City of Newcastle's employee costs are forecast to jump more than 16 per cent over the next two years, despite past assurances that the organisation's office move and a new enterprise agreement would make it more efficient.
Lake Macquarie City Council has forecast a similar jump in staff costs, well above the level of scheduled wage rises and forecast inflation.
Newcastle council's draft 2020-21 budget and March quarterly review show salary costs rising from $101.9 million in 2018-19 to $109 million this financial year and $119.6 million next year.
The council announced in late 2018 a new three-year enterprise agreement which included minimum 2.5 per cent annual pay rises, a nine-day fortnight and other flexible work arrangements from January 1, 2019.
Lord mayor Nuatali Nelmes said at the time that the agreement "incentivises productivity", and the United Services Union said it would reduce sick leave and absenteeism.
The council's chief executive officer, Jeremy Bath, said in late 2017 that the organisation's move to a new building in Newcastle West would result in "bottom-line efficiencies" of 10 to 15 per cent.
"We know council will save up to $14,000 every year per staff member by moving from four buildings into one modern building," Mr Bath said.
"Modelling from various agencies shows savings through improved sustainability, reduced absenteeism, greater employee retention and increased productivity."
About 450 administration staff shifted to the new Stewart Avenue building in October. At $14,000 per employee, that would equate to an annual saving of $6.3 million.
But employee costs are forecast to rise more than $10 million next financial year, or almost 10 per cent, according to the draft 2020-21 budget presented to councillors in March.
A City of Newcastle spokesperson said elements of the draft budget, including staff costs, would be amended in light of the impacts of COVID-19.
"As such, the figures in the exhibited budget are being updated to reflect the impact of COVID-19 on our services and bottom line," the spokesperson said.
The spokesperson said the "salary costs included in the exhibited budget included temporary staff that have in previous years been included under project costs".
"This change gives greater transparency to actual staff costs that were previously not visible to the public."
The spokesperson said the staff budget also included an increase in apprentices and trainees, a new staff training program and more staff to cut processing times for development applications.
The move to Newcastle West had included technology investments which had allowed staff to work more effectively from home during the pandemic.
The spokesperson said absenteeism among staff working at the new building had fallen by 9 per cent and staff turnover was down 13 per cent.
"This means that, in just six months since moving, ratepayers have gained, at no cost, 26 days of additional productivity."
Lake Macquarie's staff costs are projected to rise from $92 million in 2019-20 to $101 million next financial year and $109 million the year after, a jump of 18 per cent in two years.
Its 2018 three-year enterprise agreement includes a final annual pay rise of 2.75 per cent on July 1 this year.
A Lake Macquarie council spokesperson said its forecast employee costs were "conservative".
"By contrast, the latest forecast of employee costs for the end of 2019-20 was made at the end of March 2020," the spokesperson said.
"It reflects knowledge of actual costs for the first three quarters of the current financial year. As each year progresses, council uses up-to-date information to refine forecasts.
"Using conservative assumptions for future budgets is sensible, and even more so the while impacts of the COVID-19 pandemic on council's finances continue to evolve."
READ THE FULL CITY OF NEWCASTLE RESPONSE
As previously announced, a number of changes are required to the draft 20/21 budget due to the impact of COVID19. These changes while still being finalised, will include amendments to many parts of our budget including salary costs. As such, the figures in the exhibited budget are being updated to reflect the impact of COVID19 on our services and bottom line. Regardless, the Herald would be unaware that the salary costs included in the exhibited budget included temporary staff that have in previous years been included under project costs. This change gives greater transparency to actual staff costs that were previously not visible to the public. The exhibited staff budget also included an increase in our investment in apprentices and trainees as well as a new staff training program. There was also a forecast investment in staff to deliver on our commitment to lift processing times for our development applications.
Approximately 450 staff relocated to City of Newcastle's central administration centre in Newcastle West in late October. Since March these staff having been working from home as part of the nation-wide effort to contain the spread of COVID 19. However a survey undertaken in February found that 84% of staff stated that the new building allowed them to be more mobile; a key objective of the relocation.
Further technology investments delivered as part of move to the new administration building has meant that our employees have been able to work effectively from home during COVID19 - maintaining productivity during these challenging times. This alone has ensured a positive return on investment for City of Newcastle. Indeed, some of our local government peers who were equipped in a similar way to which we were when at the Roundhouse, had to stand down large sections of their workforces in March due to COVID19, as they were unable to effectively work from home.
City of Newcastle introduced a range of new employment conditions last year via its first new enterprise agreement in ten years, aimed at providing equivalent employee flexibility to that offered by other local councils. To date the changes have seen a number of improvements in the performance of the organisation, including most importantly, a decline in absenteeism. For example, sick leave among our outdoor workforce has reduced by 24%.
FTE numbers at City of Newcastle move up and down each week. This is due to any number of reasons including the mix and type of projects in the works program, resignations, use of contractors, recruitment, redundancies, phased retirements, long term illness, long service leave, use of seasonal casuals, secondments to other councils, and new service offerings such as the recycling centre at Summerhill. Our current total workforce is 1079, which is an increase of 6 during the past 18 months.
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