Coronavirus: Auckland mayor says pay cuts and freezes only one part of budget squeeze

Wednesday, 20 May 2020

A possible pay freeze at Auckland Council, and voluntary pay cuts among the higher paid, may deliver only 10 per cent of the $120 million the council has to cut from its budget in response to Covid-19.

The mayor Phil Goff said he thought wider cuts to staff numbers would be needed, something signalled to staff in an email on Tuesday, by the chief executive.

'The magnitude in the reduction in spending that the council is required to take is going to have to require taking measures that aren't pleasant - I wish we didn't have to do that,' Goff told RNZ.

The council faces a revenue hit of $450-650 million, and is asking 1500 staff who earn more than $100,000 to voluntarily give up between five and ten per cent of their salaries, for six months.

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The $120 million savings target has to be found in the council's own operating costs, of which salaries play a big part.

Public Service Association (PSA) national secretary Glenn Barclay.

'If we put pay rises on freeze for the coming financial year — that's got to be negotiated — that's about $8-9 million, the voluntary salary cuts is around $3-4 million,' said Goff.

Auckland's Upper Nihotupu Dam reservoir in the Waitakere Ranges at the depth of the drought. (Video April 2020)

A full review of council operations will be conducted, and more than 450 temporary or contract staff, have already been let go.

The trade union, the Public Service Association (PSA) said it would closely monitor the voluntary pay cut process, but that those on $100,000 or more could make their own decisions.

'We strongly oppose any pressure to take a pay cut being put on workers earning well below that amount, whether it comes from on high or from colleagues,' said Glenn Barclay, the PSA's national secretary.

A wider freeze on pay would require negotiations for those on collective contracts.

'We are pleased Auckland Council did not attempt to impose unilateral changes to employment terms and conditions on staff, but these are hard and uncertain times and many staff will be feeling anxious,' said Barclay.

The mayor, senior executives across the council group, and the chairs and directors of council agencies have all agreed to take six-month cuts of between 10 and 20 per cent.

Behind closed doors, Auckland Councillors are re-working a very different budget for the year starting July 1, to the one being finalised immediately before the Covid-19 lockdown.

Aucklanders will be given for the first time, a second chance to have a say on options, including raising rates by an average of only 2.5 per cent, instead of the previously proposed 3.5 per cent.

Goff said capital works, major projects to be built, may still run at around $2 billion a year, more than in recent times, but operating costs would be cut.