Auditor-General will not inquire into Auckland Council’s consideration of the V8 Supercar event

On 5 July 2012, the Strategy and Finance Committee of Auckland Council considered a paper prepared by its subsidiary, Auckland Tourism, Events and Economic Development (ATEED). The paper recommended that the Committee endorse ATEED’s decision to enter into an agreement with V8 Supercars Australia Pty Ltd to secure a V8 Supercar event at Pukekohe Park for five years.

A number of people asked the Auditor-General to inquire into this decision. Concerns included the adequacy of the process and information provided to councillors at the meeting and earlier workshop discussions, the speed of the decision-making process, whether proper due diligence had been carried out on the other parties and the motorsport community, whether other options had been seriously considered, and the overall wisdom of the decision.

We have carefully considered all of the information sent to us by correspondents, and obtained additional information from Auckland Council. We have concluded that no further investigation of this issue is warranted, for the reasons set out below.

We discovered that there was some confusion about what decision the Committee was actually being asked to make. Most of the complaints to us assumed that the Council was being asked to make the final decision on whether to proceed with the contract. People were therefore concerned about the amount of time and information given to the Council.

In fact, ATEED was simply intending to brief the Council on a decision that it had already taken. The decision to proceed with the contract was within ATEED’s mandate and delegated financial authority. It was consistent with the overall Major Events Strategy developed by ATEED and approved by the Committee in May 2011. The Council’s Long Term Plan includes funding for the Strategy. Operational decisions on the implementation of a funded programme are within the authority of a council-controlled organisation. However, Auckland Council expects to be kept informed.

ATEED had been negotiating with V8 Supercars since November 2011. ATEED recognised that there would be considerable public interest in this decision. It therefore briefed Council staff and the Mayor regularly during the negotiations. It also briefed councillors twice: at an informal meeting before a Council workshop on 31 May 2012 and again during the lunchbreak of a meeting of the Auckland Plan Committee on 3 July 2012. However, neither of these briefings were formally notified. Some councillors were not aware that the issue was to be discussed and missed the briefings.

The ATEED Board approved the proposed agreement, and the three parties signed a Heads of Agreement on 2 July 2012.

On 3 July 2012, an additional agenda item was circulated for the Council’s Strategy and Finance Committee meeting on 5 July. The paper summarised the information, issues, and options that had been considered by ATEED and asked the Council to “endorse that the following investment be made by ATEED”. In our view, the paper did not make clear that ATEED had already taken this decision, and was simply referring the matter to the Council as part of its “no surprises” approach. The paper gave the impression that the Council committee was being asked to make a decision on whether to proceed.

This distinction affects our view on what constitutes a good decision-making process. Some councillors raised specific concerns with us about having received papers at short notice, receiving a summary of a particular report rather than the full document, and the late public notification of the meeting. Given that the intention was to provide the Council with information on what ATEED was doing, we think that the information provided and the process followed were both reasonable. We note that all councillors were given the opportunity to review the full report, with appropriate protections for the confidential content, once some councillors had expressed concern about receiving only a summary. Council staff also told us that the meeting was adjourned to enable ATEED to obtain answers to specific questions being asked by councillors. The chair of the committee confirmed that no councillors had further questions before closing the discussion.

The Council and its various subsidiaries are responsible for making decisions on matters that affect Auckland. It is not the Auditor-General’s role to second-guess those decisions, even when they are controversial. We do sometimes have a role in reviewing how decisions are taken to ensure that public money is being properly managed. In this case, we are satisfied that ATEED’s decision-making process has been reasonable. In future, however, we encourage ATEED and Auckland Council to ensure that they are clearer about decision-making processes, and where final responsibility lies for significant decisions. In our view, the confusion about whether the Council was being informed of ATEED’s decision or taking the decision itself contributed to the public concern about this process.