THE Auckland Council has until November 1 to repay a $94 million debt in the form of a loan transferred from the Auckland Transition Agency, contributing to the council's $3 billion debt.
The Government appointed the transition agency to manage the merger of Auckland's former eight councils into one. Under the Vote Local Government budget, outlined by Treasury, the agency was initially granted $30,473,000 for the 2009-10 year, and $40 million for the following financial year.
Auckland Council Deputy Mayor Penny Hulse says that when she estimated the transition costs would escalate to about $100 million she was belittled by Local Government Minister Rodney Hide.
"I said we were going to be up around $100 million and Rodney Hide accused me of crowd stoushing and said it would be closer to $30 million.
"We did some back-of-the envelope estimates and we worked out about $100 million.
"At that time the office in Wellington was telling us it was not going to cost anywhere near that. With all the euphoria of how things are going it's something we can't let slide from view."
In response, a spokesperson for Mr Hide says the bill for the agency was set at $34 million for transition costs and $60 million for computer operations.
Auckland Council chief financial officer Andrew McKenzie says the loan figure has already been budgeted and is part of the $3 billion debt portfolio Auckland Council now holds. The cost incurred relates to both agency staff and contractors and covers a technology upgrade. He says the interest rate of 5 per cent a year - which works out at $4.6 million - is cheap and the amount will be repaid to the Crown, through a bank loan, by November 1.
Public policy and local government expert Peter McKinlay, of AUT's Local Government Centre, says the transition appears to have proceeded without any major disasters and the cost so far is not exorbitant.
"In the scheme of things, it's not ginormous. You could argue that it's gone very smoothly.
"You have a new entity doing more things in different ways. The reduction in fees and charges was a government direction to the new Auckland
Council."
He says that in comparison with Queensland, where similar reforms took place four years ago, Auckland saved money by not trying to reinstate all staff, as was done in Australia.
Ms Hulse says her main concern is about the costs of computer upgrades.
"There've been some savings but I think over the next five or six years there are going to be a lot of other costs, like $100 million over the next 10 years for computer upgrades."
REDUCED
The Victoria State Government reduced the number of metropolitan councils in Melbourne from 79 to 31 between 1994 and 1996.
In Queensland, the number of councils was reduced from 157 to 73 in 2008.
