Sloppy
The Dom Post reports:
Millions of dollars and thousands of jobs will disappear from the Auckland economy when the super-city becomes a reality, an economics consultant says. …
Unifying Auckland local government should shed between 539 and 817 council staff. That, along with centralised purchasing from suppliers, should save the super-city council $181 million a year compared with what the present eight councils spend, said Auckland University public economics teacher Rhema Vaithianathan.
Now putting aside the fact most ratepayers will be delighted at savings of $181 million a year, shouldn’t the story have made clear this research was commissioned by the Labour Party? And should it not also have been made clear that the “economics teacher” is not just a member of the Labour Party but stood for the Mt Albert nomination just a few weeks ago?
This doesn’t mean her work is wrong – but the media should be upfront about this, when it is in such a subjective area such as economic modelling.
June 13th, 2009 at 2:54 pm
DPF – agree wholeheartedly – especially when the photograph of the writer in question which accompanies the story is blown-up-and cropped from a group photograph of the Labour aspirants for Mt Albert with their new leader!
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10568780
I’d actually call it shoddy work by the Herald; perhaps even shonky. It was a highly political and inflammatory story for them to publish on the eve of a by-election – late in the day too – it went up at 2.32pm. Just as well the blogosphere was onto it!
June 13th, 2009 at 3:12 pm
I love it how Labour are doing all the hard work in marketing the SuperCity for us. Thanks Labour!
June 13th, 2009 at 3:18 pm
Even worse I ran NZPA up, who ran a story, and suggested to them they should disclose her affiliations, but as far as I can tell they did not file an amended story.
June 13th, 2009 at 3:34 pm
Nothing changed through the evening DPF – the main saving grace was that Worth’s resignation pushed Ms Vaithianathan’s effort to the lower reaches of the web-page.
June 13th, 2009 at 3:44 pm
Centralised procurement alongside other functions like payroll and accounts payable and recruitment is a complete and utter no-brainer for the entire govt sector let alone the Super City.
Centralising procurement alone would save literally billions if applied to whole of govt.
Meanwhile, Ministers, finally, get around to asking their individual depts to seriously look inside their separate silos to identify efficiencies.
Good on the Nats for immediately implementing that particular no-brainer at the first opportunity but I mean FFS. Where oh where, is the cross-functional whole-of-govt thinking that will produce immediate and massive year-on-year benefits. By comparison, everything else is merely operating at the margins.
June 13th, 2009 at 3:59 pm
Sounds like someone needs a dose of “Economics in One Lesson”.
If the centralization of local govt results in these savings/cuts the money that the ratepayers save will not simply vanish into thin air.
The extra money the ratepayers now have will probably go into one of three things:
– Savings (where a bank will now invest it into productive enterprise)
– Extra spending (which will stimulate the sector where ever such money is spent)
– Personal Investment
It will simply be a transfer of capital and employment from unproductive bureaucracy to a productive enterprise of the ratepayers choice (of course some will feel the pain of such change – namely those who currently feed off the lose spending of local govt).
Once again.. this is *if* the supercity manages to result in efficiencies of scale and reduced cost to the ratepayer
June 13th, 2009 at 4:12 pm
Well crikey, djp, this is the whole reason for doing it.
Since the pitfalls and best-practices associated with such a transformation are extremely well known and well established, I am expecting nothing less than a world standard best-in-class achievement and if we get anything less I’m for one am going to be looking askance at everyone from Key down.
This is NOT rocket-science. It is NOT difficult to get it right.
June 13th, 2009 at 4:13 pm
A later NZPA story did appear to include the background to the author along with reaction from Rodney Hide, and I think the PR from the Labour Party indicated she was a member (so how NZPA described her as independent I know not).
The actual report is pretty much a once over lightly and is available here:
http://blog.labour.org.nz/wp-content/uploads/2009/06/transition-costs-and-job-losses-of-the-super-city.pdf
What it basically says is that because the efficency savings will be higher on the Government’s proposal than the Royal Commisson’s the transitional cost will be higher, but in proportion. The analysis basically says that because the efficency savings under the Govt option will be $181M p.a. vs $135M p.a. under the Royal Commission (34% increase), the average transition costs under the Govt option will be $325M (one off) vs $242M under the RC (34% increase). Simply a product of the assumptions rather than any sophisticated economic analysis. Duh.
reid I trust your comments on centralisation were tounge in cheek. Why stop at the public service?
June 13th, 2009 at 4:14 pm
Yes I thought her argument that less government spending was somehow bad for GDP was superficial to say the least.
June 13th, 2009 at 4:16 pm
Well reid you have got more confidence in local govt then me
I would much rather get rid of the power of general confidence then create this super city (just listen to all the dippy mayors drooling at the consolidation of power.. well, Banks anyway)
June 13th, 2009 at 4:22 pm
Why are you surprised DPF?
The Dom Post, which is less and less readable by the day, has always shown its liberal leanings, so this article it’s a logical continuation of a campaign of deception started years ago.
All you need to do is ask Tim Pankhurst, who master-minded it.
June 13th, 2009 at 4:52 pm
The local East & Bays Courier has for the last few weeks been running about 1/4 of the publication in anti-Super City crap.
If this was election year that whole publication would need to be counted as a Labour Party expense.
This weeks has the front page and another page dedicated to those unbiased opinion makers (yes Rhema Vaithianathan and Phil Tyford) rabiting on.
Good to see the Herald today had in the review section a reasonable article that showed only the Councillors in Rodney and Franklin seem to be against the super city. Even the cockies can see the value and benefit.
June 13th, 2009 at 4:54 pm
Now all the need to do is scrap the RMA and then businesses will save real money
June 13th, 2009 at 5:01 pm
What is wrong with that? Isn’t Bill English trying to cut central government spending? Isn’t this the same thing at Auckland level? Isn’t it equally desirable to make local government and national government more efficient? The loss of jobs might be unfortunate in today’s economic climate but as the economy improves new jobs should become available. After all it is the ratepayers who pay for it.
June 13th, 2009 at 5:04 pm
So let me get this right. From the article, If you save costs to the Auckland area ratepayers, (who as a Wellington, I’m not effected, but please humour me now) somehow this will result in lower GDP.
Now I’m not an economics master, but this is seeming to say, if we keep taxing everybody so we can spend more, GDP will grow. Hmmmm and he’s a Labour Party member?………
I think I know why we haven’t been growing as fast as the tax rate cutting Australian economy in the previous 10 years.
June 13th, 2009 at 5:05 pm
I’m perfectly serious, Simon.
All I’m saying is that the SuperCity outcome stands or falls on the operational efficiencies it brings, not the governance adjustments that are required to enable that.
It’s therefore primarily an operational question, not a political one.
The operational processes that require integration are very well known (not rocket science). This is a one-off opportunity to ditch legacy systems and processes that don’t work and implement world best-practice across the board.
Important features in that last sentence are: well-known processes and one-off opportunity.
Let’s be quite clear: there are multiple opportunities for fuck-ups here, and the politics of it tend toward someone deliberately planting those fuck-ups in order that when unforeseen time-bombs explode in future, those who disagree with the proposition can turn around and say “I told you so.”
My point is. This does not need to happen. It can become a beautiful thing, with elegance, grace, efficiency, magnificence. I’m not joking, this is within our grasp.
All the politicians have to do, if they want to avoid a time-bomb, is to expose the operations to sunlight, to give everyone a chance to see what’s going on, as it’s happening, so that everyone who knows about for example, waste management, can have a public chance to call bullshit on a plan that doesn’t make any sense.
That’s all they have to do.
Will they do that?
I don’t know.
June 13th, 2009 at 5:17 pm
Dr Vaithianathan said the burden of rates often fell on residents rather than ratepayers through increased rents and the cost of services, so the transition would cost every man, woman and child in Auckland between $220 and $289 equating to about $400m throughout the region.
One should argue that the burden of rates should fall on the residents for they are the people enjoying the services etc provided. To argue that ratepayers should shoulder the burden allows that about 25% of the community will pay the increased costs. That 25% being the legal rate payers i.e. property owners. Now can anyone tell me why only property owners should shoulder the rates burden?
To say residents will gave to pay increased rents because of increased rates charges defies reality. Rents have been under pressure for several years now and are currently declining so no room for an increase there and in any case the Residential Tenancies Act specifically prohibits landlords from charging rates to a tenant. So how does she anticipate those increased costs will be paid by the ratepayer?
The landlord can charge metered costs such as water or electricity but for a council the does not separately charge those services then the landlord pays for the tenants living expenses.
The RTA is being reviewed currently so feel free to make submission to the select committee asking for the law to be changed to allow landlords to charge rates to tenants.(who are the users of the services etc provided by thew council.)
You can make the submission at
http://www.parliament.nz/en-NZ/PB/SC/MakeSub/3/4/4/49SCSSresidentialtenancies200907031-Residential-Tenancies-Amendment.htm
Further information can be seen at;
http://www.propertytalk.com/forum/showthread.php?t=21501&highlight=residential+tenancies
June 13th, 2009 at 5:28 pm
Property owners take the risk and reap the benefit of the capital gain. It’s their choice. Rent should be priced so as to incorporate rates into that and newsflash: I believe they are.
The fact that property owners are no longer getting the unrealistic capital gains they’ve come to expect, is not the tenant’s problem. This is the downside of the risk they take.
Cry me a river.
June 13th, 2009 at 5:47 pm
reid if your argument works we should have a command economy.
The problem with centralisation (even in local govt procurement) is that while economies of scale favour bringing everything together, innovation declines and coordination problems increase. The duplication that comes from mulitple players is the price of innovation and dynamic efficency. That’s why monopolies get regulated.
June 13th, 2009 at 6:02 pm
The reason a command economy doesn’t work Simon, is because the govt is both the supplier and purchaser.
I’m not suggesting that, in any way.
All I’m suggesting is that the govt is the largest purchaser in town, so why not use its buying power?
June 13th, 2009 at 6:03 pm
So based on the figures Simon Arnold provides, under both plans the savings will approximately equal the transition costs after two years, but after that the Nat plan gives us another $46M per year, presumably to be used for infrastructure or rates relief?
Hot damn.
June 13th, 2009 at 6:28 pm
Is that ALL???????
June 13th, 2009 at 6:34 pm
Simon Arnold (14) Vote: 0 0 Says:
June 13th, 2009 at 5:47 pm
reid if your argument works we should have a command economy.
The Second World War was won by a command economy.
June 13th, 2009 at 6:36 pm
Now putting aside the fact most ratepayers will be delighted at savings of $181 million a year,
Especially the ones who lose thie jobs or the business owners who lose a major portion of their business.
Gotta love how the more efficient the right makes things the more private enterprise loses out.
[DPF: You don't understand that little part about how reduced govt spending leads to more private spending, savings and investment as peopel keep more of their own money. North Korea and South Korea are good examples of the different approaches]
June 13th, 2009 at 6:51 pm
Bzzzzt.
Again, billy, you are quite wrong. Very wrong indeed. WWII was won by the United States’ industrial might. See, although the major fighting occurred on the Russian Front, THAT DIDN’T MEAN the materiel was supplied by Russia. Au contrare billy, it was supplied by the US of A.
Oh dear, you really are quite confused aren’t you, billy.
June 13th, 2009 at 6:54 pm
Billy, the Second World War was LOST by two command economies. Germany and Japan.
June 13th, 2009 at 6:55 pm
reid, you are abysmally ignorant. What has capital gain and or losses have to do with citizens paying for the services that they use in the community?
Rents do not cover rates although they are alleged to do so and why should any property owner have to pay someones water bill or their rubbish bill?
These are anachronisms that have arisen from the age of the dinosaur and socialists,(which is the same thing I suppose.)
Rent is for the use of a property and its chattels not for the supply of council services. End of story.
June 13th, 2009 at 6:59 pm
Not at all, maybe you need to read a bit more of your history to see how the USofA operated and how it was virtually a command economy. GB also played a rather significant role, and it was even more of a command economy the USA.
June 13th, 2009 at 7:03 pm
Who says?
I disagree with your first sentence. But I would say that, wouldn’t I.
RE: the rest of your post, you sound like someone vigorously defending a vested interest disguised as an intellectual conviction.
BTW, self-disclosure: I myself am a property owner, but not of rentals.
June 13th, 2009 at 7:06 pm
Yeah WWII history in all its aspects has been one of my lifelong hobbies, billy.
Please be more specific, so I can pretend I’m a fighter pilot on the Mariana’s “Turkey Shoot.”
June 13th, 2009 at 7:10 pm
Keep your fantasis in your pants, I don’t want to be aprt of them.
June 13th, 2009 at 7:17 pm
It was regrettable, brutal, unnecessary and vicious billy.
On that, perhaps we can agree.
June 13th, 2009 at 10:12 pm
The issue of the command economy is not trival when the genetic stock is under threat. Strong leadership and ipso facto greater centralisation seems to have survival benefits. Regrettably local government procurement officers don’t seem to be under much threat right now so I’d be inclined to stick with a bit of diversity.
June 13th, 2009 at 11:39 pm
So, savings in local govt is a bad news story? How out of touch can labour get.
June 14th, 2009 at 2:02 am
I find it amusing how labour tries to spin a savings for greater Auckland ratepayers of $181 million dollars a year as somehow being a bad thing!