The Rugby World Cup presents a challenge to Auckland’s governance. 

Listener: 7 October, 2006. 

Keywords: Globalisation & Trade; Growth & Innovation; 

The Auckland economy has been performing badly over the past few decades, partly because of the policies of the 1980s and 1990s, partly because of the failure to build adequate infrastructure. But the region’s fragmented governance (seven territorial councils and a regional council over them) has contributed to the failure, too. 

In the light of the recent failed attempt by the four Auckland mayors to reform this unsatisfactory structure, the distinction between government by federation and confederation may be useful here. 

In 1789 Americans adopted a constitution that merged their states into a “federation”, creating a powerful USA in which individual states had little power (while political power was centralised, economic power was decentralised through the market). Those who agreed to the new arrangement did not necessarily mean to undermine the individual states: after all, they did not vote for a “United State of America”. The nation-state is very much a 19th-century invention, so America’s founders had little idea of the political potential of their individual states. 

Almost 200 years later, nation-states were triumphant – too triumphant, since they had just fought two destructive world wars. So in 1958 the Europeans created what became the European Union as a “confederation” of states. Although the removal of commercial borders leaves economic decisions to the market, each nation-state retains considerable political autonomy. For instance, they have individual foreign policies: the states of the US do not. There is a European Parliament with elected members, but it is not nearly as influential as the EU Council of the heads of governments, nor the US Congress. The political power of the EU is organised around the nation-states. 

I became aware of the federation-confederation dichotomy when thinking about the future of world government for my Marsden Fund-aided project (which has led to the forthcoming book The Globalisation of Nations). As attractive as federal world government with elected representatives might be, the political reality is that nation-states will negotiate the outcome, and very few are likely to replace themselves with a federation. Like the EU – or the UN – they will favour a confederation. Nation-states are going to remain important, albeit with less discretion over commercial policy. 

Similarly for Auckland. Though one may or may not wish for a unitary government for Auckland, its local authorities are not going to commit suicide. Central government could try to pass yet another law reorganising the city, but if local commitment is not forthcoming there will be much resistance – while an MMP parliament limits the sort of unilateralism that drove through the 1990 mergers. Improvements in governance are more likely to depend upon a confederation, with the existing local authorities being (largely) retained but working together co-operatively. 

Co-operation will be vital to cope with the Rugby World Cup – the third largest sporting event in the world (behind the Olympics and the Football World Cup). In those few weeks in 2011 when the world will be looking at New Zealand, we need to be on our best display, for reputation and to entice future events and tourists. To do so we will have to build infrastructure for the cities – public transport, motorways, accommodation – and within five years. 

Consider the challenge of getting the airport-to-CBD rail link in time. Aucklanders are going to have to work together. The lasting legacy of that work is the real benefit of hosting such an event. 

Perhaps the best strategy would be to establish a special agency, with the purpose of getting the World Cup legacy infrastructure in place (and funded); it might consist of the mayors, the ARC and perhaps some special local interests and central government representatives. It would be organised as a confederation, with a super-majority of the local authorities – say, three-quarters – being required to make decisions. 

If the agency works, and other hosting centres are as successful, the 2011 World Cup will be a triumph for New Zealand (if not necessarily for the All Blacks, perish the thought). Hopefully the special agency would evolve into a more co-operative model of local governance and lead to the improved Auckland economic performance that all New Zealand needs.