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.
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