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The Risks!

Mayor Leach saved up any mention of the risks facing the incoming Council under after the declaration.

He told Michael Dobie that these included “the costs of dealing with leaky buildings, the lack of development contributions to council coffers, and a rise in interest rates.

All three demand examination:

Leaky Buildings This issue has been closely hidden away from Council for far too long with what were clearly conservative estimates of the likely liability – this goes back several years, and despite close questioning of the then head of building services - Sam Napia, I never felt that we ever were provided with a clear explanation of what was likely to arise in this area.

In fact, we were assured at the time that our liability would be far lower than that of other districts, and that this was to a great degree due to the higher building standards that had been applied in this District, and a direct linkage was often drawn to the less than acceptable times required to obtain building approvals, inspections and sign-offs. And the level of complaints!

I do know that there have been recent reports presented to Council ‘public excluded’ sessions that have never seen the light of day. One is left to wonder whether this sudden concern is the result of recent notifications, or rather just an assumption that there will be notifications on the way. This issue needs to thoroughly examined and ‘out in the open’ for a change. I can feel an OIR coming on!

Development Contributions No matter what dissembling takes place in regard to this issue, the fact remains that due to staff incompetence, our Council accepted totally unsupportable ‘growth rate’ projections for over ten years. I don’t need to go into the details – I have done so previously on countless occasions, and still they continue. The current Statistics New Zealand release showing about 1.5% population increase for the Peninsula is very revealing. This does not show ‘second home’ growth of course, but is still a shocker when compared with the rates that the Waikato University and Berl experts have been providing over the ten year period, and accepted without question.  

What is even more concerning is Glenn Leach’s determination to alter the Contributions in order to make it easier for developers – at the expense of existing ratepayers of course, as if the imposition of additional rates and borrowing resulting from the ‘out of control’ eastern wastewater development was not sufficient.

The assumption of the superior attractions of this district to anyone other than a few retirees, and its hypothetical growth potential promoted by boosters who fail to understand the underlying deficiencies will again get us into trouble unless we are very careful – the TUDS is a perfect example. And in any case it is time everyone took a deep breath and rejected the devotion to the Great God Growth – the story in this week’s ‘Listener’ regarding Stanford Prof. Paul Erlich should be compulsory reading for this entire District – he is probably the World’s leading authority on the likely effects of ‘growth’, and the story is a trimmer, if very disheartening.

Interest rates Yep, increases are coming as sure a God make little apples, and despite Glenn Leaches long held view that our Council was well placed when it comes to borrowing, that is simply not the case – not his fault – the die was cast long before his recent advent, but his failure to recognise the danger surrounding the treatment of ‘internal’ borrowing of some $50m amounts to downright ‘denial’ aided and abetted by staff who are providing what I believe is incorrect advice. The chickens will come home to roost when interest rates double, or treble, as is quite likely. ‘Internal’ borrowing does not escape an interest liability – it is required to be paid out of rates just as in the case of any other interest, and credited to the depreciation accounts from which the principal has been drawn.

Inevitably, there will be a substantial impost on rates overall of interest on some $120m in borrowing – at the very high end of councils nationally. Glenn may yet rue the day that he undertook his reckless rate reductions – far more than was required to meet his election promises, and which established a new base from which all the additional commitments will have to be met. It was ego-driven, reckless and downright stupid in hindsight, but although some around the table may suspect this self-evident truth, it may take some time to sink in.    




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