Speech by Hon Rodney Hide to Robert Walters CFO Breakfast Series, Tower Building, 22 Fanshawe Street, Auckland

Good morning.

Richard Manthel, the CEO of Robert Walters New Zealand; and Liz Nixon and the team at Robert Walters and all the attendees here today, thank you for the opportunity to address you today.

I know, that as Chief Financial officers of Auckland based companies you will all have an interest in how the new Auckland governance structure will work, and the opportunities for businesses during and after the transition. I hope to address some of the questions you may have here today, after which I will welcome your thoughts and questions.

Auckland is New Zealand's only city that is positioned to take on a globally-connected city role. Auckland already exhibits a number of characteristics of a strong international city. We can be proud of Auckland with its natural beauty, a jewel of a harbour and its wonderful diversity. But in my view there is a huge untapped potential. It could be so much better.

Recent evidence shows that Auckland has a productivity premium of around 50 per cent higher than that outside Auckland. Although Auckland is a strong performer in the national context, we believe it has potential to significantly improve its productivity.

That is why the Government is determined to set up a regional governance structure that enhances the productivity and competitiveness of Auckland's businesses.

Local Government in the Auckland region needs to optimise the region's productivity and maximise economic development, tourism, and cultural and social events.

Auckland's future depends on critical decisions being taken at a regional level. Effective region-wide decision-making must have region-wide governance arrangements to overcome the competing interests, parochialism and factionalism that has held Auckland back for so long.

The Government intends to provide a better environment for Auckland citizens and businesses to interact with their local authority. Strengthening Auckland's governance will, in turn, make it a better place for businesses to operate.

As a unitary authority governing the region, the Council will represent the interests of the entire Auckland region and foster a common identity and purpose.

As a unitary authority, it will be well positioned to provide cost-effective, efficient essential services and facilities for ratepayers.

The structure will ensure better value from rates and central government funding, by reducing duplication and delays in previously intractable problems such as transport issues.

Services such as administration, office systems, finance, human resources and information technology will be integrated and streamlined.

Each council currently operates its own systems, so there are real savings to be made here.

Unified decision-making, better transport and infrastructure and more efficient delivery of services will all contribute to a great Auckland region where people will want to live and do business.

The Local Government (Auckland Law Reform) Bill is the third and final Bill to effect the Auckland Governance changes and is currently before a select committee.

The Bill develops and enhances the two earlier Auckland Acts and amends other pieces of legislation.

It will give the new Auckland Council the tools to be up and running effectively in November this year, following voters electing their new representatives in the October 2010 local government elections.

The Auckland Governance Legislation Committee received over 800 submissions on the Bill, and has recently finished its hearings. They will report back to the House in early May. As the Bill will make changes to existing councils' planning decisions in June 2010, it must be passed by the end of May.

The new Auckland council is going to have two complementary levels of decision-making in the new Council - the governing body made up of the Mayor and councillors, and the local boards which have specific decision-making responsibilities in their own right.

The governing body is responsible for decisions on the regulatory functions of the Council as a local authority, although it has the power to delegate many of these to local boards.

The governing body is also responsible for financial management, and ensuring the Council as a whole has the capacity to provide, or ensure the provision of, services and facilities, including local activities, across the region.

In meeting these responsibilities, the governing body must consider any views and preferences expressed by a local board, if the decision may affect the local board or the well-being of communities within its local board area.

The Council's local boards are responsible for identifying and communicating the interests and preferences of the people in their local board areas. It will consider the content of the strategies, policies, plans, and bylaws of the Council, and developing bylaws for their local board areas and proposing them to the governing body.

Responsibility for the Council's non-regulatory activities has been specifically designed to reflect and support the different roles that the governing body and the local boards have in the Council structure.

The Local Government Commission is announcing its final determination on the numbers and boundaries of local boards, and board members later this morning.

There are currently over 300 council-owned entities with some form of corporate or business-like structure, spread across the existing eight councils in Auckland.

The Government has asked the ATA to review and rationalise the council-owned entities prior to 1 November 2010, and to develop proposals for a consolidated structure for the new Auckland Council.

The proposals need to meet certain criteria before the Government will agree to them. They need to:

* address inconsistencies in service delivery methods across the existing local authorities to achieve a consistent approach for the new Auckland Council; and

* eliminate multiple CCOs with the same purpose, to provide the Auckland Council with a consolidation of the entities.

The Government has already approved three CCOs for Auckland - these are Auckland Transport, Watercare Services Limited and the Waterfront Development Agency.

We expect that the stocktake and review of council-owned entities that the ATA is undertaking will result in the establishment of a small number of new CCOs, primarily based on the rationalisation of like activities that presently operate independently from local authorities through CCOs, trusts or business units.

Any of the existing 300 council entities that are not affected by the new CCO structure will simply transfer, as is, to the Auckland Council on 1 November 2010.

The CCO structure, once fully developed by the ATA and approved by the Government, will remain in place from 1 November 2010 until the new Auckland Council has completed consultation with Aucklanders on any proposed changes to the entities structure.

The Government is looking for effectiveness and efficiency in service delivery while also providing for the Auckland Council to remain democratically accountable for the delivery of those services.

The ATA has recently released discussion documents on local boards and CCOs and has invited feedback on their thinking to date.

The Auckland Council will collect rates on the basis set by existing councils until 1 July 2012. After this, the Council will implement a unified rating system. The Council will retain the current flexibility set under the Local Government (Rating) Act 2002 to decide on the mix of several categories of rates it considers most appropriate for the region.

Decisions on rating policy will be based on the Council's long-term plan, and consultation with residents. As Minister of Local Government I am strongly committed to ensuring there is genuine consultation with ratepayers about the rates they pay and to keeping rates at a level that is sustainable for communities and businesses.

The Council will have a mechanism to manage any significant changes in rating liability, during the three-year period starting on 1 July 2012 and ending 30 June 2015.

Tenders and similar processes now under way with existing councils will continue, unless there is a clear reason to change in the light of the Auckland Council's proposals. The ATA will be working with councils to ensure tenders and similar processes support the new structure and the anticipated needs of the whole region.

Where a council has given a formal commitment to a community or individual, this commitment will continue to be enforceable under the new structures.

Where a commitment is not of a type enforceable by law, the Council will be accountable to its communities for acting in a responsible and honourable way.

The Council will be responsible for contracting services through competitive tendering processes. I expect that a range of contractors will provide services for the new Auckland Council and the people of Auckland.

I have every confidence in the ability of New Zealand based contractors to be competitive and innovative in this environment.

While I appreciate there will be uncertainty for some stakeholders through the transition period, the potential benefits of more cohesive and effective local government in Auckland to New Zealand businesses and residents alike are great.

Finally I would like to acknowledge the great work being done by Mark Ford and the Auckland Transition Agency. Their professionalism and commitment is fantastic.

There is much that my Government colleagues and I are doing to improve Auckland governance, and make Auckland a greater place to do business. We are committed to making Auckland a truly great city to live and work in.

Thank you again for the opportunity to speak to you this morning about this important issue.

I am happy to hear your comments and take any questions.

ENDS