Council executive pockets $400k payout

Bernard Orsman, NZ Herald ,
Publish Date
Sunday, 1 October 2017, 7:19AM
Auckland Mayor Phil Goff (left) and council chief executive Stephen Town(right) are seeking assurances about a $405,000 severance payment.
Auckland Mayor Phil Goff (left) and council chief executive Stephen Town(right) are seeking assurances about a $405,000 severance payment.

A top executive at Auckland Council has pocketed a $405,000 severance payment and led Mayor Phil Goff to query the "exceptional" figure with the Auditor General.

The council's 2016-17 annual report, released on Friday, shows a top executive received a severance payment of $405,739.

"When I looked through the annual report that figure stood out as exceptional," said Goff, who raised the payment with chief executive Stephen Town and received an assurance it was appropriate.

But the mayor said given the size of the payment, he also asked the council's audit and risk committee chairwoman Sue Sheldon to refer the matter to the Office of the Auditor-General for further scrutiny.

The name of the executive and reasons for the severance payment are covered by a confidentiality agreement, Goff said.

"Notwithstanding the constraints ... I need independent assurance on behalf of the ratepayers of Auckland that the sum was appropriate and followed the correct process," Goff said

A senior human relations professional, who did not want to be named, said a $405,000 payout was a very significant sum and believed a very unusual set of circumstances would lead to such a high figure.

It was normal practice to pay about three months' salary to go early, the HR professional said.

The annual report shows six council staff earned between $300,000 and $340,000 and a further six staff earned between $340,000 and $700,000.

Town is the only council employee whose salary is made public. He earned $690,000 in the past financial year.

In a written statement, Town said he authorised the severance payment and agreed with Goff referring it to Audit New Zealand - the audit arm of the Auditor-General - for further inquiries.

"While the severance payment is a significant sum, I am confident the payment was appropriate given the circumstances and that correct processes were followed," Town said.

He said at the time of completing council's 2016-17 annual report, Audit NZ was satisfied with the level and form of severance payments and that the decision was properly authorised.

"Any severance payment made by Auckland Council is done with great care. While we aim to resolve any issues within the terms of employment agreements, there are occasions where a severance payment is the most pragmatic option," Town said.

The Auditor-General's guide for the public service on severance payments describes them as "payments over and above what a person is entitled to under their employment agreements, made to secure the employee's departure on agreed terms".

"Severance payments must be based on a careful assessment of the costs, benefits, and risks of the approach, and on proper legal and tax advice.

"The amount must be reasonable in the circumstances and able to be justified as a proper use of public money," says the guide.

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