Auckland councillors held an extraordinary meeting on Thursday to grapple with a $270m hole in the council budget – but almost all the detail and all the grappling was kept secret from the public
Comment: Mike Tyson’s famous quote about everyone having a plan until they get punched in the mouth could easily apply to every politician promising openness and transparency until they get into power.
Auckland’s new mayor and some councillors have proven no exception.
After months on the campaign trail railing about what we were not being told about the state of the council’s finances, Mayor Wayne Brown presided over the first real business meeting of the council’s governing body – in which a briefing on the state of the council’s finances was … saved for a secret session for councillors, in a workshop excluding the public.
A broad written overview had been available publicly before the meeting, and apart from a few unexacting questions from councillors, that was all Thursday’s extraordinary council meeting offered.
The returning veteran councillor Mike Lee, a Brown supporter, questioned the use of a confidential meeting-after-the-meeting to discuss what the public had a right to hear and know.
He reminded Brown and the other 19 councillors they’d committed at their inauguration to uphold the Local Government Official Information and Meetings Act, which advocated openness.
“Going into worskhops routinely is really bypassing that Act and I have to say I’m fairly uncomfortable with that.”
Lee believed there should be ways of open financial debate while still protecting specific matters that might require commercial or regulatory confidentiality.
But Brown and co are now caught in the beast that is Auckland Council procedure.
The council’s chief executive, Jim Stabback, said the full briefing on the council’s financial black hole of $270m for the next financial year needed to be in private so council officers could speak freely and frankly.
He tried to reassure Lee and others, including councillor John Watson that the public would get their consultation, but that will be after the financial problems and proposed solutions are hashed out and endorsed for public consumption next month.
“This first part of the process is about informing as much as possible the mayor,” he said, “and being confident that we will not, in any way, unintentionally trigger disclosure obligations” to the NZX which are linked to the council’s debt arrangements.
Stabback: “The purpose of this report is really just to table the process we have to go through.”
Watson noted there were probably members of the public who would be interested in what the council’s response to the big financial hole would be.
He did elicit the one extra fact of the morning about the financial problems, that interest rate rises this year by the Reserve Bank had added around $40m more in costs on the 10 percent of the council’s total $11 billion debt that was not hedged against rate movements.
Brown lamented the “constipated” process for financial changes and told the meeting it was a complex situation councillors had a duty to debate. “Given the size of the problem to fix, whatever we do is almost certainly going to trigger an audit” from the office of the Auditor General. The public would get their say.
The mayor spoke during his campaign of not knowing what the council’s financial position was, despite his campaign team adopting ‘forensic’ financial assessments. But he seemed to accept that the headline number of a $270m budget hole was enough for now for his 180,000 voters and the many more who are ratepayers.
Asked how keeping private the details of the problems, and possible solutions, squared with his campaign claims, he said he had not realised part of the council’s debt facility required disclosure to the NZX of material changes.
Interestingly, two councillors separately asked executive staff at the meeting if any financial information had been withheld from elected councillors or candidates before the election, or since polling day. Both were assured no material matters had been kept hidden.
Whether they intended it or not, the questions served to put paid to Brown’s campaign insinuations about the council’s books being incomplete or opaque or unavailable.
New councillor Julie Fairey also appeared to box-in a Brown campaign premise that Auckland had specific financial mismanagement and overspending beyond general economic circumstances.
She asked the finance staff if Auckland’s financial emergency was unique or “if there are variabilities at play out of our control. Is this something other councils are facing, maybe some of our comparable councils in Australia as well?”
The group chief financial officer Peter Gudsell said Auckland Council began its new budgeting process earlier than other NZ councils. “But I have heard through contacts and colleagues that other councils might be facing a greater impost than we are…. We are certainly not alone.”
Officials said the $270m figure had only been calculated after October inflation figures and the latest interest rate rises. Thursday was the first opportunity to present it as a package to new councillors.
Stabback said after the meeting the mix of financial measures to be addressed were both extra costs, such as the $40m interest rise, inflation on operating costs and on staff wages bills but also declines in revenue, for example income from declined public transport use.
The system of workshops, which are private briefings for the full council and its committees with no public oversight or published minutes, is a parallel path which allows elected councillors to thrash out problems and their answers without public scrutiny. They then bring their workshop thinking back into the public arena in sometimes pro forma meetings like Thursday’s.
It isn’t just the experienced councillors happy to seek the comfort of closed-door meetings.
Even a new councillor, Lotu Fuli from the Manukau ward, tried to shorten the anodyne financial debate in the open section of Thursday’s meeting, attempting to stop questions and debate and put the move into confidential session to a vote. “I’m eager to get to the workshop, with lots of questions and advice from our staff.”
Brown closed the meeting that was really a curtain raiser to the private meeting by saying the financial challenges meant “this will not be business as usual”.
But it seems like it might still be secrecy as usual.