Creative destruction? What will reform do for local government in Auckland?

Oops, there goes the labour market

1,200 job cuts to save city $66.5m announces the Auckland Transition Agency.

Hooray!  The reforms of local government in Auckland have delivered.  Haven’t they? 

Well maybe not.  We are witnessing the destruction of the local government labour market in the region.  Labour mobility is the stuff of active, engaged organisations.  It promotes productivity.  It attracts talent, keeps people on their mettle, and enables them to find the positions that might best fulfil their potential.  It generates competition for jobs.  It avoids the institutionalisation of poor practices and keeps unions at the negotiating table.

Once a labour market loses flexibility, once positions become entrenched, organisations falter.  When seniority depends on vertical progress  and promotion and rewards reflect length of service, individual ability no longer determines who does what.  Organisational performance suffers.  When labour markets deteriorate, it is hard to attract the best people to the positions that do come up.  Second, third, or fourth best becomes the best available.

All this is particularly true where there are monopoly providers.  It has been the mark of sunset industries – their decline sometimes punctuated and accelerated by the desultory coupling of the fading dinosoars that dominate them .

So why would central government want to engineer such an outcome for local government in Auckland?  The replacement of eight councils with just one will go a long way towards destroying what was a reasonably healthy labour market.  At the heart of the reform is the carving up of middle management, accompanied by a somewhat frenetic programme of placement of the survivors accompanied by a reduction in working conditions.  What possessed the Auckland Transition Agency to take such a negative approach to the quality of local government in Auckland? 

The decimation of middle management which has been trumpeted as an achievment is particularly puzzling.  Middle management is the glue of large bureaucratic organisations.  If it had been a problem in Auckland’s governance, then the obvious response would have been to create smaller units of government, more aligned with their communities and less reliant on paper shufflers.  Instead we have one much larger one.  This one council will be responsible for the economic, environmental, and social governance of a metropolitan region of 1.4m people - and growing (for the moment).  It will also have to provide policy and oversight for a number of council owned service delivery corporations.  Experience demonstrates that, for better or worse, middle management is the glue needed to hold such a large, multi-functional organisation together.

The new council will also face a major issue of internal alignment.  It will need protocols  - meetings, communications , rules and roles to ensure that the right hand knows (and goes along with) what the left hand is doing.  From working with government and non-government organisations throughout New Zealand and Australia it is obvious to me that bigger, more diverse organisations have to commit relatively more time and resources - and managers - to these inward-looking matters. 

The adoption of a matrix structure around functional or professional specialisations on the one hand, and localities, on the other, will make even even more management demands . 

The current shakedown is another reflection of the flawed logic of the  restructuring of Auckland’s governance and of a process that has been too rushed.  It is not a reflection on the people who have lost their jobs, or those who have chosen to go elsewhere , or those who have been shuffled into a position they would rather not have for a lesser reward. 

It all looks a little pointless, too, when the loss of 1,200 local bureaucrats no more than offsets the gain of 1,200 more central government bureaucrats  in Auckland between 2006 and 2009.  Its just half the 2,400 added over the seven years to 2009.  Central government already employed 30% more people than local government in Auckland .  (These figures do not count the "doers", though, such as teachers, police, justice and hospital staff, people in arts and recreation, or in council controlled service organisations). 

If nothing else, this latest announcement confirms the push towards central government ruling the Auckland roost .  In fact, central government has just anounced its very own Auckland Policy Office (cementing in an ad hoc assemblage of mini-departments that slipped into the region several years earlier). 


Perhaps we could do away with local government altogether?   Well, no, not if we value democracy.  Local offices – and local officers – are fonts of local knowledge.  They have the networks and experience to respond to the community because they know the community. 

They can address infrastructure shortfalls or failures based on an understanding of what went before and what is expected in the future.  Councillors, and through them council managers, are immediately accountable to their communities in which they invest and operate locally.

The new Auckland council might get up to speed on the detail of local circumstance over time.  But there will be costs in doing this, costs which would be lower if it could just hang onto the knowledge and expertise of current emloyees. 

Paradoxically, cutting middle management in this instance may may reduce productivity.  Starting out with a lean management structure may simply require operational employees to participate more in internal management, reducing their capacity to get the real work done.  Getting Auckland moving under the new regime is going to be a long and potentially costly haul.  Cutting the legs out from under it is not necessarily the best way to get started. 


Not all may be lost though.  There is a burgeoning legion of consultants in Auckland.  Having doubled over the decade their numbers about to be further inflated by the newly redundant.  They will fill some gaps and help get things done – at a cost.  This will be necessary because it is unlikely that a council organisation of the scale and structure about to be unleashed on Auckland will be able to do the job without consultants, even if many  turn out to be former employees of the old regime.  But, of course, it will require an investment in middle management for the new council to manage them effectively!

Saving $65m?  Let’s wait a while, and then balance that number against the long-term costs of the reform.  If we look back in three or four years we may just see that we have scored an own goal.