Open the books. Wages ~$100m more than reported

NZ Herald, by Bernard Orsman. Posted: 13 Oct 2018

The Auckland Council wages bill is approaching $1 billion a year, of which about $100 million is not reported as staff costs for accounting reasons.

The council is obliged by law to publish staff costs for running the Super City, but is not required to publish staff costs charged against capital projects, like building roads or new libraries and swimming pools.

Last month, the council published operating staff costs of $866m in the latest annual report, but did not report capitalised staff costs of $91m.

After questions from the Herald, the council said it had spent between $91m and $110m on capitalised staff costs in each of the past four years.

Mayor Phil Goff, who promised greater transparency in how council spends money during the 2016 council elections, is comfortable with how council reports staff costs.

“I am advised that council reporting on staff costs is transparent and in line with standard accounting practices,” he said.
Staff costs pic
Goff said staff costs at Auckland Council had fallen by $8m in the latest annual report and capitalised staff costs had fallen across the council group, which includes council and council-controlled organisations (CCOs).

Staff costs fall under “sensitive spending” at council, and have drawn a lot of public criticism in recent years.

In the past few years over a period of high growth, staff costs have gone over budget by up to $63 million for the council and CCOs, although in the latest financial year council bosses pretty much stayed within budget.

Rodney councillor Greg Sayers said council should be completely transparent with all its staff costs, saying Aucklanders deserve to know where council is spending money.

“There is no excuse for hiding these numbers from Auckland ratepayers, and it is disappointing the mayor has not demanded transparency from council staff.

“Council should not run the types of accounts that Enron would be proud of,” Sayers said.

Council general manager of corporate finance Kevin Ramsay said the council has to report operational staff costs for accounting purposes, but not capital staff costs when staff work part-time or fulltime on projects.

Capital staff costs appear as part of project costs, he said.

Ramsay said it could be potentially misleading to break out staff capital costs because most people think staff costs are funded by rates.

“The obvious assumption would be this is more staff costs, this is coming out of my rates again.

“The fact is it is not. It is being funded by debt, it is being funded by central government grants, it is being funded by development contributions and other mechanisms.

“Nobody puts the capitalised staff costs as a line,” Ramsay said.

If capital staff costs were released, he said, there would have to be a lot of explanation around what it means.