Councils can’t identify spending cuts

Thu, May 28 2009

To its credit, as part of its overall budget exercise, the National Government managed to find $2 billion in concrete spending cuts and savings over the next four years, enabling them to re-direct these funds into alternative priorities. To document this, it published a list of the specific cuts and amounts saved.

I wouldn’t agree with everything on National’s list, but I heartily applaud the exercise, and contrast it with the performance of our Hastings, Napier and Regional Councils.

None of these Councils has shown its constituency such a list; in fact, none has even proffered a specific dollar claim regarding monies saved through any reviews they might have conducted.

Instead, we get unconvincing “boilerplate” —general reassurances that staffs have diligently combed through their activities to cut out the fat and eliminate under-performing program or low priority projects.

From Hastings Council: “The budget … reflects one where discretionary funding has been kept to a minimum and every attempt has been made to examine baseline funding and apply pressure to achieve efficiencies.” So, other than close the Blackbridge dump, where are the examples?

From Napier: “Council has prioritised its spending plans by … identifying those services where cost reductions or reduced levels of service or discontinuation could be considered. Review of services delivered and the cost effectiveness of the service and its delivery are ongoing.” Yeah, right! Again, no specifics.

From HBRC: “Council’s practical response … has been to reduce operating costs across discretionary areas of the budget such as travel, training and consultancy.” Sounds like a pittance to me. Again, no specifics.

I’ve made submissions on each Council’s LTCCP (here’s my Hastings submission for hard core readers). In each case, I have included the following recommendations regarding improving the budget process:

1. Before final adoption of the LTCCP, Councillors should be given an opportunity to re-set the baseline operating cost of their Council by reviewing an 09/10 budget alternative reflecting a 5% reduction from the previous year. Maybe that scenario will prove unacceptable. But it deserves a look.

2. Councils should implement one or both of the following external budget review procedures:

• Employ an external budget examiner, in the manner of the present Government’s “purchase advisers,” to scrutinise the current budget and spending practices, and recommend savings options. And/or,

• Appoint an independent citizens budget review committee, consisting of five or so suitably informed individuals, empowered to annually review and evaluate the Council’s financial management and operating efficiencies, and make a timely report to coincide with each year’s public consultation on the annual budget.

The goal is not to substitute the priorities of un-elected members of the public for those of Councillors, but rather to inject fresh, informed and independent (the key word) thinking into assessing spending efficiency. This would enable both Councillors and ratepayers to receive reasoned alternatives to “business-as-usual” staff recommendations.

3. To help nurture “out of the box” thinking across the board within Councils, each Council should institute an annual staff awards program, perhaps in cooperation with other area councils, to publicly recognize staff members who initiate significant cost savings, program efficiencies, or program innovations that deliver superior results to the status quo.

The approach our Councils take in constructing their budgets oozes a sense that what ratepayers are paying for today is an entitlement — codified in past murky budgets and now enshrined and protected from any zero-based scrutiny. Their only option for future budgeting is then to assume they will start with that entitlement, and add more. And of course Councils are loathe to consider adding less than the rate of inflation, and even less disposed to consider whether they could make do with fewer staff, the largest operating expense in the budget.

In any times, but particularly in such dire economic circumstances as we face now, ratepayers deserve to see genuine cost reduction options, whether these entail operating efficiencies or actual reductions in service levels. But the ratepayers are never presented with such scenarios. Indeed, Councillors never even ask to see them.

To be clear, I’m not a knee-jerk anti-spender. But I am fanatical that our ratepayer funds should be spent smartly and in true reflection of currently justified needs. Indeed, there are areas where I would spend more.

However, the starting point, at least at every three-year review of the LTCCPs, must be a rigorous and well-documented examination of savings opportunities, with a public report of same.

ENDS

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