Mangawhai Matters: Beware of councillors bearing gifts

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11 July, 2022

You know it’s Local Body election year when the Kaipara District Council drops its proposed 7.13 percent rate increase by 2.27 percentage points to 4.86 percent. But in the next rating year 2023/2024 the increase is projected to jump from a forecast in the Long-Term Plan of 3.92 percent to 9.95 percent. In fact, ratepayers will be worse off by more than $600,000 on a like-for-like basis.

 

Examination of reasons to change in rates
The reasons given for this year’s decrease are simple. The administration was told by the mayor to reduce the rates. The pressure had been coming on from councillor Victoria del la Varis-Woodcock, a rival candidate for mayor, and from Jonathan Larsen who was, and continues to be, deeply concerned about the ratepayers’ ability to pay big increases.

Surprising savings of $1.990 million were found in next year’s budget that supposedly included:

· $440,000 following a review of “support costs (stationery, printing etc)”

· $500,000 employee benefit savings (staff not employed or not replaced)

· $300,000 rates collected for an expanded waste collection system not used

· $250,000 Dargaville Library Trust seed funding set aside, not required

 

These were offset by additional staff costs in 2022/2023 of $1.155 million (of which $880,000 is a continuing annual cost) as follows:

· One-off retention bonuses or the like of $275,000 or an estimated $1312 per employee. There is little doubt KDC is having huge issues retaining staff with staff turnover currently at 27 percent.

· An increased wage bill of $880,000 or $98,000 per employee for an additional nine new staff to be employed. These positions include a new climate change officer to join the climate change manager employed last year, a Whenua Maori rates officer, three new accountants and a business analyst, health and safety admin person, a building compliance officer, and a ‘library specialist’.

 

It is interesting to note that KDCs total current remuneration bill is $17 million including the cost of the planned nine new employees. When the staff numbers increase to 214 staff, that is an average cost per employee of almost $75,000 or $1,214/rated property.

But all these “savings” referred to above have not been the result of a ruthless staff taking a big knife to the budget. They are actually budget errors that have been corrected, or events that haven’t happened yet. No one has sat down and cut budgets back. It’s also not true what the mayor said in a rival publication last week: “While the cost of living crisis bites, council has taken hard decisions to help Kaipara people along in these challenging times… .” The decisions weren’t hard; they just reversed over-budgeted items.

To learn that some costs such as support costs (printing, stationery, vehicle, training, travel, subscriptions and consumables) have been overbudgeted by $440,000 pa –which is approximately 1 percent of rates – indicates quite clearly that there has been some of what is known as “feather-bedding” in KDCs budget. Especially as this saving is “on-going”.

The comment from KDC about how this saving has come about: “We have compared spending over the last three years compared to the current year. “

Our question would be: Why has it taken so long to identify these savings? The next question is: Where has the money gone for these “support costs” items that were grossly over-budgeted? Has it been an opportunity to have a “slush fund” to plug budget holes or errors?

When there are such gross errors over a period of time, the ratepayers have a right to be suspicious.

 

What’s behind the 2023/2024 proposed rate increase of 9.95 percent?
The reason given for the planned dramatic increase in rates in 2023/2024 of 9.95 percent, or $4.260 million, has been given as the proposed “Waste Minimisation” scheme which has been postponed a year.

The Long-Term Plan stated that waste minimisation (or controversially replacing rubbish bags with recycling crates) would cost an average increase of a mere $146 per year from Year One (increasing to $164 at year 10) and cost $400,000 to $500,000 over five to seven years for the crate purchases.

That reality is far removed from the proposed $4.26 million as a yearly on-going cost that we are told is embedded into rates from the waste minimisation scheme.

At a recent KDC meeting to discuss rate increases, the detail of the new scheme was not given.

So, there is a lot of explaining yet to do on a 2023/24 budget that we hope will be discussed and reviewed critically by a new mayor and a new council following the October election.

 

Some smart things for KDC to be doing now

(a) Zero-based budgeting
Used extensively in the business world, this is a system of budgeting that builds the business from the ground up every year and doesn’t merely use last year’s figures and adds new costs. It critically looks at all costs and what did and didn’t work. Nothing is

sacrosanct. Such a system would prevent serious over-budgeting items such as the “support costs” mistakes.

 

(b) A more robust budgeting system
Although KDC has an independent chairman for its Audit, Risk, and Finance Committee, it is well known that this committee doesn’t get down “deep and dirty” into budget detail or run the budget process in any arms-length manner. Councillors, as representatives of ratepayers, have a responsibility to find out and review the reasons for massive rate increases. Of course, our elected members are reliant on KDC staff reports and Mangawhai Matters has clearly shown some of these reports need much more detail to enable councillors to make good decisions. It is also okay for councillors to ask questions. At a recent meeting the mayor told a councillor that they should ask questions prior to a meeting rather than during a meeting, effectively shutting down discussion.

 

(c) Remember that everyone is hurting and it’s going to get worse
Quite frankly watching council meetings online when rates are discussed, it is hard to get the sense that every councillor is deeply concerned about the impact of such a large increase as 9.95 percent on ratepayers. If every organisation or supplier increased their costs every year by 10 percent, New Zealand would go broke as a nation.

Comments from the recent meeting that if “you can’t grow your business equal to or faster than inflation, then its not a good look for the future” have no place during times of unheard-of inflation and misery for a wide range of ratepayers through ever-increasing added costs. KDC is not a business. KDC is a cost-centre for providing services to its community and any growth should be restricted to providing better core community services rather than what KDC staff think would be nice to have.

 

(d) Do we really need some of the staff taken on in the last few years?
KDC needs to be looking at some of its staff roles as the numbers have ballooned out in recent years. Why do we have six people in the PR or communications department? Is KDC that worried about its image? Every position needs a critical review. Do we need two climate change staffers or three iwi liaison staff to name but a few opportunities for savings?

 

(e) Analyse the 27 percent staff turnover
This is an appalling figure that has huge cost implications in both salaries, redundancy payments and ongoing loss of knowledge. Given the pay rates above, the question needs to be asked whether this has more to do with work culture within KDC. Perhaps a change of leadership will improve this.

 

Mangawhai Matters’ role
As the KDC election approaches, Mangawhai Matters will be seeking answers from candidates for the three Kaiwaka/Mangawhai ward seats, and from mayoral candidates

about how they plan to hold rate increases at reasonable levels and how they plan to hold the organisation accountable.

 

Only one long-term answer
The mayor made an insightful comment at the conclusion of the recent debate about rates, by saying there were many great challenges for KDC with a population of only 26,000, and only 14,000 ratepayer properties. He is right. The current thinking about servicing needs to be scaled to the needs of Kaipara’s small communities, focusing on local solutions to the limited needs of our communities, and managing growth through incremental, scalable infrastructure rather than aiming for transformation through large-scale “me-too” projects. We need elected members who will demand open and reliable information from KDC and seek more efficient and effective use of our limited funds.

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