27 Apr 2009

Supercity may see smaller companies losing contracts

10:45 am on 27 April 2009

An overhaul of Auckland's councils into one supercity may spell bad news for small and medium sized businesses, which face losing their contracts to larger companies.

Local authorities contract a variety of work to private consultants and companies, and the merged Auckland council may look to larger companies to fulfill its needs.

The proposed supercity will have assets totalling $28 billion, more than the country's corporate giants Telecom and Fonterra.

A senior associate and expert in local government at Kensington Swan Grant Hewison says smaller companies may find it difficult to compete for business with the new entity.

He says that's likely to concern companies and their staff which have existing contracts, particularly in recessionary times.

Mr Hewison says the transition process needs to be managed carefully so contractual mechanism are handled appropriately going forward into the new organisation.

He says businesses that provide services for Auckland councils must be sure about what the terms of their contracts mean.

Mr Hewison says there is the potential for litigation going forward into the new arrangements, but the new Auckland council, the existing councils and the service providers would want to avoid that.

He says the best way to avoid litigation is working to contract.