Red Alert

Hide spins on super city costs – hold the front page

Posted by on June 3rd, 2010

I know the claim that Rodney Hide is sowing confusion over the costs of the super city is likely to be met with a sarcastic “Hold the front page!”  but his performance at select committee this morning took his excellence in the art of spin to dizzying new heights.

The latest best estimate of super city costs is $266 million, which includes $66 million in I.T. integration that the Minister has postponed to next year. But that is today, who knows what it will be tomorrow?

A month ago, and a year after the Government began its “Auckland reforms”,  the only information in the public domain was the figure of $34 million attributed to the work of the Auckland Transition Agency.

Then the Budget papers revealed an additional crown loan to fund the transition. Not a peep from Hide, but the Herald pieced together known information and Official Information Act disclosures and put the total bill at $112 million.

Then last week Hide trumpeted in the House that he had kept costs down to $94 million, explaining in a subsequent press release that the total cost was $160 million. Strangely he omitted $40 million from his tally, including $26 million being spent on setting up the new water organisation, and $14 million spent by Councils doing transition work at the request of the Government. The Herald’s headline: Super City’s set-up costs top $200m and counting

Then at select committee officials revealed another $66 million would be spent on I.T. integration to be spent by the new Auckland Council next year.

For a year now Hide’s approach to all this has been to avoid giving any information out. Last week he obviously concluded he couldn’t do that indefinitely. So now he is re-defining major line items off the balance sheet by pretending they are not “transition costs”.

He argued at select committee this morning that the following are not transition costs: $26 million to set up the water organisation, $14 million spent by Councils on transition work at the request of the Government, and the $66 million on IT integration postponed to next year.

In any case it is all going to be paid by the Auckland ratepayer.

The next bombshell is likely to be redundancy pay outs. Dozens of senior executives are going to be made redundant. It is well known they have gold plated redundancy agreements. A well placed source in Auckland local government has told me the bill for redundancy pay outs could reach $47 million.  Hide wouldn’t confirm this, and just said any such pay outs were the business of the Councils and not his concern.


25 Responses to “Hide spins on super city costs – hold the front page”

  1. TopCat says:

    Do worry Phil their will be plenty of other costs-
    1. Office re-location costs. I’m pretty sure for example that tehy will struggle to fit Auckland Transport along with Local Board staff and the services that will be needed for the Waitakere region in the Waitakere Council building. Might be worth asking if they are planning to lease some more buildings out West.
    2. Hiring. I suspect a lot of the new management will be from outside the region. They will be signing new contracts, would be good to know how much is budgeted for these people.
    3.Legal costs. A lot of legislation is involved, a lot of which ATA may not even know about yet (take the stuff over the Waitakere Ranges Act for example). I’d be surprised if the new council didn’t have to sort out a few unexpected legal issues next year.

  2. Spot on. Keep peeling away. The true costs , especially those delayed so as to appear the responsibility of the new council, will mount.

  3. John W says:

    Well they will all be so much in debt with hidden costs that the CCOs will have to be sold off. Mission complete.

    Next assignment please Australia.

  4. DeepRed says:

    Ladies & gentlemen, the gamekeeper has turned poacher.

  5. jennifer says:

    Phil, $66 million for IT integration? General rule for the end cost of major public sector IT projects is to double it. So maybe add $130 million to your growing total that Hide is dumping on ratepayers. Busted, Rortney.

  6. Loota says:

    So what is the new financial payback period for this Super-City project, taking into account interest costs? Early to mid 22nd Century?

  7. Loota says:

    Oh yes, I suggest that Labour keeps gnawing away at the foundations of Rodney’s plans until the house of cards he is building for NACT comes tumbling down sometime mid next year.

    About $0.5B worth of costs and likely overruns should do it.

  8. Jeremy M Harris says:

    It’s my magic 8-ball, it predicts a few years in Wellington till Rodders bill is settled…

  9. pohutukawa kid says:

    Loota

    The payback period will have to be discounted by an appropriate and moveable interest rate. I think we’ll be looking at the 29th Century!

  10. Kumara says:

    The redudancy packages for unwanted staff need to be added to that ‘and counting’ total.

    It’s also worth while discovering what councils have already paid out to consultancies who have availed themselves of the abundant opportunities to prepare staff to be resilient in the face of diminishing morale and having to compete with one another for restricted employment opportunities. The social costs won’t be counted – because they’re not deemed to be a priority.

  11. Spud says:

    8O K umara :-D

  12. peter says:

    Great, so not only am I funding this wonderful enterprise thru my rates, but I also have the priviledge of funding the repair costs for the leaking home debacle.

    I wonder which will be higher in 12 months, my mortgage repaymment or my Rates bill ??

  13. Gooner says:

    But Labour is promoting a bill that will make the redundancyc costs even greater through compulsory redundancy in every employment agreement!!!

  14. Tracey says:

    Rortney says it was never done to save money… I feel like I’m 6 again, standing on the chair, with mum pouring medicine down my throat “it’s for your own good”, only she was prolly right, Rortney MIGHT be right, but doesnt know

  15. jennifer says:

    @ Gooner, pathetic. You buddy Rortney is the one costing hundreds of good, hard working council employees their jobs, after well over a year of uncertainty, and years of calling them lazy bureaucrats, and he now has the gall to come over all concerned for them. Rortney, the Minister for Ratepayers, has been caught out. His deception over costs is finally being uncovered. Ratepayers will pay the price. He’s history.

  16. TopCat says:

    Interesting that Rodney says he wants to the Auckland Council to have the highest quality staff he can get. Where was this consideration last year after the Royal Commission? Auckland’s councils have been bleeding staff for the last 12 months. Of course those getting jobs elsewhere are going to be the most employable and qualified. That immediately reduces the talent pool available.

    Something should have been done last year to lock in long term contracts for these staff- not let them walk! If you were a competent and employable council worker at the moment, would you stay? The loss of institutional and technical knowledge, not to mention the relationships built up over years will hamper the Auckland Council for years.

    Shows how little thought has gone into the whole process.

  17. Loota says:

    TopCat – please think further ahead. As individual departments within the Council start to struggle and fail due to the loss of this meaningless “institutional and technical knowledge” and “relationships built up over years” you mention, they will no doubt be put up for privatisation.

    Makes perfect sense :roll:

  18. Loota says:

    Oh wait until the invoice for the Super City reaches $0.5B, then you won’t be able to spell “Gone-Burger” fast enough.

    Don’t think the bill will go that high?

    Look out for all the contortions they go though in the next 6 months to try and defer, move and hide costs away from the tally. It will be funny to watch.

  19. Gooner says:

    Jennifer, why don’t you address the issue.

    Phil Twyford is concerned about costs of redundancy on ratepayers of Auckland. Yet virtually in the same breath Labour wants to impose vastly more costs on everybody via compulsory redundancy in every employment agreement across the country.

  20. TopCat says:

    Loota- Thats been done before. Remember Building Inspectors and leaky homes.I remember Victorian councils tendering out Planning services- it was so horrendously expensive they bought them back in house within 18 months. Whenever you take things away from in house the costs skyrocket.

  21. Jeremy M Harris says:

    WTF… I read Rodney’s quotes in the Herald today and I am now convinced he is a pathological liar, i.e. he wants to see how big a whopper he can get away with, consider his reasoning today:

    Rodney: “Phil Tywford is making figures up because even the transistional authority doesn’t know how much the redundancy will cost”

    Then immeaditely after saying no one knows how much it will cost he says:

    Rodney: “But it will definitely cost less than the savings made”

    This after Rodney has gone out of his way not to say there will be any savings whatsoever…

    His credibility is absolutely shot..!

  22. Darien Fenton says:

    @Gooner – yes, we are promoting minimum redundancy pay for everyone. NOT gold plated redundancy. There were extensive provisions in the third bill around staff transition – somewhat bemusing that the government were prepared to write those into the bill, but refused to allow a modest redundancy provision in law for other workers who have nothing.
    Don’t get me wrong – I’m pleased council staff have redundancy pay in their agreements and I don’t think Phil is talking about those – he’s talking about the huge payouts those at the top will be getting.

  23. DeepRed says:

    In other words – golden parachutes.

  24. Loota says:

    Gooner said:

    Phil Twyford is concerned about costs of redundancy on ratepayers of Auckland. Yet virtually in the same breath Labour wants to impose vastly more costs on everybody via compulsory redundancy in every employment agreement across the country.

    Ah the difference is that NACT is engineering the manufacture of those many AKL redundancies.

    Add it to the Super City bill, Gooner.