Herald Maths

October 15th, 2012 at 12:00 pm by David Farrar

Bernard Orsman at reports:

 Seven chief executives and their staffs plus 49 directors are responsible for 75 per cent of the Super City’s services.

Auckland ratepayers are spending $13.1 million a year to pay for seven boards of directors, seven chief executives and seven executive teams who run much of the Super City.

The seven council-controlled organisations (CCOs) run about 75 per cent of Super City services at arm’s length from the democratically elected .

I don’t know about you, but $13.1 million for governors, CEOs and executive teams seems pretty reasonable to me. The Herald doesn’t state how many staff are on the combined executive teams, but an average of under $2 million per CCO for a Board, a CEO and a senior executive team does not seem unreasonable. The combined Auckland Council spends $2 billion a year.

The chief executive salaries range from $330,000 for the head of Auckland Tourism, Events and Economic Development, Brett O’Riley, and Auckland Council Investments’ Gary Swift, to about $710,000 for Watercare boss Mark Ford.

The Herald estimates that Mr Ford’s salary is the equivalent cost of Aucklanders taking about 9.5 million showers.

This is the part I really wanted to blog on. I’m sorry, but what the fuck? How is this a useful or relevant stat? Tell me what his salary is as a percentage of Watercare revenue. Is the Herald now going to write about the salaries of Telecom CEO in terms of the number of e-mails of the same cost? Or the salaries of a newspaper editor in terms of the number of website ads served?

If the comparison had been to the number of days water to a household, I’d find that semi-useful. But unless you know how much of your daily water use tends to be a shower, then the comparison is useless. The suspicion is it is used to just make the salary sound really bad.

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17 Responses to “Herald Maths”

  1. tristanb (1,127 comments) says:

    Google states greater Auckland population of 1,377,200. That’s about seven showers each.

    If we got rid of this guy, and our rates were reduced, we could all have two showers per day, every day, for one week of the year. I welcome this utopia.

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  2. williamsheridan (63 comments) says:

    Mark Ford is also the Chair of Auckland Transport and doesn’t get paid the $105,000 that usuallly goes with that position…. although I’m not sure that a chief exec of one Council CCO should be Chair of another… but his overall “salary” reflects that.

    Come to think of it, the Watercare CEO must be quite an easy job as Mr Ford also has time to be Chair of Solid Energy and Chair of the Christchurch Infrastructure rebuild team….. no wonder Watercare has the highest paid executives if the chief executive is so busy elsewhere.

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  3. hinamanu (2,352 comments) says:

    Just wait till the water meters come in and all the staff needed for the admin and all the glorious admin costs passed to rate payers as in Oz the media never talks about. I’m surprised with your ignorance about what’s really going on in the world Mr Farrar.

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  4. RRM (9,933 comments) says:

    I’d like to think that – in the interests of having effective leadership – the boards of any council-owned or Govt-owned businesses would remunerate well enough to attract decent candidates, but not be the highest out of comparable private companies in the job market…

    Unfortunately the Herald didn’t see fit to make their article useful by including any such useful comparisons… I guess it’s more fun to compare things to the price of taking a shower?

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  5. orewa1 (410 comments) says:

    Hinamanu – the meters are here already in many suburbs, the new meter readers are in place, and monthly bills arrive in the snail mail with depressing regularity.

    A service that we used to get as part of the rates became a separate 6-montly bill, and has now become monthly. A huge job creation scheme for meter readers, posties, and Mr Ford’s executives.

    And have we seen rates go down to offset this considerable impost? Yeah right – Watercare.

    I am happy to pay a fair contribution for collection and reticulation of water, but it should be collected in the most cost-effective way. Rates were an efficient way to do this.

    Monthly snail mail categorically is not. It creates a considerable wasteful administrative cost that has to be passed on.

    Another blow stuck for the unelected, unchallenged bureaucrats of the super city. Taxation without representation.

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  6. fish_boy (152 comments) says:

    Didn’t Rodders waste some space in the Herald on Sunday moaning about what happens when an unelected, unaccountable and out-of-touch politburo runs things? Pity he didn’ty have that revelation before he set up his shitty super-city model where the administration is full of the unelected, unaccountable and out-of-touch.

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  7. williamsheridan (63 comments) says:

    I got to googling following a further read of this… and while I’m not a conspiracy theorist I wonder about the wisdom of the Chief Executive of a company in Auckland that is awarding contracts to a Christchurch company (CityCare) also being the Chairman of an owner group of which that Christchurch Company is a member.

    http://www.stuff.co.nz/business/rebuilding-christchurch/7715162/City-Care-pipes-in-extra-5m-of-profit

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  8. campit (467 comments) says:

    Would be more useful to compare how much ratepayers pay for water around the country.

    In Auckland I pay $1.34 per cubic metre of water, plus a waste water charge. In Rolleston they pay 0.33c per cubic metre with no wastewater charge. So Auckland ratepayers are paying more than four times as much as their counterparts in the Selwyn District, plus a wastewater charge.

    I guess there are valid reasons – replacement of ageing pipes, a pipeline from the Waikato etc – but I can’t help feeling I’m being ripped off for my water.

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  9. peewilly1 (1 comment) says:

    As William Sheridan has pointed out, isn’t it time Mr Ford’s commitments were scrutinised. While his fees from outside
    jobs are paid to Watercare and not him personally, wouldn’t Watercare be better off with someone who can devote to the job full time. Is there any other so called full time CEO in New Zealand with a chairmanship of an SOE, a CCO and a major project such as the Christcurch rebuild. This after his role in the super city merger? When did he last devote his time full time to Watercare? Does Watercare therefore need a full time CEO? Is the person deputising for him being paid a higher duties allowance in his absence? Don’t water users in Auckland deserve some answers to these valid questions?

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  10. lastmanstanding (1,297 comments) says:

    I used to get 2 bills a year for watewr rates about $120 each so $240 pa. Now getting a monthly bill of $60. Thats $720 pa. An increase of 300%. Thats how come Ford gets paid $710K for running a monopoly.

    If a private company with a monopoly increased its prices 300% the Commerce Commission would step in and force a back down.

    Not with Auckland Council. Bunch of thieving bastards all of them.

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  11. MT_Tinman (3,204 comments) says:

    9.5 million showers.

    A shower a day for a week each?

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  12. Auberon (873 comments) says:

    Vlad strikes again.

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  13. KH (695 comments) says:

    I think DPFs view that these salaries are reasonable is a beltway insiders view.
    While of course the CEO positions are vital to organisation performance, there is absolutely no evidence that these astronomical salaries are neccessary to ensure CEO performance.
    An advertised salary of say $150,000 would generate many many applicants, many of whom would be very capable of undertaking the task, often to a superb performance level.

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  14. williamsheridan (63 comments) says:

    I see that Mark Ford actually steps down as Chair of Auckland Transport next month when Lester Levy takes up the role…. so maybe he will have some time on his hands to actually be Chief Executive of Watercare.

    I se the following was announced at the time he ws appointed”

    “Mr Ford will be paid a salary of $630,000 plus a performance bonus of up to 15%. Any fees that he receives from his chairmanship of Auckland Transport will be paid to Watercare.”….

    …. so I wonder if the same deal goes for his Chairmanship of Slid Energy, or his chairmanship of the Christchurch Infratsructure Group, or the position he has on the Better Public Services Advisory Group….

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  15. Patrick Starr (3,674 comments) says:

    I think Orsman is doing a vital job pointing this old boy newtork out. Certainly under the governance structure the councillors are incapable of doing anything about it.
    Make no mistake, Mark Ford designed the structure, set himself and his ‘loyal mates’ up in key jobs to run a frikken monopoly. My water rates have risen over 200% since this bastard placed himself in this untouchable position.

    He runs a monopoly for fucks sake, no revenue issues, no competition issues, not even any governance issues – and the only person keeping any eye on the situation is the herald!!

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  16. UrbanNeocolonialist (289 comments) says:

    I too struggle to see the value added by all of these gold plated director salaries. It is a comfortable assumption by those with their snouts in the trough that they are worth it – but as we have seen in all areas over the last few decades Management capture of compensation decisions has far more to do with the high levels of pay than any actual value they add, in last 50 years it has gone up 10 times relative to other employees. It is purely a sense of entitlement amongst executives that drives it.
    http://en.wikipedia.org/wiki/File:CEO_pay_v._average_slub.png

    It is particularly objectionable when we are forced to pay monopoly organisations that pay whatever they want to without ever having to answer for extravagance, and seldom for performance (I used to work for a state monopoly 20 years ago and know just how lax they are)

    The only answer is to remove all compensation decisions from the organisations in question – and have them minded by someone ruthless who is not part of the director ‘system’. Give that person a bonus that is 50-50 dependent on organisation performance+keeping the wage bills down. They will soon find ways to get cheap effective management.

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  17. Lee C (4,516 comments) says:

    “He runs a monopoly for fucks sake, no revenue issues, no competition issues, not even any governance issues – and the only person keeping any eye on the situation is the herald!!” and now KB –

    ‘Reasonable.’ . .. .ok then. But,

    well I’m reminded of Richard Prior’s parting shot to a taxman in the Film ‘Blue Collar’

    “Yeah and if I had the police and the army behind me, I’d be a mother f**ker too.”

    So, like, we have any choice. . . . any more than we do about , paying for garbage sacks on top of paying the rates (again) for someone to pick ‘em up and take ‘em away. What’s next, getting charged rental for the spot we put our garbage on while they are waiting for collection.

    Just another way to treat people like a cash-cow. These people have diminished civic service to a form of parasitism.

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