Rodney chief executive’s golden handshake largest in Auckland

Newly-elected Auckland Council Finance and Strategy Committee chair Penny Webster says that Auckland Council will not recoup unnecessary redundancy payments made to former Rodney District Council chief executive Rodger Kerr-Newell.

Mr Kerr-Newell received the largest redundancy payout in the Auckland Council amalgamation process. He served just two-and-a-half years with Rodney and received $349,200 when Auckland Council took office on November 1. This figure was calculated as follows:
• redundancy payment nine months’ remuneration $259,200;
• payment in lieu of notice $48,000;
• payment in lieu of untaken professional development $35,000;
• payment for career transition $7000.

The Auditor-General carried out an inquiry into the employment termination arrangements of the eight chief executives of the dissolving local authorities in Auckland, after receiving a request from the Minister of Local Government.

Auditor General Lyn Provost’s report states that the compensatory payments to Mr Kerr-Newell of $35,000 for missed professional development and $7000 for not receiving career transition advice, were not required under his employment agreement.

“We consider that they were, therefore, in breach of sections 103 and 104 of the Transitional Provisions Act,” the report said.

Hibiscus and Bays Local Board member John Watson is calling for Council to recoup this sum of $42,000, describing the payout as “obscene”.

“This money came from a Council which had one of the highest per capita ratepayer debts in the Auckland region and which was busily hocking off publicly owned land to service that debt,” Mr Watson says. “One can only hope that such profligacy with the public purse will not be countenanced so readily by Auckland Council and that they will attempt to recover the $42,000 paid out in breach of the Act.”

Deputy Auditor General Phillippa Smith confirms that any recovery of the payment was a matter for Auckland Council to determine.

According to Ms Provost’s report, the Mayor and chief executive explained that the chief executive’s employment agreement provided that Council would fund professional development opportunities at its discretion, calculated at up to five percent of an employee’s total remuneration annually. This was the basis for the payment of $35,000.

“The Mayor did not seek Council approval for these payments, and told us that she has responsibility for the chief executive. We accept that the agreement to defer professional development opportunities occurred before the Transitional Provisions Act, but have not seen any evidence of an agreement to compensate the chief executive at the end of his employment for the deferral.”

Regarding the $7000 payment for career transition advice, the chief executive explained that other council employees were given the opportunity to obtain career transition advice at the Council’s expense and that he deferred his use of this service at the request of the Mayor to ensure a smooth transition.

“However, we question whether a compensatory cash payment of $7000 for missing out on career transition advice was necessary or appropriate for a chief executive, especially given the large redundancy payment (which was equivalent to nine months’ remuneration).”

Cr Webster says that Mr Kerr-Newell was entitled to the payments, and it was not “a whim of mine” to pay them.
“I did ask myself whether this payment was necessary, but it is what he was legally entitled to,” Cr Webster says. “We said at the start of his tenure that Council wanted him to be there as much as possible and to bring fiscal prudence. Normally, chief executives get paid to do professional training, including travelling overseas. He chose not to do this.”

She says Mr Kerr-Newell worked hard to reduce Council’s debt, lower rates and improve efficiency. This included overseeing land sales and a number of staff redundancies.

Former deputy mayor John Kirikiri says the chief executive’s final package was put before Councillors at an extraordinary meeting on the final day before Council dissolved.

“I was surprised that this was not discussed with me earlier, as I was part of the chief executive’s management team, with the Mayor,” Mr Kirikiri says. “I think we should have had more time to discuss it.”

Mr Kerr-Newell could not be contacted, but former Rodney councillors said they understood his immediate future plans included a sailing excursion to the South Pacific.

Related document: A full summary of termination payments for chief executives of the eight dissolving Auckland local authorities.

Background
Mr Kerr-Newell severed his contract with New Plymouth District Council almost two years early to take up the position of chief executive with Rodney in March 2008. Prior to that, he was chief executive at Wellington’s Hutt City Council for seven years. Mr Kerr-Newell initially acted as ATA chief executive but was subsequently named a ‘senior advisor’ before being let go by the ATA altogether.