Rookie councillors set sights on costs to avoid borrowing

16:00, Feb 11 2014

Cut the extravagance and cut wages is the message from two councillors to the New Plymouth district's chief executive Barbara McKerrow.

Councillor Len Houwers believes the New Plymouth District Council has long lived outside of its means and the ratepayers are set to suffer because of it.

Mr Houwers has told the Taranaki Daily News there had been a significant drop in revenue through council investments, and as such the organisation must adjust its spending to fit that.

It was revealed last week the council had proposed to borrow $2.8 million to offset a rates rise after the highly criticised perpetual investment fund had drastically underperformed.

While $4m in saving had already been made from council expenditure, Mr Houwers said more money could and should be found so borrowing was not necessary.

Fellow first-term councillor Murray Chong said the council officers should lead by example and start looking at what they pay themselves.


In the 2014/2015 draft annual plan employee wages and benefits totalled $36.59m, which was a $1m increase on the previous annual plan.

"If council officers can't keep rates under inflation, then why should they get pay rises," Mr Chong told the Daily News.

Mrs McKerrow said the council had the equivalent of around 500 full-time staff, which accounted for 26 per cent of the total cost of operations.

However, the $36.59m quoted in the draft annual plan also included employee ACC levies, Kiwi Saver and staff training, she said.

Inflation readjustments on staff costs had been decreased from 2.47 per cent in the 2013/2014 annual plan to 0.99 per cent in the latest plan.

"But we will look at it in further detail and if there are more savings to be made in there then we can decide on those adjustments," she said.

Mrs McKerrow told the council on Monday that hunting out $2.8m of savings in a matter of weeks was a huge undertaking.

However, Mr Houwers rejected that claim, saying the council were attempting to "ring-fence" their own operation.

"Everyone has had to do more with less and the council should be no different," he said.

He made particular reference to Pukekura Park's new $560,000 playground and said the public would have been just as happy with one that was half the price.

He believed the council could easily find the extra $2.8m to ensure no internal borrowing was done, and said it should, in fact, be able to come up with $3.6m, so the rates rise could be kept at 2 per cent.

Mr Houwers said $3.6m was only 6 per cent of the the council's general rates and decreasing council expenditure by that amount was achievable in a short timeframe.

The capital expenditure budget, he said, had allowed for $12m to improve the level of service delivered by the council.

He questioned why, in times of hardship, the council would want to invest in improving services, rather than keep the status quo until the financial state of the organisation improved.

"Any other household or business trying to cut their budget by 6 per cent wouldn't find it difficult," he said.

Mrs McKerrow said while she agreed with Mr Houwers about potentially cutting costs from the capital expenditure budget the previous council had already committed the funds to ongoing projects such as upgrades to roads and footpaths, the wastewater plant, and the Govett Brewster Art Gallery.

"Councillors do come up with some great ideas, but sometimes the reality is when we drill down to the details it's not as simple as it may seem, but it is our job to sort that out and explore all avenues," she said.

The new council would be able to make big cost cutting changes to budgets next year, when they debated and set the long term plan, she said.

After Monday's meeting Mrs McKerrow and council staff have been assessing all budgets to try to find a way to avoid borrowing.

Taranaki Daily News