The Wellington City Council sent out a hasty denial on Monday after a DomPost report that councillors were to get a nine per cent pay increase. (The increase, said the council, will be only 1.7 per cent). But bigger pay increases have been approved within the council’s orbit, which the council cannot deny. For example – the annual salary of $260,000 being paid to Glenys Coughlan in her job as chief executive at Positively Wellington Venues.
The salary is more than twice as much as the council was paying when the work was being done in-house in a council business unit.
Positively Wellington Venues, a council-controlled trading organisation, is now in the second year of its existence. It has 71 permanent employees. It describes its core business as “venue rental,” which means that it handles bookings for six council-owned venues including the Town Hall and the Michael Fowler Centre. The chief executive’s salary – and the comparison with the much smaller amount that was paid before the organisation was created – is revealed in its first annual report, a document which is well hidden on the council website, where it is filed as an “appendix” which puts it beyond the reach of any search engine.
Positively Wellington Venues reported a loss of $458,000 in the 2011-2012 financial year, its first year of trading. This, it said hopefully, was $49,000 less than budgetted. There were also “unbudgetted and unanticipated transition year costs” totalling a further $811,000. As a result, the new organisation’s total loss was $1.269million.
The organisation stated its intention to break even in the current financial year. In an unfortunate choice of words, Glenys Coughlan said: “We do not anticipate any further ‘unknowns’ to surface in the new financial year.”
But further unknowns did surface. And last month – in circumstances which have yet to be fully explained – her organisation told councillors that it would be making another loss, at which point she offered to resign. The unexpected loss is $240,000, almost equal to her annual salary, in a year when she had intended “to drive further savings and productivity gains” and when her chairman Chris Parkin (annual fee $30,000) had promised “robust commercial disciplines.”
Only one senior staff member resigned when the loss was discovered – the new organisation’s chief financial officer. Presumably his salary had been in the range of $150,000 and $159,000, which is listed in the annual report as being paid to two Venues employees.
Positively Wellington Venues said it won’t ask the council for money to cover its first-year losses. It says it expects to cover the $1.269million from future surpluses. But surpluses are not yet on the horizon. The organisation depends on a substantial annual subsidy from the council, which pays it an annual fee of $5.4million for managing the six venues. This amount is “equivalent in value to the aggregate of the Company’s personnel costs, directors’ fees, audit fee and directors’ liability insurance.”
Are council-controlled organisations more costly than the system of administration inside the council which they have replaced? A clear answer is given in the notes to the financial statements of Positively Wellington Venues. The notes show that in the year before Venues was established, when the council was running the six venues in house, the equivalent management fee was $1.1million. About one fifth of what’s being paid to the organisation headed by Glenys Coughlan.
And in the same year – before Venues was established – the highest salary range was $100,000 to $109,000, which was paid to one employee in the relevant business unit of the council. No one was being paid in the range from $150,000 to $159,000, and no one was being paid in the range from $260,000 to $269,000.