OPINION
John Porter
“Something is rotten in the state of Denmark.” Originally a line spoken by Marcellus in Act I of Hamlet.
It has now become an idiom used when something is not right, or seriously amiss, especially when leading to suspicion of motive.
For example: “If the authorities knew about the problems and chose not to prevent them, then clearly something is rotten in the state of Denmark.”
Well, I’m asking if “Something is rotten in the state of Napier!”
Recently Napier City Council advised ratepayers they will be asked to accept the highest ever proposed rates rise, 23.7%.
That 23.7% increase is made up of labour costs 11.57%, other costs (?) 5.2%, inflation 3.9%, borrowing costs 1.56% and insurance 1.47%.
Now what stands out like Steven Adams in a room full of jockeys is that labour costs will make up 48.8% of the rates increase!
Put more simply, that equates to approximately $9.76m being allocated to increased labour costs! That is an eyewatering amount, especially in a year where the council is facing a huge increase in future borrowings.
How did I come by that figure? It was given to me by Mayor Wise at the recent public meeting, in answer to my question “What does the 23.7% increase in rates deliver in terms of extra revenue?” Even more staggering was the mayor’s acknowledgement that the bulk of that $9.76m is earmarked for wage increases.
I am at a loss to comprehend how, in a year where the whole community is under extreme financial pressure, an increase in wage costs of that magnitude can be justified, let alone proposed.
Information supplied to me, subsequent to the meeting by the mayor, shows that staff earning <$100k will receive a 7% increase. At $90k per annum that would be $6300. But those earning >$180k receive an 8% increase, a minimum of $14,400!
There are 8 council staff in the $180k-plus remuneration bracket, rising to 16 in 2024–25. And 3 staff earning >$359,999.
Another issue that requires sunlight shone on it is borrowing costs. Being 6.58% of the $20m of increased rates revenue, that again is a gigantic amount of $1.31m. But of more serious concern is what the cost to ratepayers will be in 5 or 10 years.
Hold on to your hat folks! External debt is forecast to go from $10 million to $500 million in 10 years!
Does that mean if we have $10m external debt currently, costing $1.31m, $500 million could cost us $65m?
What is happening or has happened that sees Napier ratepayers in this alarming situation? Is something starting to whiff?
I had no trouble finding disgruntled ratepayers happy to identify cockups, point fingers and apportion blame.
Even the council’s consultation booklet admits to failures in the management of city infrastructure, stating: “We also haven’t invested the way we needed to in maintenance and proactive replacement. While that saved our ratepayers money in the short term, it means we’re starting to see assets failing and requiring costly emergency fixes and increased renewal programmes.”
“We need to be honest with ourselves about the state of the infrastructure networks we manage” and “…admitted that the council had not invested in infrastructure as they should have.”
That sees fingers directed in the direction of, at least, the previous administration.
From what I was able to ascertain, apparently the Taxpayers Union was highlighting councils who were paying salaries over $100k p.a. Presumably spooked by possible bad press, I understand, that administration discarded decades of knowledge and experience held by 75 senior managers, replacing them with staff, presumably having less knowledge and experience, on circa $70–90,000 to stay under the $100k bracket.
But get this: they needed to employ more than 125 staff as replacements.
It gets worse! One informant believed the senior staff got together and took the council to court, and were successful in winning significant compensation (settlement confidential).
While that’s “short term thinking” in the extreme, short-term thinking by elected officials is nothing new and is really driven by election cycles and susceptibility to variations driven by the short tenures of council agendas, the prevailing economic climate and the ideologies of the region’s leaders. Consequently, these policies have frequently presented inconsistencies, ultimately falling short of effectively addressing the needs of the city.
But let’s go back to that massive $9.76m being allocated to labour costs. Who dictates who gets what size slice of the pie?
That responsibility falls on the city’s CEO, Louise Miller. She would be the executive charged with putting forward to the mayor and finance committee recommendations for remuneration increases.
Miller replaced Dr Stephanie Rotarangi, who resigned in July 2022 in unexplained circumstances, after less than 18 months in the job, leaving behind many unanswered questions and even Official information Act requests lodged by Dr Rotorangi.
But Ms Miller’s employment is also somewhat out of the ordinary. I understand that, in addition to being paid circa $400,000, she was able to negotiate a contract whereby she commutes weekly from her home in Whangarei and enjoys top-rated accommodation when in Napier.
It has been suggested that the extra costs to the city for this largesse range from $85,000 to $150,000.
This is indulgence accorded to the person who is actually charged with maintaining a frugal position while overseeing the spending. Given the proposed remuneration increases, nothing could be further from the truth.
What makes this extravagance more galling is that apparently all that will show in council accounts is the CEO’s salary. NOT the perks and privileges to which the mayor has evidently agreed. It is probably lost in “General Expenses” or some such cover-all line in the accounts.
I asked the 10 councillors at the public meeting if they were happy with nearly $10m of ratepayer’s money being allocated to wage increases. Not one replied in the negative!
Why so when New Zealand’s inflation rate for the December 2023 quarter was 4.7% and the quarter to March 2024 is only 4%?
I have to ask: are there simply inconsistencies in the mayor’s and council’s rationalisations for the huge $9.76m increase in labour costs or could there be obfuscation or even disguising of an overly generous use of ratepayers’ funds?
I ask that because:
- At the public meeting the mayor categorically stated the bulk of the $9.76m was for wage increases,
- In an insert in the Napier Courier the mayor then says, “The main driver is not salary increases. It is largely due to Ocean Spa now becoming a Council facility.” That totally contradicts her meeting statement! Why was that not clarified at the meeting? Were ratepayers advised back in late 2022 that owning Ocean Spa was going impose enormous additional expenditure?
- The mayor states “NCC has paid lower salaries and wages compared to similar sized councils.” If our city CEO is earning around $400k, her salary would increase by $32,000! This makes me wonder what the CEOs of similar sized councils earn?
I was advised by the mayor at that recent meeting to make an on online submission regarding the approximately $9.76m allocation for wage increases, to be derived from increased rates revenue.
Astoundingly, the council are not accepting formal submissions on this most critical issue in their 3-year plan.
A cynic could be excused for thinking the inability to make a formal submission on the wages issue is calculated.
So are we getting value for money for a council that feels able to propose a rates increase of approximately $20m? Do we have a compliant and obsequious council, a city CEO who has taken a leaf out of Grant Robertson’s playbook and is happy to squander tax or in this case ratepayers’ money and a mayor that is comfortable stating, “…Napier is still one of the lowest rating cities in NZ…” while approving a near $10m wage increase?
Why are we borrowing money for infrastructure spend but spending nearly $10m, from increased rates revenue, on large remuneration increases?
Furthermore, to add insult to injury, this profligate council will also be spending $3,458,477 on consultants.
That is an increase of $428,294 on last year.
All to help those who have just received, courtesy of the ratepayer, thousands of dollars in wage increases to perform their assigned tasks better?
Is something rotten in the state of Denmark?
Thomas Sowell, the American economist, and social philosopher said, “If you want to help someone, tell him the truth. If you want to help yourself, tell him what he wants to hear.”
Mmmmm.