$40 million in super city redundancy payouts, says Labour

06:16, Sep 28 2010

The Auckland Transition Agency estimates redundancy payouts resulting from the Auckland super city merger to cost up to $20 million but Labour estimates it could cost $40m.

More than 1200 existing council staff will lose their jobs when the super city comes into effect in November, cutting the wages bill by $66.5 million. Staff will be cut by 1223 to 8207.

About half of those cuts were expected to come from natural attrition.

Middle managers will be among the biggest casualties and the Auckland Transition Agency said about 650 people would be paid between $15m and $20m in redundancies.

Labour's Auckland Issues spokesperson Phil Twyford said redundancy costs for workers laid off in the super city restructuring could reach $40m.

"Based on council responses to official information requests I estimate the bill for senior managers will be close to $20 million. Add that to the $15-20 million cost of general staff redundancies and the total could well reach $40 million."

Local Government Minister Rodney Hide said frontline staff were being retained, but with eight councils being rolled into one there was "considerable potential" to save on management.

"You don't need eight HR (human resources) departments or treasury departments, and that's where the savings have come," he told Radio New Zealand.

About 300 managers would be involved in the transition process, but by July 2012 they would no longer be needed, meaning the total staffing number would be reduced to 7907.

Mr Hide said the transition team considered that cuts could go further, but that would depend on whether the people of Auckland wanted to keep their rates down.

"After 2012 the council will be able to have a look at it. We have done it conservatively, because what people need to be assured of with change is that they will have local government services..."

He said some of those who would lose their jobs had already organised other work, and while it was difficult for others, ratepayers were not prepared to pay for people who weren't needed.

Mr Hide said there was still a "lack of clarity" with the fate of chief executives and what sort of golden handshakes they might get.

It was up to mayors and councils to sort those details out and honour contracts, but he said he would be disappointed if such details were kept under wraps.

When staffing numbers are reduced to the July 2012 target, it is expected to equate to wage savings of $91m a year.