Time for transparency

Claims Dunedin City Council company Delta is out of control will come as no surprise to some watchers of council company activities.

The claims have been made by Cr Lee Vandervis, not known for temperance in his allegations during his terms as an elected member of the council.

The claims this time centre on the number of staff paid more than $100,000 a year with chief executive Grady Cameron’s remuneration increasing to within the $510,001 to $520,000 range.

Four directors share among them a total of $103,524 in fees, including chairman Ian Parton receiving $35,256 for his role.

Other directors are Stuart McLauchlan, Dave Frow and Trevor Kempton.

Ratepayers deserve to know at what stage does Mr Cameron take a report to the board for approval.

The company has had  failures, particularly around its involvements in Jacks Point, Luggate and Yaldhurst subdivisions.

The latest annual report shows 70 Delta people getting paid more than $100,000 a year with 26 at the bottom of the range being paid up to $110,000, 15 paid up to $120,000, six paid up to $130,000 and the rest paid between $130,001 and $520,000.

A salary of $130,000 will not be unusual in some local institutions but there will be many in the community who see a salary of that scale as beyond their aspirations.

Delta does make a profit ($6.2million operating  and $4.66million  reported  for the year ended June 2015). 

It pays a dividend to the city council, in most years.

Delta has a history of secrecy and limited transparency, stretching back many years to the time it was a council department. 

This culture  continues to envelop a company which  is effectively owned by ratepayers.

Delta defended its growth of people earning more than $100,000, saying it was a result of wage inflation, customer growth and business requirements for highly skilled and qualified specialists, primarily in the electricity distribution sector.

One thing to  point out is wage inflation in New Zealand is benign, a concern for the Reserve Bank and one of the reasons the official cash rate is so low.

In the June quarter, wage inflation was negligible, so how does Delta expect ratepayers to accept its other explanations when the first is so blatantly incorrect?

Mayor Dave Cull says he has received assurances from Dunedin City Holdings Ltd, which oversees Delta and other council-controlled companies, that the processes used to set pay levels were appropriate and within guidelines.

That implies Mr  Cull has not checked the details himself, relying on the word of city holdings chairman Graham Crombie, and his fellow directors that all is well.

If true, this is not satisfactory.

Cr Vandervis has correctly raised the issue about the management of Delta, but his concern should be spread to the running of other council-controlled companies. 

There are two schools of thought on whether the council should be involved in the running of commercial enterprises, such as Delta and a forestry company.

Contrast the secrecy of the DCC-controlled companies with Port Otago, owned by the Otago Regional Council.

Port Otago’s chief executive and chairman attend ORC meetings, answering councillors’ questions and facing media inquiries.

Ratepayers throughout the region are aware of the plans for the port, something which cannot be said for  the way DCC companies are operated.

There are too many layers between the company and the eventual owners.

Too many councillors have taken a  hands-off approach to the activities of the commercial operations.

This, in part, is because there are too few councillors elected with commercial experience and those who do are being either sidelined or captured by other agendas.

The operation of these companies deserves to be an election issue and councillors must be asked, and answer, where they stand on the issue.

Ratepayers have no say in who manages the company,  but the appointment of directors is also left to others. 

This is such an important issue, it can no longer be left to chance.

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