Council confidential: property deals and the public good

by Kōrero Te Upoko o te Ika | June 21, 2019 | Housing & Development

Recent media highlighted the diverse views over local councils’ property dealings and the commercial confidentiality involved. How much secrecy is too much?

In recent weeks there’s been a bit of coverage of property deals and criticism of councils for being secret-squirrel, including:

Porirua City Council getting heat for procuring development plans for a site apparently sold to them on the proviso it would stay public open space
Wellington City Council getting criticism (including from its own councillors) about secrecy over removing protection from an inner city pocket park
And of course the reckon-riddled discourse around Shelly Bay (nicely summarised by the DomPost here)

“Democracy demands transparency”

We tell our councils and government bodies to be transparent, holding them to a much higher threshold of transparency than in the private sector.

This is really important, because (crudely put): government is spending money they can take off us by force, unlike companies who are spending money shareholders choose to hand over.

And transparency works: the prospect of someone looking at your work (especially if it’s the media) is a powerful influence on one’s behaviour.

In Ao-NZ our constitutional integrity relies heavily on “cultural” behavioural influences like these, and we’re at risk of being too “she’ll be right”[3.3MB pdf]. (If you’re skeptical, see the continuing perverse behaviours of government actors trying to thwart the Official Information Act , and see also #fixtheOIA.)

At the same time, anyone who’s worked in a local council will know how many LGOIMA requests (local government version of the Official Information Act) seem made purely “because I can”, or to put the boot into a local bureaucracy that’s annoying the requestor.

And things like property deals are notoriously complex: it’s simply not possible to make a judgment on whether things are Right or not without having at least a full cross-section of all the information.

“Be commercially savvy”

But as well as being open and transparent, we need our councils and government to “get into bed” with commercial operators, third-sector organisations, iwi groups, and so on and so on. It’s essential simply because that’s how to get things done that can’t be done with local government’s (paltry) resources alone. Everyone’s balance sheets can come together to do good stuff, with much greater total leverage in the public good.

And while it’s a truism that councils and government agencies are publicly-funded officials spending public money, it’s also true that negotiations are negotiations. Statements of good faith bargaining are all very well, but it’s essential for the government parties to be equally smart negotiators to the private-sector parties because otherwise they can get done over by those whose obligations aren’t to the public. Commercial confidentiality, the cone of silence agreed around a commercial project, is typically what’s used to avoid getting at a disadvantage in current but especially future negotiations.

On the pocket park issue, Stuff quotes Wellington City Council’s property manager: “Vriens said releasing information on the deal would allow other commercial operators to “see how we do these things”.

“That process of negotiation is not something we want to compromise ourselves in when we get into other similar commercial bargaining situations, that’s why it’s commercially sensitive.”

Who are you working for?

All this occupies the interesting zone at the interface of private and public sectors. Negotiations between people working for shareholders or their foundations’ trustees, and people working “for the public” via the chief executive.

Other challenges – in our small towns’ local government, especially – include perceived or actual conflict of interest (be it councillors’ or their families’ voluntary work, or their actual other jobs (how about all those real estate agents!)). Also challenging fact that long-term relationships with a high level of trust are typically far more efficient at getting stuff done (not to mention being kaupapa Māori), partly because they can involve less paperwork. But that means a bit less transparency.

Slow but important improvements to public sector procurement are happening, including moves towards relationship-based contracting and procurement of services, and mixed models like public private partnerships (PPPs). But you need some serious negotiation, contract-design and contract-management chops to do these complex partnerships well – see the Skycity example – and they’re tricky to manage long term. The then Australian Auditor-General summed the trends up in “Commercial Confidentiality: A matter of public interest” [tiny PDF],noting:

Private sector providers clearly feel under pressure from the openness and transparency required by the public sector accountability relationship with the Parliament and the community. Public sector purchasers are under pressure to recognise the commercial ‘realities’ of operating in the marketplace. There needs to be some movement towards ‘striking the balance’ on the appropriate nature and level of accountability.

Amen.