Council-controlled organisations (CCOs) are not a new concept. They were introduced under the Local Government Act 2002 (LGA) as a way for councils to exercise their stewardship responsibilities more effectively while still retaining control. The Auckland Transition Agency’s cabinet paper describes the benefits of setting up CCOs as including an improved commercial focus, some insulation for the council from financial liability, and tax effectiveness.[1]
The LGA sets out mechanisms such as the statement of intent and six-monthly and annual reporting, by which all CCOs are currently held accountable. Concerns over the accountability of the new Auckland CCOs have been addressed by introducing into the Local Government (Auckland Council) Amendment Act 2010 (LGACA) some additional accountability requirements. As such, Auckland Council may impose the following requirements on substantive[2] CCOs:
- the provision of a narrative in the statement of intent on how the CCO will contribute to the council’s and, where appropriate, the government’s objectives and priorities for Auckland,
- quarterly reporting, and
- compliance with policies regarding strategic assets.
Under the LGACA, Auckland Council may also appoint the chair and deputy chair (except for the initial appointments made by government), and may remove directors at any time. The legislation requires that substantive CCOs must give effect to the council’s long-term plan and act consistently with any other plan or strategy as specified by the council.
However, the above mechanisms are not necessarily new and could have been imposed on a CCO outside the legislative framework. Legislative provisions that do represent new mechanisms include the ability for Auckland Council to require substantive CCOs to adopt a 10-year plan, and the requirement to hold at least two public meetings per year.
Auckland Council must also have an accountability policy for substantive CCOs that provides information on how the council will hold the CCO accountable.
[1] Auckland Transition Agency, Council Controlled Organisations of Auckland Council (Report for Use in Cabinet paper). Department of Internal Affairs website, 28 May 2010, pp. 8-9.
[2] A substantive CCO is defined under the Local Government (Auckland Council) Amendment Act 2010 as a CCO that is responsible for the delivery of a significant service or activity on behalf of the Auckland Council, or that owns or manages assets with a value of more than $10 million.