Ratepay­ers fork out $400,000 farewell to top coun­cil ex­ec­u­tive

Sev­er­ance pay­ment re­ferred to Of­fice of Au­di­tor-Gen­eral.

Herald on Sunday - - FRONT PAGE - By Bernard Ors­man

Atop ex­ec­u­tive at the Auck­land Coun­cil has pock­eted a $405,000 sev­er­ance pay­ment, prompt­ing Mayor Phil Goff to query the “ex­cep­tional” fig­ure with the Au­di­tor-Gen­eral. The coun­cil’s 2016-17 an­nual re­port, re­leased on Fri­day, shows the em­ployee got 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 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 leave early, the HR pro­fes­sional said.

The an­nual re­port shows six coun­cil staff earned be­tween $300,000 and $340,000 and a fur­ther six 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. Town said he au­tho­rised the sev­er­ance pay­ment and agreed with Goff re­fer­ring it to Audit New Zea­land — the audit arm of the Au­di­tor-Gen­eral.

“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 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.

“I need in­de­pen­dent as­sur­ance . . . that the sum was ap­pro­pri­ate and fol­lowed the cor­rect process.”

Mayor Phil Goff

Twelve coun­cil staff mem­bers earned be­tween $300,000 and $700,000.

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