A year into the job, Mayor Phil Goff is having big problems with his budget. And with water, transport, housing, the America’s Cup, the rest of council and the whole of government. And he’s still trying to beat up on the city’s tourism and economic development agency, ATEED. But somehow, says Simon Wilson, he also seems happy.
It’s one year on and Phil Goff hasn’t got any money. Well, not him, but the council. His annual budget was passed mid-year, and it’s very tight. His 10-year budget is now being developed and there’s hardly enough to do anything. “All the easy options for savings have gone,” he told me when we sat down for an interview yesterday morning.
And it gets worse. Council staff, it’s been revealed by the Herald, have a bloated salary structure: of the 11,893 staff, 20% of them earn more than $100,000 and 194 of them earn over $200,000. Is there any word for that other than outrageous? The council overspent its budget for salaries by 5% last year.
And worse. The America’s Cup is coming and there’s nowhere to put it. The council needs to find 30,000 square metres somewhere on the harbour and none of the options is all that good.
And still worse. Every time it rains in Auckland, 70 outlets dump sewage into the harbour. “Diluted, to be fair,” said Goff. “But sewage nonetheless. I think it’s completely unacceptable.” Aucklanders are going to get a shock when the new pollution data comes out next month, he said. This is a problem that’s been stewing for 100 years and it will cost $1.8 billion to fix.
And worse again. Over at Auckland Transport, they’ve hatched a plan to spend $630 million on “active transport” – that’s cycling and walking – over the next 10 years. There’s no money for it.
And even worse again. Whatever Phil Goff wants to do as mayor, he has to persuade a majority of councillors to support him, because he has no caucus, no whipping structure he can rely on to pull errant councillors into line. After parliament he’s just not used to it. Being mayor is about herding cats.
And worse still. A delegation of school principals went to see Goff recently to plead with him to take their case to government. Auckland schools are in crisis: teachers are leaving because they can’t afford to live here and too few people are entering the ranks to replace them. The immediate problem is the price of housing, but it’s not just a problem for teachers. All middle and low income people are affected.
And then there’s Winston, potentially the worst problem of all, because the demands NZ First makes in coalition talks will have real implications for Auckland.
Goff was careful not to express a view on Winston Peters, or any other politician. But he will know that Peters could suck resources away from desperately needed transport projects, and could stop the move to light rail, to the airport or anywhere else, because he favours heavy rail. Peters could slow the house-building programme by collapsing immigration numbers, mess with the orderly planning of the future of the port and undermine business confidence with reforms to the fiscal settings.
So how is Phil Goff, one year into the job? He’s quite a happy guy, really. “One year in and three years older,” he said, sitting in his favourite spot on the leather couches in the anteroom to his office, enjoying the joke. He likes making jokes. He leans in quickly to shake hands, he’s still got a spring in his step.
He’s also still got a desire to get things done. His way. He barely had time to get his feet under the desk last year before picking a fight with the council-controlled organisation ATEED (Auckland Tourism, Events and Economic Development). Goff accused them of, among other things, excessive spending on staff perks and acting unilaterally to create a marketing campaign for the city.
Within months, ATEED boss Brett O’Riley had moved on. But Goff still has the outfit in his sights.
O’Riley’s replacement, Nick Hill, barely had time to get his own feet under the desk before the mayor wrote to the chair of the ATEED board, David McConnell, asking for Hill to conduct a “first principles review” of everything the organisation does.
The Spinoff has a copy of that letter. In it, Goff noted that ATEED seems to duplicate work done by government agencies like Trade and Enterprise, Callaghan Innovation and Tourism New Zealand. He also wondered whether ATEED was making the most of opportunities to work with local initiatives like “the Southern Initiative, COMET and the business improvement districts”. The first two of those are Manukau-based council agencies that coordinate educational, health and social programmes. ATEED already does some of this work but it’s a world away from what it has treated as core business: running big events like the Masters Games, enticing to entrepreneurs to set up shop here and sharpening the tourism potential of the place.
I asked Goff about the review Hill has been asked to do, thinking he would beat around the bush. He didn’t. He said it’s “a basic review of everything they’re doing and how well it’s being done”.
Does ATEED have a reduced budget? “Yes it does.” And reduced staffing? Yes, that too.
“Look, we do need a body to promote Auckland as a destination, and to promote us as a city with work skills,” he said. “But why would we want to double up on the work of government bodies like the Ministry of Business, Industry and Economic Development?”
So does he even value the work ATEED does? “Auckland did very well from the Masters Games,” he said, but then added that sometimes ATEED talks about events as if it made them happen when really it’s “a contributor”.
Was that the case with the Masters Games? In that instance, he acknowledged, “they were a driving force”.
Phil Goff and Nick Hill both spoke at a function last night to open the innovation hub Grid AKL’s new Generator building, in the Wynyard Quarter. Goff was excited about innovation and quoted the late Paul Callaghan: “a place where talent wants to live”.
“I thought that was so good I stole it for my campaign slogan last year,” he said. Which was true.
Hill made an amazing speech. He looked at the notes his comms team had given him and then said he had some other things he wanted to say. So he tossed the notes aside. After calling innovation “really really important”, which made everyone feel good, he said that when you strip away the population growth, productivity in Auckland “is actually going backwards”. Then he pointed out that the room was full of white people and most of us were male as well.
“What we need,” he said, “is an innovation corridor, running north south through the city. We need to be linked up to what’s happening in Manukau and in the Southern Initiative. We need to be talking about how we generate real value. Not the buildings, but the people side.”
It felt like a real throwdown to Goff. Five weeks into the job, the new ATEED boss was saying to the mayor he was totally on board with the idea of bring the people of south Auckland into the equation.
Meanwhile, Goff has a long-term budget to resolve. Spending has grown “because of the marked growth in population” and rates income hasn’t kept up. He can’t borrow more because that would impact the credit rating, not just of Auckland Council, but of all local councils. And it’s not credible to make the budget work just by cutting off ATEED and/or whichever other parts of the council body he doesn’t like. When he says all the easy options have gone, he really means they’re already well into the not-so-easy options.
They’re debating hot-button topics like whether sports clubs should pay for the privilege of using the playing fields. (It was fascinating listening to Cr Dick Quax at a recent meeting, trying to reconcile his commitment to kids in sport with his user-pays approach to politics. The kids won.)
Library staff numbers have been cut. The operating budgets of the museums, galleries and sports venues that come under the Regional Facilities umbrella have been gouged. Auckland Art Gallery lost over $1 million from last year to this: a cut of 13% on top of other cuts in previous years.
And on it goes. The trouble is, at the same time we now know the council pays its staff (many of them but not all) salaries that are absurdly out of whack with the private sector. There are mid-level professional staff with no management function at all paid well over $100,000.
Goff said things were changing. The salary of the incoming CEO of Auckland Transport is $100,000 less than that of the outgoing one, “and there are no bonuses either”.
That’s good, I said, but using attrition to drop the top salaries is easy. You’ve got a workforce with established relativities and it looks like far too many of them are earning far more than private sector equivalents. How are you going to fix that?
“I’m not happy,” he said. “We have to compete for staff, but I have to be convinced we are not leading, but following.” He said he wanted to be satisfied that salaries were in line with what council officers were paid “in places like Wellington, Christchurch and Brisbane”. Although the Herald story had suggsted Brisbane salaries were much lower and he wasn’t sure if that was right. “That might be a case of comparing apples and oranges,” he said.
But what was he going to do? “The public need an assurance we are paying good people at an appropriate level.”
Given that you can’t just undo employment agreements or the relativities around them, that assurance will be a while coming.
Is the council really spending its money well? The question usually gets asked in a political way: why do ratepayers have to pay for this project or that service? But what if we leave all those questions out of the equation and accept that the council has the right to decide what gets funded? After all, that’s what we elect them for. Do we – do they – really know that any given project or service is operating as cost-efficiently as it should be?
Goff says he’s doing his best to find out. He’s got a guy in his office called David Wood who is in charge of that. Wood, a former Treasury official, is director of finance and policy, and it’s hard to find anyone who loves his work.
That’s not necessarily a bad thing, of course, if he’s the guy asking the tough questions. But there are many who say he asks the wrong questions. We’ll return to this in a future article.
Goff has put city planning for the America’s Cup is in the hands of a committee chaired by council CEO Stephen Town, with the relevant council and government agencies all represented. The mayor has asked them to look at all the options for a site to house the syndicates and highlight “a couple of the most likely”.
Auckland won’t even know for sure it will host the cup until August 31 next year (Italy is formally on standby) and everything has to be ready for the arrival of the first boats in the middle of 2019. That’s basically no time at all.
If they use the current Tank Farm (Wynyard Point) there will be massive problems clearing and cleaning the site in time. Captain Cook wharf isn’t big enough, so some syndicates would have to go elsewhere. Whangaparāoa is too far away. Westhaven has traffic issues and so does the naval shipyard at Devonport. Halsey Wharf would involve building out into the harbour and what happens to the site after that? Put the whole lot in the Orākei Basin, with a drawbridge? (Sorry, nobody has suggested that. It’s just an idle thought).
“The America’s Cup will bring hundreds of millions of dollars into the Auckland economy,” said Goff. Well, probably yes. But it’s a worry that nobody is yet talking about an inspired option for where the boats will be based. This thing has to leave our city better than it found it, not with a bloody great legacy problem somewhere on the waterfront.
As for the sewage, next month the council will start its new high-tech advisory system for the water quality of beaches. We’re going to learn there’s a lot more pollution in the water than we thought.
Yes, there are plans to fix this, with three big new “interceptors” soon to be built so that sewage doesn’t flow into the harbour. Half the budget has already been set aside in the current 10-year plan. But there’s no scope for the rest when they renew that plan. Goff wants to use a new funding model, involving private investment through an infrastructure fund, which would eventually be paid back out of water rates. He’ll need government support to set it up.
“I’ll bite the bullet and say, ‘Let’s do it now’,” he said. “We’ll solve 80% to 95% of the problem. Now that’s worth doing.”
This proposal, along with everything else related to the long-term plan, will come before council in the next couple of months and will be up for public consultation in the new year. The plan covers the next 10 years and gets updated on a rolling basis every three years. Making it workable with almost no money to play with will be by far the biggest test of Goff’s mayoralty this term.
That $630 million proposal for walking and cycling? Goff was keen on the idea, in general, but it’ll get flicked on to government. The council is already spending 37% of the rates on transport and there’s no scope for big new ideas like that.
Help for the schools? Goff will not be lobbying central government for an Auckland allowance for teachers. “If you do that, what about all the other people who deserve it too?” But he will continue to make the case that they need to build a lot more houses a lot more quickly.
As for herding the council cats, that’s almost easy by comparison. Goff gets a wistful look when he talks about how he misses the “disciplined political environment” of parliament. He means he doesn’t have a caucus he can boss around.
But it has advantages, surely, I said. You got to choose Bill Cashmore as your deputy (Cashmore belongs to the National Party, Goff is Labour). Don’t you value that?
“Oh well, yes, of course I do,” he said.
The cross-party allegiances work well on council, even if they do mean the mayor has to keep making sure he has enough support for his proposals. He’s got National, Labour and independent people in his kitchen cabinet.
Goff also looked wistful about what he called “the lack of checks and balances”. There’s no Treasury to contest the official advice from other departments, he said, and no Department of the Prime Minister and Cabinet.
In fact, that’s not really true. The council officers under CEO Stephen Town can contest the advice of the CCOs. More directly, the Office of the Mayor was established precisely so the mayor would have advice independent from Town and his officials, and from the CCOs. With David Wood in charge, Goff is getting that independent advice.
As for Winston Peters, Goff is waiting – just like the rest of us.
simon@thespinoff.co.nz @simonbwilson
The Spinoff Auckland is sponsored by Heart of the City, the business association dedicated to the growth of downtown Auckland as a vibrant centre for entertainment, retail, hospitality and business.
