Shed 10 Official Opening

Today was a great day for Auckland and for its waterfront. She 10 on Queens Wharf was officially opened today. Kicked off by Tangata Whenua, Sir Bob Harvey and a significant speech by Mayor Len Brown. Special pieces of Maori taonga were placed, enlivened and presented.

Waiata, Sir Bob blowing his very own trumpet (gifted by tangata whenua to be held by the Chair of Waterfront Auckland)

The place looks great. I look forward to some fantastic events here, despite it being Auckland's "primary" cruise ship terminal. Keep on smiling....

Ports of Auckland: Enough Already

In a few weeks time Auckland Council will be debating - again - how to provide for Ports of Auckland reclamation expansion plans in the Unitary Plan. Council's decision about that was deferred after the debate that took place at a meeting on 16th April this year - and which triggered this post.

This post looks at Big Picture issues.

But first a brief reminder of what has happened recently. The key findings of the Price Waterhouse study that was commissioned by the Upper North Island ports are, as summarised by Ports of Auckland Ltd (POAL):

• The Upper North Island needs all of its existing ports 
• The best way to meet future demand is to grow those ports 
• Growth = efficiency + expansion 
• Auckland ports must substantially improve efficiency 
• Auckland ports may needs to expand, but less than thought 
• Auckland must retain options, given forecasting uncertainty

The POAL summary also suggested that any congestion on Auckland transport corridors would not be caused by POAL's expansion. Hard to agree with that!

It is important to note that the work required for the North Island port study was in two stages. The Stage 2 study has not been done yet. Let's remind ourselves what the Stage 2 study should explore.... 

A good place to start is to report what other Councils reported after receiving the first PWC report. (The other councils involved were Whangarei District Council, Northland Regional Council and Tauranga City Council. These Councils may have a conflict of interest, but nonetheless, they have a good idea of the public policy issues around Port expansion.) These councils support the case for the next stage of the study, and argue that what is missing so far in the Stage 1 study includes:

• there is no investment case 
• it was not meant to make specific recommendations on how future freight demand should be met
• it does not consider what is best for NZ Inc
• the external pressures on waterfront space are not addressed.

I am aware that other matters not addressed in Stage 1 include the impact of expansion (from say 800,000 container movements/annum to almost 3,000,000 container movements/annum) on Auckland's existing infrastructure, its urban fabric, and the Harbour Edge urban environment itself.

This work has not been done, either by PWC or Council officers. If it has, it has not been reported.

There have been suggestions by some, that elements of such work could be undertaken later,eg when a resource consent might be applied for (for expansion), but in my opinion that is a totally inappropriate time for such a study. The study required now is one that would satisfy the Auckland Plan.

It is an investigation that needs to be undertaken by the Auckland Council. It needs to address broad and far-reaching Auckland Plan issues. These matters should not be left in the hands of POAL, POAL consultants, Environment Court judges or commissioners.

There are significant matters of public policy which need to be addressed. They are not purely environmental matters - to be left to RMA processes. These are fundamentally about costs and benefits. For example Economic Consultancy Covec have examined development options along the Eastern Railway Line, and conclude “Overall, in our view it is unlikely that the net welfare benefits of the expansion scenario [of the port] will be positive for the Auckland region.” (Covec, Discussion Paper: Future Scenarios for the Port of Auckland, 2012).

Auckland developed and was colonised as a Port City. The Port was then the heart of the city. That was then. Today the port threatens to be the cuckoo that has outgrown its nest. By continuing to suck on the resources of the city - its roads and rail, its harbour edge, its Waitemata Harbour space - Ports of Auckland is outgrowing its house. By pushing for expansion it will force Auckland to tip it out of its nest. Time to cut the coat to suit the cloth.

The relationship between Auckland and its Port is tipping away from the port benefiting the city to a port that is costing the city. Port expansion puts at risk plans for an economic future for Auckland that emphasises tourism. Waitemata Harbour increasingly defines Auckland as a Harbour Edge City - not as an industrialised Port City.

The Ports of Auckland Ltd Company has inherited some of the "sense of entitlement" behaviours that were characteristic of the old Auckland Harbour Board (AHB). The AHB built its futuristic Headquarters building where Princes Wharf meets Quay Street in 1985. They claimed the building was needed as a symbolic gateway to Auckland - despite the fact that passenger ship traffic had declined to record lows - and that most visitors to Auckland increasingly saw the control tower at Auckland International Airport as the gateway. AHB won the planning permit for that building by claiming it would only be used for AHB staff.

A few short years later the building was let as commercial office space, and it prepared the way for the development of the rest of Princes Wharf. Revenue from the sale of related development leases were about the same as the cost of developing the space-age HQ building. Questions were asked about the spending. Was it the best use of public money?

Today I understand POAL is preparing plans for a new headquarters building on reclaimed land at the container port. I imagine the building will be deemed a port use. A controlled activity. A waterfront development that can avoid public notification and obtain a resource consent without going through the hoops that other developments are subject to.

It is this sense of entitlement, this steady pursuit of expansion and development without public scrutiny that is fundamentally in the interests of Ports of Auckland Ltd - rather than Auckland Inc or New Zealand Inc - that needs to be curtailed.

I don't think that Auckland Council should be providing for more Ports expansion and reclamation in the Unitary Plan. Certainly not without the work being done on what is the highest and best use of the Waitemata Harbour spaces.

And that is important.

But the Big Picture here is the question of who controls the port, and who manages its activities so they are better integrated into the whole of Auckland's waterfront, and so the port facilities across the whole country are rationally planned, and not regulated so that the costs of market failure are born by ratepayers and taxpayers alike.

Today POAL is governed and managed as an asset by Auckland Council's property CCO. POAL is a publicly owned waterfront activity. It should be governed and managed by the Waterfront Development Agency CCO. That way some sort of joined up governance and management would be possible.

But the really big picture is at national level. Container loads of cash are being wasted because Councils and other entities across the country are forced into competition with each other, to provide bigger and better and cheaper container handling facilities - both at the waterfront and on land transport systems - in order to get shipping contracts. Pragmatic Central Government intervention is required. This is not efficient and it is unproductive. Time for a New Zealand Ports Policy.

Does it take an earthquake?

Enough Reclamation Enough Port Enough Already.

Watercare Intercepts Planning Process

We read in NZ Herald today, in a story about its Central Interceptor project:

"In a break from tradition, the Auckland Council-controlled organisation has released its evidence supporting the bid for resource consents and notices of requirement for the project ahead of the public hearing on Monday, July 29...."

Can't think why Watercare might do that - unless it feels a need to go on the media front-foot in defence of this particularly problematic and expensive project. NZ Herald is usually a little more savvy in situations like this - don't like to see it used to further any particular agenda.

Risk of being unbalanced. The NZ Herald story says the project will "save Auckland $500,000,000". That's an interesting claim. To date the project cost figure is given as $800,000,000. Now it looks like a net cost of just $300,000,000. Never heard that before. Not in the application either. But it is in the NZ Herald. maybe the Central Interceptor's funding is under threat. Auckland Council is facing the fact it can't go on borrowing money from banks. Driving us all deeper into debt. Pressure from Government is forcing Council to identify priorities. Top priorities.

Is a tunnel for dilute sewage - redirecting sewage overflows from the Waitemata Harbour into the Manukau Harbour - THE top priority? Or is a tunnel for the Britomart Rail link a high priority? That's what Councillors are there for. Identifying priorities.

But I digress. Was writing about NZ Herald's rather cheery story for Watercare. For example, the reporter could have looked into the Auckland Council Officer' report that will be read by the Hearing Commissioners. The Auckland Council report has been available on the internet for a couple of weeks at least. A juicy read if you like that sort of thing. Balanced as well - as it has to take account of Watercare's application AND what submitter concerns are AND come up with recommendations and suggested conditions.

I have already expressed my concerns about the Central Interceptor project, and my submission. And I will be speaking at the hearing.

But for now a few quotes from the officers report (by the way - this is 328 pages long):

In the summary we find this statement:

"Subject to new or contrary evidence presented at the hearing, the recommendation of the
authors of this report is that the NORs be confirmed subject to conditions, and that the
applications for resource consent be granted subject to conditions."

Which is not surprising. But as in all things, the devil is in the detail. A few interesting titbits, before I cover a couple of salient details in the conditions that have been recommended by the Auckland Council officers. Titbits:

Pg 233: "It is noted, that the benefits of the Central Interceptor project can only be realised following
its completion and connection with the existing wastewater network."    (This is an important recognition of the fact that the pipe-based solution cannot be implemented incrementally - as for example North Shore's approach was - and cannot provide public benefits until it is totally finished. This is the classic problem with traditional, centralised, think big infrastructure. Today's thinking is much more de-centralised.)

Pg 67:  "Watercare advises that wastewater flows to the Mangere WWTP will not be significantly
influenced by the Central Interceptor....  Flows into and out of the Central Interceptor will be controlled to ensure the annual mean flow (390,000m3/day) and maximum daily flow (1,209,600m3/day) provided for under the current consent (permit number 30083, which expires on 31 December 2032) will not be exceeded within the term of that consent....   Although the submissions suggest that there will be a doubling of flows to the Mangere WWTP as a result of the Central Interceptor, it is noted that this would be outside the scope of the present discharge consent, and is well beyond Watercare’s own assessment of likely flows even by 2062...."   (An important consideration here is the capacity of Mangere. Especially during wet weather. Mangere does not have the ponds that Rosedale has that give it ability handle wet weather inflows with discharges.)

Pg 15:  "Other associated works at and in the vicinity of the Mangere WWTP include: an air
treatment facility; a rising main to connect to the plant; and an Emergency Pressure
Relief (“EPR”) structure to enable the safe discharge of flows in the extreme
scenario that pump station failure occurs and tunnel storage capacity is exceeded."  (This is an interesting new discharge. When it is used it will essentially divert overflows that did occur on the East Coast into the Waitemata - untreated into the Manukau.)

There will be lots of other important matters in the Officer Report. But I will summarise two that struck me here:

Pg 321:  Discharge Consent Condition 10.3  "Within 3 months of the granting of this consent, the Consent Holder shall prepare an Emergency Pressure Relief (“EPR”) Discharge Management Plan which shall be in accordance with the conditions of this consent and should include, but not be
limited to:
(a) A summary of the key reasonable operational and contingency procedures
the Consent Holder should follow to minimise the potential need for an EPR
discharge;
(b) The EPR Discharge Management Plan covering the initial receiving
environment, water quality and shellfish monitoring sites and procedures
immediately following the discharge and subsequent further monitoring;
(c) The procedure for the rapid provision of signage and any other health
warnings at potentially affected locations to warn the public of the potential
public health risk. This should include at any other coastal foreshore areas
that may also be affected by the discharge that may be accessed by the
public for water recreation or shellfish collection purposes; and
(d) A procedure for determining suitable locations for signage based on an
estimate of the extent of marine waters and shellfish that may be affected by
the mixing zone plume of the discharge depending on relevant variables that
may apply, including relative tidal conditions and the duration and rate of the
discharge.
The EPR Discharge Management Plan shall be submitted to the Manager for
approval within three months of the granting of this consent and the Consent Holder
shall then comply with the approved EPR Discharge Management Plan."

Pg 47:  Other Consents   "The overall Central Interceptor project also involves further regional consents for the CSO Collector Sewer works (overall network and six construction sites), and a network discharge consent....   Pg 235:   "Submission 697 seeks that the Central Interceptor proposal does not proceed to a hearing until Watercare lodges its resource consent application for network discharges. While the authors acknowledge that there is some risk in seeking consent for a specific
infrastructure component prior to the Network Discharge package, this approach will allow
the Network Discharge package to better align with the GAP project in terms of content
and conditions. The authors also consider there is adequate information to determine the
current resource consent applications and for recommendations to be made on the
NORs....."   Pg 21: "A further separate application will be made for existing and future wastewater network discharges in the Central Interceptor catchment area (the Auckland Isthmus) that will be
directly influenced by the proposed Central Interceptor scheme. The application will
relate to the existing operation of the wastewater network and the future operation of the
network as improvements are made either as part of the Central Interceptor scheme, or
as part of Watercare’s day-to-day management of the network...."

In terms of "Other Consents", the RMA has always advised and usually required, that ALL related consents be sought in the one application. In order to allow for integrated planning. I note that officers say: "a further separate application will be made...". When?

Mangawhai - Summary and Update

This post provides a few dates, but mainly is my big picture explanation of how and why the Mangawhai fiasco happened, and was allowed to happen. But first a few dates:

- a hearing has been obtained in the Whangarei High Court for August 16th 2013
- submissions for the Validation Bill are due by Thursday 25th July. Here's how to submit. 

The heart of the Kaipara District Council matter is the debt.

I have been doing some research on how the provisions in the legislation that has been relied upon to justify the loans and the ability of KDC to rate ratepayers for them, came about. The following bullet points are a very simple (probably too simple) summary of what happened.

• On or about 18 July 1996 Parliament made a suite of financial management changes to the Local Government Act. The then Minister of Local Govt Graeme Lee explained to Parliament: "The predominant objective is to require local authorities to identify explicitly the reasons for their funding proposals. In turn, this will engender public consultation, and will promote funding decisions that are more clearly representative of the wishes and the values of local communities....". This included a section about "protected transactions" and borrowings. Richard Northey - an opposition member told Parliament: "....Government members, and members of the other parties were happy to see the abolition of loan polls on the basis that the consultation and forward planning provisions for revenue raising and borrowing, in particular, that are provided in this Bill provide a fairer accountability and a level playing field in terms of revenue raising for local government...." The idea of a separate loan poll was dropped by Parliament on the basis that borrowing decisions would be accountable.
• Then in 2002 Parliament introduced a new Local Government Act. This included the idea of General Competence - that Councils could do what the community wanted (subject to consultation), rather than being constrained to provide specific services. When the new Bill was introduced to Parliament it did not contain any "protected transactions" provisions. Several Councils made submissions about this to the Select Committee. Parliament was persuaded to include the old 1996 Local Government Act Section 122ZG(3) (which protected bank transactions). This change was made seemingly at the last minute - and without properly integrating it into the consultation, transparency and democratic provisions of the new Act. Without that integration it is likely that it should have been included with a Loan Poll requirement. But it was not.
• On 24 August 2005 Kaipara District Council (KDC) resolved to accept an offer from EarthTech Consulting Limited (EarthTech) to design, construct and operate the proposed EcoCare Sewage system. The idea was to establish an arm's length company to do this. Local Authority Trading Enterprises and suchlike were envisaged in the new Local Government Act.This was a bit like a "Build, Own, Operate and Transfer" arrangement. (BOOT).
• On 21 March 2006 KDC publicly notified the statement of proposal for EcoCare (EcoCare SoP) and LTCCP 06-16 for consultation. The EcoCare SoP indicated that the capital cost for EcoCare was estimated as $35,600,000. (You can see the sequence - decision first, consultation later.)
• On 26 September 2007 KDC resolved in confidential to adopt Modification 1 (the expansion of the sewage scheme - doubling its size and cost), confirm the EcoCare Agreement and concluded negotiations with EarthTech and ABN Amro Bank to activate the necessary funding and borrowing arrangements. At this stage the public were none the wiser about the expansion.
• On 7 December 2007 KDC decided - in secret - to give effect to Modification 1. It also executed a term loan facility agreement with ABN Amro Bank for the amount of $53,000,000. Ultimately KDC borrowed $57,978,000.00 from ABN Amro Bank - including capitalised interest. This debt did not show on any public KDC balance sheet for several years. It stayed hidden from public knowledge - presumably on the accounts of EarthTech - despite the fact it was the Council that had negotiated the loan - and presumably offered rates revenue as security.
• In April 2011, ratepayers were consulted about KDC's changed Long Term Community Plan. For the first time KDC's Annual Plan showed the $57,978,000 loan - and the interest payments - and KDC's proposals for getting it paid off by ratepayers. (You can see that the decision to take the loan was totally disconnected from any public consultation - a million miles from what Parliament intended in 1996 when it first provided proper provisions for Councils to borrow from banks.)

The ratepayer revolt began. The rest is history.

Ratepayers could NEVER have found out about the $57,978,000.

It was hidden in EarthTech and described in deals between KDC, ABN Amro and EarthTech. No amount of LGOIMA requests for information could dig deep enough.

But ratepayers had good reason to be concerned. That was why they tried to alert the Office of the Auditor General and the Audit Office. These institutions - had they looked - would have seen what was happening and could have blown the whistle years ago.

The High Court Judicial Review is an opportunity to unpack and explain the chronology of what has happened, and to persuade the Court that Parliament never intended for Councils to go out and borrow money without first checking with ratepayers, and getting their support.

The validation Bill Select Committee is an opportunity for a good sized group of MPs to learn about the consequences when Government's system of checks and balances fails. Then they need to act.

Responsive Zoning For Intensive Development

This is meant to be pithy and to the point.

Critiques of the draft Unitary Plan provisions for intensive development use words like: One size fits all; blanket zone; fails to recognise difference; neighbourhoods at risk of market failure; should be bottom up not top down....

When Penny Pirrit gave a public talk about the Unitary Plan a couple of years ago, emphasis was put on Area Planning and Precinct Planning.  It sounded good then - though there were some thorny problems to engage with.

The perception that has arisen from the Draft Unitary Plan is that the Area and Precinct scale of planning has been forgotten at worst, or to come much later and have minimal effect, at best.

The solution to this conundrum is to write the Unitary Plan zoning provisions so that they are clearly dependent upon, and subservient to, subsequent Area and/or Precinct planning.

This is how future planning is now done for greenfield areas. Long Bay, North Shore, was zoned "Future Urban". This did not mean it could be developed in an urban form. Not until a Structure Plan was prepared for all of the land, that took account of topography, existing buildings, ecosystems and such like.

The same planning approach was used for Huapai and Kumeu in Rodney District. It wasn't until Structure Plans were prepared - after lengthy and detailed consultation with existing land owners and infrastructure planners and so on, that detailed residential and commercial zones with specific controls were prepared and included in planning documents.

Why can't the Unitary Plan provide an overall zone - or zones - labelled "Future Medium Density Residential", "Future High Density Residential",  "Future Medium density Mixed Use" - and include a prescribed Structure Planning process to be undertaken with land owners and stakeholders, before any such intensification can occur?

This sort of process would enable pieces of regenerating city to be planned and to develop with the support, participation and involvement of local land owners.

It may be that a Future Intensive structure planning approach is prescribed if a land area greater than a half hectare is to be developed (for example). This would need to come with incentives that encouraged this approach - rather than a lot by lot approach where infill is the only tool that is practical and therefore favoured.

A balance needs to be struck between enabling infill development at any cost, and allowing and enabling and encouraging communities to take some control over their futures.

Did Parliament intentionally Bankrupt Mangawhai?

This is the question now being asked by those in the know, and those of us wanting to get more in the know, as the judicial review triggered by Mangawhai Ratepayers gets closer to being heard in court. (On this, by the way, looks like a hearing has been obtained in the Whangarei High Court for August 16th 2013).

This posting explores the intentions of Parliament when it passed into law changes to the Local Government Act in 1996 which are being relied on today, by the banks, and by councils, when councils borrow money. The key piece of legislation is the wonderfully numbered Section 122ZG:

122ZG Effects of breach on third parties

[Repealed]

(1) In this section, protected transaction means—

• (a) Any deed, agreement, right or obligation constituting, relating to, or for the purpose of, any borrowing or incidental arrangement; and

• (b) Includes—
  • (i) Any charge, guarantee, or security for the payment of any amount (including any loan) payable in relation to or for the purpose of any borrowing or incidental arrangement; and
  • (ii) Any conveyance or transfer of any property, in relation to, or for the purpose of, any borrowing or incidental arrangement.

(2) Every protected transaction entered into or purportedly entered into by or on behalf of a local authority shall be valid and enforceable despite—

• (a) The local authority failing to comply with any provision of this Act in any respect; or

• (b) The protected transaction, or the entry into or performance of the protected transaction, being contrary to any provision of this Act; or

• (c) The entry into or performance of the protected transaction being outside the capacity, rights, or powers of the local authority, or being for a purpose not authorised by this Act or any other Act; or

• (d) A person held out by the local authority as being a member, employee, agent, or attorney of the local authority—
  • (i) Not having been validly appointed as such; or
  • (ii) Not having the authority to exercise any power or to do anything either which the person is held out as having or which a person appointed to such a position would customarily have; or

• (e) A document issued, or purporting to be issued, on behalf of the local authority by a person with actual or customary authority, or held out as having such authority, to issue the document, not being valid or not being genuine.

(3) A certificate signed, or purporting to be signed, by the principal administrative officer of the local authority to the effect that the local authority has complied with this Act in connection with a protected transaction shall be conclusive proof for all purposes that the local authority has so complied.

(4) Subsections (2) and (3) of this section shall apply even though a person of the kind referred to in paragraph (d) or paragraph (e) of subsection (2) of this section or in subsection (3) of this section acts fraudulently or forges a document that appears to have been signed on behalf of the local authority, unless the person dealing with the local authority or a person who had acquired property, rights, or interests from the local authority acts in bad faith.

 All looks pretty open and shut and draconian doesn't it. But things are never as they seem. It seems.

Section 122ZG was part of a large set of changes that were made to the 1974 Local Government Act by Parliament between 1996 and 1998. These changes were all collectively called Part 7B.  This new part of the Local Government Act came into force on the 1st day of July 1998. Part 7B (which comprised sections 122Y to 122ZT) was inserted, as from 1 July 1998, by section 3 Local Government Amendment Act (No 3) 1996 (1996 No 83).

That might all sound a bit boring, and it is, but what's interesting is what various MPs (Cabinet Ministers and other Government Ministers) told Parliament as these changes worked their way through Parliament. (This is important because the Section 122ZG provisions were retained in the Local Government Act 2002 - which applied to Kaipara District Council when it did what it did to Mangawhai.)

Hansard - Stage: REPORT OF SELECT COMMITTEE - 19 DEC 1995
LOCAL GOVERNMENT AMENDMENT BILL (No. 5) : Report of Internal Affairs and Local Government Committee
Main speaker - Hon. GRAEME LEE

This Bill is about the new financial management provisions, which

build on the existing accountability regime to which local

authorities are presently subject under the Local Government Act.

There is also an important balance in terms of the greater borrowing

flexibility proposed in new Part VIIB in clause 3. The predominant

objective is to require local authorities to identify explicitly the

reasons for their funding proposals. In turn, this will engender

public consultation, and will promote funding decisions that are more

clearly representative of the wishes and the values of local

communities. Funding decisions will be the responsibility of the

local authority, but the basis of those decisions will be

transparent..... 

New Part VIIB in clause 3, which deals with borrowing and

security, gives local authorities more flexible borrowing powers, and

access to a wider range of financial instruments than those currently

prescribed in the Local Authorities Loans Act. Reform of borrowing

powers was seen as the most urgent and most widely accepted element

of local government finance during the 1987-90 local government

reform exercise. The provisions in the Bill have been developed from

proposals initiated at that time, and have been subject to extensive

consultation with local authorities.

Section 122ZD in new Part VIIB prohibits local authorities from

borrowing in foreign currency, to protect ratepayers from the risks

involved in exchange rate fluctuations, and to protect the credit

reputation of the New Zealand Government in overseas markets, which

may not appreciate the distinction between national and local 

government in this country. This matter was very strongly contested

by local government, but that is the decision of the committee.

In view of the requirement for local authorities to adopt

comprehensive borrowing management policies, which will be published

in the annual plan---on which the public, of course, is able to make

submissions---the committee, in discussing the question of loan

polls, has unanimously agreed to omit the loan poll provisions from

the Bill. This will be well received by local government.

You will see here mention of the idea of a loan poll. This was intended to be a bit like what they have in US local government. If a council wants to borrow money for a project or activity, it has to go to the public with a poll or bond issue poll, where ratepayaers vote yes or no to the project and the loan. You will see that the Minister told Parliament that - in view of the requirement that borrowing policies be published in the annual plan - there was no need for a loan poll.....

And later, when Parliament further considered the matter, we see what the then Minister of Local Government (John Banks) told Parliament....

Hansard - Stage: SECOND READING - 27 MAR 1996
LOCAL GOVERNMENT AMENDMENT BILL (No. 5) : Second Reading
Main speaker - Hon. JOHN BANKS

Hon. JOHN BANKS (Minister of Local Government): I move, That the

Local Government Amendment Bill (No. 5) be now read a second time.

The debate on the policies and the objectives of this Bill is very

important. It is important to clarify the intentions and purposes of

the Government in this legislation. It is important for the local

authority members and officers who will have responsibility for

implementing it. It is of even greater importance for the residents,

ratepayers, and other stakeholders in the local government area for

whose benefit this legislation is being enacted.

   There are two components of this Bill: a new financial management

regime for local government and a new borrowing power to replace the

outdated Local Authorities Loans Act. I will first discuss the new

financial management provisions. Under this Bill local authorities

will be required to prepare a framework for financial management

strategies and policies to govern all financial decisions, not just

borrowing proposals. That framework will be subject to extensive

consultation requirements and will provide a clear basis upon which

specific expenditure, investment, rating, and borrowing proposals can

be understood.

   These new financial management provisions have a clear and simple

objective: enhanced transparency and accountability---enhanced

transparency and accountability in local authority financial

decisions. They are designed to provide greater flexibility and

autonomy to local authorities while, at the same time, ensuring that

the policies and priorities adopted by those councils reflect those

of the community they serve.

While these concepts are new to local government legislation,

there is nothing in them that is not based on existing best practice

in the local government sector. Long-term strategic planning is a

case in point. New section 122K will require each council to prepare

a long-term financial strategy covering a period of at least 10

years. The strategy must outline the proposed activities and

programmes of the local authority over this period, the reasons for

them, and how the financial requirements and consequences of them are

to be managed.

   The long-term financial strategies must go through the special

consultative procedures at least every 3 years. This will be a

significant opportunity for public participation in establishing

long-term plans and priorities for the local authority.

   The local authority will also be required to adopt an investment

policy and a borrowing management policy. These are more technical

financial management documents that will set the overall parameters

for managing financial assets and debt and should avoid the dangers

of short-term, ad hoc decisions.....

The public will be in a much better position to make submissions

supporting or opposing those proposals. Better focused submissions

should lead to decisions that more accurately reflect the values and

priorities of residents and ratepayers. That is what local government

is all about---meeting the needs, the wishes, and the interests of

local communities....

Another change made by the select committee is the removal from

the Bill of the loan poll provision. When I introduced the Bill I

invited submissions on this issue. I recognised on the one hand that

the concept of a loan poll was inconsistent with a modern and

flexible approach to borrowing, but I was also aware that many people

continued to feel it was an important check against irresponsible and

extravagant expenditure proposals by local authorities. After

considering submissions for and against, the select committee has

recommended---and I agree---the abolition of loan polls, and I, for

one, think that this was one of the great decisions taken by this

select committee of Parliament....

And for the avoidance of doubt about Parliament's intent about the relationship between consultation and borrowing I include a couple more bits of Hansard....

Hansard - Stage: IN COMMITTEE - 18 JUL 1996
LOCAL GOVERNMENT AMENDMENT BILL (No. 5) : In Committee
Main speaker - Hon. GRAEME LEE

.....But an issue is unanswered, and I want to answer it for the

benefit of the Committee. Steve Maharey and Judith Tizard raised the

question of borrowing. Let me answer that question. First, the

abolition of loan polls was agreed upon by everyone. It was a thing

of the past and a growing anachronism. In due time local government

will not be hindered by that poll requirement, which has caused a

great deal of local government progress to be stymied.

   The reason that overseas borrowing is not supportable is that

local government has had no difficulties in raising major capital. I

am aware of some major capital projects in the near future, but I am

not aware that any territorial authority views its ability to raise

money in the manner of the past as being a problem in the future.

Territorial authorities---probably the smaller councils---could

potentially find themselves in some difficulty in terms of overseas

borrowing mechanisms, and that would be unfortunate and unnecessary.

Overseas lenders who were dealing with local government, in turn,

might expect central government to backstop these issues. It would

not be an unreasonable expectation but it would be a totally wrong

expectation, and it could lead to complications that we do not need.

Hansard - Stage: IN COMMITTEE - 18 JUL 1996
LOCAL GOVERNMENT AMENDMENT BILL (No. 5) : In Committee
Main speaker - RICHARD NORTHEY

   RICHARD NORTHEY (Onehunga): We note in the particular schedules

the following points. First of all, it is proposed to delete the

first schedule. That was recommended by the select committee. The

first schedule contains the detailed procedures for loan polls.

Labour members, Government members, and members of the other parties

were happy to see the abolition of loan polls on the basis that the

consultation and forward planning provisions for revenue raising and

borrowing, in particular, that are provided in this Bill provide a

fairer accountability and a level playing field in terms of revenue

raising for local government. So we are happy to suggest, and the

Government readily agreed to, the deletion of the first schedule,

which enables loan polls to occur.

So there you have it. In black and white - and yellow highlighting.

Parliament intended for bank borrowings to be protected transactions all right - but ONLY after the public consultation had occurred.

There has been no change in Parliament's intent from when these laws were passed, and when they were in place during the time of Kaipara District Council's appalling track-record of decisions. The problem was - and is - that the Audit Office did not do the simple and decent thing and CHECK that the Council had indeed consulted before going ahead and doing the borrowings.

Between the years 2005 and 2007 KDC made decisions and borrowed money. Because ratepayers were not consulted no-one knew how big these loans were. In fact between the years 2007 and 2011 the KDC issued no rate demands relating to the loans. It appears that any interest that was owed, was paid, capitalised, and simply added back to the loans which did not appear on Council accounts, but would have been visible to the Audit Office had it done its job. The loans finally went public in 2012. KDC proposed a Long Term Plan (2012-2022) with huge rate increases to make loan payments. This resulted in widespread protest action and to Government intervention last year - when commissioners were appointed (to fix up the mess).....

Government failed Mangawhai - not Parliament.

Man oh man.

Endangered Public Spaces on Auckland's Waterfront

I took this photo on Wednesday 26th June 2013. It is of an iconic structure at the base of Princes Wharf on Quay Street. The Hilton Hotel development is behind. This building was constructed by the Auckland Harbour Board to house its offices and activities.

It was the first stage of Auckland Harbour Board plans to redevelop the part of Auckland's waterfront which was becoming redundant as containerisation changed the face of the shipping industry and ports.

Auckland Harbour Board planning at the time was conscious of the objective of turning the waterfront into a people place. Public spaces were to the forefront of the original planning.

I've photoshopped the above photo a bit to show how the Auckland Harbour Board (AHB) envisaged their HQ building would look on Princes Wharf next to Quay Street. My work is not that good (sorry about losing the red heritage iron posts, and the ground level access is actually at the centre of the building - not off Quay Street as this picture suggests), but gives a fairly good impression of the AHB design. This had a central set of lifts at the base of the building - but with substantial paved areas all the way underneath the building offering open access onto the base of Princes Wharf from Quay Street.

This image is from a newspaper photo of a model of the proposed Hilton Hotel and Passenger terminal development. It shows the AHB HQ building as it had been constructed.

Here is another newspaper photo - this time of the actual AHB HQ building. You can see the sense of spaces and openness that was intended when the building was established.

You can also see the central access point, and the footprint it took up.

And now we are looking up Princes Wharf. This image is from documentation used in the resource consent process managed by Auckland Regional Council in 1997 when it permitted the development of the Princes Wharf Hilton Hotel, Passenger Terminal and Apartment complex that is there now.

The artist's impression commissioned by the developer and applicant for consent gives the impression of popular public spaces and places, and a sense of the views and public access that would be afforded around the development, and between it and the AHB HQ building which was already in place.

I took this photo montage on the 26th June 2013. It is taken from about the same point as the artist's impression. You can see that the reality is very different from impression. And not just because the artist has left out the AHB HQ....

The good scale public spaces and access do not exist because the space below the AHB building has been infilled. It also does not exist because priority has been given to cars and taken away from pedestrians.

While the former AHB HQ building was controversial at the time of construction - it was built with care and attention for the public domain and public spaces where it was established.

However since that time a careless approach to development and infill has allowed commercial objectives to erode the public domain, and to create a situation on this very significant part of Quay Street and Auckland's waterfront that now needs drastic corrective action.

Do we need a public I Sight and a Mini Market on this site. If there is serious intent behind the objective of opening up the harbour edge stitch, then a good start would be to buy back this ground floor infill development - and repair the urban vandalism that has been allowed to incrementally occur.

And while you're at it - do we really need the ANZ logo writ so large here?

Affordable Housing Conference - Malaysia

Attended this conference last week. Was invited to give a presentation about affordable housing in New Zealand (chose Auckland as the case study), and to chair one of the streams.

Most delegates were there from developing countries - like Malaysia, Philippines, Zambia, Zimbabwe, Nigeria - but there were a number there from Australia also.

I had heaps to talk about from New Zealand. What with the Affordable Housing Commission, the Auckland Unitary Plan, leaky buildings, our experiments with apartment buildings....

It was interesting how much New Zealand could learn from developing country experiences. And it was interesting to me, to learn from developing country delegates, what they picked up from my presentation.

Initially I thought we would not be comparing apples with apples.... 

This presentation was exemplary. To give you a bit of background on Malaysia's  SPNB. From its website:

"We aim to deliver the development of quality affordable homes that are sustainable and meet customer satisfaction through a culture of excellence and to become a caring and responsible developer mindful of social responsibility.

Syarikat Perumahan Negara Berhad (SPNB) was established on 21 August 1997 as a wholly owned subsidiary of the Minister Of Finance Incorporated (MOf Inc.) with the objective of providing quality affordable homes for every family in Malaysia in accordance with the National Housing Objective. SPNB is responsible in implementing Rumah Mampu Milik Programme and the Rumah Mesra Rakyat Programme to ensure those in low income group are able to affordably own comfortable homes, an agency for Rehabilitation of Abandoned Housing Projects, Government Quarters Programme in Klang Valley via SPNB-LTAT Sdn. Bhd. (USL) for various agency and government bodies and Special Project Programme such as for Program Perumahan Rakyat (PPR), housing programmes for Tsunami victims in Malaysia and Acheh, Indonesia as well as resettlement for flood risk area as per instructed by the Ministry of Finance. Apart from these main responsibilities, SPNB is also dedicated in providing housing for the less fortunate and poverty stricken families in Malaysia by contributing some amount of the company’s annual profits towards welfare works such as repairing or reconstructing dilapidated houses under Special Housing Projects via the Amal Jariah Scheme.

This slide was typical of many of the presentations. The problem of supply not meeting demand is experienced across many of the incomes demographics. Not confined to social (low) or middle income buyers. 1st time buyers are experiencing major issues with buying in Malaysia - especially in or around Kuala Lumpur.

SPNB's activities are distributed across many sectors of the housing economy. You can get a flavour of that from this slide. 

In all of the presentations there was explicit recognition of the cost of living for people - and that housing (being a verb - not just a noun - for commodification) had to be paid for alongside all of the other living expenses. Typically a Malaysian person takes out a loan for both house AND car. A key point made was that the cost of living is growing a greater rate than incomes - adding to the problem of housing affordability.

This slide summarises different Government housing funding, subsidy and construction initiatives. 

PR1MA was established under the PR1MA Act 2012 to plan, develop, construct and maintain affordable lifestyle housing for middle-income households in key urban centres.

Middle-income is defined as a monthly household (husband and wife) income of between RM2,500 – RM7,500. (To compare - about 2RM = $1NZ). The Prime Minister is fully aware of the financial pressures faced by the urban, middle-income population due to Malaysia’s rapid urbanisation. His vision is to rebalance assistance to the rakyat in both rural as well as urban areas. PR1MA is one of various initiatives implemented to help the rakyat manage costs of living in urban areas. PR1MA will be the first that exclusively targets this middle segment with homes ranging from RM100,000 to RM400,000 in a sustainable community. (ie $50,000NZ to $200,000NZ)

This slide resonates with the New Zealand situation. It looks at the challenges of providing affordable housing. But it provides other ways of looking at it - for example how much land is required for infrastructure - when it is used for housing. It also raises the matter of credit-worthiness - the ability of new home owners to actually buy into housing.

This slide reports on the performance of SPNB in building new homes for the low income range. The left pie chart reports on the number of housing units built, while the right pie reports on the cost in Ringaats. The cost of production is around $50,000/unit equivalent in NZ dollars.

This is a sample of the housing units referred to.

And the floor plan.What is interesting about all of this is that I am aware from talking to a number of housing providers in Auckland is that there is a growing demand - often from women - for houses decribed as "Corollas" - ie well built, go well, last well, but don't cost an arm and a leg. This can be an analogy for low cost. but it can also be an analogy for Asian mass produced industrially manufactured housing. This is exploding in developing countries in Asia. Made me feel that we are behind the 8 ball when it comes to housing supply in New Zealand.

Take a look at this Youtube clip. It's about the IBS- industrial building system in Malaysia. The travelogue format shows the basic usage and types of IBS systems. it can also be called as a prefab system. The types of houses and construction methods are quite eye-opening....