GUEST BLOG: Mike Lee – Time and patience running out for the Super City?

By   /   July 11, 2017  /   6 Comments

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Auckland has had the Super City for more than six and half years now and for a lot of people it’s starting to feel like a sentence.  It should be recalled Aucklanders were never allowed to vote on this massive amalgamation – the government just imposed it.  Over time even the Auckland Council’s own polling has revealed the council has become increasingly unpopular – and mistrusted. 

Auckland has had the Super City for more than six and half years now and for a lot of people it’s starting to feel like a sentence.  It should be recalled Aucklanders were never allowed to vote on this massive amalgamation – the government just imposed it.  Over time even the Auckland Council’s own polling has revealed the council has become increasingly unpopular – and mistrusted.  The election of a new mayor has made little of the hoped-for difference – in many respects the situation is worse now than before.  So in addition to the disaffected communities of Waiheke and North Rodney, it’s not surprising that thoughtful commentators from across the political spectrum are speaking out about an Auckland Council that is perceived to be becoming increasingly ineffective and undemocratic.    Leading the charge is National Party elder statesman Terry Dunleavy who recently in a ‘Herald’ opinion piece delivered a withering verdict on the Super City – the National government politicians, he declared, ‘got it wrong – and imposed their own mangled monstrosity on our largest metropolis’.   Dunleavy’s critique was taken up by Emeritus Professor Ian Shirley who was prescient enough to see it coming. In 2010 he warned that proposed Super City had ‘a corporate structure where the major beneficiaries will be the exclusive brethren of big business, merchant bankers and a narrow range of consultants dominated by legal and accountancy firms’.   How right he was.

But with a flying start under the leadership of the effervescent Mayor Len Brown, things at first looked promising.  But the truth is the Super City was financially crippled from the start by the fatal decision to buy a brand new IT system that has ended up costing $1.2b and some $70m a year to operate.   This was compounded soon after by decisions around office accommodation – especially the decision to buy the ASB tower on Albert Street (a faulty tower indeed) spending on which is still ongoing; and the consequent abandonment of the Civic Administration Building on Aotea Square, 18 floors and 14,000 square metres in the hear of the CBD, deserted for over two years. After the initial spend and borrowing spree (much of it on itself) the council approaching its debt ceiling and fearful of pushing its luck too far with ratepayers is now resorting to selling key assets.  First on the block is the Diversified Financial Asset portfolio, a legacy of the Auckland Regional Council, and essentially derived from the model of asset management created by Bruce Jesson and the Alliance Auckland Regional Services Trust of the early 90s: see  Prudently managed by Infrastructure Auckland and then Auckland Regional Holdings, its investment returns along with Ports of Auckland dividends, enabled the region to pay for the Northern Busway, the Britomart Transport Centre and to rescue and rebuild Auckland’s rail network and services from the very brink of extinction.

With the establishment of the Super City in 2010 the portfolio of stocks and bonds valued at $345m was transferred to the council CCO, Auckland Council Investments Ltd. It was very ably managed by ACIL, returning just under 10% per annum, providing an alternative (non rates) funding stream to the council of $24m a year.  However this pot of gold inevitably proved to be too much of a temptation for Auckland Council.  In 2015 against the strong objections of its chairman, the highly rated investment banker Simon Allen and fellow ACIL directors, it was transferred to the control of Auckland Council officers.  It was in council hands only a few months when the first $100m worth of stocks and bonds was cashed up in 2016 to fill a hole in the budget. ‘Repaying debt’ was the stated reason but repaying debt, which has an interest rate of approximately 4.5%, by cashing up investments that earn twice that amount, is simply destroying value.  Last month led by mayor Phil Goff, a majority of councillors including most of the Labour Party and Labour leaning councillors voted to cash up the remaining $230m.  Again ‘repaying debt’ was the stated reason with this time much talk of ‘infrastructure’. But liquidating assets that earn money, to replace them with assets that cost money (lots of it) to operate, is not sensible.   What happens when the capital is spent?    Tragically the benefits of keeping the principal and dedicating the dividends, along with the $50m per year from the port company and the $40m from the airport to a ring-fenced infrastructure investment fund, as I and some other councillors advocated was simply rejected out of hand.  As we know from recent disclosures, things won’t stop here, asset sales, the nightmare from the nineties are back.  These assets which were inherited from previous generations of Aucklanders should be managed well and handed on to benefit future generations of Aucklanders. Unfortunately among other failings, history may judge the Super City guilty of inter-generation theft

I will leave the last word to Professor Shirley.

‘We don’t need another review of governance, what we need is a cleanout in September of the Wellington swamp that delivered us the Super City and as structural change to those policies that continue to undermine the development of Auckland today’.

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  1. Anthony B says:

    So what Russia and America found out with the models of control is one big central control is not as effective or productive as it may instinktlivbley thought amoungst many

    See what happenes is over time all decisiobns will need to make their way to the top person 1 person ” in this case an OK guy Phill Goff” . There is no trail and error or competition in this regard. ]

    eveneutall all deciosn takes ages to make and the most conservative decions are made slowley while people become sucicald as they fell thei is no point to life.

    Irocnically Act party (some) understood the beautid of competition where some places fail and some success and we learn from our mistakes but Rodney hide fell for the old line the one big central control is more effecient.

  2. countryboy says:

    Here’s a fact.
    NZ farmers, and especially ironically the True Blue Moronic, Kiss me jonky types, earn the money which Auckland spends faster than those farmers can earn via exports so Auckland must borrow and pretend that hilariously inflated house prices are the new normal and a sound show of wealth. Hence $ 93 Billion National Debt against 4.7 million people.
    The reality is simple enough. A nice few fancy lawyer and real estate fellows will buy new Aston Martins, Banksters will be wallowing in all that lovely, and ominously controlling debt while producing Zero of anything important to the well being of us Kiwis or the betterment of Aotearoa /NZ and us schmucks will let the architects of that swindle get clean away with it while innocents lie down in the gutters. Honestly? You couldn’t invent this shit.
    ” The Super City? ” Oh, fuck off! ” The Super Swindle ” more like.

    Auckland, you lovely old thing? You’ve been conned and I bet you anything you like, this election is when the baton changes hands in the race to see who can grab the most out of the public purse. Again.

    But what to do about it? That’s the gold plated Lambo’ question.

    I’d suggest doing an Iceland and kick out the Banksters first then see what happens.
    The Banksters and Corporates are really the ones who own and run you and me and Aotearoa/NZ. Our politicians and our electoral processes are a quaint harking back to the good old days. That’s why I have no respect nor interest in the political commentary here. It bores me to death and it alarms me that people still believe in that parliamentary process. And another thing. There’s no likelihood whatsoever that Banksters and Corporates will ever threaten the presence of that parliamentary process simply because while we have it for us to tinker with three yearly like some sad little hobby, we will be far less likely to realize that our sovereignty over our country has long gone. Which I believe it has.

  3. esoteric pineapples says:

    When are New Zealanders going to stop just complaining about the government and actually vote it out?

    • CLEANGREEN says:

      100% EP.

      Auckland is sucking all the taxpayers money out of our coffers for their empire building antics!!!!!

      This while the Provinces wither with little funding from Government as Auckland takes it all!!!

      Kiwirail was given $760 million in 2009-10 through to 2014 then another $480 Million in 2015-16 and most of the money went to installing and upgrading the passenger rail & buying passenger rail rollinng stock for both Auckland & Wellington passenger while the provinces got peanuts!!!!

      This was what we were told at a meeting in Gisborne in 2012 by kiwirail CEO!!!!!

      So that is just one example of what Auckland has done to the rest of the country.

      We can no longer afford Auckland any longer so it’s time to take it off the government public money drip feed and re-distribute the shares to all provinces so we can regain all our provinces before they wither away!!!!!

    • Jack Ramaka says:

      Most don’t vote handing power back to the incumbent party National and it’s Cling On’s ?