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Auckland Council CCO 2 step

Written By: - Date published: 10:42 am, March 7th, 2014 - 13 comments
Categories: accountability, auckland supercity, democracy under attack, election 2014, greens, infrastructure, labour, mana, national/act government, Privatisation - Tags:

Tony Holman’s op ed piece in the NZ Herald today adds an important perspective on the Auckland Council CCOs currently under review. He is concerned that the CCOs are a trojan horse that is part of a 2 step movement toward privatisation of Auckland assets. He argues that this will be on the agenda if John Key’s team regain the treasury benches in the election later this year.

Holman’s article is in part a response to Mai Chen’s piece in the last week about the same issue.  Mai Chen argued that the CCOs need to be improved, but that the basic set up is fine.

The review is likely to result in CCOs being put on a tighter leash governing what they can do without council approval.

Eighty per cent of the changes to the CCO model are likely to be relationship driven, focusing on improving communication so CCOs better carry out the council’s imperatives.

The remainder is likely to be structural reform. There may be mergers. There is pressure to bring some CCOs, such as Watercare and Auckland Transport, back into the council since they carry out core functions of local government.

Chen outlines some of the questions being investigated for the review, then concludes:

When I interviewed decision makers for my book on how the Auckland Council was created, the feedback from some was that CCOs were generally working well, so don’t fix what was not broken. The magic was private sector people on CCO boards and the great staff CCOs attracted, who may not stay if CCOs were required to work under greater council direction. But others have said consolidation of CCOs is needed, and some should be brought under greater council control

Tony Holman has been a councillor for North Shore City and has a business background.  He brings a certain amount of insider knowledge to the modus operandi of the CCOs.

In today’s NZ Herald article, Holman begins with some criticism of Chen’s approach:

But much of the analysis tended to be academic and theoretical, rather than analysing the politico-economic philosophy behind the CCO facade and the real aims of the governments that promote them, and of some businessmen appointed to CCO boards.

CCOs are a sort of Trojan horse, designed to infiltrate publicly owned assets under cover of the public’s “owner”, the council.

There are three major objectives behind the establishment of CCOs:

• To carry out the government’s wish – to take over publicly held assets for eventual privatisation.

• To learn more about the strengths and weaknesses of each CCO’s business.

• To take steps to prepare the CCO for privatisation.

The CCO device is a commercially-oriented two-step. The first step is to put various council functions at arm’s length from elected members and council managers, that is, largely out of the council’s control (despite the name).

The second step is to use the inside information gained by appointees to build a case for privatisation. Then will come the mantra that privately-owned businesses are always more efficient than publicly owned organisations.

Holman argues that, while the unelected  CCO directors and managers are to some extent answerable to the elected councillors, the councillors have a limited amount of say.  Also, the CCOs’ staff maintain a more detailed working knowledge of the CCO operations than do the council members.  This gives the CCOs an advantage when arguing for privatisation.

Holman ends with a warning about what will happen to Auckland assets should Key’s NActs get back into government in the election later this year:

The current set-up for our “Super” city resulted from Government legislation which required that all of the Auckland region’s publicly owned assets be taken out of direct public control and had to be put into CCOs (the first part of the two-step). If National is re-elected this year, with an Act component, it is likely to require the Auckland Council to sell its billions of dollars of assets tied up in the CCOs to help fund the council’s wildly ambitious schemes, particularly the subway project.

If legislation is passed to sell them, the consequences can be forecast.

Water would be sold to one of the international water conglomerates, resulting in much higher prices, lower efficiency and poor maintenance – as a study of the results of privatisation of water in UK, France, Canada and other countries soon reveals.

Privatisation of Ports of Auckland would put the considerable public profits into private hands, removing the millions of dollars now available for public investment in Auckland’s transport system, leading to bigger loans and therefore higher rates.

So, there are two actions Aucklanders can take to try to prevent such a devastating blow for Auckland. Mai Chen claims Aucklanders can have their say on the review by 30th June, but I’m not sure how this can be done.

The Council website mentions the review here.  Maybe members of the public need to communicate their views to “Councillors, local board members, CCOs and the Independent Maori Statutory Board” ?

The terms of reference for the review are here.

The second thing Aucklanders can do is vote Labour, Green or Mana at the election later this year.


13 comments on “Auckland Council CCO 2 step”

  1. Penny Bright 1

    Any so-called ‘lefties’ out there who still to want defend ‘pro-privatisation via PPPs’ Auckland Mayor Len Brown, Prime Minister John Key’s ‘little helper’?


    Tony Holman: CCOs a Trojan horse for privatisation


    Mayoral Position Paper on Public Private Partnerships November 2013 – written by Ernst and Young ….


    The Mayor has asked for a position paper to be developed on the nature and uses of Public Private Partnerships(PPPs). This paper is to focus on the range of PPP options that may be suitable for major Council and CCO projects.
    ……………. ”

    (Note – this is the same Ernst and Young who, in my considered opinion, wrote the dodgy Len Brown cover-up report, which effectively helped to protect the Mayor from possible criminal prosecution?


    But – remember the mantra?

    New Zealand is (‘perceived to be’ the least corrupt country in the world?


    Pity about the reality ……

    Penny Bright
    ‘Anti-corruption / anti-privatisation Public Watchdog’

    • xtasy 1.1

      Penny, I fear you are right with some of what you say!

      The “lefties” have in too great numbers been compromised and become followers of fads and trends, and they defend Len Brown from any criticism, even where it may be justified. That is not going to serve the cause of the left as such, I am afraid.

      I am through with Len and his conduct, not just what happened with Sky City upgrades and freebies, but with the recent ideas about a “poll tax”, his love for PPPs, his extravagant day dreams of Auckland growing to a “world city” of 2.5 million and so forth. I question his sanity, to be honest.

      So I went through the Proposed Auckland Unitary Plan, and I saw so much stuff, that will certainly create endless issues and problems, and that are not even communicated to the people at large (given prioritised, abbreviated, corporate style information strateties), it is a “disaster”, to put it mildly.

      Again, you will find many here support it, but know little about the detail.

      My submission only covers bits at issue, but if taken seriously, it will seriously upset Len’s Plan, as it is not workable. It is not what we need, and it is even close to breaching laws, it ignores recent scientific and other findings and will fail, after years likely and deservedly end up in the waste bin of “plans”.

      Len’s talk (in a Herald article) of wanting a third term, of this and that grandiose ideas, now thinking he can charge an extra tax on every Aucklander, that disqualifies him. He will be out by next election, indeed he is stuff that would make National proud. We do not need such crap.

      The CCOs must go altogether, and there should not be any ifs and buts, it is time to redraw the whole scheme for greater Auckland, and to bring back true democracy, which we have not.

      I am sick of what goes on in Auckland, and it is not just Len Brown, the whole council is full of self serving jerks, that do not really represent the interests of Auckland, certainly not the future of the city.

      • Chooky 1.1.1

        +100 xtasy…you make a lot of sense

      • Douglas Haig 1.1.2

        Expose “The Purple Corridor” I wholeheartedly agree we are all sick of what goes on in Auckland, and it is not just Len Brown, the whole Council including the CCOs is more than full of self serving jerks who do not represent the interests of Auckland. The fact that Len Brown remains confirms such view.

  2. RedLogix 2

    I’Great post karol. I admire the work you put into them. m going to flog this horse a third time because it is so pertinent.


    Over the past 14 years GWRC Bulk Water Division returned over $80m to Wellington ratepayers in terms of avoided rates. This came about from two factors:

    Sound and decent managers who understood their industry and acted in the public good.
    Staff who were capable and worked hard to find productivity gains via technology improvements.

    By contrast the private owners of the electricity network extract insane economic rents while arguably doing nothing for the actual asset.

  3. Sanctuary 3

    Mai Chen’s piece was basically of the sort which grown to great favour after thirty years of bi-partisan neoliberalism – an establishment technocrat offering a cool view in the tradition of the grandes écoles.

    As a believer in vigorous Ango-Saxon democracy, I am always suspicious of technocrats bearing gifts of TLAs and much prefer the democratically informed and formed views of elected citizens like Tony Holman when it comes to governance over the expenditure of public money.

  4. captain hook 4

    The thing abouth these so called businessmen is that they cant create anything. all they can do is steal from others. usually under cover of some neo-liberal bullshit philosophy. Stealing from Councils seems to be becoming easier and easier. Aucklanders must stand up now and remove this horrid canker from their local governance before its all gone and the piggies have taken everything. Time to take action. Its a pity that those who demonstrate against the mayor aren’t inclined to demonstrate against theft of the councils assets. There is a disjunction here that must be addressed by direct action if necessary. Moaning about it on this blog wont achieve anything.

  5. Penny Bright 5

    Back in 2010, when I stood as an Auckland Mayoral candidate in order to make a fuss about the issues, and oppose the ‘Supercity – Super Ripoff’ – this is what my little leaflet said:


    This is not ‘left’ vs ‘right’

    This is ‘public’ vs ‘corporate’.

    The $upercity agenda is about replacing thousands of ‘piggy in the middle’ private contractors with fewer but bigger multinational snouts into a bigger public trough.


    You didn’t vote for this Auckland $upercity and Rogernomic$ blitzkreig, to seize control of $28 billion of Auckland public assets.

    7 (corporate) Council Controlled Organisations (CCOs) will grab 75% of Auckland regional rates.

    Do you want unelected businesspeople controlling your interests? These CCOs will be run like a business, by business, for business – setting up for future privatisation under Public Private Partnerships (PPPs).

    Have your rates gone down since the last council amalgamations? EVER?
    The $upercity legislation set up this corporate structure – it can and must be repealed.

    Penny Bright
    ‘Anti-corruption / anti-privatisation Public Watchdog’

    • karol 5.1

      Yes, I think this is the crucial issue.

      Brown is the lesser of evil choice for Aucklanders, and he has limited parameters in which to move. I hope the left puts up a new choice for mayor next time round.

      But, the most crucial thing is the need for a change to the main structure of Auckland Council. Get rid of the CCOs, and a stronger role for councillors and local boards.

  6. James Thrace 6

    Overseas Interest v Kiwi Interests

    Nuff said.

  7. captain hook 7

    time to organise against these predators.

  8. Flip 8

    Privatisation means economic growth and we all want the economy to grow. Yeah Right.

    We do not care where the growth happens. All that extra income for the already wealthy will trickle down.

    Yeah Right.

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