Auckland Council development agency Panuku's blow-out in staff earning over $100,000

An artist's impression of the Ormiston town centre Panuku has been working on with Todd Property Group to develop.

Auckland Council development agency Panuku's annual report shows 100 employees received $100,000 or more in 2019/2020 - up from 78 recorded the previous year.

Total personnel costs jumped 23 per cent from $23.7 million in 2019 to $29.1m in 2020, while the executive leadership team's earnings increased from $3.3m to $3.5m in the 12 months to June 30.

Panuku manages around $3 billion worth of land and buildings owned by Auckland Council and is also involved in a number of major urban regeneration projects in the region, including ones in Manukau, Old Papatoetoe, Avondale, Hobsonville, Meadowbank and Henderson. Its portfolio generates around $68m in income for the region each year.

Despite its increased staffing overheads, the council controlled organisation (CCO) was keen to highlight in its annual report that it has tightened its belt due to COVID-19.

In February Panuku's board agreed to stop performance payments to its executive leadership team and its staff and also took part in a recruitment freeze.

The performance payments had been paid at the board's discretion to select employees following their end-of-year performance reviews and to executives for achieving key objectives.

But according to the agency's annual report it decided to stop the scheme as the payments were no longer in keeping with public sector best practice.

In a statement Panuku's acting chief executive David Rankin said the increase in staff earning over $100,000 was a result of it needing to ensure it had the best people it could get to build on the work it was doing.

"Panuku's workforce is made up of professional, highly qualified staff to undertake our regeneration programme. This increase through 2018/2019 and early in the 2019/2020 year was required to ensure Panuku had the best people to build on planning momentum, enabling more capital delivery, project management and development in neighbourhoods across the region."

The number of full time equivalent (FTE) employees the council controlled organisation (CCO) had grew from 203 to 214 in the year to June 30, but Rankin said it was already reducing staff numbers.

"One of the measures implemented by Panuku to recover from the financial impact of the COVID-19 pandemic was to reduce personnel costs. Through the change, there will be a reduction in FTE employee numbers in the 2020/2021 financial year," Rankin said.

He said during the first COVID-19 lockdown Panuku had a staffing freeze.

"Contractors and temporary staff were reviewed on a case-by-case basis which led to a reduction in contractor and temporary staff full time equivalents (FTE) by June 30, 2020."

Panuku also asked all its employees earning over $100,000 to agree to a temporary salary reduction for a period of six months due to the pandemic.

Rankin said areas where staffing levels grew were projects and delivery, stakeholder engagement and communications, finance, people and culture, administration and marina operations.

Auckland Mayor Phil Goff said that before Covid-19, Panuku had been ramping up its delivery of key projects such as Manukau's Barrowcliffe Bridge and waterfront projects including the Westhaven Promenade and Marine Village.

"This required additional staff with specialist skills and expertise and is reflected in the increased staff costs in Panuku's annual report for the 2019/2020 financial year. In total, Panuku increased its employee numbers by 11 FTEs in the 2019/2020 financial year, however this included the transfer of seven positions from contractor to employee."

He said the annual report for 2019/2020 only captured the first months of the impact of Covid-19.

"In the Emergency Budget for the new financial year, council set a $50m savings target for CCOs, in addition to the $120m target set for the parent. This included $5.4m worth of operational savings from Panuku, to be realised primarily through a reduction in staff costs, corporate costs and changes to project and procurement planning."

Since the new financial year began on July 1, Panuku had confirmed a new organisational structure which had seen a reduction in staff numbers of 20 full time equivalents, Goff said.

Panuku's acting chief executive David Rankin has defended the increase in the number of staff earning over $100,000.

And 73 per cent of Panuku staff earning over $100,000 had accepted voluntary graduated salary cuts of between 5 and 20 per cent, in line with the council parent, as part of measures to respond to the impact of COVID-19.

"Performance payments to all staff ceased in February 2020.

"I meet regularly with the board chair and chief executive of Panuku. They understand the impact of Covid on council's finances and the significant spending constraints that it imposes on the whole council group, and are making tough decisions to meet the savings we expect and are budgeting for in the Emergency Budget and next year's 10-year Budget."

Panuku's annual report shows it sold $83m worth of property on the council's behalf in 2019/2020.

This included sales in its Transform and Unlock locations worth $33m, the sale of the council's corporate properties worth $40m and general asset sales of $10m.

* An earlier version of this story incorrectly stated the total number of Panuku staff.