring harmonisation.

• We have multiple community centres and arts centres on massively varying dollar values having no regard to populations being served.

• We have Watercare, Auckland Transport, Chorus, Vector and the New Zealand Transport Agency commencing projects in the same streets over a 36 month period without any coordination or harmonisation because the council owned organisations refuse to talk to one another.

I could provide a more expansive list, but ultimately the use of ratepayer dollars on value for money projects will require a city wide review and under my leadership, major contracts over $500k will now require the Governing Board’s Audit and Risk Committee sanction.
• In addition, all contractors, consultants and others earning over $50k contracts will need to be disclosed, as will terms of what is being purchased and over what time. The veil where people hide behind commercial sensitivity must be lifted while we reset, refresh and clean up the city in a fiscal sense.

Preference to Auckland Domiciled Companies
The biggest change of emphasis and requirement under a Tamihere mayoralty will be a stronger application to the law in regard to purchasing from Auckland and New Zealand domiciled companies. An emphasis will be placed on the growth of scale for Auckland and New Zealand businesses with our annual purchasing clout.

The number of multi nationals being given multimillion dollar Council contracts while not paying their fair share of taxes must stop.

Finally, if by any form of malperformance or incompetence the ratepayer suffers a major loss contractually there must be consequences at senior management level. For example heads should have rolled after council’s in house procurement team - and its advisors - bought the 26 storey ASB Towers for $55 million and waived the building warranty. The building required a $38 million ratepayer injection for immediate remediation. A Tamihere led Council will bring back the concept of accountability.

Council officials must face the same standard of performance that a plumber, carpenter, electrician or truckle has to adhere to. There can no longer be a veil of silence around poor performance or incompetence and my Integrity Unit will be the eyes and ears of Aucklanders.

John Tamihere will use a common sense approach, encouraging the collaboration of all stakeholders.

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