Water entity CEOs (from left): Jon Lamonte, Vaughan Payne, Colin Crampton and Michael Brewster. Photo / WSR Herald montage
OPINION: The Public Purse is a new fortnightly Herald column focused on the public sector and how taxpayer money is spent.
Buried in the Water Services Entities Bill passed in December and followed by three more pieces of legislation - the last of which will revise the first - is a comforting requirement.
Clause 162, subclause 1(a) says the water services entities’ annual reports must include the remuneration received or payable to each of the chief executives and board members in that financial year.
Good. When these new public entities are established to run our storm, waste and drinking water services, they’ll be obliged to disclose what they’re paying their execs with, you know, ratepayers’ money.
You might think that the Department of Internal Affairs (DIA) would absorb the spirit of this law and tell the public what it’s already paying the four establishment chief executives it hired earlier this year to launch the new water services entities (WSEs).
But it has better things to do as officials race headlong to a deadline of August 31, when the House rises for the election period, by which time the Government’s aim is that all of its water bills will have hurtled through Parliament and be snugly bedding in.
The Herald requested the total remuneration for the new chief executives under the provisions of the Official Information Act (OIA), but the DIA, which is leading the water reform, refused the request for privacy reasons.
It did, however, confirm that the salaries sit within a range of $602,500 to $815,500 per year, which suggests a very tidy pay rise for at least three of the four executives in question.
Just last year the two highest-paid executives in public water services were Jon Lamonte, on $585,000 and running Watercare for the Auckland Council, and Colin Crampton, on $455,000 who runs Wellington Water for six councils in that region.
As part of the Government’s contentious plan to reform and improve the delivery of Three Waters services, it is consolidating the assets of some 67 local councils into 10 new WSEs - but we’re getting ahead of ourselves. Bear in mind it also claims it will lower the price.
In January, when the DIA hired Lamonte and Crampton to run new water services entity A (Auckland and Northland) and entity C (east coast North Island and the top of the South Island) respectively, the plan was for just four new WSEs. In January and March, it hired a total of four establishment chief executives.
Auckland and Northland‘s entity A is by far the largest of the new bodies, and it is likely that Lamonte’s salary now falls in the top half of DIA’s range, which would amount to a pay rise of anywhere from 20 per cent to 40 per cent. Not bad, when you consider that the Auckland and Northland entity will cover a population of 1.7 million, only a smidgeon larger than the population of 1.6 million Lamonte covered at Watercare.
The pay of the other three executives appears more extraordinary still. The Northland and Auckland entity is the only WSE which has not shrunk since the chief executives’ hiring.
Recall that last year, then Minister of Local Government Nanaia Mahuta told Parliament that the four new water services entities were of very considerable “national significance”, and that their chief executives would be paid accordingly.
In setting their salary range, the Government would look to other public organisations of a similar scale, she said.
She cited Transpower, New Zealand Post, the Accident Compensation Corporation, Kāinga Ora, Watercare, Waka Kotahi NZ Transport Agency, and KiwiRail.
Chief executive salaries for those organisations ranged from $585,000 at the bottom end (which, incidentally, represented Lamonte’s earnings running Watercare in fiscal year 2021/22) up to the $1.345m that the DIA gauged was paid to KiwiRail’s chief executive Greg Miller (this roughly corresponds to his 21/22 salary across 12 months, excluding performance pay).
But here’s the hitch. If you’ve been following this muddy old water business, you’ll know that in April, just a few months after legislating to create four new water services entities and after hiring their establishment chief execs, the Government scrapped that plan as insufficiently local (read “very unpopular”).
The Water Services Entities Amendment Act, now making its way through Parliament, will disestablish the four previously-planned WSEs, and the jobs of their chief executives (with the notable exception of the Auckland and Northland chief executive, whose post is preserved). And it paves the way for 10 new WSEs, all - with the exception of Auckland and Northland - considerably smaller than the earlier configuration, with fewer customers to serve, and fewer assets to manage.
Nine of the 10 entities will need to be established by July 1, 2026, a delay of two years. Auckland and Northland alone remains on the original reform schedule of “go live” by July 1, 2024.
Despite the delay and the diminution, the DIA confirmed (under the provisions of the OIA) that there have been no revisions to the establishment chief executives’ salaries.
When Crampton took the job of running entity C, it was expected to cover a population of some 955,000, spread across the top of the South Island and along the east coast of the North Island.
If he ultimately gets the job of running entity G, the revised Wellington entity (population 516,000), his operation wouldn’t be very significantly larger than that covered by his old employer Wellington Water. Despite that, his pay has risen between 32 and 80 per cent.
The DIA’s third chief executive hire, Vaughan Payne, is similarly on pay scaled to an entity the size and significance of which no longer applies. When he was engaged in January, entity B comprised the central North Island, including Waikato and Taranaki. It covered 799,610 customers. Under the revised 10 entity plan, entity B will be shrunk to Waikato and cover a population of just 364,799 customers.
Until last December, Payne made $375,000 to $395,000 as deputy chief executive operations at the Government’s still-struggling, merged super-polytech, Te Pūkenga (his role was disestablished).
The fourth new water executive, Mike Brewster - an Australian who previously ran Tasmania’s TasWater through a period of considerable reform - is only an interim hire on a 12-month fixed-term contract. He started work in March as a stop-gap after the candidate to run entity D pulled out of the process.
As such his job was to “support the transition” for entity D, which then covered the bulk of the South Island and some 854,000 customers. The largest South Island entity now anticipated is entity I, which would include the West Coast and Canterbury and take in 607,000 customers.
Whether Brewster, Payne and Crampton are ultimately hired to run any of the new WSEs, and on what pay, will be up to those bodies’ establishment boards, which are anticipated to be formed sometime between the passing of the current amendment bill and July 2026.
It didn’t have to unfold this way. When the chief executive job search began in August last year, the ink was still drying on some 90,000 public submissions on the Water Services Entities Bill that was yet to create the roles. Even a cursory glance at that huge volume of feedback suggested serious opposition, not to reform per se, but to this plan for it.
It was an opportunity to pause and reconsider. Instead, the DIA splashed $501,000 on a search for four executives (which seems quite extraordinary, considering that two were found already running the same council-owned water assets they were hired to take over).
The Government’s reconsideration didn’t come until April 2023, after Chris Hipkins succeeded Jacinda Ardern as Prime Minister, and public discontent threatened to fester all the way to an October election.
Even now, Opposition parties National and Act vow to repeal the water reforms if given the opportunity.
In the meantime, the new chief executives remain on the DIA’s books, its four best-paid staffers, all of whom make considerably more than the $538,000 earned in the last fiscal year by the department’s own chief executive.
OPINION: December is often the month in which we spend money like it’s confetti.