Deloitte report shows local government changes would provide cost savings

Whangarei District Council has released a report prepared by independent accounting firm Deloitte which indicates significant savings are possible should local government reform proposals go ahead.

Deloitte was asked to look at the financial impacts of options for governance in Northland via one or two unitary authorities (councils combining the functions of a district and regional council). The firm looked at the issue from two points of view: a hypothetical combination of Far North and Whangarei District Councils to assess what savings were possible; and a high level cost analysis using the Local Authority Census and contrasting performance against other existing New Zealand unitary authorities.

"The hypothetical combination of the two district councils could potentially result in over $2 million in continued expected annual savings through reducing duplicated wage costs while allowing for salary uplifts due to increased responsibility," says Whangarei District Council CEO Mark Simpson.

"The census cost analysis showed that potential net savings of $9.7 million pa could be generated from the planning and regulatory and overhead spend if there was just one unitary authority operating at the same level as an average unitary authority in New Zealand.

"On the other hand, potential net savings of $11.2 million pa could be generated on the same basis from the planning, regulatory and overhead spend for a northern Northland unitary authority based on the current Far North District Council. A southern unitary authority based on a combination of Kaipara and Whangarei's current boundaries would generate net costs of $1.5 million, so the overall saving across Northland would be about the same as for a single unitary authority - although the report suggests Whangarei’s level of operating efficiency may create more savings in a southern unitary authority," he said.

"The overall position would be even more positive because these figures do not take into account the considerable cost savings we believe can be made in areas such as the rationalisation of roading and other infrastructure works."

The report, which was commissioned with the full co-operation of Far North District Council, notes that Whangarei District Council operates more efficiently than the average district council, although Mr Simpson says it is well recognised that one of the main drivers of efficiency is a critical mass of population.

"Mostly importantly, this is about what is best for Northland, which was the original brief for the McKinlay Douglas (Local Government Options for Northland) report. This economic work shows us that two unitary authorities, along with shared services, Council Controlled Organisations and approaches such as 'Northroads' (a joint approach to roading in the North combining all councils and NZTA), will benefit Northland as a whole."

The Deloitte report, which was prepared as part of the Whangarei District Council submission to the independent commissioners, has been posted on the Council website.