$260,000 a year to run bookings for six council-owned venues

Wellington.Scoop
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.

 

20 comments:

  1. Iona Pannett, 7. May 2013, 21:07

    Some good questions are raised in this article. I do have some concerns that we are paying salaries at this level. I have generally been in favour of bringing CCOs back in house. At the very least, we need to look at whether we need so many of them.

    Just a reminder too that the Council will be looking at whether councillors sitting on CCOs should be paid to sit on them or should just see it as part of their job.

     
  2. peter@east-welly, 7. May 2013, 22:49

    Iona, please don’t just try to cover this up with more political spin.
    But the real question is: what is the connection between Jo and Glenys Coughlan ? All too often with this City Council, people come to the table with flawed business plans, then when they fail, the Council offers them “love and hope”, tells the proponents to stay on, spend more money, and ends up chucking more money at a flawed idea. The ratepayers are continuously flogged. The Council continuously fails to learn. Zealandia is now considered too big to allow to fail – the ratepayer will subsidize the “white elephant” that is the interactive centre even though we were told when it was being built, it would pay for itself. When will this City Council stop lying to the ratepayers??!!

     
  3. Simple Simon, 8. May 2013, 7:22

    What was the justification for creating Positively Wellington Venues? Clearly it was not about saving money and it is plain to see that it is not being run any better than when it was in house either. Scrap it asap.

    Could somebody also clarify whether Jo and Glenys Coughlan are related or not.

     
  4. Nora, 8. May 2013, 9:16

    As a follow up to this “unbelievable” salary of Glenys Coughlan (dare we ask her qualifications) would it be possible to publish the cost to ratepayers of all the CCO’s with special regard to the Chief executives, number of staff and board members.

    And why are the ratepayers unable to attend their meetings?

     
  5. CC, 8. May 2013, 9:59

    Not too many decades ago, the day to day running of all of the businesses of the city was under the purview of a Town Clerk. The management of the Council staff and administration was overseen by a Board (Councillors) that was chaired by the Mayor. The novelty of the structure was that the board was democratically elected by, and accountable to the citizens and was expected to have an intimate knowledge of the assets, infrastructure and administration of the city. This included oversight (without additional payment) of very large service enterprises such as the tramways, gas production and distribution, an electricity department, a single supplier milk processing and distribution company along with numerous other service branches that have been progressively handed over to trough feeding CCOs or to sharp ‘private sector’ operators who seem to know how to wrangle excessive incomes and heavily subsidised income streams, as in the case of the likes of Infratil. The cash flows are of course guaranteed without question, by the perceived long pockets of the ratepayers.

     
  6. Jack Ruben, 8. May 2013, 10:41

    Your report on the disgraceful situation at Positively Wellington Venues should be answered by the mayor, the Deputy mayor, Glenys Coughlan, Chris Parkin, and each individual councillor. But this wont happen! They are all scared to rock the boat…
    The culture of wasteful spending … and incompetent management of spending ratepayers’ funds is an established part of the culture of the councillors. Not one of them has the guts to rock the boat. Glenys Coughlan should resign or be sacked – but neither step will happen.
    I long for the day when this current council, from top to bottom, are replaced by 5 Commissioners who will shake the place up, and put an end to such abuse of public funds. .

     
  7. Keith Johnson, 8. May 2013, 12:50

    It’s a fascinating well-researched article. This kind of Mates’ Rates Revolving Door Capitalism is unfortunately endemic in NZ.
    Incidentally, my brother-in-law was in Wellington last week looking for a venue. He is from Southland and has run some successful ‘Dora the Explorer’ shows for kids, in Invercargill and Queenstown. And he was looking for a 400-800 seat venue in Wellington with a fairly modest rental that could support his semi-professional, limited run shows. He was staggered at the rates quoted by Positively Wellington Venues – and he decided to flag the idea of bringing the show here.
    This illustrates the wider issue. The current councillors are fixated on ‘glitz and glam’ ‘Party Central’ red carpet events – and these are becoming fewer and fewer as the competition from other NZ cities increases and disposable incomes shrink.
    As I have always argued, we need a much more down-to-earth approach that does more to benefit ordinary families and citizens in both the CBD and the suburbs.

     
  8. Chris Parkin. Chairman, Positively Wellington Venues Ltd, 8. May 2013, 18:43

    This article is in fact very poorly researched and inaccurate for the most part. For the record, Glenys Coughlan was married to Jo Coughlan’s cousin over 20 years ago. The only connection between them is that they both share a passion for improving Wellington.
    Glenys’ salary is no secret. At the time she agreed to take the position, the salary offered was less than she had been offered elsewhere. She is worth every penny of it. Prior to the formation of Wellington Venues, Council ran the organization at an annual loss approaching $2 million. In the first year of operation we reduced that to less than $500,000, and this year we have budgeted to break even.
    The Council does not pay $5.1 million to Wellington Venues, it pays nothing. (Perhaps you are confusing us with the Museums Trust or the Zoo?)
    Glenys did not advise Councillors that we expected to make a large loss. That was a newspaper report of of a confidential email circulated to the board of Wellington Venues, which was clearly leaked. It identified a possible outcome. One of the outcomes of leaking confidential material, is that it can come back and bite you in the nether regions.
    I remain confident that under Glenys’ leadership, we will in fact come close to meeting our budget.
    The independent members of my Board and myself have years of experience running successful businesses. Check us out on Google and see what we do. We don’t do this for the money. [The information about the management fee of $5.4million is included in note 8 on page 34 of the Notes to the Financial Statements in Positively Wellington Venue's annual report, which states: "The company charges WCC a management fee for venue management... The charge for the year was $5,444,776." The comparison with the previous year's fee of $1.1million is on the same page. We will, of course, be ready to publish any clarification which Mr Parkin wishes to make. - Wellington.Scoop]

     
  9. Iona Pannett, 8. May 2013, 20:51

    Thanks for your comments Peter. Definitely not spin, just saying how I have voted on the issue of whether we have CCOs or not. I have been one of the few to oppose them. I know many of the staff working in them do a great job but suggest we could do some of this work inhouse.

     
  10. Chris parkin, 8. May 2013, 22:59

    It may be a Council report, but certainly not from wellington venues. Suggest you quiz the Councils CFO. I can assure you it is not a subsidy to Wellington Venues.

     
  11. Rosamund, 9. May 2013, 16:01

    Surely Glenys Coughlan accepted her job to share her expertise to benefit the people of Wellington, not to personally benefit. After all, the entity that is Wellington Venues is a creature (CCO) of Wellington City Council which has the role of serving the citizens of this city. Prior to its creation, the work was carried out in-house by willing and able WCC staff.

    Incidentally I learnt today that the Capital funds available to the walkways programme as part of Parks and Reserves has been cut by more than 50% to approx. $125k from $259K. This reduction of funding is not identified anywhere in the Draft Annual Plan and our elected representatives may be “unaware” of it, if so they should be asking questions of their Chief Executive who may be similarly ignorant of this cut-by-stealth. I am appalled that whilst issuing documents eg: “Capital Spaces”, Our Living City (sic), Open Spaces and Recreation Framework, the Executive Leadership Team (ELT) of Council has supported this dramatic reduction of funding.

    Please if your Annual Plan submission is still gestating, add a comment about this unheralded and unwarranted reduction to the upkeep of our magical network of walkways, tracks, trails and routes.

     
  12. Bryan Pepperell, 9. May 2013, 16:06

    On reading Jack Ruben’s comments I wish to place on record how I and other Councillors attempted to deal with this situation. Once again, for the public record, here is the vote.

    From: Bryan Pepperell
    Sent: Wednesday, 7 November 2012 8:36 p.m.
    Subject: Report 4 Amendment S& P 8 November 2012

    REPORT 4
    Amendment:
    • Delete 2 – 11
    • New 2 and 3 as below

    2. Recommend to Council that the activities of the following Council CCO’s are brought in-house:
    a) Basin Reserve Trust
    b) Partnership Wellington Trust
    c) Positively Wellington Venues Limited
    d) Capacity Infrastructure Services Limited
    e) Wellington Cable Car Limited
    f) Wellington Museums Trust
    g) Wellington Zoo Trust
    h) Wellington Waterfront Limited

    3. Recommend to Council to instruct the Chief Executive to agree a transition process with the Board of each CCO to give effect to recommendation 2 and report back to the Strategy and Policy Committee on the transition plan for agreement by SPC by 31 March 2013.

    Moved
    Cr Pepperell
    Seconded
    Justin Lester

    Voting for were:
    Stephanie Cook, Iona Pannett, Bryan Pepperell, Helene Ritchie

    Voting against were:
    Mayor Celia Wade-Brown
    Councillors Ahipene Mercer, Ngaire Best, Jo Coughlan, Paul Eagle, Leonie Gill, Justin Lester, Ian McKinnon, John Morrison

     
  13. Nora, 10. May 2013, 17:36

    Just as a matter of interest, when it says there are 71 permanent employees on the staff, how many of these are ushers and behind the ticket desk clerks at the Opera House, St James, Town Hall and Michael Fowler centre. How many hours a year does the average usher work? [There's a larger number of part-timers.]

     
  14. Jack Ruben, 13. May 2013, 0:06

    Chris Parkin states that the $5,444,776 shown in Wellington Venues Annual Report as a ‘management fee for venue management’ is incorrect.and refutes the claim. Then why is it shown as such? Surely he too wants to know?? .
    He suggests the public should check this or themselves! Rather strange isn’t it that he cant be bothered on behalf of his organisation to clarify whether this large sum was paid to his organisation or not?? Is he so disinterested that members of the public are told to research themselves what he is in fact paid to do – as well as those colleagues he informs us are not on the Board for the money. Come on Chris, ask any competent board member of any reputable company, – I have! – and they will tell you that it is your job to ensure the Venues Report is at least accurate. You are paid to safeguard public money.
    ..

     
  15. Michael Gibson, 14. May 2013, 8:55

    As suggested by Chris Parkin, I have asked the Council CFO about the $5,444.776 Management Fee & here is his (Mr Peter Garty’s) response:
    “This is correct and represents the management fee paid by Wellington Venues Project (part of WCC) to Wellington Venues Limited so it appears as revenue in the Wellington Venues Limited accounts. The Chairman of the board would have seen these financial statements as they are signed off by him. The auditors, Audit New Zealand, have also signed off the accounts as part of the audit opinion.”
    Mr Parkin has merely proved what we all suspect about unaccountable CCOs – now do something about it, Chris!!

     
  16. Jack Ruben, 14. May 2013, 17:16

    So neither Chris Parkin nor Ms. Coughlan were aware of over $5 million in revenue shown in accounts which they both approved!! What a scandal and disgrace! Both should immediately resign or be sacked. In any commercial organisation, such a management failure would be dealt with in the most serious manner, but doubtless councillors will ensure the matter gets swept under the carpet.

     
  17. Lee, 16. May 2013, 23:55

    Over to you, Chris Parkin.

     
  18. Nora, 17. May 2013, 9:08

    I understand the accountant at this CCO resigned before the ……. hit the fan! Was he the fall guy for the CEO and Board Chair?

     
  19. Jack Ruben, 17. May 2013, 10:17

    Thank you Wellington.Scoop for stating so clearly the questions to which we expect answers from both Chris Parkin and/or Glenys Coughlan.
    Chris Parkin is a frequent commentator on WCC matters and critical of those of us who disagree with his viewpoint. Fair enough. But now the challenge for him (and Ms. Coughlan) is to demonstrate impartiality and maintain credibility by immediately providing answers followed by actions. Obviously there should be a change of leadership in the organisation.

     
  20. Eve, 28. June 2013, 18:43

    Great article. What would it be like to be an employee in the lower echelons of Wellington Venues? Would their pay, training and facilities have improved? Would they be forgiven for performing badly against their job description repeatedly? Are they the obvious target for savings and efficiencies that will be vigorously pursued in order to reign in the overblown spending that must have been led, sanctioned and administered by the senior executive team? Is the hospitality on offer from Wellington Venues vastly improved from their in-house predecessors? Do they outperform the hospitality venues up and down the street, competing for the hard-earned Wellingtonian’s dollar? Hardly, no change in the standard of fare since Wellington Venues took over these prime locations. Same bottom of the range wine and beer and comestibles, served on the same glass and crockery, from the same counters. What was wrong with it being run by the St. James Trust – your article suggests that the epithet “Trust” might indeed be the main difference between prior and current governance of our facilities, our services and our money. If Wellington is the creative capital of New Zealand and traditionally a fabulous city for the performing arts and hospitality, what a shame that the venues, critical to sustaining this, are badly run.

     

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