Council overhead cost increases
Max Shierlaw made this Official Information request to Hutt City Council
The request was partially successful.
From: Max Shierlaw
Dear Hutt City Council,
Each year the current Mayor and Chief Executive have promoted updated Annual Plans or the updated Long-Term Plan with statements along these lines:
Jo Miller February 2020
“As the Chief Executive, I’ve also committed to making operational savings – of at least $1 million in the current financial year. This will be followed by a line by line review of Council’s budget for the Long Term Plan process next year. If we are to ask our residents to pay more through their rates, we need to be able to demonstrate we can squeeze the most out of every dollar we collect.”
http://heart.huttcity.govt.nz/services/h...
Jo Miller June 2020
Hutt City Council Chief Executive Jo Miller, says additional operational savings have been a big part of Council being able to adopt a lower rates increase, while also being able to progress key priorities.
“We’ve tightened our belt and made $3 million of operational savings ………….”
Hutt City Council opts for lower rates increase and cuts costs for year ahead | Hutt City Council News
Campbell Barry 2021
We’ve put together these proposals with financial sustainability and affordability front of mind. We know COVID-19 has been tough for our community, and made the economic outlook more uncertain. This is why we have tightened our own belt and made $5.2M in annual savings ($1M equates to about one per cent of rates). This has helped us avoid larger rates increases.
Message in the Draft 2021-2031 Long-Term Plan
Jo Miller April 2022
Hutt City Council’s Chief Executive Jo Miller says the focus of the Draft Annual Plan is to deliver on key infrastructure projects in an environment of rising costs. "Through embedding cost savings and other efficiency gains, rates increases have been constrained to keep to those projected in our 10-year plan…."
Hutt City Council's draft Annual Plan open for engagement | Voxy.co.nz
The latest savings claim is not quantified like the others. However, these statements together have promised our community that total savings and efficiencies have been achieved over the last three years that amount to something like $10m per annum, or a 10% reduction in rates. These claims by the Mayor and Chief Executive would therefore imply that well over $100m in costs have been removed from the ten years of the Long-Term Plan (LTP) once inflation is accounted for.
These claims have been tested against Council’s published plans and budgets. In order to be fair, the cost of frontline services have been excluded where council has stated they have increased expenditure. Focus is on the areas where ratepayers would have naturally expected Council to have “tightened their belts” without external customer service reductions. Accordingly, there is a summation of the planned expenditure closest to the control of the Mayor and Chief Executive – the “Governance” and “Corporate Services” (previously called “Leadership”) activities. Effectively these are the overheads of running the organisation and its elected members.
Unfortunately, it seems Council has chosen to not disclose these costs in the recently published Draft Annual Plan. It no longer reports the costs of Corporate Services, whereas this seems to have been Council’s transparent practice in this past.
The analysis revealed the reality of Council’s spending is almost the exact opposite of that claimed by the Mayor and Chief Executive. Rather than $100m of savings and efficiencies over the ten-year LTP budgets, there has been a $102m increase in back-office spending between the 2018-28 LTP and the 2021-31 LTP. An approximate $200m variance relative to the cumulative message that has been told to the community!
This was calculated by taking the total combined expenditure for the governance and corporate services activities, excluding the internal reallocation of these support costs. The ten-year total in the 2018-28 LTP is $162m. The corresponding total from the 2021-31 LTP is $264m. This is a $102m, or 63%, increase in overhead costs!
The $102m in extra overhead costs includes $62m in extra employee costs, which have gone up by 58%.
My questions and information requests:
1. Please provide the Corporate Services prospective statement of comprehensive revenue and expense that supports the current Draft Annual Plan (for all reported years) but has not been published.
2. Please quantify and itemise the cost savings and efficiencies that support the chief executive’s statement quoted above in relation to the just released Draft Annual Plan.
3. Please provide the itemised build-up of the $3m savings quoted by the chief executive in 2020.
4. Please provide the itemised build-up of the $5.2m in annual savings quoted by the mayor in 2021.
5. Please quantify the financial impact of the items listed in response to questions 3 and 4 on the ten-year costs reported for the governance and corporate services activities in the 2021-31 LTP.
6. Referring to the $102m I have calculated above and the response to question 5, please provide an itemised reconciliation of the inefficiencies, additional expenditure or other budget changes in the governance and corporate services activities that have offset the claimed cost savings AND instead delivered a $102m increase in LTP overhead expenditure.
7. Please provide a breakdown by division of the assumed employee numbers comprising the corporate services/leadership and governance activities for purposes of the 2018-28 LTP and then for the 2021-31 LTP. If that is problematic, please provide the equivalent breakdown for the actual employee numbers comprising those activities as at 30 June 2019 and as at 31 March 2022.
8. This additional expenditure across the ten-year budgets amounts to an additional rates burden of well over 10%. This is clearly a major issue for residents and businesses in the Hutt. The extra back office expenditure exceeds the cost of the much discussed Naenae Pool replacement. So please:
a. Provide copies of all correspondence, reports and communications held by council that discussed and supported decisions made in relation to increasing the spending on corporate overheads to such a huge degree.
b. Provide Council’s documented assessment of this expenditure and decisions made in order to comply with Council’s Significance Policy.
c. Explain why this huge increase in overhead expenditure was not highlighted during the LTP consultation as a major reason for the proposed rates increases.
d. Why media releases by the Mayor and Chief Executive have claimed savings and efficiencies when they are actually responsible for the huge blow out in the cost of Council’s support functions.
Yours faithfully,
Max Shierlaw
From: Information Management Team
Hutt City Council
Tēnā koe Max
REQUEST FOR INFORMATION - LOCAL GOVERNMENT OFFICIAL INFORMATION AND MEETINGS ACT 1987: ACKNOWLEDGEMENT OF REQUEST
I am writing to acknowledge receipt of your official information request dated 22 April 2022 for information regarding financial reporting by the Council.
We will endeavour to respond to your request at the earliest opportunity and in any event no later than 20 working days after the day your request was received. If we are unable to respond to your request by then, we will notify you of an extension of that timeframe.
Please note that our response to your information request may be published on Hutt City Council’s website.
Ngā mihi
Susan Sales
Ringa Āwhina Tāhūhū ki Te Koromatua | Senior Advisor
Te Kaunihera o Te Awa Kairangi | Hutt City Council, 30 Laings Road, Private Bag 31912, Lower Hutt 5040, New Zealand
Paetukutuku: www.huttcity.govt.nz
-----Original Message-----
From: Max Shierlaw <[FYI request #19194 email]>
Sent: Friday, 22 April 2022 2:08 pm
To: Information Management Team <[Hutt City Council request email]>
Subject: [EXTERNAL] Official Information request - Council overhead cost increases
Dear Hutt City Council,
Each year the current Mayor and Chief Executive have promoted updated Annual Plans or the updated Long-Term Plan with statements along these lines:
Jo Miller February 2020
“As the Chief Executive, I’ve also committed to making operational savings – of at least $1 million in the current financial year. This will be followed by a line by line review of Council’s budget for the Long Term Plan process next year. If we are to ask our residents to pay more through their rates, we need to be able to demonstrate we can squeeze the most out of every dollar we collect.”
http://heart.huttcity.govt.nz/services/h...
Jo Miller June 2020
Hutt City Council Chief Executive Jo Miller, says additional operational savings have been a big part of Council being able to adopt a lower rates increase, while also being able to progress key priorities.
“We’ve tightened our belt and made $3 million of operational savings ………….”
Hutt City Council opts for lower rates increase and cuts costs for year ahead | Hutt City Council News Campbell Barry 2021 We’ve put together these proposals with financial sustainability and affordability front of mind. We know COVID-19 has been tough for our community, and made the economic outlook more uncertain. This is why we have tightened our own belt and made $5.2M in annual savings ($1M equates to about one per cent of rates). This has helped us avoid larger rates increases.
Message in the Draft 2021-2031 Long-Term Plan Jo Miller April 2022 Hutt City Council’s Chief Executive Jo Miller says the focus of the Draft Annual Plan is to deliver on key infrastructure projects in an environment of rising costs. "Through embedding cost savings and other efficiency gains, rates increases have been constrained to keep to those projected in our 10-year plan…."
Hutt City Council's draft Annual Plan open for engagement | Voxy.co.nz The latest savings claim is not quantified like the others. However, these statements together have promised our community that total savings and efficiencies have been achieved over the last three years that amount to something like $10m per annum, or a 10% reduction in rates. These claims by the Mayor and Chief Executive would therefore imply that well over $100m in costs have been removed from the ten years of the Long-Term Plan (LTP) once inflation is accounted for.
These claims have been tested against Council’s published plans and budgets. In order to be fair, the cost of frontline services have been excluded where council has stated they have increased expenditure. Focus is on the areas where ratepayers would have naturally expected Council to have “tightened their belts” without external customer service reductions. Accordingly, there is a summation of the planned expenditure closest to the control of the Mayor and Chief Executive – the “Governance” and “Corporate Services” (previously called “Leadership”) activities. Effectively these are the overheads of running the organisation and its elected members.
Unfortunately, it seems Council has chosen to not disclose these costs in the recently published Draft Annual Plan. It no longer reports the costs of Corporate Services, whereas this seems to have been Council’s transparent practice in this past.
The analysis revealed the reality of Council’s spending is almost the exact opposite of that claimed by the Mayor and Chief Executive. Rather than $100m of savings and efficiencies over the ten-year LTP budgets, there has been a $102m increase in back-office spending between the 2018-28 LTP and the 2021-31 LTP. An approximate $200m variance relative to the cumulative message that has been told to the community!
This was calculated by taking the total combined expenditure for the governance and corporate services activities, excluding the internal reallocation of these support costs. The ten-year total in the 2018-28 LTP is $162m. The corresponding total from the 2021-31 LTP is $264m. This is a $102m, or 63%, increase in overhead costs!
The $102m in extra overhead costs includes $62m in extra employee costs, which have gone up by 58%.
My questions and information requests:
1. Please provide the Corporate Services prospective statement of comprehensive revenue and expense that supports the current Draft Annual Plan (for all reported years) but has not been published.
2. Please quantify and itemise the cost savings and efficiencies that support the chief executive’s statement quoted above in relation to the just released Draft Annual Plan.
3. Please provide the itemised build-up of the $3m savings quoted by the chief executive in 2020.
4. Please provide the itemised build-up of the $5.2m in annual savings quoted by the mayor in 2021.
5. Please quantify the financial impact of the items listed in response to questions 3 and 4 on the ten-year costs reported for the governance and corporate services activities in the 2021-31 LTP.
6. Referring to the $102m I have calculated above and the response to question 5, please provide an itemised reconciliation of the inefficiencies, additional expenditure or other budget changes in the governance and corporate services activities that have offset the claimed cost savings AND instead delivered a $102m increase in LTP overhead expenditure.
7. Please provide a breakdown by division of the assumed employee numbers comprising the corporate services/leadership and governance activities for purposes of the 2018-28 LTP and then for the 2021-31 LTP. If that is problematic, please provide the equivalent breakdown for the actual employee numbers comprising those activities as at 30 June 2019 and as at 31 March 2022.
8. This additional expenditure across the ten-year budgets amounts to an additional rates burden of well over 10%. This is clearly a major issue for residents and businesses in the Hutt. The extra back office expenditure exceeds the cost of the much discussed Naenae Pool replacement. So please:
a. Provide copies of all correspondence, reports and communications held by council that discussed and supported decisions made in relation to increasing the spending on corporate overheads to such a huge degree.
b. Provide Council’s documented assessment of this expenditure and decisions made in order to comply with Council’s Significance Policy.
c. Explain why this huge increase in overhead expenditure was not highlighted during the LTP consultation as a major reason for the proposed rates increases.
d. Why media releases by the Mayor and Chief Executive have claimed savings and efficiencies when they are actually responsible for the huge blow out in the cost of Council’s support functions.
Yours faithfully,
Max Shierlaw
-------------------------------------------------------------------
This is an Official Information request made via the FYI website.
Please use this email address for all replies to this request:
[FYI request #19194 email]
Is [Hutt City Council request email] the wrong address for Official Information requests to Hutt City Council? If so, please contact us using this form:
https://fyi.org.nz/change_request/new?bo...
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If you find this service useful as an Official Information officer, please ask your web manager to link to us from your organisation's OIA or LGOIMA page.
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From: Information Management Team
Hutt City Council
Information Request Shierlaw Financial Records and Corporate Services Costs incl attachments.pdf
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Kia ora Max
Please find attached our response to your LGOIMA request of 22 April 2022.
Ngā mihi
Susan Sales
Ringa Āwhina Tāhūhū ki Te Koromatua | Senior Advisor
Te Kaunihera o Te Awa Kairangi | Hutt City Council, 30 Laings Road, Private Bag 31912, Lower Hutt 5040, New Zealand
Paetukutuku: www.huttcity.govt.nz
-----Original Message-----
From: Max Shierlaw <[FYI request #19194 email]>
Sent: Friday, 22 April 2022 2:08 pm
To: Information Management Team <[Hutt City Council request email]>
Subject: [EXTERNAL] Official Information request - Council overhead cost increases
Dear Hutt City Council,
Each year the current Mayor and Chief Executive have promoted updated Annual Plans or the updated Long-Term Plan with statements along these lines:
Jo Miller February 2020
“As the Chief Executive, I’ve also committed to making operational savings – of at least $1 million in the current financial year. This will be followed by a line by line review of Council’s budget for the Long Term Plan process next year. If we are to ask our residents to pay more through their rates, we need to be able to demonstrate we can squeeze the most out of every dollar we collect.”
http://heart.huttcity.govt.nz/services/h...
Jo Miller June 2020
Hutt City Council Chief Executive Jo Miller, says additional operational savings have been a big part of Council being able to adopt a lower rates increase, while also being able to progress key priorities.
“We’ve tightened our belt and made $3 million of operational savings ………….”
Hutt City Council opts for lower rates increase and cuts costs for year ahead | Hutt City Council News Campbell Barry 2021 We’ve put together these proposals with financial sustainability and affordability front of mind. We know COVID-19 has been tough for our community, and made the economic outlook more uncertain. This is why we have tightened our own belt and made $5.2M in annual savings ($1M equates to about one per cent of rates). This has helped us avoid larger rates increases.
Message in the Draft 2021-2031 Long-Term Plan Jo Miller April 2022 Hutt City Council’s Chief Executive Jo Miller says the focus of the Draft Annual Plan is to deliver on key infrastructure projects in an environment of rising costs. "Through embedding cost savings and other efficiency gains, rates increases have been constrained to keep to those projected in our 10-year plan…."
Hutt City Council's draft Annual Plan open for engagement | Voxy.co.nz The latest savings claim is not quantified like the others. However, these statements together have promised our community that total savings and efficiencies have been achieved over the last three years that amount to something like $10m per annum, or a 10% reduction in rates. These claims by the Mayor and Chief Executive would therefore imply that well over $100m in costs have been removed from the ten years of the Long-Term Plan (LTP) once inflation is accounted for.
These claims have been tested against Council’s published plans and budgets. In order to be fair, the cost of frontline services have been excluded where council has stated they have increased expenditure. Focus is on the areas where ratepayers would have naturally expected Council to have “tightened their belts” without external customer service reductions. Accordingly, there is a summation of the planned expenditure closest to the control of the Mayor and Chief Executive – the “Governance” and “Corporate Services” (previously called “Leadership”) activities. Effectively these are the overheads of running the organisation and its elected members.
Unfortunately, it seems Council has chosen to not disclose these costs in the recently published Draft Annual Plan. It no longer reports the costs of Corporate Services, whereas this seems to have been Council’s transparent practice in this past.
The analysis revealed the reality of Council’s spending is almost the exact opposite of that claimed by the Mayor and Chief Executive. Rather than $100m of savings and efficiencies over the ten-year LTP budgets, there has been a $102m increase in back-office spending between the 2018-28 LTP and the 2021-31 LTP. An approximate $200m variance relative to the cumulative message that has been told to the community!
This was calculated by taking the total combined expenditure for the governance and corporate services activities, excluding the internal reallocation of these support costs. The ten-year total in the 2018-28 LTP is $162m. The corresponding total from the 2021-31 LTP is $264m. This is a $102m, or 63%, increase in overhead costs!
The $102m in extra overhead costs includes $62m in extra employee costs, which have gone up by 58%.
My questions and information requests:
1. Please provide the Corporate Services prospective statement of comprehensive revenue and expense that supports the current Draft Annual Plan (for all reported years) but has not been published.
2. Please quantify and itemise the cost savings and efficiencies that support the chief executive’s statement quoted above in relation to the just released Draft Annual Plan.
3. Please provide the itemised build-up of the $3m savings quoted by the chief executive in 2020.
4. Please provide the itemised build-up of the $5.2m in annual savings quoted by the mayor in 2021.
5. Please quantify the financial impact of the items listed in response to questions 3 and 4 on the ten-year costs reported for the governance and corporate services activities in the 2021-31 LTP.
6. Referring to the $102m I have calculated above and the response to question 5, please provide an itemised reconciliation of the inefficiencies, additional expenditure or other budget changes in the governance and corporate services activities that have offset the claimed cost savings AND instead delivered a $102m increase in LTP overhead expenditure.
7. Please provide a breakdown by division of the assumed employee numbers comprising the corporate services/leadership and governance activities for purposes of the 2018-28 LTP and then for the 2021-31 LTP. If that is problematic, please provide the equivalent breakdown for the actual employee numbers comprising those activities as at 30 June 2019 and as at 31 March 2022.
8. This additional expenditure across the ten-year budgets amounts to an additional rates burden of well over 10%. This is clearly a major issue for residents and businesses in the Hutt. The extra back office expenditure exceeds the cost of the much discussed Naenae Pool replacement. So please:
a. Provide copies of all correspondence, reports and communications held by council that discussed and supported decisions made in relation to increasing the spending on corporate overheads to such a huge degree.
b. Provide Council’s documented assessment of this expenditure and decisions made in order to comply with Council’s Significance Policy.
c. Explain why this huge increase in overhead expenditure was not highlighted during the LTP consultation as a major reason for the proposed rates increases.
d. Why media releases by the Mayor and Chief Executive have claimed savings and efficiencies when they are actually responsible for the huge blow out in the cost of Council’s support functions.
Yours faithfully,
Max Shierlaw
-------------------------------------------------------------------
This is an Official Information request made via the FYI website.
Please use this email address for all replies to this request:
[FYI request #19194 email]
Is [Hutt City Council request email] the wrong address for Official Information requests to Hutt City Council? If so, please contact us using this form:
https://fyi.org.nz/change_request/new?bo...
Disclaimer: This message and any reply that you make will be published on the internet. Our privacy and copyright policies:
https://fyi.org.nz/help/officers
If you find this service useful as an Official Information officer, please ask your web manager to link to us from your organisation's OIA or LGOIMA page.
-------------------------------------------------------------------
hide quoted sections
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