Hon Judith Collins
MP for Papakura

5 December 2015

Speech to ACT Party Auckland South Annual Conference

Good afternoon, thank you for the invitation to be guest speaker at your Auckland South Annual Conference.

The theme of your conference is local government. I want to talk about local government in Auckland - a topic we all hold strong views on.

It is five years since the establishment of the Super City and it is fair to say much has gone right. Let’s face it - it could hardly have got worse.

Auckland is vitally important to New Zealand’s economy and the issues with local governance could not be ignored any longer.

The Commission recommended the dissolution of the ARC and all seven territorial authorities to be replaced by a single Council and Mayor- a single voice for Auckland.

What did the Commission think one Council would deliver for Auckland? A great deal in fact:

• significant streamlining in local government arrangements

• clearer mandates

• elimination of duplication

• better strategic planning

• better management of resources, and

• a more efficient and less fragmented council

The change was meant to bring about certainty for developers. Certainty for rate payers, fairness in delivery of services, joined up services… world peace within the Auckland region.

Long term Mayors, Sir Barry Curtis and Sir Bob Harvey recommended a three city option.

With hindsight, that would have provided the competition between cities previously used to drive development. Now, with only one Council, developers tell me that they have lost the ability to pick their Council and for the Councils to respond accordingly. It can’t be any coincidence that the nearest Council that’s any competition with Auckland is Hamilton and there is a lot of development going on there that used to go on in Manukau.

Whether or not the one Council and one Mayor was the right call that’s what we’ve got and we need to make the most of it. Some say the Council could be further downsized.

We’ve got a Mayor plus 20 councillors, 21 local boards with 149 elected member positions. Seven Council Controlled Organisations (“CCOs”) and eight (soon to be nine) advisory panels.

Speaking of pointless organisations - The Royal Commission called for guaranteed Maori seats on the Auckland Council. The Minister in charge and ACT Party Leader, Rodney Hide rejected that and so did we.

We’re in an MMP environment and in coalition with both ACT and the Maori Party and so we agreed to a Maori Statutory Board which was supposed to be Advisory only.

Rodney Hide recently stated the Maori Statutory Board (“IMSB”) was a mistake and his biggest regret. He’s right.

The Board is neither elected nor accountable. The Maori Statutory Board is an unaccountable Monster. It believes it is outside the law.

I recall my experience trying to get some basic information about its members. The IMSB ignored the request and ultimately I had to get the Office of the Ombudsmen involved.

Despite the Ombudsman finding the IMSB had no grounds under the Local Government Official Information and Meetings Act (“LGOIMA”) to withhold the information the IMSB thumbed its nose at the Ombudsman. The Board actually passed a resolution not to comply with the Ombudsman’s recommendation!

The IMSB’s refusal to provide basic information that should be publicly available showed a total lack of respect for the law and the ratepayers of Auckland. It needs to go.

LEADERSHIP

So, in addition to a whole new governance structure, what else did the Royal Commission think we needed to ensure the success of the new Council?

An inspirational leader, an inclusive but decisive leader who could develop a shared vision, who could speak for the region, and deliver regional priorities decisively.

The new Mayor would chart and lead an agenda for all of Auckland. She or He would be fully accountable – whatever that means.

Well, we got the wrong Mayor. The Mayor we elected – hey – don’t look at me – I didn’t vote for him, turned out to be true to his party and appointed a whole stack of people whose jobs appeared to be focussed on creating a messianic cult around a singing Mayor Len.

A Mayor who rapped about ‘Getting down with Brown’ on the Southside and had a foreign policy on the other. A Mayor who thinks that he and his troupe flying to Paris to talk climate change is his job.

Instead of strutting on the world stage, all of his focus should have been on the many issues facing Auckland.

He is a pleasant chap, but Len has not delivered for the people of Auckland. And he has surrounded himself with the wrong people.

The wrong Mayor made sure that the wrong people ran the bureaucracy. We were told that surplus bureaucrats would lose their jobs and be made redundant.

We found that these same people were made redundant, got paid out substantial amounts of money and then got re-hired by the new improved Auckland Council. Nice work if you can get it.

VALUE FOR MONEY

In the 2008/09 year the eight Auckland councils were budgeted to spend almost $2 billion in operating expenditure and over $1.25 billion in capital expenditure.

The Royal Commission forecast that the new Auckland Council would achieve greater value for money for Aucklanders due to comprehensive planning, budgeting and reporting. Have we got greater value for money? No one really knows.

Auckland Chamber of Commerce head Michael Barnett has repeatedly called for a transparent line-by-line review of Council costs and planned capital expenditure.

He is absolutely right. Central Government has undertaken value for money reviews since 2008. Taxpayers deserve to know that public money is being spent cost effectively and efficiently.

41 percent or $1.5 billion of Council’s $3.6 billion revenue comes from 527,000 ratepayers. It isn’t a bottomless pit. Ratepayers shouldn’t and won’t tolerate massive annual rate increases.

It has been five years since the establishment of the new Council. I’m willing to bet that there are significant savings and cost efficiencies to be made.

We expect prudent use of taxpayers’ money from Central Government. Local Government is no different.

Auckland Council has major issues to deal with in infrastructure, transport and housing.

We’ve already got a major housing issue in Auckland and the forecast increase in population is only going to fuel the fire that is the Auckland housing market.

Auckland’s population has grown by 100,000 in five years. Over the next 30 years Auckland is expected to increase by 50 percent (750,000 people). The Council must have the infrastructure and public services in place to meet this growth.

We’ve all probably got half a dozen stories of people enjoying incredible wealth thanks to the Auckland housing market. One I read about recently was the couple who bought 4 hectares in Brigham’s Creek Road in Whenuapai for $285,000 20 years ago. They just sold it for $ 7 million.

Let’s face it, if you have been a property owner in Auckland over the last few years, chances are you have done very well. Despite all the advice about diversification and investing in our equity markets, Auckland housing is where the real money has been made.

But what about those who don’t own property? While house prices may eventually stagnate or fall there are other things central and local government can do to make it easier to buy property.

I think all of us here today are disappointed the lack of a political majority means that the Government will be unable to deliver really significant RMA reform.

However, it is pleasing that what has been announced will go some ways towards simplifying the consent process - the new planning templates for Councils are expected to improve the consistency and reduce the complexity of plans, there will be reduced requirements for some minor consents, and some stronger national direction around requiring provision for housing growth.

THE FUTURE

Auckland Council has stated that, in order to deliver on its vision to become the world’s most liveable city it must speed up its infrastructure spending of $18.7 billion over the next 10 years on building new assets and replacing existing ones.

How are they going do it? The Council appointed Cameron Partners and EY to consider that question.

In short, they were asked to suggest ways to reduce the proportion of Auckland Council’s revenue which comes from rates - currently it is 41 percent ($1.5 billion) with the remaining $2.1 billion coming from other sources such as investments.

They were also asked to put forward options to maximise the Council’s return on investments and explore alternative sources of financing.

Cameron Partners and EY were also asked to review the Council’s assets and to assess whether the holding of those assets is aligned with Auckland’s core business. They’ve wondered why the Council owns so many golf courses. I could also add, why does Council need to own 100 percent of the Ports of Auckland?

Both Cameron Partners and EY think the Council has limited additional debt capacity so it can’t fund all its future expenditure by borrowing. Smarter thinking is required.

Auckland Council has $42 billion in assets.

Infrastructure makes up 70 percent of those assets to a value of $28.6 billion. This includes storm water, water, waste water, transport, roads and public transport.

Commercial assets such as stakes in Auckland Airport and Ports of Auckland have a book value of $2.8 billion.

Community assets which includes parks, sports facilities, community facilities, stadium, libraries, the Zoo etc. have a value of $7.6 billion.

In terms of realising gains from the infrastructure assets the Council could look at PPPs or outsourcing and there are always operational efficiencies to aim for. But the reality is these assets are not structured to run in a profitable manner, so that leaves community assets and commercial assets.

In terms of community assets they are generally non-income generating but offer potentially very large proceeds if sold.

The consultants recommended that Council develop a central register of community assets that compares the value and use of community assets currently compared to their value if used alternatively (such as using golf course land for housing).

The potential alternative use value of these assets is very high.

For example, the balance sheet value of 13 golf courses owned by the Council is $61 million but if that land was used for housing then the land value is $1.4 billion.

I’m not suggesting that Councils shouldn’t own golf courses but I’d hope the ones they own are well used like our parks. I’d expect the Council was making a reasonable return on them if they’re not open to the general public.

What about other assets? EY suggested non-core assets could be partially or fully sold down, the Council could look at sale and lease back options, sell surplus property assets and seek better commercial value from Council Controlled Organisations.

For example, the stake in Auckland Airport could be partially or fully sold down and the proceeds used to pay down debt, reduce rates or accelerate infrastructure investment. As could another non-core asset, Auckland Council’s Diversified Financial Asset portfolio, a $350 million equity portfolio. This has been described as a “rainy day” fund. Well it has been raining quite a lot lately.

PPPs are another option for providing funding certainty, private sector innovation and discipline. The EY report had a great example of the Birmingham City Council (population 1.1 million) that used PPPs for its street lighting. The savings to the Birmingham City Council have been in the order of £ 2 million per year.

What was Auckland Council’s response to the Consultants’ reports? A workshop in February to discuss and to decide on preliminary further investigations. Doesn’t sound like the Council will be making decisions any time soon.

There are critical issues facing Auckland - infrastructure, housing and transport must be addressed urgently. The reports from EY and Cameron Partners have some “controversial” options. Auckland Council should not shy away from considering them.

Auckland desperately needs a leader, someone who can articulate their plan, implement it and be accountable for it.

Next October, Aucklanders will vote for a new Mayor. The 30 year Parliamentary veteran, Labour MP, Phil Goff has put his name forward – as an independent. I was quite hopeful of him until he ruled out asset sales or reconfigurations (even Lianne Dalziell supports them now), and said that the rates shouldn’t go up by a greater percentage than they already have – that’s over 9 percent. The fact that Len’s men – the ones who got him there and kept him there, have now switched over to Phil Goff – doesn’t auger well either. Len Brown was an Independent too.

Mark Thomas has put his hand up to stand for Mayor. He’s impressed me with his clear thinking. His name recognition isn’t great enough though.

I’m told that Victoria Crone has impressed people. I haven’t met her and again, I’d say it would take a lot to get her the name recognition that is needed. That might change.

Others will put their names forward. As a ratepayer, I just hope we end up with a financially literate, decisive Mayor who can work with Central Government and not someone who thinks being Mayor of Auckland is all about themselves.

ENDS

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