Red Alert

Posts Tagged ‘council controlled organisations’

Taxation without representation

Posted by Phil Twyford on March 24th, 2010

You have to wonder about the damage the super city fiasco is doing to National and ACT.

Both parties pride themselves on fiscal responsibility, and accountability. But with the super city they have created a monster that reflects neither principle.

The latest twist is Auckland City’s claim that the Government’s CCOs will incur tens of millions of dollars in taxes that the Auckland ratepayer will have to pick up. Bernard Orsman has the story in this morning’s Herald. Did the Government consider this when it announced its plan to corporatise 75% of Council operations in council-owned companies?

Local Government Minister Rodney Hide and Revenue Minister Peter Dunne put out a face saving statement this morning saying “no decisions have yet been made on taxation issues” for the Auckland Council, yet the third super city bill makes it clear that all of the CCOs except transport will pay tax. They go on to say while some current non-taxable activities will become taxable, tax losses will be offset against taxable income in the future. So we are going to set up a bunch of council-owned companies but we will run them at a loss to avoid paying tax?

At the very least it is another example of Hide’s rushed and shoddy process. See our exchange in question time on this. And more in the general debate.

Add to the possible tax liability a $34 million bill for consultancy fees and executive salaries at the Auckland Transition Agency, and that is only for the last few months.

And the fact that most Aucklanders believe their rates will go up as a result of the super city.  Ditto water rates.

Add to that Auckland Council’s share of the $11.5 billion Price Waterhouse Coopers reckon it will cost to fix to fix the leaky homes crisis.

The poor old Auckland ratepayer is getting well and truly stiffed. By the man who likes to refer to himself as the “Minister of Ratepayers”.  Last year Rodney Hide told an audience “…given how these Councils have been run I would be surprised if there wasn’t some ability to make savings.”  He doesn’t talk about the cost savings of the super city much these days.

But what Aucklanders find really galling about the Government’s super city is that while they are having their pockets picked, the Government is sticking masking tape over our mouths: we’ve been given no choice about the super city, the CCOs will lock us out of 75% of the Council’s operations, and the local boards won’t even have the power to make by-laws.

That is taxation without representation.


Roll call of opposition to super city grows daily

Posted by Phil Twyford on March 16th, 2010

Rodney Hide must be getting quite lonely.  The Government’s plan to parcel up 75% of Council operations, including the powerful transport agency, into arms-length council-owned  companies has met with an avalanche of opposition.

I read out the roll call to Hide in question time today: Len Brown, John Banks, Andrew Williams, Mike Lee, Michael Barnett from the Chamber of Commerce, Lawrence Yule from Local Government NZ, The Herald, The Aucklander newspaper, Suburban Newspapers, hundreds of individuals who submitted to the select committee, and the 56% of Aucklanders who told a recent poll they didnt want to be part of the super city.

Is there anybody else out there who doesn’t like the corporatisation of Auckland local government?

Lawrence Yule was the latest to step up, this morning on RNZ. He is the mayor of Hastings, and president of the association representing local government politicians and officials. He is someone who cannot easily be written off by the Government. His opinion: the Government’s super city model is fundamentally undemocratic. “Handing over 75% of Auckland’s assets to unelected ‘council controlled organisations’ is unfathomable.”

Hmmm. Let’s see who is lining up to support the corporatisation of Auckland. John Key is. There’s Steven Joyce. And Stephen Sellwood from the Council for Infrastructure Development who Sean Plunket took delight in pointing out on Morning Report is a business lobby group that costs $9000 to join.

I am picking the Government will throw a bone to public concern by putting up some minor adjustments to the CCOs’ accountability regime. If they do, they will underestimate the depth and intensity of public concern. People don’t want transport to be run by an unaccountable council-owned company. They are concerned that one of these companies will be given control of waterfront development. They want their elected representatives on the Auckland Council to be properly accountable for the Council’s activities.

Meanwhile Rodney Hide is spinning like a top. Russell Brown this morning said he was ‘flat out lying’.  Sean Plunket’s interview is worth a listen. Plunket got him to concede that the use of CCOs will be expanded under the super city, and made the point  that Hide seems to equate commercial discipline with democratic controls.

Hide said “the ratepayers of Auckland have had a say”. How exactly?  He said the CCOs are “totally controlled by the Councils” when the whole point of them is to keep the elected representatives at arm’s length. A full catalogue of Hide’s misrepresentations awaits another post. Not enough room here.


ORIGIN Greek demokratia, from demos ‘the people’ + -kratia ‘power, rule’

Posted by Phil Twyford on March 8th, 2010

I have been shocked by how many of the Government’s members don’t seem to think there is anything strange about handing over government of our nation’s largest city to a whole lot of hand-picked business appointees.

The Herald is shocked too. As are most of the mayors, the Chamber of Commerce, and the overwhelming majority of the public who turned up to speak to the select committee on the third bill.

National and ACT are so imbued with neoliberalism they are quite happy to throw out our tradition of representative democracy, and replace it with a corporate governance model. That’s what they are doing. They are wrapping 90% of Council operations up into commercial entities with their own boards of directors and CEOs.  These commercial entities can meet in secret and won’t have to publish agendas, minutes, or subject themselves to members of the public asking pesky questions. And that is the whole point of it, keep the people and their elected representatives out of it.

Transport, the waterfront, water, economic development, investments and regional facilities are all due to be corporatised so they can be managed behind a veil of commercial secrecy.

One private sector group at the select committee last week defended the proposal to structure transport into one of these commercial entities by saying this would avoid transport issues being “politicised”. He meant that people and politicians would no longer be able to argue publicly about priorities and what should be done.

I am not against the commercial model in all cases. There is a place for it, as there is for the State Owned Enterprise in central government. But this Government is going way too far, applying the commercial model to the vast majority of Council operations. Not a shred of comparative analysis is available to demonstrate they have considered different organisational models or applied some criteria to guide this decision making.

What is more, they are cutting the number of elected representatives for the region in half.  I know the anti-politician crowd will celebrate that, but seriously, it will be all but impossible for 20 councillors to be accessible and give meaningful democratic representation to 1.4 million Aucklanders.

Add to that the heavy centralisation of power in the super council, leaving local boards with little in the way of real power, a far cry from the capable empowered local councils that the Royal Commission recommended.

It is a gutting of our democracy. Centralise power, take it away from communities and the city’s periphery and put it in the hands of a small number of politicians who will be remote from the people. Hand over administration of the city’s assets and services to council-owned companies, leaving the politicians to draft annual statements of corporate intent.

It all fits the contemporary neo-liberal fad for commercial governance. Small hand-picked boards in the privacy of boardrooms can make decisions efficiently. Democracy on the other hand is messy, time consuming and sometimes inefficient. There is always a balance to be struck but Aucklanders are now waking up to the fact that this Government is imposing an extremist unbalanced model.

The Government and the cheerleaders of this blighted project are forgetting some essential lessons about liberal democracy in the modern era. That the vote was a concession to contain the tensions generated by market capitalism; society and economy might be unfair but at least we can all vote Governments in and out. That the rulers rule because the ballot box allows the people to give their consent. That it is far from perfect but no one has come up with a better system yet.

ARC chairman Mike Lee put it well last week at the select committee when he described the third super city bill as Rogerpolitics. Rogernomics was the transformation of the economy in the interests of the few, now National and ACT are using the super city to do the same thing to Auckland local government.


Hide’s corporatisation shocker

Posted by Phil Twyford on October 29th, 2009

I’ve been saying for a while the Government’s agenda for Auckland is to corporatise our democracy and privatise our assets.  In 24 hours they have delivered on both.

Yesterday we had Rodney Hide announcing plans to loosen up the controls on privatisation of water services just two months after he and his National cronies denied any plans to privatise when they voted down my private member’s bill to protect Auckland’s assets.

And now I hear from concerned senior staff at the Auckland Transition Agency of the agency’s extreme corporatisation agenda for the super city. The plan, due to be announced on Monday after agency chair Mark Ford briefs mayors today, is to parcel almost all the functions of the new city into commercially-run ‘council controlled organisations’ (CCOs). The elected mayor and councillors will presumably turn up to work and eat their lunch. There will be nothing else for them to do.  Why would good people bother standing for office under this model?

Up to eight CCOs with their own boards and CEOs will run all the main city services including transport, water, stadiums, land development, and economic development. They are even planning to corporatise libraries and community houses.  A rump Auckland Council CEO will be left to administer things like human resources, public relations, IT and finance.

To make it even more difficult for elected representatives to exercise any kind of accountability, these CCOs will all report to a Council-owned holding company with its own CEO and board.

So you are a ratepayer. You get mad that the trains aren’t running on time. Or the footpath is not being maintained. You get on the phone to your local councillor. What is the councillor going to do? Talk to the Mayor? Talk to the Council CEO? Ask him or her to talk to the holding company CEO, and in turn ask him or her to talk to the CEO of the council controlled organisation, who in turn will probably have to talk to the contractor?

Get ready to spend a lot of time waiting on the end of a phone to the customer services call centre.

This Government is planning to run our country’s biggest city like a group of companies. But Auckland is not a private firm. It is a collection of communities.

A case can be made for the CCO model for certain activities where you might want to insulate from direct political control. But not the whole operation of our city. It is corporatisation gone mad.