Submission on

Introduction

This submission strongly opposes the Auckland Council (Auckland Future Fund) Bill in its current form and calls for either its rejection or substantial amendments to ensure transparency, accountability, and public interest protections. The Bill, as drafted, contains fundamental flaws that undermine community ownership of assets, lack independent oversight, and fail to uphold principles of prudent financial management.

Key Issues and Proposed Amendments

1. Lack of Independent Governance and Oversight

The Bill grants Auckland Council excessive discretion over the governance of the Auckland Future Fund (AFF), without sufficient mechanisms for independent oversight. Clause 7 allows the Council to determine governance structures, including internal management, which introduces risks of political interference.

Proposed Amendment:

• Establish an independent statutory body to govern and manage the AFF, similar to the New Zealand Superannuation Fund (New Zealand Superannuation and Retirement Income Act 2001).
• Require appointments to the AFF governance body to be independent of Auckland Council members and subject to a merit-based selection process.
• Ensure annual independent audits of the AFF’s financial management.

2. Risk of Asset Sell-Off and Capital Erosion

The AFF is initially funded with Auckland Council’s shares in Auckland International Airport Limited (AIAL), and the Bill allows their sale without requiring strong reinvestment protections. Furthermore, Clause 11 permits the Council to authorise distributions that diminish the fund’s capital, jeopardising its long-term stability.

Proposed Amendment:

• Restrict asset sales by requiring a binding referendum before selling AFF capital assets.
• Strengthen fund preservation rules by amending Clause 11 to prevent capital erosion unless there is an extraordinary financial emergency.
• Include a requirement for independent financial modelling on any proposed distribution that reduces the capital base.

3. No Treaty of Waitangi or Public Consultation Protections

The Bill fails to recognise Auckland Council’s obligations under Te Tiriti o Waitangi (Treaty of Waitangi) and does not mandate meaningful community consultation on major fund decisions.

Proposed Amendment:

• Insert a Te Tiriti clause similar to Section 4 of the Local Government Act 2002, requiring the Council to consult with iwi and Māori on fund governance and asset investment.
• Mandate public consultation for any significant changes to AFF governance, asset disposal, or capital distribution.

4. Weak Investment and Ethical Standards

Clause 9 allows investments outside the Auckland region without specifying ethical or risk management criteria. This could expose the AFF to high-risk or ethically questionable investments.

Proposed Amendment:

• Require investments to align with responsible investment principles, as outlined by the New Zealand Superannuation Fund’s ethical investment policy.
• Ensure diversification and risk mitigation strategies are included in the AFF’s investment framework.
• Prohibit investment in industries that conflict with Auckland Council’s environmental and social commitments.

Conclusion

This Bill, in its current form, threatens Auckland’s financial future and community ownership of key assets. Without independent oversight, stronger safeguards against capital erosion, adherence to Treaty obligations, and public accountability, the AFF risks becoming a tool for political spending rather than a secure, intergenerational fund.

The Committee needs to either reject the Bill or amend it in line with the recommendations outlined above to ensure robust financial stewardship, uphold Treaty obligations, and protect Auckland’s long-term interests.