In an $11 million deal, Auckland Regional Council is outsourcing the collection of its rates to EDS and contracting local government specialist GEAC to provide the software needed to produce 450,000 extra bills.
The council must collect its own rates to meet new local government legislation that forces regional councils to detail their spending to ratepayers. It replaces the current regime of regional councils simply adding a one-line charge to a territorial authority rates demand.
The first bills will be sent out early in July next year. The council claims using a “billing partner” will be $1 to $2 million cheaper than collecting the money itself. Using territorial authorities to collect the money was not feasible, the ARC says, as they would have to upgrade their own software to handle the ARC’s bill component.
CIO Tony Darby says choosing how to meet the new legislation, imposed by central government, took six to nine months. Implementing the new system will be the focus of the council for a further six. The ARC believes the EDS move is the first example of a local body outsourcing rates collection like this.
EDS was chosen for its financial and IT systems experience, he says, and GEAC because its Pathway system is used by many other councils across Australasia. The council also believes Pathway is the only system capable of handling so many bills from what will be Australasia’s largest rating agency. EDS is also supplying project management, the Christchurch-based “print and mail” function, and will run an Auckland-based call centre to handle rating inquiries using GEAC WorkSmart software. Darby says the council will deal solely with EDS.
The ARC presently pays the six territorial councils in the region $2 million a year to collect its rates, with other related internal costs, such as maintaining its rating database, amounting to $1 million a year, giving a total bill of $9 million over three years. The council says the new system will cost it $11 million over three years, practically all the money going to EDS. But after about five years the cost of the new system should be the same as it would have been under the old system.
Darby claims the EDS contract was “tightly written” and includes a range of penalties and rewards concerning performance. Staff have just begun working on the project, he says, with trials due in three months' time.
However, while the new legislation imposes some short-term added administration costs, what will the impact be on rates? It all depends on where a ratepayer lives, the rating revaluations imposed by district councils and the capital value of a property, not to mention other charges for matters like public transport and biosecurity.
Auckland Regional Council collects some $73 million in rates eacah year, equivalent to average bills of about $190. It says checks of rating and related data will be available online through its website.