Labour Auckland Council figures wrong

The Labour Party’s claims surrounding Auckland Council transition costs show a fundamental misunderstanding of the numbers involved, says Minister of Local Government Rodney Hide.

“I don’t know where the Labour party gets its advice from, but their numbers are completely wrong. This information was released publicly on May 27, but for the Labour Party’s benefit allow me to reiterate the facts,” Mr Hide said.

The Royal Commission estimated the cost of their proposed reforms to be between $120-$240 million, the transition costs are now expected to be $94 million at 1 November 2010.

Based on planning to date, the ATA has estimated that a further $66 million will be needed after 1 November to complete the information technology (IT) work programme. This is not a part of the Government’s loan package, and will be funded by the new Council once it’s up and running.

It is expected that the overall transition and IT implementation cost will be around $160 million [$94m plus $66m], which is below the Royal Commission mid-point estimate of $180 million.

To put the ATA expenditure on IT into context, local government in the Auckland region typically spends around $90 million annually on IT and has spent $86 million on IT this year already. Local government in the Auckland region will spend more than $2 billion dollars this year, and has a total asset base of more than $27 billion. The total costs of the transition and IT work before 1 November will amount to just 0.3% of its total assets.

The transition funding is a loan from the Government to the ATA, and will be repaid by the Auckland Council by 1 November 2011. The Council may decide to refinance this loan through its borrowing programme, so as to spread the impact over time.

Of the $94 million in transition funding, $34 million covers the cost of the ATA itself, including $6 million for managing the upcoming elections for the new Council and the Local Boards. The remaining $60 million of transition funding will be to provide operational computer systems for Day 1 of the new Council.

The Minister acknowledged that there are also transition costs being borne by existing Councils and other local government organisations such as Watercare Services that are outside the ATA transition costs.

ATA FUNDING
Date Amount Description of main expenditure
10 Dec 2009 34.4 million ATA operational costs, including LG elections
20 May 2010 36.9 million 1st allocation for establishing new IT system for Auckland Council
27 May 2010 22.8 million 2nd allocation for establishing new IT system for Auckland Council
Total 94. 1 million To be repaid November 2011

ENDS

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