December 31, 2010
Municipal Amalgamation ... Where’s the problem?
New Zealand (and Canada) still have time to “get it right”
Discussion of the amalgamation of local authorities is often accompanied by passionate invective and a collective holding of noses. Is this fair? After all “Amalgamation”, like “Terror”... as in the war on is a noun and is inanimate. Should we then shoot it? or debate the issues instead?
Down under, here in the Antipodes, or Auckland, New Zealand, to be precise, we read with alarm of the apparent unravelling of the Toronto and Montreal metropolitan amalgamations. As not disinterested bystanders, our alarm is due to the recent November 2010 merger of eight Auckland local authorities (we call them Councils) into one mega city of 1.4 million residents. Could Auckland City now be starting down the same path as Toronto and Montreal?
There is, unfortunately for Aucklanders, a distinct resonance with the woes of the two big Canadian cities and it is showing up here already. So what are our common issues and what is to be done? How can any common pitfalls be avoided? How could we learn from the hard-earned Canadian experience? And, is amalgamation the real bogeyman?
There are many reasons why urban metropolitan amalgamations, in theory, should make eminent good sense. Principally these benefits include the coordinated management of large urban public infrastructural services including transport, rapid transit, water and wastewater. In Auckland’s case there would be few people who would argue that pre-amalgamation provision of these services by the eight local authorities was satisfactory. Far from it, actually. Auckland’s traffic gridlock, its poor public transport system and expensive public services characterized the last 20 years of the fragmented and parochial provision of services by these smaller units of local government.
Equally, there are countervailing disadvantages of municipal mergers, not the least of which are local community disempowerment and bureaucratic capture. Let’s then deal with these two issues and see if some factors common to both Canada and New Zealand appear. It is not too late for Canada to fix its problems and, for Auckland, to sound a warning and a timely cautionary tale.
Many local communities within post-merger Toronto and Montreal are reported to be dissatisfied with their lot. This is particularly true of those who live in the peri-urban areas, that is, those at the periphery of the mega city. Many of these peri-urban districts are more rural in character; often they have long standing identifiable local community cohesion and come with definable local identities.
What is more, a number of these outlying districts had at the outset expressed a strong aversion to amalgamation and now feel that their fears were well founded. Coupled to this they keenly feel alienation with the centre. Their perception, possibly the reality, is that they are now paying for urban services which they cannot readily access, all at the expense of lost local services that they had traditionally enjoyed.
A local community, as opposed to an amalgamated city-wide view of the world, is showing up here too. For example the people of the area, previously administered by the Waitakere City – a beautiful green part of the Auckland region – are unsure whether their long standing emphasis on environmental protection will survive under amalgamation. The rural areas are left with uncertainty too and are deeply sceptical of the city style “Big Brother” administration.
Add to these fears the issues concerning the governance process, that is, the as-yet poorly defined linkage between local community boards and their dealings with the super authority. Admittedly it is still in the early days but local boards are at present in the dark as to how the linkages are supposed to work. They are fearful that they will suffer from emerging governance design flaws. The flaws include the ambiguous (some contend deliberately so) terms of reference for boards and the minimal funding and support provided for their extensive duties. Based on reports from Canadian sources, these issues sound awfully familiar.
The answers to the governance issues are not simple. Local government experience in both countries indicates that these problems generally take years to shake down. Taken together with the regular changes to elected member representation, they may remain in a constant state of tension, healthy or not, and if experience is any guide, good process alone will not produce durable solutions. Local boards will remain reliant more upon mutual goodwill than upon any process, good or bad.
The second area of concern, common to all local authority amalgamations is the poorly controlled growth of the larger city bureaucracy. An enduring solution to this issue is possible but this totally depends upon elected representatives doing as they are elected to ... that is, to properly govern. In setting accountability and performance policies elected officials must at all times remain in the driver’s seat.
The separation of policy from operations works both ways, elected members must insist upon maintaining control of the policy agenda often in the face of organized and determined attempts of management to wrest that control. Easier said than done some would say. This is correct, as it is never going to be a pushover. No excuse, however, can exempt elected members from their responsibilities. What is more, the stakes are high. The stakes are indeed highest, especially in terms of control over staff numbers and payroll costs. For if any incentive is needed, policy control over this area is worth the effort.
Salaries and wages are always, without exception, the major component of municipal annual recurring operating costs. The reported huge increases of staff numbers and payroll costs of Toronto’s now bloated personnel roster are truly shocking.
Auckland is currently fudging its staff numbers. No performance culture and a setting of staff number targets have been evident. Elected members are ill-informed and have failed from the outset to set demanding higher performance targets. We look like heading the same way as Toronto. Loss of elected member control leads to bureaucratic bloat, inevitably with higher than optimal staff numbers and payroll costs rocket. Unsurprisingly, payroll costs are most often the principal culprit for operational budget blowouts.
If these are the two major areas at issue, common to our city amalgamations, then what can be done to fix them? (Canada) and avoid them? (New Zealand).
Here is a (short) suggestion list to ensure that the policy makers remain where they should be, which is firmly in the driver’s seat and in control. Elected members must:
Solutions to most amalgamation woes are there for the taking if the will and the wit is there too. Local organizations, namely our Municipalities and Councils, are owned by us, the citizens. Let’s not pass the buck or just blame a noun for our “Amalgamation” problems.
Amalgamation is a process which is, (or is supposed to be) under citizen’s control. Blame for failures of amalgamation must, in the final analysis be laid firmly at our own door. At least we here in Auckland still have the time to ... “Get it right”.
Larry Mitchell, Senior Fellow is a New Zealander though a Canadian by birth. He has over 30
years active experience of commerce, chartered accounting and since the mid-nineties an immersion in local government finance and policy practice. He services the New Zealand local government sector with extensive financial and policy advice primarily through his "Base Stats with Trendz" statistical reports to over 30 New Zealand Councils. Larry is working with the Frontier Centre to lead, develop and deliver the Canadian Local Government Index a major initiative designed to assist with performance improvements of the Canadian local government sector. Larry graduated B Com, (Auckland University) in 1967. He served as a pilot in the RNZAF before taking up public accountancy practice. Following over twenty years experience as a partner in Coopers and Lybrand's Auckland office in 1996 he graduated Master of Public Policy (Victoria University) majoring in public sector finance. He operates his own international local government consultancy business from Puhoi, 40 km north of Auckland, New Zealand.