Late on Friday afternoon, 13 November, a thick document landed on my desk – marked in bold red capitals ‘Embargoed until 10am Friday 13 November’. (!) I knew exactly what the EY (Ernst & Young) report was going to say, so to avoid ruining my Friday evening and the whole weekend – I stuck it in my briefcase without opening it.
As it happens it turned out to be a horrid weekend anyway – because the next morning, the dreadful terrorist attacks took place in Paris. Ponsonby has a strong cultural connection with France – and we have a small but vibrant French community – as anyone reading ‘Ponsonby News’ would know. These connections go back to the very beginnings of Auckland and have much to do with the legacy of Bishop Jean-Baptiste Pompallier who lived here and gave St Mary’s Bay its name. To the French members of our community I extend my condolences and solidarity. An attack on Paris is an attack on civilisation itself.
On Sunday evening, still depressed by the weekend’s events I finally dealt with the EY report. There were two reports actually – the second report was from Cameron Partners. (Dear reader Auckland Council does not stint ratepayers’ money on these sorts of things – the two reports together cost nearly half a million dollars.) Despite the costs the quality of the reports is unimpressive and unashamedly biased towards the same old neo-liberal agenda – privatisation of public assets.
Having pushed rates increases and the level of borrowing as high as it dares Auckland Council management, rather than dealing with costs is casting about for more money. EY’s key recommendations are the partial or full sell down of council shares in Auckland International Airport; partial or full sell down of the Diversified Financial Assets portfolio (global shares and bonds inherited from the ARC); partial of full sell down of Auckland Energy Consumer Trust (not legal); commercialising Watercare ie increasing householder charges in order to privatise); and finally a ‘long term lease’ of Ports of Auckland – in effect a full sell-down of the company.
The Cameron Partners report is more oblique and couched with euphemisms such as ‘asset recycling’. Essentially its conclusions are similar to EY’s – with somewhat more emphasis on selling off ‘community assets’ eg golf courses and prime areas of regional parks.
There is a deep irony here and apart from the costs of these reports. The Council has spent a huge amount of money on consultants in its continuing quest to come up with more funds. The previous big spend was on the three-year process to find alternative funding for transport eg. road tolls, motorway charges etc. As it turned out none were feasible – or more to the point, legal. In the end ratepayers simply got slammed with a $110 plus gst ‘transport levy’). Despite my urging, council management has refused to have its own administration costs reviewed to identify savings.
Three egregious examples of over-the-top council spending on itself come to mind.
The first is IT. Over half a billion dollars has now been spent so far on a system that still does not work properly.
Staff costs. The Auckland Council 2015 Annual Report indicated Council staff numbers (including CCOs) increased from 11,122 to 11,380. At the same time, officers earning more than $100,000 increased from 1,720 to 1,912, including 146 now earning over $200,000 and 36 earning over $300,000. The Annual Report also revealed total staff costs for 2014/15 were budgeted at $729m but they came in at $792m – $63m over budget and $62m more than the previous year.
Accommodation. A couple of years ago the Council bought the former ASB Bank office tower for $104m and then proceeded to spend another $53m to bring it up to its high standards. The Council then evicted rent-paying commercial tenants and moved in en masse. The perfectly functional 18-storey, 14,000 sq m Civic Building has been left standing empty for over 12 months, meanwhile CCOs and Independent Maori Statutory Board pay millions every year to rent swank, mainly waterfront offices.
This council seems to be only interested in getting its hands on more income not controlling its costs. Like a congenital spendthrift it refuses to face up to the fact that it has a serious spending problem. It is now, with a little help from the finance sector attempting to hawk-off the family silver left to it by its more responsible predecessors.
The deep irony is that while the council professes to be looking for ‘alternative funding’ – that is alternative to rates and user charges – the Airport Company dividends ($39m in 2015), the offshore Diversified Investment Asset earnings ($23m in 2015) and the dividends from the Ports of Auckland ($41.7m in 2015) constitute the one source of alternative funding that does not come from Auckland ratepayers. There will be a showdown early next year but be aware and on guard. Rust never sleeps.
A similar article has been published in the Ponsonby News December 2015 issue.