Context
As a Council Controlled Trading Organisation, QAC’s purpose isn’t that of a normal company or State Owned Enterprise, which for them is to act in what the directors believe to be the best interests of the company.
In contrast, the principal objective of council-controlled organisations is to achieve the objectives of their shareholders, both commercial and non-commercial, as specified in the statement of intent. An organisation or company is council-controlled when a Council or Councils hold the majority shareholding.
So, QAC’s purpose could be any objective determined by its majority shareholder, being the Council. And there is no requirement for any explicitly commercial objectives, such as increasing profit or shareholder value. As a Council Controlled Trading Organisation, QAC is required to conduct its affairs in accordance with sound business practices, which means it should return a normal profit on its activity and investments. This requirement is to ensure the company remains commercially efficient, but returning profit is not its goal per se.
While it is QAC’s responsibility to write its own statement of intent, each year the council must agree to that statement. If the Council considers that QAC’s statement of intent doesn’t properly align with the Council’s objectives for the company, then the Council can and must require QAC to make appropriate changes. It does this in its capacity as the majority shareholder.
It is this mechanism, where the Council can force QAC to change its statement of intent, that gives the Council control over the company.
In our view, over the past four years, this process of the Council being consulted on and agreeing to QAC’s statement of intent has been poorly managed with councillors largely in the dark over the appropriate process and their authority, resulting in a considerable diminishment of councillors’ (and therefore the community’s) influence over the company.
To remedy this, Clr Whitehead led a majority vote requiring Council executive to provide an information manual for councillors to clarify the process and their powers.
We are concerned, that after a year in gestation, the draft manual falls far short. We think that instead of empowering councillors, it’s another example of hiding their powers in a cluster of detail.
QLDC full council meeting
December 15, 2022
Kia ora, I am John Hilhorst representing FlightPlan2050, and I’m speaking to Item 1, the proposed manual for managing Council Controlled Organisations.
It would be easy to gloss over this item. What could be wrong with receiving this manual?
But I ask you, particularly the new councillors, to reflect on the context that has brought us to this point.
For the previous two councils – over the past four years – Council’s governance of QAC has been the most vexatious issue between our communities and councillors. And for good reason. The airports are the largest blocks in the challenging puzzle of the district’s spatial planning, economic drivers, climate change, growth and so forth.
And there is a strong perception that the process of Council’s governance of QAC is poorly managed, in a way that undermines Councillors rightful authority, giving the levers of power squarely with QAC.
These concerns are why previous councillors asked for a manual that could better inform and empower them to exercise the council’s shareholder rights.
Here we are, nearly a year in preparation, and you’re offered this proposed manual. With multiple errors, including that Auckland Airport’s signature would be needed on shareholder resolutions, implying that the minority AIA retains a right of veto. There is no veto right as Council can require a poll vote, making the outcome determined by the number of shares held, not the number of shareholders.
If this manual had been quickly prepared by generalist staff for a general audience, perhaps we could shrug our shoulders and say that’s fine, it’s a living document that can improve in time.
But the manual has been a year in the making, and it’s written by your legal advisers, professionals who have been at the coalface of this process with QAC for the past four years. These are people who should be on your team, assisting and empowering you, our elected representatives.
In that context, the errors give an impression of shoddy work. At best the proposed manual is a procedural tick-box-list. But it fails entirely to draw your attention to what counts, to where your influence could be most effective. It deflects where you have authority. It fudges the very crux of your shareholder control. It dilutes your capacity, by omission and nuance.
You are a new council. Will you jolly along with this flawed manual that usurps your rightful authority as our shareholder representatives of QAC? Or will you use this opportunity today to set your standard?
We ask that you reject this proposed manual.
Thank you.
Ngā mihi e noho rā