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Weak Cities

Written By: - Date published: 8:30 am, December 16th, 2016 - 44 comments
Categories: accountability, business, capitalism, local government, Politics - Tags:

There’s a weakness in public governance that needs fixing fast.

The first that caught my eye this week is to see in the NZHerald the mayor of Auckland was caught in a major traffic jam as he was trying to get to the airport, and the airport itself was in complete chaos at its domestic terminal.

The second is that Dunedin’s Aurora Energy has had a major grilling about thousands of dangerously rotting power poles.

To the first, there’s a growing catastrophe about managing the whole of Auckland’s transport and its overall growth specifically concerning tourism growth. Auckland Council wilfully refuses to use the power it has to coordinate it.

Auckland Council owns 25% of Auckland International Airport Ltd. It does not have a seat on that board. Instead it passively manages that investment through another entity, ACIL. Despite this shareholding, and its place within Auckland, its development plan fails to even mention the Unitary Plan.

And it’s not as if its plans weren’t publicised. They bought out the cover the NZHerald for it, as well as going nationwide.

The Mayor could disband the useless ACIL, get the appropriate number of board members on it, and use that real voting power around the table to require the integration of Auckland Airport’s development plans with Auckland Transport, and Council’s development arm Panuku, and indeed other agencies like NZTA, Kiwirail, indeed any other agency. As Hobsonville’s redevelopment shows, it doesn’t have to be this way.

Auckland Airport instead simply uses its legal status as a state within a state to grow exactly the way it wants and to its own speed. That is a sustained failure of governance that should and can be fixed right now. Auckland Council’s response was to ‘form a taskforce’.

In the second instance, a Mr Richard Healey of Dunedin, longstanding Delta/Aurora employee went on television stating that thousands of Dunedin-area power poles were in such poor condition that lives and property were at major risk.

Delta and Aurora ducked for cover fast. But Mr Healey was persistent. WorkSafe got involved. E Tu got involved. Over November this year the pressure on the shareholder Council grew. Deloittes did a damaging review of its asset management, which was tabled at Council recently.

Today in the ODT, resigning longstanding board member Stuart McLaughlan blamed it back on the Council that had needed funds for many years to fund the stadium.

Gotta love how much use his fees were then if he was that effective with his own shareholder.

Between the Council and the company is Dunedin City Holdings Ltd. They have delivered as much value to Dunedin City Council in this matter as ACIL has to Auckland Council.

Now, we won’t see the rollback of the entire 1989 local government reforms that installed this kind of rent-seeking governance behaviour, nor the Bradford electricity network reforms. But there’s far too much ineffective governance, not enough bold and direct democratic accountability, and not enough coherence across the public sphere.

The results in Dunedin and Auckland of weak democratic oversight and an absence of wisdom in running the whole of a city is stark. This stuff is gradual and not very sexy and hard to change, but when it goes wrong, it goes almighty wrong and affects tens of thousands of people immediately. Our cities need to govern wisely and act with strength.

44 comments on “Weak Cities ”

  1. One Anonymous Bloke 1

    We won’t see any improvement until the SOE model is terminated with extreme prejudice and public services are reinstated.

    The best way to sabotage any future vandalism is to pay no compensation. Once bitten, the National Party’s owners will be twice shy.

  2. saveNZ 2

    Yep get rid of SOE and COO models. It is increased cost and bureaucracy and zero transparency. It’s not working. Nothing is being done, because it is all about profit for a few companies and not about actually public service and accountability with the money.

  3. Draco T Bastard 3

    Now, we won’t see the rollback of the entire 1989 local government reforms that installed this kind of rent-seeking governance behaviour, nor the Bradford electricity network reforms.

    And yet that is exactly what we need. Most of these things (airports, ports, power) should be a government service. Turning them into a bunch of rent seeking entities only benefits the new private shareholders while costing the community far more both in monetary and social terms.

    • ropata 3.1

      There is no such thing as society or community. We are all induhviduals

    • millsy 3.2

      You wont belive how things work in the post-Bradford electricity market. Things are fragmented to a degree that is unbeliveable.

      For example. If you are a Genesis customer who wants their power reconnected in the South Island. Genesis sends the work order to the company I work for, then I send it to another company who sends it to yet another company and so on and so fourth. It is completely crazy.

      There is also a large call centre in the South Island who handle most of the call outs for all the different service providers. They send me work orders, and no shit, I technically send them straight back.

      • Draco T Bastard 3.2.1

        That would not surprise me. I was on the ADSL helpdesks of Telecom and Telstra and saw similar BS happening there. So bloody stupid and inefficient.

  4. Muttonbird 4

    Auckland Airport instead simply uses its legal status as a state within a state to grow exactly the way it wants and to its own speed. That is a sustained failure of governance that should and can be fixed right now. Auckland Council’s response was to ‘form a taskforce’.

    It is no surprise that this author rests the blame for Auckland’s increasing problems on middle-management issues, and doesn’t mention current central government policy which is precisely the same – ‘to grow exactly the way it wants and to its own speed’ – regardless of the consequences.

    Why is local government responsible for the pressures placed upon it by national government policy when they have no control over this policy?

    The solution might be for Auckland to be able to set its own immigration policy – right?

    • Ad 4.1

      I don’t think too many politicians would want to limit the tourism boom.
      Almost all of that comes through Auckland airport, both international and domestic.

      • Muttonbird 4.1.1

        Some politicians would like to accept responsibility for the infrastructure requirement demanded by that boom. The current ones do not.

        This is not a local government problem, it is a central government problem and they have been missing in action for some time now.

        • Ad

          It’s definitely both a local and central government problem.
          To give an example, the primary arterial going into Auckland Airport is bisected by Kirkbride Road. There is a major work underway to trench SH1 and fully separate the two. Kirkbride is Council, SH1 is central.

          The airport itself however is failing to get its development programme up fast enough. That again is where a more active Council as shareholder could step in and really put some pressure on.

          The problem with Auckland’s growth is too big for Auckland Council alone, but also too big for central government as well. They are interdependent on each other now in managing how this 1/3 of the economy grows and operates and changes.

          Auckland Council should do its part by operating the levers its got.

          • Muttonbird

            It’s definitely both a local and central government problem.

            Can I ask then why you didn’t address central government’s role in you post?

            No problem should be too big for a decent, forward-planning central government. The problem lies in that we don’t have one right now.

            Also, I see your government’s so called stellar response to the North Canterbury quake has a roadblock yesterday. You claim the quake is a god-send to the National party. Brownlee telling locals on TV to shut up and stop complaining is a god-send?

            • Ad

              I didn’t address it in the post because it was about the failure of local government governance about entities in their own shareholding control. So it is squarely local government control, even if they don’t have control of all the policy settings. It’s a post about governance and democracy within two specific cities.

              You have a different view of the scale and purpose of government than the one we have had for the last thirty years. We’re not going back under any combination of parties that we have in parliament, so I don’t bother worrying about considering that scale of command-and-control state.

              As for your last point, check the polls.

              • Muttonbird

                “Check the polls”. Thats the refuge of right wing trolls on this site so I can assume you are happy to be included as one of them.

                You are jumping the shark to equate my call for proper governance and cooperation in infrastructure of national importance with ‘command and control state’. Typical.

                Also, you narrow the discussion in this post to a ‘failure of local government governance about entities in their own shareholding control’ conveniently ignoring the massive demands placed upon Auckland due to policy outside their control.

                As for similarly comparing Auckland’s critical infrastructure demands to a few rotting power poles in Dunedin, well that is just weapons-grade stupid.

                • Paul Campbell

                  It’s not a “few rotting power poles” it’s $400M worth of rotting power poles all over Otago. Every power poll, except for 2 concrete ones, in my street have been replaced in the past year, the Chorus people refused to climb them to install fibre.

                  So Dunedin built this stupid over priced stadium, it will cost half a billion dollars by the time they’re done, and it loses millions every year that have to be propped up by the council and the ratepayers – originally rugby came to the party, they offered to contribute to the stadium by donating Carisbrook for the city to sell and help fund the project, in the end the good ole rugby boys turned it around backwards forcing the ratepayers to buy it from them for far tool much money and sell it at a loss, the next promise was that they would raise $50m in private fundraising to contribute to the stadium, in the end the raised $0, but they did create a scheme where they sold each other luxury seats at below market rates while pretending to raise money, meanwhile the City borrowed the $50m and pays the interest on it using our rates …. it goes on and on

                  In the end they raised rates (a lot, even for non-rugby fans), and they funded it by forcing the council owned corporations to pay far larger dividends than they were comfortable to help cover all the debt payments – Aurora’s been subsidising professional rugby at the expense of safety (one guy died) and normal maintenance

                  Mr McLaughlan is not an innocent whistle blower here, he was chairman of the Highlanders before this CF, he was on the CST, the rugby organisation who sold the city this whole bill of goods, and he was on the board of Aurora that was paying for all this – and never, until now, as he leaves his sinking ship, mentioned that this whole plan was completely unsustainable

                  • Muttonbird

                    Interesting that the physical structures supporting the massive profit making lines are the responsibility of rate-payers rather than line users.

                    • Paul Campbell

                      There’s history here ….

                      Dunedin built it’s own hydro power in the past, and wired it to the city, and the profits from that went to the ratepayers.

                      When central govt forced the city to sell either the hydro scheme or the lines they chose to keep the lines.

                      Aurora is supposed to be a profit making corporation created by the investments of previous generations of ratepayers, it used to be we’d get a dividend included in our rates bill, instead that’s gone, it’s being quietly used to prop up for-profit rugby, a bunch of wowsers supping at the public trough.

                      At this point the cost of the rugby stadium is a sunk cost, and is costing millions every year to cover the operating losses, the city would be far better off if they mothballed the thing, rugby would scream, but it might finally get them off of their flabby arses to contribute all the money they have promised over the years but never actually fronted up with (and for the record watching sport is not sport, it’s entertainment, they deserve the same ratepayer support the local movie theatres get)

                  • millsy

                    IMO Sky TV should own/fund all the major sporting stadiums in the country. They are, after all, technically giant TV studios..

                • Ad

                  Proper governance of infrastructure at the national level is another post altogether.

                  Impact of central government policy on local government would also be another post.

                  No, it’s not “a few rotting power poles”. Delve in and have a look at the Deloitte report and it’s big right across the assets Delta has.

                  Dunedin still retains traces of the kind of regional government and regional strength that Otago and other region used to have before generations of forced divestment, corporatisation, asset stripping, and legislative stripping. Auckland, however, doesn’t even have that.

                  That situation is not going to get better in the medium term, if ever. You could change all the nations’ immigration policy settings overnight and you would still see massive growth continue in Auckland it would take a decade to fulfil its needs.

                  So in the meantime, Mayors Cull and Goff need to operate the governance instruments they have a whole lot better.

                  • Muttonbird

                    Proper governance of infrastructure at the national level is another post altogether.

                    Impact of central government policy on local government would also be another post.

                    Other posts, more important posts, which you don’t want to consider. You’d rather attack middle management and local structures for massive national infrastructure problems and leave the 8 year National Party government clean of blame.

                    • Ad

                      Local government is its own democracy with its own systems.
                      It needs to be tested in its own right.

                      If I wanted to do a post on the relationship between local government and central government, it would cover more than the National government. The key moves were made under Labour in 1989.

                      I’m sure either myself or MickeySavage will do something on the RMA or the local government reform bill once it comes into the House again.

                    • Muttonbird

                      Labour did it too. Ok.

      • saveNZ 4.1.2

        They supposedly support tourists – yet they still can’t get a light rail service going from the airport. Instead tourists are price gouged for taxi’s – or take a bus – both clogged with traffic – not what you need when you are catching a flight.

  5. Muttonbird 5

    As if on cue, despite rubbishing opposition discussion about government funding of such projects, despite the penguin yelling about BCRs in the satellite suburbs of Sydney, there comes this.


    Typical of this government, it is all about the phrasing and short term vision, rather than the results.

  6. tc 6

    Enron, worldcom, feltex, PPCS, GFC etc show how corporate governance and company rules do bugger all and nobody is held to account.

    That same governance allows assets to be stripped (SCF), organisations run down (telecom/spark/vodafone etc) and general plunder with large overpaid management structures and no investment in the business systems, process, technology.

    Its the last model you should be using to run anything IMO.

    • saveNZ 6.1

      +1 TC

      I’d like to see the living wage implemented in all public COO and SOE services – and the top salary pegged at the PM salary. And serious consequences and audits for cronyism and fraud as in jail sentences and criminal convictions.

  7. Aaron 7

    It’s been fun here in the Waikato with Waikato District Council’s CCO Tanlaw becoming so useless and unresponsive that the council ended up giving their contract to other entities – meaning Tanlaw no longer exists.

    Their roading maintenance work went to a private contractor and bizarrely, their town maintenance work has gone to Chritchurch City Council’s CCO City Care.

    It’s working about as well as you’d expect. As an exmaple, the local community board chair put in a maintenance request to fix a local park bench. This work was done the next day by a City Care employee and then the following day another employee turned up in their “City Care” branded ute and took the fixed-up bench away!

    Remembering of course that the rationale for running council services like an independant business was that it would be more efficient!

    • tc 7.1

      Raglan have been told to get used to sewage leaks as WDC have allowed it to get to the stage that they’ve had to admit its screwed.

      Downers are making a killing out of them with road work having pulled their straw out of a that duopoly hat.

      The brighter future folks….dont drink too much of it unless you have excellent water filtration and sterlisation.

  8. ropata 8

    Any public utility run for profit is liable to be abused by politicians or shareholders seeking an easy cash cow. Essential services should not be profit driven, rather they should measure their success on customer service, network coverage, sustainability, employee wellbeing, and enhancement of NZ society.

    Profit driven cost cutting leads to all sorts of bad outcomes, like the 1998 Auckland power crisis (cost ~0,3% gdp), the Leaky Homes crisis (cost ~20b) etc

    More examples

    • Ad 8.1

      A couple of comments on that.

      Not sure whether you think an international airport should be considered an essential service. But regulating the prices that they charge through aircraft landing fees is incredibly hard. Four years ago a set of airlines took the Auckland Airport to court complaining about the landing fees. It was an incredibly tortuous and difficult case to the Commerce Commission about whether the costs to run the airport, and the income the company got from other sources such as retail and real estate and car parking, really required that level of charging.

      The airlines lost on all counts even when they took many of the points to the High Court.

      As to whether a lines company is an essential service, it probably is. But honestly I can’t work out anymore whether public ownership would make much of a difference to the customer. Probably if it were in direct public control there would be more public noise and faster about service problems. I don’t claim to be an electricity utility expert, but I don’t think it would hurt to bring their price plans to a local Council for a bit of debate, rather than going through the tortuous Electricity Commission.

      I would definitely prefer faster and louder electricity utility regulators, and with more teeth like Australia’s ACCC.

      • ropata 8.1.1

        The Bradford electricity reforms were ideological nonsense, there are no advantages of scale or a proper electricity ‘market’ in a small country like NZ. But they have been very profitable, and asset sales are fun, so hooray for capitalism…

        The airport was built with public money and it’s an absolutely critical gateway to the world, too important to leave it to the tender mercies of private capital

      • Jono 8.1.2

        Who’s pocket is all this cash going into…. Surely the airport has the funds to invest in a light rail connection to the city. May some of these shiny seat executives could take a pay cut for the sake of the cities future…

      • millsy 8.1.3

        I actually believe in a compromise.

        Basic airport infrastructure, ie terminals, runways, carparks, refuelling equipment, fire control, etc is publicly owned, with land around the airport leased to private developers to do private develop-y things.

        Landing fees are calculated to recover costs of infrastructure, with surpluses returned to the local body owners to be placed in a special infrastructure fund.

  9. Brendon Harre 9

    It is the same problem down here in Canterbury. Neither the Council and the government appointed bodies -ECAN, CERA, CCDU etc covered themselves in glory. Given the amount of private insurance kiwis have -the rebuild should have been easy -the fact it wasn’t and has taken so long is an indicator on how poorly our cities are governed. God help us if the big one hits and we have to rebuild Wellington……

    NZ badly needs major reform in this area -if we are to have strong, resilient, functional and affordable cities. Surely the lesson from John Key is that can kicking only works for so long…..

    • Ad 9.1

      Cities are by necessity more coherent and require far more intensive and centralised planning than whole nations.

      Imagine trying to do a Unitary Plan for the entire country!

    • ropata 9.2

      Bully boy Gerry Brownlee, king of CERA, could have told the private insurers to pull their heads in and pay up. Should have created a special commission to make sure that everyone was properly covered and to chase up disputes.

      But big bold Gerry became a timid lamb when dealing with the insurers (Nat donors)

      • Brendon Harre 9.2.1

        Agreed Ropata. Also Gerry could have taken an active government stance wrt the displaced from the red zone.

        For instance the government could have bought some farmland near Christchurch, rezoned it and provided all the infrastructure for housing, roading, public transport etc and given the redzoners the option of a land swap instead of just being paid out government valuation for their redzoned land.

        That would have led to a much better outcome -rather than let redzoners sprawl to the ends of Greater Christchurch -Rolleston to Amberley. Especially as Gerry has not been able to get much in the way of infrastructure or RoNS for Canterbury -so this sprawl is heading the same way as Auckland -eventually it will be a cluster f..k

        For all of Gerry’s fighting talk, in reality he is piss weak and has given Canterbury bugger all.

  10. DH 10

    “The Mayor could disband the useless ACIL…”

    Does the Mayor, or the council for that, even have the power to disband CCOs? I thought they were enacted by legislation…. ??

    • Muttonbird 10.1

      Ad seems to think New Zealand cities are modern, walled fiefdoms within which they can do what they please.

    • Ad 10.2

      A couple of them were protected for two years following the Auckland amalgamating legislation of 2009 and 2010. Mayor Goff has commented that merging some of them or bringing services in-house is still a possibility, but not yet.

  11. Muttonbird 11

    I’m in Mt Wellington and I used to allow 30 minutes to get to the airport. Now I will set aside 90 minutes.


    All the fault of council middle management apparently. Nothing to do with unregulated immigration.

  12. simbit 12

    Could only down two beersies at Galbreath’s after a conference at Auckland Uni before trekking to airport in taxi. Should’ve had time for three. I offer this as a model of lost productivity to the city.

  13. Jono 13

    We are on the third world city track where infrastructure is not developed to keep up with population growth. You would think Auckland was a first world city but its not really.Auckland city needs to get its A into G. Cause it must look pretty third world to tourists arriving.

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