April 16, 2015

Guest post: Larry Mitchell on what's wrong with Auckland Council

So what is wrong with Auckland Council?

Well quite a lot really - if daily headlines are any guide. Signs of a dysfunctional Council organisation have now reached a point where the direct intervention of the Minister of Local Government is being urged.

A scheduled official review of the Council, under the legislation that created the Council is required this year to address Council performance issues of concern and to provide in future a programme of performance measurement and improvement.

Among the issues that assuredly deserve this level of scrutiny, one in particular has significance well beyond its prosaic sounding nature. After all, the defect, the subject of this piece, that of a flawed budget and accounting process is hardly the subject of animated conversations over a latte in the fashionable suburbs of Auckland.

Nevertheless, the way this Council currently runs its accounting cutter has a huge effect and contributes greatly to current Council deficiencies.

Let’s put it like this: If you, (say) ordered a shed to be constructed to your specifications at an agreed cost on your property only to find that a shed of a differing lower quality had been erected on the neighbours plot, I venture to suggest you would at the very least withhold your payment.

In the Auckland Council World though

  • rates and charges are set using compulsive powers,
  • delivery of the services supplied, whether they meet the standard expected (or are even applied to the particular area of benefit the charges relate to) is by no means assured and
  • payments are seldom rebated, even when there are obvious defects.

Accountability to ratepayers for the services supplied by Councils has deteriorated over the past decade or more. The rot set in when Councils, in the mid-nineties progressively moved their accounting systems to what became to be known as “The Council-Corporate Treasury model”.

In simple terms, the well-established and accountable, detailed audit trail of revenues and expenditures, all tracked down to the ward level area of benefit were replaced by an organisation- wide aggregation of information. The detail was lost.

As a result, assessments, often called for by groups of ratepayers characterised as “What did we pay for … compared with what did we get?” are nigh on impossible.

A Councillor recently advised that his enquiries of this kind on behalf of Waiheke ratepayers has been met with obfuscation and spin.

Similarly, Northern Rodney ratepayer enquiries, intended to establish the value received in their area for their Council services payments failed to satisfy the group. Their own assessment was that up to half of their area payments had not been spent in their area, particularly on their crumbling rural roads.

Debates of this nature rarely satisfy anyone, such is the dearth of detail and specifics including ratepayer’s value received for a defined area of benefit.

At the time Council systems were changed, all those years ago, justification for the change, in part was the matter of complexity. Council management asserted their inability and the high administrative costs to maintain the necessary level of detail needed to answer such enquiries.

Now, with mature, flexible, modern IT systems in place providing powerful relational data base information and systems of financial management, this excuse no longer holds up.

To maintain this fiction today and when the information could readily be supplied to satisfy essential levels of accountability, this stance amounts to a version of Auckland ratepayers getting the mushroom treatment so beloved of bureaucracies.

The upcoming Council performance review should put fixing this state of affairs high up on their “To Do” list.

Larry Mitchell is a Local Government Finance & Policy Analyst who lives in Auckland Council’s Northern Rodney rural area township of Puhoi. If you would like to contribute a guest post please contact us.