Catriona MacLennan: The hypocrisy of the Auckland Council

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Auckland Council's aim is to make Auckland the world's most liveable city. But how can a city be liveable when people can't afford to live here? It's a total contradiction.

The Auckland Council is also hypocritical, because it refuses to pay its own employees and contractors a Living Wage. And, at the same time, it regularly gives very large pay rises to council staff already earning the highest incomes.

For example, chief executive Stephen Town, who was already earning $630,000, in January 2016 received a $60,000 pay rise, taking his income to $690,000.

Town is the same person who said in 2015 that paying a Living Wage to Mt Albert Aquatic Centre swimming pool attendants would "have ramifications beyond your local board's area of responsibility and would have untenable consequences for me as the employer of council staff."

Auckland Transport's chief executive received a $20,000 pay rise in one year, while the mayor received a $10,000 salary increase in 2015. The heads of the Council-owned organisations are all paid between $340,000 and $680,000. All those earning the highest salaries at the council are male, and almost all are pakeha.

By contrast, those earning less than the Living Wage are mainly female and many are Maori or Pasifika.

The council has produced numerous plans and vision documents setting out its purposes and strategies as far ahead as 2040. These repeatedly refer to increasing inequality in Auckland, and call for action to dramatically improve living standards for those at the bottom of the heap.

Introducing a Living Wage would ensure that the council's own employees earned enough to live on, and would also set an example for other Auckland employers.

At the moment though, the council is going in the opposite direction. It is adding to inequality by continuing to give large pay rises to those on high incomes, while refusing to raise the wages of those earning a small amount.

READ MORE: Barry Soper: Minimum wage rise relatively respectable

Statistics reveal this very clearly. The number of council employees earning $100,000 or more rose from 11.5 per cent in 2012, to 16.8 per cent in 2015.

During the same period, the number of staff paid less than the Living Wage climbed from 15.4 per cent to 16.2 per cent.

I've written a report titled The Living Wage in the world's most liveable city in 2016 - Addressing inequality starting with Auckland Council. It lists 10 ways the council could afford to pay a Living Wage -

1. Freeze the pay of Auckland Council Group staff.

In the United Kingdom, Cornwall Council last year introduced a Living Wage for 1800 of its lowest-paid workers by freezing the pay of other employees until 2017. A pay freeze for Auckland Council 's staff would fit in perfectly with the council's aim of reducing inequality in Auckland, and ensuring prosperity is shared among all residents.

2. A long-term freeze on increasing the pay of those on the highest incomes in Auckland Council Group and the Mayor and councillors.

In 2013, it was calculated that 7 per cent of the council workforce earned over $120,000, costing a total of $127 million, or 20 per cent of the total salary budget. A reduction of the amount paid to those on salaries above $120,000 by 5.5 per cent, would have been enough to meet the cost of the Living Wage in 2013. Paying a Living Wage to employees and contractors in 2016 would cost less than 0.02 per cent of the council's budget, or under $8 million.

3. Defer or reduce some major infrastructure projects

The council plans to spend $5.3 billion on major infrastructure projects in the next decade. It will spend a further $5.8 billion between 2025 and 2045. Slightly reducing the scope of, or deferring, some major infrastructure projects would easily result in enough money to fund the Living Wage.

4, Defer or reduce some capital expenditure

Auckland Council projects it will allocate $18.7 billion of capital spending between 2015 and 2025. Once again, a small reduction would be ample to fund the cost of implementing the Living Wage.

5. Use efficiency programme savings

The council is aiming to reduce governance and support costs through an ongoing efficiency programme. This is forecast to achieve reductions of $21 million in year one, and $30 million from year two onwards. Savings in corporate costs are projected to reach $309 million a year by 2025. Allocating a small part of those savings to implementation of the Living Wage would allow it to be introduced both for employees and for councillors in 2016.

6. Reap the rewards of technology

The 10-year budget states that Auckland will improve its technology and processes to increase savings from $183 million for the 2014/2015 year, to more than $300 million per annum by 2025. Those technology savings could be partly used to fund the Living Wage.

7. Defer or cancel small local projects

The Annual Plan 2014/2015 records planned expenditure such as $17 million to upgrade public spaces in the CBD, including $900,000 on improvements to O'Connell Street to make it a people-friendly street; $2.1 million to upgrading Freyberg Square and $2.4 million to redeveloping Bledisloe Lane, including a new canopy. $11.5 million is budgeted for developing public spaces in the Wynyard Quarter, and $23 million for upgrading town centres. Deferring, downsizing or cancelling some of these projects would produce sufficient savings to pay for the Living Wage.

8. Reduce debt more slowly

The 10-year plan projects that the increase in Auckland Council's debt will slow in the years to 2025. Reducing debt a fraction more slowly than projected, would be enough to fund the Living Wage and would have a negligible impact on the council's overall debt.

9. Borrowing

The cost of the Living Wage could be funded through borrowing. The council's debt is expected to be $11.6 billion by 2025, so borrowing a few million to pay for the Living Wage would result in only a fractional increase in the council's overall debt.

10. Use the proceeds from the sale of surplus property assets

The council expects to sell an average of $66 million of surplus property assets each year in the next decade. That money could be used to finance the implementation of the Living Wage.

Auckland Council currently has an asset base of $42 billion and annual income of $3.6 billion. The council's asset base is projected to rise to $60 billion by 2025. It's not that the council can't afford to pay a Living Wage. It simply chooses not to do so.

It's time for councillors to put their money where their mouth is and adopt a Living Wage in 2016. If they can't do that, they should stop calling Auckland "the world's most liveable city." For those on the lowest incomes, our city is not liveable at all.

Catriona MacLennan is a barrister and the co-winner of the 2015 Bruce Jesson Foundation Senior Journalism Award for her report on Auckland Council and the Living Wage

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