Super city may not deliver big savings

Aucklanders might not see much in the way of savings from the super city model, says a financial report ordered by the Royal Commission on Auckland Governance.

Turning Auckland into a super city is predicted to cost between $120 million and $240 million over four years and bring savings of between $76 million and $113 million by 2015, according to Taylor Duignan Barry.

But a report by the financial consultants says the reviews of local government shake-ups in Australasia do not provide evidence of large efficiency gains.

A number of submitters, including the Auckland Regional Council and the Employers and Manufacturers Association (Northern), predicted savings of $160 million and $132 million respectively.

The commission also heard how the creation of a mega-city of 2.6 million people for Toronto cost C$275 million ($390 million) and was predicted to bring savings of C$300 million a year. Eight years later a report found the reforms generated few, if any, savings.

Taylor Duignan Barry said the findings of its report were a preliminary and partial assessment based on the Auckland councils' 2008 annual plans.

It estimated efficiency savings of 2.5 per cent to 3.5 per cent of the councils' total $3.2 billion in spending this year. Many of these savings would come from shared services.

The report also identified savings in water and wastewater, stormwater, community assets and regulatory/planning/governance areas.

Its findings were based on half the 6356 staff from the existing eight councils being employed by the super Auckland Council and the other half by the six local councils. Details about staffing levels will not be known for some time.

Commission chairman, retired High Court judge Peter Salmon, QC, said he anticipated local government would pay for the practical costs of the transition and the Government would pay for an establishment board overseeing the transition.

Councils, which are going through the process of setting new 10-year plans and budgets, have not set aside money for transition costs.

North Shore chief financial officer Dale Lott said if the council was instructed to meet any costs it might have to reprioritise other spending.

The royal commission has recommended one rating system.

Under its model, ratepayers would receive one rates bill with a component for the activities of the Auckland Council and a component for local council services.

Local councils would also be able to ask the Auckland Council to set targeted rates for special projects in their communities.

The Auckland Council may choose to phase in a single rating system to avoid a repeat of the Auckland Regional Council rates revolt in 2003.

COSTS

* Turning Auckland into a super city will cost $120 million to $240 million over four years.
* This will lead to savings of $76 million to $113 million by 2015.
* Many of these savings could be spent on new functions or improving services.
* Auckland will have a single rating system that is still to be decided.