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Bernard Orsman

Bernard Orsman is Super City reporter for the NZ Herald.

Tight belt starts at city's top

In Auckland, 113 council staff earned more than $200,000 in 2013, up from 98 in 2012.
In Auckland, 113 council staff earned more than $200,000 in 2013, up from 98 in 2012.

When the dust settles on his sex scandal, Auckland Mayor Len Brown has another delicate task ahead - setting a lower salary for the new boss of the Super City.

Chief executive Doug McKay leaves the council in December, having been paid a salary of $782,887 in 2013, about the same as Watercare boss Mark Ford.

Council executives' salaries came under fire during the election campaign, where Mr Brown defended salaries of nearly $800,000 to Messrs McKay and Ford, saying "You have got to meet the market".

Since making those remarks and taking on board "messages" around debt and spending, Mr Brown has promised to tighten the belt in his second term, starting with a pay cut for the new chief executive.

The council is due to appoint a new chief executive before Christmas.

A post-election Herald-DigiPoll survey found 73 per cent of Aucklanders think the new chief executive should be paid closer to or less than $500,000. Just 18.5 per cent believed the chief executive should be paid the same or more than Mr McKay.

Watercare chairman Ross Keenan said it was correct in dollar terms that Mr Ford's income rose between 2012 and 2013 from $710,000-$720,000 to $780,000-$790,000.

He said Mr Ford got a pay rise of about 2.5 per cent in 2012 and 3.2 per cent in 2013 following independent advice by remuneration consultants Strategic Pay. Mr Ford's salary showed a 10 per cent rise, he said, due to an accounting change for a performance-related bonus.

The 2012 bonus was paid in two blocks of six months, one in the 2012 financial year and one in the 2013 financial year. The 2013 bonus is due to be paid in one block in the 2014 year, which made Mr Ford's 2013 salary look high, Mr Keenan said.

He said as part of Mr Ford's contract he was allowed to chair state-owned Solid Energy and head a group charged with repairing Christchurch's earthquake-damaged infrastructure, but his fees for those jobs were paid to Watercare "and there they stay".

Regional Facilities chief executive Robert Domm said last month he turned down a 1.2 per cent pay rise from the board because he considered himself adequately paid.

The Australian, who took over the reins at RFA from former North Shore City chief executive John Brockies, began work in November 2011 on a salary package of $390,000. This increased by 2 per cent in late 2012 to $397,800. Mr Domm said his package would stay at this level at least until September next year.

At Brisbane City Council - a Super City like Auckland - chief executive Colin Jensen is paid more than $500,000. Last year, politicians criticised this figure, which was up from $330,000 paid to former city boss Jude Munro four years earlier. Politicians were also unhappy at figures showing the number of senior executives earning more than $200,000 jumped from 14 in 2011 to 48 in 2012.

In Auckland, 113 council staff earned more than $200,000 in 2013, up from 98 in 2012.

Seven of the 20 councillors responded to a Herald survey on the salary of the new chief executive. Most felt the salary had to come down, although new Franklin councillor Bill Cashmore wanted to reserve his position until he had all the information at hand.

New Waitakere councillor Linda Cooper said an appropriate salary was between $500,000 and $600,000, while another new councillor, Chris Darby (North Shore) envisaged something in the $650,000 to $700,000 bracket.

City Vision's Cathy Casey said the salary had to be "much less", while Albany councillor Wayne Walker said $800,000 was way too high and a lower salary would impact on second tier and other salaries.

He also criticised the salaries paid to the chief executives of council-controlled organisations.

In the past year Waterfront Auckland chief executive John Dalzell's salary rose 16 per cent from $380,000-$390,000 to $440,000-$450,000. Chairman Sir Bob Harvey said Mr Dalzell received an "appropriate" increase from the board for doing an extraordinary job in an extraordinary successful year.

Executive team costs at Waterfront Auckland rose 42 per cent in the past year - from $983,000 to $1.376 million. Reasons given include new general manager roles, changes to existing jobs descriptions and an increase in permanent staff numbers from 48 to 68.

Mr McKay's own executive team costs rose 14 per cent - from $3.1 million to almost $3.6 million due to "salary adjustments", the creation of a "transformation director" role and costs associated with a serious illness and filling the role temporarily.

Doug McKay's salary

Chief executive Doug McKay took home a salary of $782,887 in the latest financial year, including $17,067 in KiwiSaver contributions.

Last year, he made $839,106, but that included a $70,356 bonus paid for his work in setting up the Super City in the previous year. He received a 2 per cent pay rise in 2013.

Mr McKay - the first chief executive of the Super City - began work in 2010 on a salary of $675,000 with an incentive bonus of $75,000.

Soon after the end of the 2011 financial year, the CEO subcommittee, chaired by Mayor Len Brown, incorporated the bonus into his fixed pay and gave him a 2.5 per cent pay increase in line with other council staff.

Mr McKay described the change as "a conversion of a variable part of my income to a fixed part of my income".

Mr Brown said it made no sense to pay a bonus because unless he completely dropped the ball the council was bound to pay it - and council would be criticised for dishing out a bonus.

- NZ Herald

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