Two of the government’s water reform chief executives have taken redundancy payouts of $355,000 apiece, while a third has “transitioned” to another water reform job within the Department of Internal Affairs, now under review.
Jon Lamonte and Colin Crampton both left their posts on December 15 with redundancy packages worth six months’ of their $710,000 “establishment chief executive” base salaries. They were each on the job for just 10 months.
Bizarrely, a third chief executive, Vaughan Payne, took up a new post, focused on the last iteration of the Labour-era reforms, on December 20, six days after the new Cabinet formally decided to legislate to repeal and replace that plan.
A department spokesman said Payne’s new job, regional establishment director, was agreed to in September, before the October 14 election, under the water reform law of the time.
The spokesman said disestablishment of the previous “water services programme”, including the role of regional establishment director, is now expected by the end of March.
It’s expected that some two dozen DIA of the department’s staff will be needed to work on the new National-led Government’s water reform programme. The spokesman said these staffing decisions have yet to be made. This work will continue under the current executive director of water services, Hamiora Bowkett.
A fourth chief executive, Michael Brewster, left his job last October and was not entitled to a payout.
The four were hired as “establishment chief executives” by the Department of Internal Affairs in February and March of 2023.
Lamonte, Crampton and Payne earned had base salaries of $710,000 each and were contractually entitled to redundancy payments of up to six months under certain circumstances, including employment termination before June 30, 2024.
Brewster was hired when the preferred candidate for the job pulled out; his contract was for 12 months on $740,000. It did not contain redundancy provisions.
Labour’s unpopular plans to fix the country’s aging ageing storm, waste, and drinking water infrastructure helped it to lose the October election. – The reform programme involved amalgamating council-owned water assets into Water Services Entities (WSEs) and anticipated both aggressive debt loads, and co-governance provisions shared with iwi.
The new National-led coalition Government has promised to dispense with WSEs and forced centralisation and will require adequate investment in water infrastructure through economic regulation. This plan is, as yet, embryonic.
The hiring of the chief executives was originally contentious because the pay constituted a massive 50 per cent rise, on average, for three of the chief executives who were previously on public sector salaries. Alone amongst the four, Brewster did not previously work in the New Zealand public sector.
He previously earned AUD A$527,000 (roughly NZ $561,000 in 2020/21), the last full year for which he was the CEO chief executive of Tasmania’s waste and drinking water provider, TasWater.
In addition, just weeks after the chief executives took up their jobs, the Labour government decided to disestablish three of the four positions.
It was originally intended that the chief executives would establish and run the four new Water Services Entities (WSEs) that were at the centre of the last Labour government’s water reforms. However, on last April 11 it decided to replace the original four WSEs with 10. This about-face triggered the first redundancy payment.
Colin Crampton, hired on February 21, 2023 to run “Entity C”, covering the lower east coast of the North Island and the top of the South Island, took redundancy and left the job on December 15. Prior to last February, Crampton led council-owned Wellington Water on $455,000 per year.
This redundancy flowed from Labour’s WSE Amendment Act, which came into force on August 2023; the legislation disestablished the four original WSEs, including their associated establishment chief executive roles, except for “Entity A”, covering Northland and Auckland. The legislation provided for chief executive Jon Lamonte’s work to continue.
Nevertheless, Lamonte, hired on February 8, 2023, took the second redundancy was taken by Jon Lamonte, hired on February 8 2023. While Lamonte’s job survived Labour’s reforms overhaul, it ended after the new National-led Government came to power in October – elected on a promise to scrap and replace Labour’s water reform programme.
On December 14, the new Cabinet formally agreed to repeal Labour’s scheme. This triggered Lamonte’s contractual redundancy clause and he left his post the following day.
Murray Bain, the chair of the newly disestablished establishment board for “Entity A”, confirmed Lamonte’s redundancy payment to the Herald.
Until last February, Lamonte made $585,000 running Auckland City Council’s Watercare, where the current temporary chief executive is set to leave the job in June.
Lamonte declined to speak to the Herald about his plans and whether he means to return to the top job at Watercare. However, he noted that he has recently moved to the South Island.
Payne, hired on February 8, 2023 to run “Entity B” – covering the central North Island including Waikato and Taranaki – chose not to take redundancy after August 23, though his contract contained a six-months’ redundancy entitlement.
Instead, on December 20, Payne took up an alternative position offered by the department, leading “transition work” to set-up the revised WSEs B, C, and D, a job he still holds.
The department spokesman said that while Payne took up the role in December, the agreement to do so was reached in September, before the election and under the law of that time which provided for the former chief executives to remain in DIA the department’s employ.
The position is a 30-month, fixed-term role, and the salary range is $265,770 to $359,571 per annum. The redundancy provision from Payne’s role as an establishment chief executive was not preserved, and there are no redundancy provisions in his current employment contract, the spokesman said.
Until December 2022, Payne was paid $375,000-$395,000 a year as deputy chief executive operations at merged super-polytech, Te Pūkenga – another mired Labour-era reform currently being unpicked. This job was disestablished. The Herald understands that Te Pūkenga made a redundancy payment to Payne, but the organisation declined to confirm this, citing privacy reasons. An Ombudsman ruling on the matter is still pending.
The department originally refused to release the establishment chief executives’ pay details and did so only after the Herald complained to the Ombudsman.
On the matter of pay, successive Ombudsmen have held that, for chief executives and other heads of public sector organisations, greater weight should be given to accountability than to privacy.
In late October, the department DIA had 427 staff working on water reform, excluding consultants. That headcount now stands at 172 (168 FTEs or full-time equivalent jobs).
Since last year it has shed some 157 contractors and 53 staff on secondment, 43 on fixed-term contracts, and several who were permanent.
Of the 172 remaining, 160 are on fixed-term contracts, and 11 are permanent.
Consultations are ongoing with this group, and the spokesman said the headcount is expected to “reduce further” between now and the end of March.
”The Department of Internal Affairs can confirm that it has initiated a consultation process with its people who work within the water services programme to facilitate the closure of the programme and the disestablishment of positions within the programme by the end of March 2024, including Mr Payne’s role as regional establishment director,” the spokesman said.
He said most remaining staff have fixed-term contracts which end by June 30, and include one-month notice periods: “therefore the department is not anticipating redundancy costs associated with the termination of their employment”.
He confirmed that Heather Shotter, executive director of the national transition unit - whose work was to oversee and co-ordinate the huge water services changes planned by the last government - is on a fixed-term contract to July 26. It contains no redundancy provisions.
He declined to provide an estimate for redundancy costs related to the shuttering ending the water reform programme.
Last week, the coalition Government’s bill to repeal Labour’s water reforms passed a third reading and passage into law is imminent.
Minister for Local Government Simeon Brown has promised to set out new water reforms (dubbed “local water done well”) in two new pieces of legislation. He said the first bill will be passed by the middle of the year, and the second will pass by mid-2025.
Brown also recently announced a technical advisory group to help flesh out the new policy. The chair is Andreas Heuser, managing director in Asia Pacific of Castalia, a consulting firm specialising in infrastructure.
Heuser and Castalia worked in recent years for the group Communities 4 Local Democracy, a council-led group which formulated a rough alternative plan for water reform.
The four other members of the group are Raveen Jaduram, director of the New Zealand Infrastructure Commission, and past CEO chief executive of Watercare; Wendy Walker, chief executive of Porirua City Council; Mark Reese, partner with expertise in finance and infrastructure at law firm Chapman Tripp; and Simon Weston, chief executive of Whangārei District Council.
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