'Hard to see the explanation' - $2m wage spike for Auckland Museum staff riles council CEO

A $2 million spike in Auckland Museum salaries this year has prompted a concerned letter from the chief executive of cash-strapped Auckland Council, saying "it is hard to see the explanation for such a large increase in staff costs".

A February 10 email from Auckland Council chief executive Jim Stabback to Auckland War Memorial Museum board secretary John Donaldson raises "several high-level points" requiring careful consideration with the museum's draft annual plan for 2021/2022.

Particularly galling to the council CEO and elected councillors is the fact the museum actually projects an $8m increase in revenue next financial year - but it is more than offset by extra costs.

However, the museum claims there are a number of factual inaccuracies in Stabback's letter and it is out of step with conventional annual plan processes.

Stabback said Auckland Council is the "primary funder" of the museum's income - typically providing at least 75 per cent.

The new council chief executive says their "biggest area of concern" is a planned 11 per cent rise in museum staff costs in the next financial year.

This amounts to an annual jump of $1.98m from $17.81m total staff costs in 2019/20 to $19.79m in 2020/21.

This almost $20m payroll covers the museum's 200 full-time employees.

"In a context where onsite and overall visitation will be lower than four years ago, it is hard to see the explanation for such a large increase in staff costs, or for a levy increase in future years," Stabback said.

The letter to Donaldson was included as a submission to be discussed at the museum's quarterly performance update to Auckland Council's governing body today.

A museum spokesperson said they were surprised to see Stabback's letter attached to the meeting agenda as it was "out of step with the Draft Annual Plan process" and contained factual inaccuracies.

"It is unfortunate that the museum has not had the opportunity to address these inaccuracies directly with council before it was put on the council's public agenda," a museum spokesperson said.

In 2020, there were 47 staff at the museum whose salary was over $100,000.

The museum did not directly respond to questions about the planned $2m wage increase, but did cite staff cost reductions in 2020.

In particular, a spokesperson said that during 2020 they implemented a 25 per cent reduction in staffing costs, leave without pay schemes, and recruitment and across-the-board wage freezes.

"These reductions were temporary measures to enable us to sustain the immediate economic shock of the Covid-19 pandemic and associated lockdowns. They are not sustainable in the medium to long-term," a museum spokesperson said.

"The salaries of all positions in the museum, including that of the chief executive, are independently evaluated by the museum's external remuneration specialists.

"All pay ranges are 90-110 per cent of the median 'going rate' for positions of similar Hay scores across the sector in which we compete for talent."

However, Stabback was particularly concerned that despite the museum's projection that it will actually increase its revenue by $8m next financial year, that figure will be offset by costs.

"Yet because costs will also rise dramatically, the museum will still be operating in deficit," he said.

"We would appreciate a better understanding of the driver for these increases, in light of the current environment where council's expectation is that costs should be significantly restrained by organisations which it funds."

Last year, Auckland Council was forced to fill a $750m hole in its "emergency budget" as a consequence of Covid-19 and the region's severe drought.

It is proposing at 5 per cent rates rise for the next financial year to help addresses that hole and was last year in the process of cutting 500 full-time staff.

A review of Auckland's council-controlled organisations (CCOs) released in August 2020 also vowed to reduce chief executive salaries to no greater than $600,000 and merge two CCOs together.

A gradual and significant increase in the museum's top salaries has gone on for many years.

In 2020, there were 47 staff at the museum whose salary was over $100,000. In 2018, there were 42 staff over the $100,000 mark and back in 2013 there were only 23.

Last year, the museum also opened a $38m refurbishment to its south atrium, Māori Court and several interior galleries.

In 2021/22 the museum expects 2.159m visitors, yet in 2017/18 there were 2.42m visitors.

Auckland Ratepayers' Alliance spokesperson Monique Poirier said it was incomprehensible the museum thought "this sort of spending" was justified at a time like this.

"Given the current economic climate, it's simply outrageous that the museum has proposed to increase staff salaries, courtesy of the ratepayer. It should be looking at ways to reduce costs, not increase them by $2 million."

Auckland Council performance and Finance committee chair Desley Simpson said almost 2 per cent - more than $32m - of Aucklanders' rates currently goes towards funding the museum.

"For over a decade, council funding has increased year on year, ranging between 75-97 per cent of their cost.

"While we wish to continue our support of this national treasure we also note that the museum costs keep rising. Because of the challenges Covid poses for council finances, it's my personal view that the museum should hold their ask for any further increases from the ratepayer."

Discussions are underway to address the Auckland War Memorial Museum Act (1996) which requires the council to support the "minimum obligations" of the museum board to "adequately maintain, manage, and develop the museum".

However, both Stabback and Simpson say the act is no longer fit for purpose and was designed at a time when there were multiple councils in the Auckland region.

"Thanks to out of date legislation, council could be forced to fund the museum whatever amount they request without giving ratepayers a real say or control," Simpson said.

"We are currently engaged in a process with the museum to discuss new arrangements, which will need government support to implement and that will both ensure the continued success of the museum in future, but also give ratepayers confidence that money is being spent responsibly."