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The Dunedin City Council would need to take on unions over working hours and other conditions if it hoped to keep water services in-house while slashing costs, yesterday's hearing was told.
Councillors were given the blunt assessment during yesterday's pre-draft annual plan hearing, while debating the proposed new council-controlled organisation (CCO) to manage the city's $1.6 billion portfolio of water assets.
The move would see about 100 staff transferred to the new organisation, but could achieve estimated savings of up to $20 million over 10 years, council water and waste services manager John Mackie said.
However, council staff were grilled over the proposal yesterday, with some councillors demanding to know why the savings could not be achieved simply by making the existing council operation more efficient.
"I wonder what we as a council are doing that we can't get those efficiencies and drive it?" Cr Kate Wilson said.
"Is there a better structure within the current council ... that could deliver that?"
The proposal would reduce operating costs and internal charges and create other efficiencies and tax benefits not available to the council, staff responded.
However, council city environment general manager Tony Avery said an "enhanced status-quo" was one of three options considered during the review of the council's water and waste services operation.
Enhancing the existing council operation would keep services in-house, with an advisory board established to help streamline operations, and would generate some - but not all - of the benefits of a CCO.
Mr Mackie said estimated savings of $564,000 a year could be achieved by streamlining the council's in-house operation.
However, that would require "very, very tough conversations with the unions" about restructuring, working hours and other conditions, which the council had historically "backed away from", he said.
It could be done if the council was prepared to "tough it out", even at the risk of industrial action and possible fallout for the city, as was taking place in parts of the United Kingdom, he said.
"That's the sort of calls being made elsewhere," he said.
Cr Chris Staynes said the council was a big organisation but appeared not to have "the balls" to manage the business as it would be in the private sector.
"That worries me," he said.
Cr Kate Wilson suggested the council was rushing towards a CCO, and argued unsuccessfully for a trial of in-house improvements over two years.
Cr Jinty MacTavish had an alternative, wondering what would happen if councillors cut the water and waste services budget by $1 million to create an incentive to find efficiencies.
Council chief executive Jim Harland said the move would be a "valuable technique" but budget reviews and pressure to find greater internal savings had already been carried out, identifying savings of $4 million for 2011-12.
Mr Avery said a further reduction would be a "challenge", but spending on some discretionary items, such as modelling for climate change, could be cut if required.
Other councillors supported the CCO's benefits, with Cr Lee Vandervis saying they would help eliminate waste and Cr John Bezett predicting an "immediate change of culture" within the organisation would result.
• Cr Fliss Butcher voted against a proposal to review the council's economic development unit because of concerns over its costs, rather than abstaining, as reported yesterday.