Column: Budget review could reduce expenditure

There was an interesting letter to the editor last week, suggesting I was being a little hypocritical.
On one hand, I supported the inclusion of the airport infrastructural interest in the rates, then I decried the large increase in rates on business. I can understand how it seems hypocritical and justifies an explanation.
The council's process of rates consideration is in two parts: the budget for the coming year, considering the total amount it is going to spend, and the model used to allocate the amount that needs to be generated from ratepayers.
The annual budget underwent review by council officers. The initial budget saw a considerable increase in the total rates to be collected, compared to last year.
Most of us are aware of the public furore when it was explained the increase was needed to meet the airport interest bill. I was very supportive of the council's role in the development of infrastructure by providing assets such as roading and sewerage, and, yes, by building the airport. I stand by that position.
However, I believe the Rotorua District Council budget for next year should be further reviewed to see whether the level of overall expenditure could be reduced.
The budget for July 2011 to June 2012 is based on the projection contained within the  10-year plan, moderated by the pattern of expenditure evident in the current year's actual accounts. This is normal business process.
The current annual plan suggests, in the statement of cash flows, an overall cash income of $125 million, with $66 million driven by rates.
On the other side of the equation, the report shows $33 million being paid in various employee payments via wages and salaries. This indicates wages are a substantial component of the financial structure of council operations.
During last Wednesday's debate about the rating model, one councillor questioned whether the proposed model was achievable, given this year's expenditure on wages was running at $520,000 over budget at the end of December. If this is the case, a question has to be raised on the effectiveness of management control over budget expenditure.
Perhaps now is the time for a review of the overall scope of council activities. Alongside the core functions, there are a number of business units including activities such as the Tourism Information Centre, The Organiser, the Museum, CastleCorp, the Nursery and Events and Venues. Many of these are run at a net cost to the ratepayer. Although having them with council may be "nice to have", are they a "must have"?
Other councils have looked at other ways to provide similar products and services. There has to be a valid reason why these councils have moved some services externally.
Reviewing the provision of services would not necessarily result in a reduction of service - it may result in a change in the way the service is provided.

- Roger Gordon is chief executive of the Rotorua Chamber of Commerce