$775k Auckland Council agency salaries must be cut - but it's not the CEOs' fault

Tuesday, 18 August 2020

Mayor Phil Goff says Watercare could have done better

OPINION: It is hard to report the resignation of the head of Auckland Council’s water company, without mentioning Raveen Jaduram’s $775,000 salary.

Partly because it is a figure that one rarely gets to mention in relation to someone in a local government role.

However, it is also slightly unfair, because the chief executive does not set his own salary - that has been the job of the company’s board of directors, who in turn are appointed by, and report to, city politicians.

Jaduram’s path to $775,000 says more about the culture of Watercare, and of the oversight by the politicians than it does of the CEO himself, apart from the fact that his employers considered him worth it.

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Watercare chief executive Raveen Jaduram has resigned and will leave on October 31.

Auckland Council, and its unique structure of five major companies, was formed in 2010 with its ultimate shape overseen by the then National-led government.

An Auckland Transition Agency oversaw the appointment of the inaugural crop of chief executives for council and the companies, and the ATA was headed by the late Mark Ford.

Ford took on the role after stepping away from the role of chief executive at Watercare, and was perhaps the most influential executive in Auckland’s local government world.

The inauguration of Auckland Council in 2010 with mayor Len Brown (left) and CEO Doug McKay

The inaugural CEOs commanded salaries that have since been discounted after they moved on.

Doug McKay earned $780,000 near the end of his almost three years as council CEO, while his successor Stephen Town departed on $698,000, and his replacement Jim Stabback starts on $600,000.

Ford, having successfully guided the creation of Australasia’s largest local body, was re-appointed as chief executive of Watercare, and at the time of his death from illness in 2014, earned $860,000.

The chair of the CCO review panel Miriam Dean QC, and Auckland’s mayor Phil Goff.

Jaduram was acting CEO during Ford’s illness, and took on the job permanently on a base salary of $510,000, with performance bonuses taking it in his first year to a possible $586,500.

The more than $250,000 salary cut compared to his predecessor at the time, was signalled as a re-set of executive salaries in the council “family”.

During the course of his nearly six years leading Watercare, Jaduram’s salary rose steadily from that initial base of $510,00, by nearly 52 per cent to it’s eventual $775,000.

Members of the independent CCO review Panel (left to right) Doug Martin, Miriam Deans (chair), Leigh Auton.

The increase was temporarily reversed by a 20 per cent pay cut taken by CEOs across the council group, which will run until Jaduram’s October 31 departure.

While Auckland Mayor Phil Goff has publicly said he doesn’t think CCO chief executives should earn more than the council CEO, Jaduram’s salary rose by around $160,000 since Goff’s 2016 election.

However, Watercare’s board has managed executive salaries, and Jaduram appears to be only the chief executive who has enjoyed steady and significant increases.

Watercare’s annual report for 2014 showed the second highest paid executive was in the $450-460,000 band, with the next three earning $380-390,000.

Five years later, the only other executive in the $400k range was one who left, and received final wrap-up payments as well as salary, with the next highest-paid continuous employee, in the $380-390,000 range.

Raveen Jaduram’s rise in six years to become the highest-paid employee in the Auckland Council group, has been made possible by Watercare’s board, seemingly without significant political opposition.

The recently-released independent review of how the structure of the council and the five CCOs was working, concluded the council “needs to have some say about (CCO)chief executives’ pay”.

Whether the councillors always had that ability to influence but failed to use it, is not clearly spelled out in other criticism of how the political oversight has worked.

“The council has all the necessary levers at hand to ensure accountability, but is not using them effectively,” said the reviewers’ report in its overview.

Neither Jaduram, Goff, nor Watercare’s chair Margaret Devlin would be interviewed on the CEO’s resignation, and the short statements give no clue as to whether there has been internal pressure, or whether Jaduram is moving on to a new role outside the council group.