Part 6: Accountability, transparency, and financial sustainability

Principles for effectively co-governing natural resources.

In this Part, we discuss the need for:

Summary of what we learned about accountability, transparency, and financial sustainability

The parties need to set up proper financial management and accountability processes, to provide assurance that finances are well managed.

The parties need to keep the public informed of progress and be transparent about what is being achieved to maintain support for the projects.

The parties need to plan ahead to secure the financial sustainability of the project. Otherwise, they run the risk of not achieving their outcomes because they do not have the money to sustain the project.

Accountability and transparency

It is important that public money is spent accountably and transparently. The public is entitled to be assured that co-governance is not wasting taxpayers' or ratepayers' money, and is achieving positive results. Therefore, parties need to set up proper financial management and accountability processes to provide assurance that finances are managed well.

These processes can help to prevent misinterpretation and protect reputations. As participants pointed out, it takes only one mistake for reputations to be lost.

The Waikato River Authority members we spoke to commented on how they are careful because it is a new co-governance arrangement between the Crown and iwi. Canterbury Regional Council's commissioners also made this point. They were aware that if anything goes wrong, it could be used to criticise Māori.

We consider that proper financial management and accountability processes, and transparency, serve the interests of all parties.

The Waikato River Authority is an example of how to set up accountability processes and provide transparency (see Figure 7).

Figure 7
Waikato River Authority accountability processes

The Waikato River Authority provides the Minister for the Environment with an annual report, which is presented to Parliament. The annual report includes a summary of attendance at meetings and the financial statements.

Every year, the Auditor-General audits the Waikato River Authority.

Because it was a new co-governance agreement between the Crown and iwi, the Waikato River Authority members spent a lot of time putting processes and systems in place, such as financial management and risk management:
We put a funding strategy in place so we would be fair to everyone. The funding deed provides line of accountability. We undertake independent audits of big and small projects, using a random sampling. We also have random test of our systems by KPMG to check systems are in place and working. Because this is public funding and public money, we have to be very careful.
There are four different stages before an application is approved. Full peer reviews and checks of applications are carried out to ensure that the proposed projects are achievable. The applications are also independently reviewed before going to the investment committee and then the full board, which decides whether an application is successful.

The Waikato River Authority relies on external consultants for the endowment fund and legal and financial advice. It carries out reviews of that advice:

… [We] always have to keep the pencil sharp. This is public money so [we must be] open to scrutiny, and we must ensure that advice received is always the best advice.
One staff member pointed to how successful their accountability methods are:
As a demonstration of how successful we are, you just need to look at the metrics – funds are distributed and funds invested and we are not in the papers [for bad news].
Conflict of interest

The Waikato River Authority has also set up a register of conflicts of interest, which lists all the duties of the members. All Waikato River Authority members have multiple responsibilities and interests. We were told that members take managing conflicts of interest seriously. One experienced member described the register as the "best conflict register" they were aware of. Other parties told us that the Authority manages conflicts of interest well.

Keeping the public informed of progress

Environmental outcomes take a long time to achieve and the public needs to be kept informed about the parties' work. In some of these projects, it will take decades to see improvements. For example, in Te Waihora, the parties told us that because of the lake's function as a catchment for surrounding land run-off, it will take 20-30 years before the lake stops deteriorating and starts improving. Similarly, members of the Waikato River Authority are aware that the river will probably get worse before it improves.

The length of time it takes to achieve results can affect public perceptions of the projects' effectiveness. It is important to manage peoples' expectations about the pace of progress to keep stakeholders and the public engaged to sustain support for the project. This can be done by keeping people informed about the progress made to date, and by explaining why it takes so long.

For example, in mid-2015, information about the Rotorua Te Arawa Lakes Programme on its website stated that annual monitoring showed that water quality in many of the lakes had declined slightly when compared to the previous year. Climatic conditions and rainfall affect water quality and this highlights the importance of long-term sustainable water quality solutions:

The decrease in water quality levels for 2014/15 by no means takes away from the work done to-date, or its importance. Rather, it reinforces the fact that there is no quick or easy fix for cleaning up our lakes, but that action must continue for the benefit of our community, the environment and our economy.

The public can also be kept informed about progress by reporting on the activities under way. The activities can serve as indicators towards achieving outcomes, but can also be achievements in themselves. For example, the Ministry for the Environment publishes regular updates on the projects that are funded through the Fresh Start for Fresh Water Clean-up Fund. The updates are based on reports provided by the parties to the projects. The Rotorua Te Arawa Lakes Programme listed the actions being taken to improve the quality of the lakes. These included:

  • ongoing harvesting of lake weeds;
  • building floating wetlands;
  • using aeration devices to help stop the release of nutrients from the lakebed and help prevent algal blooms;
  • changing how land is managed, to reduce run-off of sediments and nutrients; and
  • making permanent changes to land use by clearing gorse and converting land, so less nitrogen is used.10

The Te Waihora Co-Governance Agreement provides an example of how activities contribute to meeting the aspirations of iwi and achieving environmental outcomes that can also meet the needs of the wider community.

Figure 8
Recognising Ngāi Tahu's historical relationship with Te Waihora

The National Water Conservation (Te Waihora/Lake Ellesmere) Order 1990 (the order) recognises the historical relationship between Ngāi Tahu and Te Waihora as a nationally outstanding feature.

The order specifically requires the consideration of habitat for indigenous wetland vegetation and fish, along with wildlife, and tikanga Māori in respect of Ngāi Tahu history, mahinga kai and customary fisheries, when managing the lake, and, in particular, lake openings.

The order, together with the resource consent authority jointly held by Te Rūnanga o Ngāi Tahu and Canterbury Regional Council, now allows the timing of the opening of Te Waihora to be more conducive to manaakitanga and fish migration, instead of just for flood protection:

We've had reports from the fishermen that the fishing has been the best that they've seen for the past years. That's the journey we've been on.

Financial sustainability

Environmental outcomes take a long time to achieve and parties need to plan ahead to secure the financial sustainability of the project. Otherwise, they run the risk of not achieving their outcomes because they do not have the money to sustain the project. In our view, the earlier and further ahead parties plan for there to be enough money available, and the more broadly they think about different ways of securing this, the more likely they are to succeed in achieving the intended environmental outcomes.

Large and complex projects like the Maungatautari Ecological Island project require a large degree of collaboration with funding partners. It is unlikely that projects of this scale will ever be self-sustaining financially and will require local government assistance. This is appropriate where the land being managed is in public ownership or a Crown reserve that has been set aside for a conservation purpose. However, it is still important to ensure that the funders agree to this long-term financial commitment. Without this commitment, trusts like the Maungatautari Ecological Island Trust always face a challenge of meeting operational costs because committed funding is always less than operational costs. This makes it difficult for the Trust to prepare for eventualities like when the fence will need replacing.

Several of the parties involved in the projects have aspirations for eco-tourism ventures to become self-sustaining. For example, one member of the Tūpuna Maunga o Tāmaki Makaurau Authority spoke of a vision to become self-sustaining through tourism and economic development. Maungatautari was another example where the parties hoped that the resource could support a thriving eco-tourism venture to help cover operational costs.

Several of the co-governance arrangements were set up under Treaty of Waitangi settlements. These were negotiated between the Crown and iwi. In some cases, Crown funding is time-bound and long-term funding needs to be resolved. This can create pressure for some parties. But as Figure 9 shows, the broader and long-term benefits need to be considered along with the financial costs in working out whether and how to fund co-governance in the long term.

Figure 9
Why Auckland Council pays for Tūpuna Maunga o Tāmaki Makaurau Authority's costs

Auckland Council is responsible for paying the Tūpuna Maunga o Tāmaki Makaurau Authority's costs. Auckland Council received some funding from the Crown for start-up costs, which covered only a short period. People at Auckland Council expressed concern about putting into effect co-governance arrangements that arise from a Crown-iwi negotiation process, which incurs costs to another party. We were told that the Crown is prepared to help pay for some start-up costs, but that it does not compensate local authorities for ongoing costs.

When local authorities raised their concerns about the cost of co-governance to the ratepayers, we were told that the Crown's response was that involving iwi benefits the community "and they should have been doing this anyway". Auckland Council staff told us that the Crown seemed to consider that Auckland Council was "big enough to pay and look after [itself]":
So it requires quite a bit of good will. We accepted there was a greater-good argument. At the end of the day, there are these great big green chunks of landscape that are public parks, and public access has been safeguarded in the process. So there was a bigger picture here than just money. It wouldn't have been appropriate to stand in the way of the settlement by putting in arguments of cost-transfer.

We saw some practices that might promote financial sustainability. The Waikato River Authority is an example of preparing for when Crown funding ends (see Figure 10).

Figure 10
Waikato River Authority Endowment Fund

Under its Deed of Settlement with Waikato-Tainui, the Crown committed to provide funding for a contestable Clean-up Fund "to fund initiatives for restoring and protecting the health and wellbeing of the Waikato River for present and future generations". The fund is administered by the Waikato River Clean-up Trust. The Waikato River Authority is the sole trustee of the Waikato River Clean-up Trust.

The Trust receives $7.333 million every year until 2036 and $7.342 million in 2037/38. This funding includes $333,000 each year from the Ngāti Maniapoto settlement.

Usually, clean-up funding goes to the regional council. However, because of the co-governance arrangement, the funding goes to the Waikato River Authority to administer.

Because the time frame required to realise the restoration vision is likely to exceed the Crown's 30-year funding commitment, the Waikato River Authority has set up an endowment fund. In the first year of operation, the Waikato River Authority received the first three years of funding up front. No money was allocated to projects in that first year. Instead, the money was put into the endowment fund. Also, any funds not committed towards projects in each funding year are added to the endowment fund. The Waikato River Authority has a policy to not spend the full amount of funding each year, but not at the expense of grants for the projects.

The Waikato River Authority wants the endowment fund to reach a point where it generates an annuity. This will allow the Waikato River Authority to continue to fund its Vision and Strategy beyond the 30-year period.

Another method that may help with financial sustainability is to work in partnership with industry or other stakeholders. Again, the Waikato River Authority is an example (see Figure 11).

Figure 11
Working with others

To put into effect its Vision and Strategy, the Waikato River Authority recognised that it needed to work with major stakeholders who affect the river, such as Waikato Regional Council and industry partners.

The Waikato River Authority, the Council, and DairyNZ are working on a restoration strategy for the Waikato and Waipa Rivers (the Waikato Restoration River Strategy). As at November 2015, the Waikato River Authority and DairyNZ have contributed $200,000 each in direct costs, with the Council contributing $75,000. Other costs will be met by significant in-kind support, such as staff time from DairyNZ and the Council.

The restoration strategy is intended to help guide investment decisions for improving the health of the Waikato River during the next 5-15 years.

A main aim of the restoration strategy will be to ensure that the combined work – and the work of other agencies − is carried out as efficiently as possible, while getting maximum benefit by ensuring that it is integrated and co-ordinated to avoid duplication.

A key supporting action has been the creation of a Waikato River Restoration Forum, involving the three strategy partners as well as all Waikato River iwi, the Department of Conservation, Fonterra, Genesis Energy Limited, and Mighty River Power Limited, along with local councils. The Waikato River Authority's chief executive chairs the forum, which will offer advice and input into the preparation of the restoration strategy.

10: Adapted from Rotorua Te Arawa Lakes Programme page at the Ministry for the Environment website,