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Friday
Jul202012

Carter on Debt Levels

"I am comfortable with the level of debt incurred by councils overall." (Minister David Carter)

It is interesting to note the comments of Wellington City Council strategic executive Allan Prangnell in his report on the Smith changes to that Council when he points out that infrastructure be be simply un-affordable for these councils, and that "perhaps the time has come to ask whether core infrastructure needs similar treatment to that surrounding the provision of subsidised education and health services in rural and provincial areas with lower population."  And he is a large city council employee - heresy!

He talks of the potential for an "infrastructure deficit" that could eventually fall back on central government, and the temptation for councils, particularly smaller councils with large areas to look after to resist spending on key maintenance and infrastructure, because they are the most expensive items for councils, and the easiest to cut because they are often the least visible to rate-payers.

This could be better illustrated than in own case here where our Mayor has taken the knife to maintenance in particular in order to fund his election promises, and to strike totally unnecessary/dangerous rate decreases for blatant political purposes.

There is undoubtedly a second Local Government Reform Bill on the way in 2013, and although Carter will see to it that the edges are rubbed off the Smith proposals, it seems certain that there will be expenditure and borowing limits imposed, and substantial re-definition of council purposes to 'good quality local infrastructure, local public services and performance of regulatory functions for maximum cost effectiveness."

Of course, the devil will be in the detail, with many councils pushing for continuation of their social and cultural roles that elected members love to fiddle with for election purposes. Minister Carter will probably adopt a pragmatic approach, but he does need to be firm and consistent if he is to retain any credibility - the entire sector will otherwise  ignore him, with resultant court challenges at every step. 

 

 

 

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