Transparency in business, is the availability of all information, without hidden agendas, to make good and sound decisions.
This is a fundamental principle when spending money from the public’s pocket.
While I’m confident our Council adheres to this principle, in my past two years as a Councillor there have been times where it’s been called into question.
Most in Lower Hutt will be aware that over the past 3 years the Council has undertaken a bold strategy to revitalise our City through a number of capital projects. Something that I support for the most part.
Unfortunately, what people don’t always see is the tactics employed to get some of these projects over the line. Budget ‘reworkings’, off-loading of extra costs (taking from Peter to pay Paul) and a lack of clarity around the total cost of projects are just a few of the tactics that I have witnessed.
The worst case of these tactics being employed is the work associated with the Council’s Administration building, Riddiford Gardens and ANZAC Lawn projects.
Let me explain; in early 2013 a budget of $22m was set for work on upgrading and earthquake strengthening the Council’s Administration building on Laings Road.
When it was realised that this budget did not include all associated costs, instead of coming back to Council and requesting further funding (what should happen), $1-1.5m of costs associated with the ‘building frontage’ was put into the Riddiford Gardens budget without any additional funding being allocated. The ANZAC Lawn project ($1m) was also thrown into this budget even though none of this work was considered to be part of the Riddiford Gardens project.
The result: An impression that the Administration Building will be completed within budget was created. The budget of $5m for the gardens will be blown with little of the actual work planned being completed. Council will now be asked to approve an unbudgeted $3m to make up the shortfall.
Interestingly, I’ve figured out that the only way I can get a genuine grasp on how much ratepayer money has/is being spent on projects in our civic centre is by adding all of the actual spend together, as well as the cost of what is needed to complete the projects. That figure comes to $60m.
That’s $1,600 per dwelling in Lower Hutt being spent in a 300m radius over a 3-4 year period. When you crunch the numbers you start to understand maybe why things aren’t as transparent as they should be.
Here are some more examples of budget reworking and the off-loading of extra costs associated with capital projects:
The redevelopment of The Sir Walter Nash Stadium (something I wholeheartedly support) came in at a cost of $12m. At the time of completion it was cause for celebration that the project was completed within budget – technically it was, but only after $350k in cost associated with the project was offloaded onto the Parks and Gardens department of Council (additional budget was approved for Parks and Gardens on this occasion).
Similarly, the Regional Bowls Centre in Naenae. During public consultation, the public were told the project cost to rate payers would be $4m. However, after consultation it was revealed that an additional $450k of project associated costs would again be lumbered with the Parks and Gardens department of Council.
The Avalon Park project is another example – $150k was taken from a playground maintenance budget to help cover extra costs associated with that project. This practice means much needed maintenance and/or projects in other parts of the City are delayed or forgotten about.
Case by case this may not seem big in the context of multi-million dollar projects, however the bill starts to add up when this happens regularly.
What really gets me is that this money comes from the same source – rate payers! So the only thing achieved is a lack of transparency around information, a misled public when it comes to the real cost of projects, and more cost eventually having to be stumped up by rate payers.
The other major concern I have is the Council’s habit of only approving say 50% (for example) of a project knowing that more money will be needed to start or complete that particular project.
Some argue that this simply shows intent for a project without fully committing to it. However in practice, from what I’ve seen, the Council becomes committed every time. The only time this can make sense is when a project is clearly staged and the first stage doesn’t necessarily rely on any of the future stages to be funded.
The key reason why I think this happens is so that the Council’s overall budget remains within the bounds of its financial strategy. If all projects were budgeted for properly, then the debt target of $120m (that we have set) would be breached or rates would have to be increased above the level of inflation – both which are in breach of the strategy.
The problem with this approach is that you are operating on a false economy. Sooner or later it will catch up with you and you’ll eventually have to cut other projects that the community has been waiting a long time for or you will have to cut services that people rely on.
My solutions to these problems are very simple.
- When a project is consulted on and considered, every single dollar which is coming from the ratepayer (doesn’t matter what budget or department) should be clearly outlined in the total cost.
- If significant money from an existing budget is going to be used towards a capital project, then it should always go to Council for a decision so the public can understand the ramifications and have their say.
- If you approve a project, then budget for the full cost of that project from the start – Always. If you don’t want to fully commit to the project, then have conditions tied to the budgeted amount. Simple.
- Change the Council’s financial strategy so officers aren’t forced to get creative with the City’s budget in order to comply.
- When setting budgets and reporting on costs be as transparent as possible. This will help Councillors make the best possible decision for the benefit of our City.
I’ll leave you with one question to ponder.
If, 4 years ago, you were consulted on a, let’s call it, ‘Civic Centre project’, which included the Administration Building, Town and Horticultural Halls, Riddiford Gardens and ANZAC Lawn, and were told it would cost you $50-60m total – Would you have seen this as a good spend of rate payer money and a priority for our City?
No matter what your answer is – Understanding the total cost (and benefit gained) would have led to a more informed public, and ultimately a better and more sound decision by the Council either way.
Always keen to hear your thoughts?