Auckland Council must continue with rates increase

Author
Newstalk ZB / NZ Herald,
Publish Date
Wed, 8 Apr 2020, 1:34PM
Auckland Mayor Phil Goff. (Photo / NZ Herald)

Auckland Council must continue with rates increase

Author
Newstalk ZB / NZ Herald,
Publish Date
Wed, 8 Apr 2020, 1:34PM

Auckland Council is taking steps to reduce spending on external contracts and contract staff in non-essential services, as part of plans to manage the financial impact of Covid-19.

However, Mayor Phil Goff has signalled he is pushing for a planned 3.5 per cent rates increase from July.

Goff told Kate Hawkesby the council is cutting back on hundreds of external contractors and temporary staff - but it can't cancel major infrastructure projects or take on more debt.

"We have a high debt to revenue ratio, we've been investing billions of dollars into infrastructure. If we cut, that puts pressure on our ability to go ahead with capital projects."

Auckland Council chief executive Stephen Town says that like many organisations and households in this time of economic uncertainty, council is planning for the impacts from Covid-19 to continue beyond the current lockdown period.

"Our priority at this time is to maintain the essential services we provide for Aucklanders, while reducing costs where we can," said Town.

"Over the past fortnight we have been working to pause external contracts for non-essential services, and to reduce our temporary and contract (contingent) workforce. This does not include employees of council on fixed term contracts.

"We identified around 1100 contingent workers providing support across a range of business areas. While it is too early to say exactly what the savings will be, we expect this number to significantly reduce as we pause non-essential work.

Examples of the types of work the council has been able to pause are consultancy and project management services for capital works projects, event operations, non-essential asset maintenance, fleet servicing, and internal business improvement projects, he said.

"Workers who are affected may be eligible for the Government's wage subsidy package, depending on their individual circumstances.

"In addition, all permanent staff recruitment is on hold until further notice, and under-utilised permanent staff will be redeployed into roles currently filled by contingent workers.

"This will help us to manage costs in this unpredictable period, while retaining the necessary capacity and skills to restore services when we move into the recovery phase and beyond."

Auckland Council has developed criteria for approving exceptional circumstances where non-essential expenditure may still be required.

These could include, expenditure which relates to legislative compliance, completion of projects with substantial sunk cost, property transactions due for settlement, or the completion of in-flight procurement processes for outsourced services.

"We know this will be distressing news for some of our external contractors and contingent workers during what is an already challenging time. It's not a decision that has been made lightly. These are valued partnerships and hard-working individuals who have been committed to serving Aucklanders and to making our city a great place to live.

"I want to acknowledge how hard so many of our staff are working through this time to continue to support our essential work for Auckland.

"We can reassure Aucklanders that we are committed to ensuring that essential services continue throughout this time of national emergency and are not affected," said Town.

‌Said Goff: "The Covid-19 lockdown has significantly reduced the council's rates and non-rates revenue.

"We do not have the option of borrowing more, nor putting rates up other than what has already been outlined," said Goff.

"We will maintain critical services and continue to invest in much needed infrastructure that will also stimulate jobs and recovery. However, we have to prune back desirable but non-essential expenditure.

"We can't continue to pay temps, consultants and contracted workers when we can't provide work for them. It's a tough but necessary decision we simply have to take," Goff said.