Frugal five’s staff costs plan a real rate saver
Any real hope of securing meaningful rates relief for Christchurch ratepayers has been all but dashed. With the council’s Long Term Plan (LTP) being finalised, the rates track poses like a gluttonous toll-bridge on Christchurch businesses and households, mining your pocket for everincreasing mountains of moolah.
Mayor Lianne Dalziel has demonstrably failed to honour her 2019 re-election pledge to ‘‘reduce rates increases to a sustainable level’’. Last year’s average annual rates rise was 3.8 per cent – despite Dalziel earlier claiming that the city council was ‘‘laser-focused’’ on achieving a zero percentage rates rise, to assist residents through the Covid-induced economic downturn.
Twelve months ago, the council’s finance committee chair, Cr Andrew Turner, told me, ‘‘I fully expect there will be a strong focus on reducing rates increases in the LTP.’’
Turner believed that bending the arc on rates could achieve average annual increases of 2 to 3 per cent over time. ‘‘My focus will be on ensuring we keep rates increases as low as possible as early as possible,’’ said Turner.
Fast-forward to the present and the proposed rates track in the LTP lays bare their weasel words. The city is now staring down the barrel of a 4.97 per cent increase in the next financial year, while the 10-year track has blown out from a 47.8 per cent increase to 55 per cent. Furthermore, council staff have flagged that there is a ‘‘moderate risk’’ of a credit rating downgrade from Standard & Poors, given the increased level of debt that the council is carrying over the next decade, which would also ratchet up pressure on rates.
It’s a particularly bleak picture, given all the rhetoric about the council’s ‘‘root and branch’’ spending review. Undertaken by CEO Dawn Baxendale, it identified proposed savings of $329 million of operating costs, over the next 10 years, including $35m this year. However, only $19m in savings will proceed.
The review has seemingly failed to tackle the billowing payroll bill. Baxendale confirmed to me in March that this year’s staff bill (excluding elected members) will hit a record $198m, ‘‘which is 40 per cent of the Council’s overall operating expenditure budget’’. The LTP proposes removing 61 positions, which seems an incredibly timid tweak, given the council employs more than 2700 people.
Compare that to the Auckland Council, which has just cut its workforce by 643, or 9 per cent, netting tens of millions of dollars in permanent operational savings.
That is why I was so enamoured by ‘‘The Frugal Five’’, spearheaded by finance committee deputy chair Cr Sam MacDonald, and their costsaving amendments ahead of the finalising of the LTP.
The proposal to press pause on the cycleways network roll-out has drawn enormous public interest, despite being red-carded by the mayor. With a further $55m in ratepayer funding proposed over the next 10 years, ‘‘The Five’’ want half of that redeployed on road and footpath repairs, while also lowering borrowing levels.
The idea taps deep into the public pulse, as was manifest in the council’s Annual Residents Survey, highlighting how the shoddy state of unrepaired roads and footpaths is the city’s dissatisfaction king.
I believe their most potent amendment proposal was the call to reduce staff costs by 10 per cent
But I believe their most potent amendment proposal was the call to reduce staff costs by 10 per cent – very similar to Auckland’s recent re-sizing exercise. If it attracted majority support from councillors, the amendment would require the CEO to formulate options on how to achieve a 10 per cent saving plan on personnel costs, ahead of next year’s annual plan, to allow time for consultation.
MacDonald argues, ‘‘I still don’t believe Dawn Baxendale has been empowered by the elected council to drive a more efficient organisation.’’
A 10 per cent cut in staff costs would permanently eliminate $20m annually from the council’s operational budget, cutting the annual rates increase by four percentage points.
So, for example, if this was in force this year, it would lower the average rates increase to just 0.97 per cent.
That’s real change. That’s meaningful, sustainable rates relief. That’s my idea of rightsizing a very bloated ship. But the majority of members around this increasingly fractious council table can’t stop spending more of your money.
Expect the 10 per cent cut to be a major battleground issue come election time next year.