A simpler council? Auckland tried that — and got the country's biggest bribery case.

The Hawke's Bay Today headline.

Hawke's Bay's mayors are being asked to design something Auckland already failed to deliver. The order of operations matters more than the merger.

  Hawke's Bay's mayors didn't accidentally welcome the three-month deadline to design a “simpler” council model. Wendy Schollum, Richard McGrath, Craig Little and Will Foley deployed precisely the language they were given — “certainty,” “simpler,” “more effective” — and Hawke's Bay Today duly carried it.

Former regional chair Rex Graham went further, calling it “absurd and childish to have so many councils.”

Local Government Minister Simon Watts and RMA Reform Minister Chris Bishop want larger unitary authorities.

Everyone is reaching for the same metaphor of efficiency. Almost no one is asking the question that matters: who polices the new entity when it goes wrong?

  That the framing landed unchallenged says something about the political class. That the regional press spent the morning ringing mayors for predictable quotes — rather than examining whether the underlying premise has any merit — says considerably more about the state of New Zealand local-government journalism.

“Simpler” is easier to adjudicate than “accountable.” A reform announcement generates copy without anyone having to read a corruption file. The political media, drawn to the choreography Watts and Bishop had engineered, duly obliged.

  Just over a decade ago, 66.18 per cent of Hawke's Bay residents voted no to exactly this proposition. Napier voted 87.68 per cent against. Wairoa voted 83.99 per cent against. They were not being conservative. They were paying attention to what had just happened up the island.

What “simpler” actually delivered in Auckland

  When then-Local Government Minister Rodney Hide pushed Rodney District Council into the Super City in 2010, Rodney was already rotten. As I document in Unleashed, the council's roading division was running what Crown prosecutor Brian Dickey would later call “a cascading culture of bribery.” Director of Transportation Murray Noone and his deputy Barrie George took monthly $8,000 “consultancy” payments, $5,500 lunches, a Florida honeymoon for a senior staffer's daughter, dozens of overseas trips, iPhones, iPads and fine wines from a single contractor — Projenz Limited. By 2012, Projenz's annual profits had ballooned from break-even to $3.8 million on $8.2 million of sales, almost entirely from contracts overseen by Noone.

  The merger did not end the racket. It absorbed it. Noone walked into a senior role at the new Auckland Transport. The bribes kept flowing until 2013. By the time Justice Sally Fitzgerald sentenced Stephen Borlase to five-and-a-half years and Noone to five years for offending that “harms New Zealand's public reputation as a place where corruption is low or non-existent,” six other AT staff had quietly departed in an internal investigation. Police valued the unlawful benefit at $20.3 million. The court froze $8.6 million. Borlase ultimately forfeited $3.5 million. SFO director Julie Read explained that prosecuting more people would take up too “much of the court's time.”

  The lesson is not that some councils have corrupt managers. The lesson is that mergers do not cure the cultures they inherit. They scale them.

  Auckland councillor John Watson — a former Rodney District councillor who had tried to blow the whistle on his old council — wrote that the convictions were “the tip of the iceberg” and that investigators had “unnecessarily restricted” themselves to the roading division.

Senior engineers told the National Business Review that “rorting of delegated financial authorities was common practice, tenders were rigged, and smaller companies bullied.”

Whistleblower-councillors who tried to drill into contracts and land deals were ostracised by the mayor and hit with code-of-conduct charges. None of this stopped at the merger. All of it carried over.

The watchdogs cannot keep up

  The last CEO of Rodney District Council, Rodger Kerr-Newall, claimed $42,000 from ratepayers he was not contractually entitled to. The Auditor-General said it lacked the power to require repayment. He decamped to Western Australia, where the state's Corruption and Crime Commission concluded he was “the very embodiment of corruption.” It took an Australian watchdog to do the work New Zealand's couldn't.

  Sixteen years on, the Super City has grown into a leviathan. As I set out elsewhere, Auckland Council serves 32 per cent of the population, employs 42 per cent of council staff nationally, and accounts for 54 per cent of all council spending. Its staffing costs have nearly doubled to over $1.1 billion. There are six layers of management appointing each other. Salaries reflect the resources a manager controls, not productivity — the textbook definition of a fiefdom.

  What Auckland does not have is anyone with the resources to keep up. The Ombudsman, the Auditor-General, the Serious Fraud Office and the Privacy Commissioner are all swamped with complaints about Auckland Council. The Privacy Commissioner and Ombudsman openly admit they lack the resources to investigate an organisation that size.

Information requests are stalled, redacted and refused. Corruption complaints are intercepted by “relationship managers” who gaslight complainants. The council's own integrity unit doesn't appear in Google searches or on its own website.

New Zealand has slipped down Transparency International's rankings, and as I argued in 2017, we badly need a properly resourced anti-corruption watchdog with teeth. We still don't have one.

Australia did the work we won't

  Australia, by contrast, built the institutional infrastructure New Zealand has avoided. The federal National Anti-Corruption Commission can investigate any Commonwealth official. Every state has an equivalent: New South Wales has ICAC, Victoria has IBAC, Queensland has the CCC, Western Australia has its own CCC — the body that prosecuted our own runaway CEO. They can compel evidence. They can raid offices. They can hold public hearings. They can refer matters for prosecution.

  New Zealand offers councils almost nothing equivalent. The Auditor-General produces excellent reports but no prosecutions. The SFO prosecutes when the evidence is overwhelming and the headlines are right. The Ombudsman issues findings that councils ignore.

There is no specialist body with the statutory teeth, resourcing or independence to investigate misconduct that adversely affects public officials' honesty or impartiality. We have, in effect, decided that local-government integrity is somebody else's problem.

What Hawke's Bay actually needs first

  Hawke's Bay's councils may well be too small. The Hawke's Bay Regional Council may well be due for restructure. None of that is the question. The question is the order of operations. Before Schollum, McGrath, Little and Foley sign anything, central government needs to deliver three things first:

• A properly resourced, independent anti-corruption commission with statutory powers to investigate and prosecute;

• An Office of the Auditor-General with the legal authority to compel repayment of misappropriated public money; and

• A single accessible channel for ratepayers to report misconduct that does not route through the council itself.

  Without those, the “simpler” council Hawke's Bay's mayors are being asked to design will be simpler in only one respect: there will be fewer points of accountability between the next Murray Noone and a $20.3 million procurement file.

  Auckland was sold to ratepayers as efficiency. They got a cascading culture of bribery, six layers of management, and four watchdogs that admit they cannot cope. Hawke's Bay does not need to repeat the experiment to know how it ends.