Letter to Mayor Goff – in defence of democratic representation on the board of Auckland Transport

31 October 2016

 

Hon Phil Goff,

Mayor elect of Auckland

 

Dear Mr Mayor,

Thank you for your letter dated 26 October 2016 (note this was emailed to me on 28 October) regarding the matter of councillor-directors on the board of Auckland Transport.

I will accept in good faith, your questionnaire about ‘arguments for and against, the appointment of councillor-directors’ and ‘competencies and personal attributes’ is a genuine quest for knowledge, despite you already making your own preferences known in such a public way.

You begin your letter with ‘as discussed’ but without going into too much detail there really has been no discussion on this matter between us, nor with my esteemed colleague Cr Christine Fletcher. That is really the problem.    Regardless of the pros and cons of the question of councillor-directors being on the board of Auckland Transport the peremptory manner in which you have gone about this has been unfortunate and could and should have been avoided.

In regard to your questionnaire

  1. The arguments for and against councillor-directors to the Board

Given your public statements I don’t propose to get into a lengthy argument regarding the appointment of councillor-directors. Transport, public transport in particular, has always been the core business of local government. This was the situation in Auckland until 1 November 2010 and it is still the situation in the rest of New Zealand. Moreover due to that aberration, the board of Auckland Transport is more than just a CCO board, it is also legally Auckland’s Regional Land Transport Committee – legally a regional council and in terms of transport, the legal successor to the Auckland Regional Council.  The arguments ‘for and against’ democratic governance of Auckland Transport (mainly ‘for’) were heard by the parliamentary Auckland Governance Legislation Committee chaired by Hon John Carter, when the ‘Super City’ was being formed early in 2010, the recommendations of which were included in the Local Government (Auckland Council) Amendment Act (2010). Please note:

s 43 Governing body of Auckland Transport

(2) The board of directors comprises – (a) no fewer than 6 and no more than 8 voting directors, of whom 2 may be members of the governing body of Auckland Council.’

This was step was taken by the Government, supported by Parliament to provide some reassurance to the ratepayers of Auckland that there would be at least some element of democratic representation on the CCO board of Auckland Transport.

Still even this level of democratic representation was considered insufficient by most of the 786 submitters- including the parliamentary Labour Party, which was so concerned it lodged its own ‘minority report’ on the Government Bill. This ‘minority report’ stated ‘The goodwill and high expectations generated by the Royal Commission have dissipated as concern has mounted about the loss of democracy’.   The ‘minority report’ went on to claim ‘ …this bill corporatises much of Auckland local government with no democratic mandate.’ In regard to Auckland Transport, the Labour MPs commented: We have particular concerns regarding the Auckland Transport CCO. It will be larger than any existing transport body in Auckland (and larger than the one contemplated by the Royal commission), with the power to make bylaws, and an annual budget of $1 billion soaking up 54 percent of rates. However, there is no evidence that running Auckland transport as a CCO would be more efficient than running it in-house. No other council in New Zealand has this arrangement. These reservations were shared by four Government departments – the Treasury, Department of Internal Affairs, Ministry of Economic Development , and Ministry for the Environment – who argued against setting up the transport agency as a CCO. They argued that it lacked transparency and accountability to the ratepayers.’

Now as the newly elected Mayor of Auckland you have revealed your preference to abolish even the minimal democratic level of oversight that the National-led government felt it was obliged to provide. Incidentally I checked to confirm who was the Labour Party leader at that time – and it was you.

The Green Party at that time had similar concerns: ‘We strongly oppose the bulk of the Council’s work and assets being put into the hands of appointed rather than elected representatives, given the near certainty that the organisations will claim that commercial imperatives can override the public’s right to know how their assets are being managed.’

In regard to arguments against democratic representation on the board of Auckland Transport – I am sorry I have none. I would refer you to the ‘minority report’ of your own party and remind you of the age-old principle ‘No taxation without representation.’

  1. ‘The specific events over the past six years where you, as councillor-director strengthened Auckland Transport’s accountability, in a way that independent directors couldn’t be expected to’

I am uncomfortable about discussing my own achievements, as if begging you for my job back (a dialogue inappropriate – for me as well as you).

Obviously I don’t have recordings of the points I have made within board room discussions and I will refrain from sending you the long list of letters and emails sent to Auckland Transport on behalf of concerned members of the public. In regard to this interface role I would note that the public is by and large completely unaware who the ‘independent directors’ of Auckland Transport are, though some have been in place for six years.

but I do have copies of numerous letters, many sent on behalf of the elected members of Auckland Council. For these please see the archived minutes of the Auckland Council Transport & Infrastructure committees. I can provide others including memos provided at the request of Mayor Len Brown.

As for information, I will point to the protocol I proposed (accepted at the time by the AT board chair and announced to the councillors) for AT to release commercially-confidential board items as soon as possible and to give councillors the courtesy of prior notice before being posted on the AT web-site. Incidentally I have found most ‘independent directors’ are quite uncomfortable with interacting with the public, as anyone who has attended an AT Board ‘open session’ will attest. And I well recall the former ‘independent’ deputy chair of the AT Board successfully arguing why a request by the former council chief executive Doug Mackay, no less, to sit in and observe a confidential board session (most AT business is deemed confidential) should be declined, adding that it was ‘inappropriate’ for him to have even asked! ( Obviously I did not allow this pronouncement to go by unanswered).

As one example for my personal efforts to seek better accountability, I also attach a bench-marking report I went to a lot of trouble researching and compiling and provided to the AT board as well as to the mayor and governing body, in 2015, highlighting systemic financial inefficiencies relating to 10s of millions per year of public money in AT’s commuter rail operations, compared to the operation of a similar operation funded by that of the (democratic) ‘Greater Wellington’ Regional Council.

Finally I would point to my willingness to challenge management policies whether it be the failure to address chonic rail fare evasion (or even to admit the true level of evasion, (now 5 years on grudgingly and inadequately being addressed by installing gates at the worst effected stations) and the deeply-flawed decision to dismiss any future possibility of train services to Auckland International Airport.

  1. ‘The competencies and personal attributes you believe Auckland Transport directors must possess’

I will not attempt to respond in regard to ‘independent’ directors but it should be glaringly obvious. However ‘independent directors’ seem to all come through one privileged recruitment company, have no special experience or interest in transport but all apparently acceptable to or actual supporters of the National government.

In regard to councillor-directors I would say this: They should be councillors with a good knowledge of transport and commitment to improving transport – public transport in particular – and ideally a track record of service (and corporate memory) in this field would be preferable but not essential. Most importantly of all, councillor-directors should have a serve-the-public ethic and the strength of character not to be coerced into corporate ‘group-think’; in other words, a commitment to advocate for the interests of the ‘shareholder’ (the council on behalf of the ratepayers) and the ‘customer’ – again the interest of the general public of Auckland.

  1. Strengths and weaknesses of the Council’s monitoring and setting of expectations for Auckland Transport.

A full answer would take some time and strictly-speaking should come from council management. However there are some existing mechanisms which need to be improved.

Statement of Intent. I have repeatedly argued for more inclusion for meaningful metrics in the annual corporate Statement of Intent which would enable direct comparability with the performance of other jurisdictions. Example: a ‘fare box return’ metric which is comparable for instance to that of the Wellington Regional Council and not ‘sandbagged and made to look better by adding in non-subsidised commercial services. Another important metric lacking despite my repeated requests is ‘percentage of public transport trips per capita’ which also would allow effective bench-marking with comparator cities who use this metric.   To be fair the weakness for failing to demand this rigour is really the council’s. Council senior management appears to be adverse to challenging Auckland Transport senior management in any way. The council itself as shareholder needs to be prepared to lift its game. This leads me to:

Contestable advice. I have also argued for the retention of those Auckland Council officers with expertise to provide contestable transport advice to councillors. My letter to the council CEO Mr Town in 2014 on this matter was never responded to, though the letter was acknowledged by his personal assistant.  Unhelpfully the small council transport planning team was soon after disbanded and the highly-respected manager who also managed the Transport-Infrastructure committee was made redundant. He now works for NZTA. I understand this was done at the behest of management of Auckland Transport who resented councillors receiving occasional expert challenge to its approach. The council’s Transport Committee (advocated by the Royal Commission) from 2010-2013 which I chaired was a popular and effective monitoring tool, of Auckland Transport, so effective that apparently Auckland Transport lobbied for its abolition. It was renamed the Infrastructure Committee in 2013 but with the subsequent disbanding and dispersal of the council’s own team of transport experts and now your own decision to abolish this committee, it has been effectively removed as a monitoring mechanism of Auckland Transport for councillors and the public alike.

Finally I recall when you were in parliament and ‘Labour spokesperson on Auckland affairs’, you did seek information and advice from me on transport matters on a number of occasions. I recall the briefing I gave you at your rather urgent request on Auckland Transport’s plans for light rail which had just been announced that day and the subsequent arrangements I made for you to have a special technical briefing from AT staff.

While I view your preferred approach, the removal of the role of elected representatives on the board of Auckland Transport as likely to result in the antithesis of better accountability and public confidence in Auckland Transport, I am bound to say am also personally disappointed at the manner in which you have handled the matter.

 

Yours sincerely,

 

Michael Lee

Auckland Councillor

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