Goff’s fiscal laxity exposed

McGreedy Winder & Co do a monthly newsletter called Town Hall that focuses on the Auckland Council. It is excellent reading and well worth subscribing to for those interested in Auckland.

Their analysis of the Auckland Council’s latest budget is so astute that I thought I’d share some key aspects here:

Alongside its torrid passage, the budgets noteworthy characteristic was the most fiscally lax approach that has been seen in an annual plan to date. To be honest, if you are even remotely a fiscal conservative who thinks Auckland Council needs to tighten up its ship, it was an absolute shocker.

So why was it so fiscally lax?

Internal council documents provided to the Town Hall show that the efficiency savings achieved during the 2017 budget process were a meagre $11.3 million (in the context of a $3.8 billion operating expenditure budget). To put this another way, Mayor Goff’s first annual budget delivered efficiency savings of 0.30%.

So that is bad enough – Goff only found 0.3% of spending to cut. But they find that half of even that paltry $11 million came from Auckland Transport (which can be done by capitalising some opex). How much came from the Council itself:

The truly staggering number though, is the savings generated within the Council organisation itself. From its $2.957 billion operating budget, the cost cutting crusader of a Mayor managed to find
$800,000 in savings. Despite all the Mayors huffing, all of his puffing, he could only drag 0.03% of savings out of Council’s bureaucracy.

Let’s put that into context. Say you are in a household spending $100,000 a year. Things are tight so you need to save money. This is equivalent to reducing your annual household spend from $100,000 to $99,970.

And finally to add insult to injury:

The budget includes an additional $1.2 million for 17A cost efficiency reviews (that were discussed in the March edition). So, the initial budget impact of the Mayor’s much heralded efficiency drive, in the financial year that starts tomorrow, is to increase costs by $1.2 million. For lovers of the slap stick, that is 50% more than the council organisation managed to capture as efficiency gains during the budget round.

So Goff has spent more trying to save money than the Council has actually saved. Someone should turn this into a Yes Minister episode.