11.3.3 Control and accountability of Auckland’s substantive CCOs

 

1. The council is accountable for a CCO’s actions and spending; it is, therefore, essential that a CCO’s decisions align with the council’s plans and policies. The council uses the following tools and processes to achieve this alignment and accountability: 

   • Appointments to a CCO board of directors – the council appoints all directors to the board of each substantive CCO and the majority of directors on a number of smaller CCOs. The council’s approach to these appointments and directors’ remuneration is outlined in its Appointment and Remuneration Policy for Board Members of Council Organisations. While the Companies Act 1993 requires the directors of CCOs that are companies (all but AT) to act in the CCOs’ best interest, their constitutions also allow them to act in the best interests of the shareholder, the council. The council may also appoint up to two councillors onto the board of Auckland Transport.

   • The annual Statement of Intent (SOI) - each CCO must annually document strategic priorities in its SOI for the following three years and agree these with the council [1].

   • Reporting requirements - Each CCO’s SOI sets the performance measures for the three year period. Each CCO must provide the council with half-yearly and annual reports [2]. The council also requires all substantive CCOs to report on their performance at the end of the first and third quarters and explain if SOI performance measures have not been met. The council has face-to-face performance discussions with CCO boards for the half-year reports and for the fourth quarter results.

   • Strategic Alignment – Each substantive CCO must give effect to the Long- term Plan and act consistently with any relevant aspect of council plans and strategies [3]. The overall direction for CCOs is also set in line with the Auckland Plan.
   • The CCO Accountability Policy - The council is required to have a policy on the accountability of its substantive CCOs [4]. This policy is set out in the council’s Long-term Plan and establishes the council’s enduring expectations for each CCO. Important elements of the Accountability Policy are:
     • Additional planning and reporting requirements - all substantive CCOs are required to have asset management and activity plans, performance frameworks and supporting financial information to feed into the council’s Long-term Plan and Annual Plan.
     • Among other requirements substantive CCOs must:
       • use accounting policies and standards that are consistent with the council group’s accounting policies and standards
       • follow any other planning requirements specified by the council and notified to CCOs
       • prepare a Māori Responsiveness Plan and work with council to monitor and report against it
     • Major transactions relating to strategic assets - the Accountability Policy identifies the strategic assets owned or managed by each substantive CCO and sets out the requirements for management of them. In particular, CCOs may not undertake a major transaction (as defined in the CCO Accountability Policy) in relation to a strategic asset unless approved by the council or already provided for in the Long-term Plan. Certain transactions, such as a decision to transfer the ownership or control of a strategic asset to or from the local authority, must be provided for in the Long-term Plan [5], and may trigger consultation requirements [6].
   • Statement of Expectations - Section 64B of the Local Government Act allows Council to issue a statement of expectations and in October 2021 Auckland Council approved its first iteration of this document. The SOE is read in conjunction with the CCO Accountability Policy, and focusses on how CCOs should conduct their business and manage their relationship with Council and other stakeholders. Both documents have statutory status and work in complementary fashion. The SOE encompasses a range of principles for CCOs, such as:
     • Giving effect to Auckland Council's shared governance (governing body and local boards)
     • Achieving outcomes for Aucklanders is paramount
     • operating as a group, not individual organisations
     • The no-surprises principle
     • Common use of or branding
     • Openness with the public.
2. The council also has a range of additional mechanisms to achieve alignment and accountability, including:
   • Local Board Engagement Plans - CCOs are accountable to the council through the governing body. They are required to proactively build relationships with local boards, as well as develop engagement plans with them. The requirements for local board engagement plans are set out in the Governance Manual.
   • Governance relationships - Following the recommendation of the CCO Review in 2020, the governing body is visiting each substantive CCO annually to better understand its business and culture and to informally build relationships.
   • Liaison councillors for substantive CCOs – Liaison councillors roles were established in the 2019-2022 term with the purpose of developing the relationship between the council and each CCO’s board, and enhancing the flow of information between the parties.
   • Letters of expectation – Council issues an annual letter of expectations to each of its substantive CCOs to inform the development of the CCOs' Statements of Intent. Following the recommendation of the CCO Review in 2020 a workshop has been introduced to support the development of letters of expectation between CCO chairs, chief executives and the governing body.

 

 

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