PRIME MINISTER CALLS FOR AUCKLAND-WIDE CONSENSUS

Prime Minister Jenny Shipley has asked the elected local body leaders of Auckland to work together to come up with a detailed plan for an infrastructure fund for Auckland.

In a letter to the Auckland Mayors, the Auckland Regional Services Trust and the Auckland Regional Council Mrs Shipley says the preferred option for the future of the Auckland Regional Services Trust (ARST) is to establish an infrastructure fund to help restore Auckland's urgent backlog of projects which require investment.

Mrs Shipley says to achieve this will take the combined skills and experience of the elected members of the Auckland Regional Services Trust, who have built up the value of the ARST assets through their good stewardship; the elected Auckland Regional Council members, who used to be the principle owners of the assets; and the Mayors of Auckland's cities, who have identified the infrastructural requirements they say urgently need to be met.

"In my letter I have outlined the key points of difference that emerged during my discussions with interested parties over the last three weeks. These matters of difference must be resolved by all Auckland leaders so progress can be made.

"I have asked all three groups of elected representatives to work together so that they can bring a common position to the Government. The views of each of the three groups carry equal weight.

"It is important that the Auckland leaders come up with a single option, so that central Government can make the necessary changes to the law and Auckland can get on with investing in infrastructure to solve its problems.

"Government officials are available to help make progress as soon as possible, and Ministers hope to be in a position to meet the key elected leaders next week," Mrs Shipley concluded.

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7 April, 1998

'Name'

Dear 'Sal'

I am writing in response to the Auckland Mayors, the Auckland Regional Council and the Auckland Regional Services Trust, who have phoned or otherwise contacted me, since Parliament opted not to proceed to a referendum on the future of the Auckland Regional Services Trust's assets. Government views all of these publicly elected bodies as joint stakeholders in this issue.

It is the Government's hope that you, as elected local government representatives, can work together with the Government to develop an option that will achieve a consensus. The options now are:

- to leave the Trust as it is, and I understand that no one wants this to occur; or
- change the Trust so that its main purpose is to be an infrastructure fund to help restore Auckland's urgent backlog of projects which require investment.

The challenge now is to see if agreement can be reached on the detail of how to bring this project to life.

You will have heard me say that what is now required is a different environment for decision-making and a different culture among the stakeholders. As you know, I have been, and remain now, of the view that a consensus solution is possible with a sensible degree of 'give' on all sides.

All would agree that the assets and resources of the Auckland Regional Services Trust be used in a way that:

- ensures good economic outcomes;
- ensures money is effectively spent and used for priority projects in the Auckland region;
- ensures good decision-making to meet the long-term needs of Aucklanders; and
- that these arrangements are durable and sustainable and have strong accountability.

I believe that a consensus can be reached about how an infrastructure fund should be established. To achieve that there are a vital set of decisions which must be made. I would appreciate your combined response to them.

Future of Community Trust
A decision must be made as to whether the Community Trust provision and the existing arrangement be retained or abolished. If an infrastructure fund is to be established I would appreciate clarity on whether there is a residual function for a general purposes Community Trust.

Governance
When I discussed this matter with you recently there was a mixed view on whether or not the decision-making group overseeing the infrastructure fund should:

remain as a directly elected body, as is the current Auckland Regional Services Trust; or alternatively be an electoral college system made up of the leaders of the respective territorial local authorities. It was proposed that the electoral college be responsible for appointing a governance body to oversee management of the infrastructure fund's assets and the distribution of them, where projects meet infrastructure fund criteria.

There are merits in both these options. I am interested in an indication as to whether there is any consensus on this matter, and any other accountability arrangements that you believe need to be taken into account.

The Underlying Ownership of the ARST
The recent debate over the Auckland Regional Services Trust's assets has raised the question as to whether it is necessary to identify who the underlying owners of the ARST's assets are. Do you accept that the assets are held by ARST on behalf of the people of Auckland?

This issue has created uncertainty and it would be of assistance if this matter could be clarified prior to legislation being drafted. I would be happy to discuss this matter further with you.

Prioritisation of Infrastructure Projects
After meeting with you it is clear to me that there is general consensus that the infrastructure fund should be able to allocate funds to projects for the public benefit of people in the Auckland region, in particular:

stormwater projects;

public transport projects;

other major transport infrastructure investment which would not be funded from current sources or other means.
It would be of assistance if you could clarify whether these are the three main areas of purpose for the infrastructure fund. Is there any other project that you believe should be permitted?

I would appreciate your advice on prioritisation of infrastructure projects.

Distribution of Wealth
Clearly the need for investment in infrastructure in Auckland is urgent. If it is to be responded to in a timely fashion the question of whether or not the new infrastructure fund should make grants from income only, or from income and/or capital, is a matter that must be clarified.

If a decision is taken to only draw down on income derived from the assets, then it is questionable as to whether or not the fund will be able to respond at a sufficiently rapid rate to meet the expectations of the people of Auckland. This is a crucial matter that requires clarification.

There are other matters related to the fund that will require clarification. They are:

- should the assets continue to increase in value, hence the draw down on the infrastructure fund remain at low levels;
- should the fund be required to distribute annual surpluses over and above an identified asset value, for example, the value of the assets as at a particular date;
- whether the fund can acquire new assets; and finally
- clear understandings will need to be established around the potential sale of existing assets in order to fund the infrastructure fund. Any sale of shares in Ports of Auckland Limited will need to be in accordance with the Coalition Agreement.

Retention or Transfer of Assets
The question of whether all Auckland Regional Services Trust assets should be held in the infrastructure fund, or not, needs to be clarified.

I would appreciate your advice on whether you believe all of the existing assets should be retained or whether any, and if so, which ones, should be transferred from the Auckland Regional Services Trust to local authorities. For example, capital investments may be required for:

regional parks;

museums;

marine parks.
If there are assets to be transferred to local authorities, I would appreciate your advice on the purpose of the transfer, to whom, and any rules that you believe need to surround such a transfer.

Review
We would need to consider whether a review of the arrangements is required, maybe after a period of five years. Also, consideration may need to be given to a distribution of any residual funds.

Summary
Finally, if this matter is to be resolved and brought to a conclusion, then there is clearly some significant detailed work that needs to be done. There is a need to find an Auckland-wide consensus by those who supported and those who opposed the referendum, before any new proposal can be put in front of the Parliament.

I would appreciate your urgent consideration of the points that I have raised. There may be others that I have overlooked that you feel are important and I would appreciate your identifying those as quickly as possible.

Ministers and I are very willing to meet with you at the appropriate time, but I think all of us would benefit from working on the detail of this so that we have a chance of making real progress. It is my hope that our respective officials may be able to have an informal meeting this week and Ministers and elected Auckland stakeholders meet in the week following Easter in order to make progress.

I look forward to hearing from you with your response to the matters that I have raised. This matter can be resolved if there is goodwill on all sides.

Yours sincerely

Hon Jenny Shipley
Prime Minister