Pay rises and rates increases
Unlike company shareholders, ratepayers have very little influence on what their local authorities pay the chief executive and they cannot opt out as easily as shareholders can.
Have we become so inured to the growing disparity between the over-paid and under-paid in society that we no longer react or even care when the differences are the biggest they have been since the Great Depression of the 1930s?
When private enterprise owners and the shareholders of large corporates pay massive salaries to senior staff, it can be said to be their business and not the concern of the general public. We don’t have to be shareholders in these companies and we can opt out if we don’t like what the directors do.
Different rules apply when local government decides on salaries for chief executives and the $60,000 increase for Hamilton’s chief executive in August this year is a case in point. The increase alone is much more than many other council employees are paid and brings the boss’s salary to $440,000.
Unlike company shareholders, ratepayers have very little influence on what their local authorities pay the chief executive and they cannot opt out as easily as shareholders can.
Such salary increases are usually based on some form of performance measure, and if Hamilton City Council’s finances and operational projects were in excellent shape, the increase would have at least some justification. They are not.
Judging by one of the largest proposed rate increases in the country, Hamilton is need of an urgent rescue operation, with Mayor Andrew King floating an initial 16.5 per cent average rate increase. That has since been modified to a 15.5 per cent increase which could add about $340 to the rates for an average Hamilton house, taking the bill to around $2530. That is still below most New Zealand cities of similar size, but many councils eventually face a painful catch-up if rate increases have been kept artificially low for too long. That seems to be at least one of the causes of the current problem. Things have now got to the stage where the council is funding day-to-day operational costs with borrowed money and that is not sustainable.
With the added burden of high regional growth, balancing the books has become a matter of urgency. The mayor admits it probably will not make him popular and it won’t unless his council exercises a great deal more leadership and control over expenditure. That means not awarding massive salary increases without sound justification and at the same time ensuing all staff are properly paid.
This situation has not developed overnight and it would be unfair to hold the current chief executive wholly responsible, although he held a senior council position in financial management for some time before being promoted to the top job. It is still hard to see justification for a salary increase based on performance with things the way they are.
Ironically, the mayor has also announced he wants the council to lift the minimum wage for direct employees to $20. All staff should have been paid at least the ‘‘livable wage’’ of $20.20 long before the chief executive was given a $60,000 increase.
These matters should have been addressed long before such a huge rate increase was required and the massive salary increase should at least have been held over until proper solutions have been found and applied.
Part of the expected leadership responsibilities of local government is to provide role models and set standards, particularly as employers. That does not mean paying out ratepayers’ money with the largesse of big corporates or becoming captured by the false philosophy of having to ‘‘meet the market’’ for senior staff. There is little real correlation between the autocratic world of private enterprise and the democratic world of local government. They operate to different rules and for different purposes.
Local government must also treat and pay all employees properly and fairly. That means paying at least a livable wage.
Most people don’t want food parcels, charity or government-funded benefits. They are simply links in the chains of their bondage. They want the dignity of properly paid employment and the Labour Government’s minimum wage debate is an important part of that process.
Over the past few decades, since a former National government virtually destroyed trade unions in 1991, the gap between rich and poor has become almost too wide for reasonable people to shout across. Blaming the poor for their poverty while blindly accepting that certain people in high-profile jobs are entitled to salaries far in excess of the average income is simply not acceptable any longer.