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The Bad News Comes Before Christmas

It will not surprize readers to hear that the bad news about the impending 5.5% rate increase for 2015/16 (and a great deal more for subsequent years if I am not mistaken) was released in the form that I predicted some time age. The spin and massage that accompanies the release is exactly as I earlier suggested. And 5.5% may just be the beginning, or opening bid.  

Just as I predicted, the entire blame  for the need for the increase has been placed squarely at the foot of the 2007/10 Council, and this Council that has been in office since (four years!) takes no responsibility, and even manages to flannel the utterly politically driven rate decreases they instigated after coming into office. It has spent the last four years lauding its own fantastic financial achievements, and claiming huge savings that would permanently entrench its rate decreases.

But suddenly, it has hit the reality wall comprising interest and depreciation, and low growth rates about which they were apparently ignorant. I suggest the current lot look particularly stupid as a result - the embarrassment must be intense, and they will undoubtedly be anxiously awaiting the reaction from this announcement, and to see whether or not their attempts to escape blame through their utterly transparent finger pointing at the previous council - what a joke!

They cannot even get their time-line correct - the decisions on the waste-water were made long before the previous Council - between 2002 and 2006 in fact. and while Leach claims they were "over-built" he paradoxically claims that two of the plants are already at full capacity over the summer. Hilarious!

You have to read the entire announcement, and particularly the statements by Leach and Hammond - they amount to the greatest load of arse-covering that you are likely to see in the foreseeable future. The two day workshop where they spent time "wrestling" with the problems of their own making must have been a real 'head-scratcher' as the truth dawned.

To claim that they had no idea that the growth rates would be so low just does not stack up - they must have known the moment they were elected, and still proceeded with rate cuts. I can only assume that they have been very,very badly advised by both Hammond and Baker over the last four years to have arrived in this situation, or else they should be individually liable for their ultimate irresponsibility.  

I am exasperated at the sheer effrontery of this bunch of incompetents that having removed an entire raft of experienced staff, and replaced them mainly with what can only be described as terrified, time-servers, mostly searching for their next step up the scale.  And our Council has allowed itself to be bullied and blustered into making crazy decisions devised with a combination of megalomania, and Mayoral abilities that can fairly be best described as moderate, or worse. 

The announcement of the increase could not be delayed any longer, and I guess that our Mayor hopes like hell that the timing of the announcement, and the flannel that accompanies it will reduce the heat on his Council to tolerable levels. And who cares as long as the transfer of blame on to the previous Council can be made to look at least credible. 

Wait for the follow-up announcements designed to entrench this belief amongst rate-payers - particularly those who are here for the holidays, and who are generally hidden from the day to day incompetence with which we who live here have become so familiar. All most of them have to compare him with is Len Brown. 

Study the announcement very carefully - what I am saying will become very clear, even to the most sceptical observer. 




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Reader Comments (14)

So, Bill, have I read this situation correctly, putting aside the issue of which council is to blame, that this 'problem,' has just come out of no where? The council and staff didn't see it coming? It, like, just snuck up behind us when we were not looking, and suddenly said 'here I am!'
One must ask just what sort of return rate-payers are receiving on the salary investment they make in the Mayor, CE, CFO et. al. if they didn't know what was happening around them.... sigh. If these august personages can't manage the TCDC budget, how are average Joe rate-payers expected to manage their (largely) fixed income budgets in the face of these sorts of increases I might wonder?

December 18, 2014 | Unregistered CommenterRussell

Those damn Councillors in the early 2000's have alot to answer for. Thank goodness we have Leachy and crew to get us out of the proverbial.
We should have woken up earlier- --a female Mayor - no wonder why Council went off the rails.
Over designed, far too large-what in Heavens was the Council thinking of then??

December 19, 2014 | Unregistered CommenterSour Ratepayer

What Sour Ratepayer should remember is that Leach, Goudie, Dunwoodie, Abrahamson and all the other familiar renta-mob loonies from the Coromandel Right all lobbied extremely hard to make Barriiball our first female Mayor.

In truth, they have a lot to answer for rather than the Councillors from the early 2000's - as all the Councillors then were expected by Leach et al to tow the line with her!

Also, how much of this so called over capacity issue is true?

For Sour Ratepayers benefit, not much.

Future capacity planning for infrastructure takes a long term view over 20 years and is not an exercise in short term navel gazing. That type of thinking led to the failure of all the eastern seaboard wastewater schemes in the 1990's as they did not have nearly enough capacity for growth.

Thank the Councillors from that period (of which Leach was one) for that problem through a systematic underfunding of capital improvements leading to the need to completely replace this wastewater infrastructure in the mid 2000's.

The truth is often inconvenient - sorry about that Sour Ratepayer.

December 20, 2014 | Unregistered CommenterRatepayer

I still reckon Ratepayer, that Leachy is the man to get us through this upcomming bad patch. Whether or not he was behind our first female Mayor, he has certainly got rid of the 'troughers' who filled the corridors of power. I have yet to hear one person who thinks Leachy is not doing a top job.
Never in 20 years will those waste water plants will ever met capacity- and we as unfortunate ratepayers will suffer the consequences.
There is no doubt in my mind Leach is the right person to lead us out of the financial wilderness and once again the Peninsula will be open for business. No more of those cursed Developement levies, a relaxation of the current District plan restrictions, great ideas for Coastal walkways, rail trials, living memorials [trees] to show respect for the WW1 soldiers, yip Leachy is the man!!

December 20, 2014 | Unregistered CommenterSour Ratepayer

I smell a rat - no-one could possibly in his right mind really belive that stuff that Sour Ratepayer has put up.
I therefore suspect that he/she is acting as an agent provocateur just to get our dander up. I will not respond and thereby raise the humour level so close to Christmas. Have a good one, whoever you are!

December 20, 2014 | Registered CommenterBill Barclay

Yip, you can't argue with an idiot.

December 20, 2014 | Unregistered Commenteranother ratepayer

Regarding 'another ratepayer' comment---- surely you do not mean our esteemed leader, His Worship the Mayor???

December 21, 2014 | Unregistered CommenterGround Zero

Wow, that's a point - Sour Ratepayer could be the Mayor writing under a pseudonym.

December 21, 2014 | Unregistered CommenterI see the light

Maybe-- more likely he has dictated it to one of the 5 PR people--up from 1 in the 'previous' Council.

December 21, 2014 | Unregistered CommenterGround Zero

What has been overlooked is that TCDC was advised by growth projections prepared by BERL who got a lot of their data from Developers who were insistent that Mercury Bay would have a population of 20,000 by 2020 courtesy of all the baby boomers who would be buying retirement homes in Mercury Bay.

Roading, Power, Telephone, and Water planning was driven by this data provided by the Three Wise Men of Whitianga.

Systems were installed that could cope with holiday peaks and future growth. They cost millions, millions that were increased exponentially by complaining citizens, and further stroked by some shifty staff. Playing the loan market with dodgy derivatives hasn't helped. [yet another example of council staff having absolute and potentially catastrophic power]
'Development Contributions' on all new houses would pay for the cost of installing the plants for water, and the loans, so ratepayers were eased in to the increased costs because the DC's would provide a buffer.
By 2005 it was obvious that sales were nowhere near the required number to deliver this growth possibly because Mercury Bay lacked the key infrastructure to make it an attractive place to live, and no that does not mean a Warehouse and Countdown. Slow sales were blamed on a 'global downturn' while retirement villages elsewhere were selling as fast as they could build them. Expensive beach places were not selling, but remember the prediction was for permanent residents.
SP Steve has been warning successive councils that the budgeted amounts for Development Contributions needed to be revised down, but the glacial pace of bureaucracy, and the unthinkable increases in rates slowed down any action.
It is easy to blame 'the previous council' and BERL and anyone else whose head is sticking over the parapet, but the fact is the predictions were driven by developers, the Three Wise Men of Mercury Bay, who are now the biggest bleaters, claiming that costs should now be borne by current ratepayers so they can more easily cash out of their sand holdings. Oh yes, sand. Much of Mercury Bay Real Estate is low lying, flood prone, liquefaction liable, hard to insure and almost impossible to garden.
Risk averse retirees check rates insurance and distance to the nearest hospital and the places that tick off all boxes are the ones that are going ahead.
Everyone blamed BERL. No one ever thought to ask where BERL got their information. Oh yes, there was one voice in the wilderness; Minouge.
Equally easy to blame Lux, Bariball, Catran, and a series of lacklustre local councilors, but the puppet show that is TCDC has long been controlled by the Constructors Cabal who are now fighting a rearguard action. 5% increase in rates will be a big hit on anyone holding a handful of sections, and just around the corner the Combined Tribes of Coromandel will make ISIS look like the Herald Angels as they exert their 50% say in every TCDC decision.

White Flight may become a stampede.

Hiding the true cost of running the council may have worked in the past, but the new mayoral powers to allow the hard questions to be asked.

Tis the season of peace and goodwill to all men but for some December 25 is the day before the races out at Tangmalangaloo.

It's always hard to pick a winner, Boxing Day Races and Councils alike.

December 23, 2014 | Unregistered CommenterThe Elephant

The Elephant seems to know quite a bit. Some of his points are worth following up on too.

It is impossible to 'second guess' future economic development generally or globally and specifically as for example in relation to development contributions within a small District Council that becomes, through such a policy, dependant on surplus cash (or rather surplus credit arising from the policies of global banking institutions ) and discretionary spending on a holiday home.

Who among the current Mayor or Councillors predicted the economic malaise we have been subjected to back in 2004-6 when things were booming and the planning for wastewater development was underway?

Nobody that's who. A good level of proof would be to ask whether the Mayor or any current Councillors got their finger burnt in the finance company melt-down following the 2007 global financial crisis? Did they all see that coming and remove their money before it was too late? I doubt it.

I know of one current Councillor who lost all his savings in that melt down and of others who lost substantial sums.

For the record I had better sense than to invest in such financially leveraged 'development funders' and lost no money on them at all.

So I find it a bit rich being accused as a previous Councillor of not reading the global financial crisis three years before it happened and of having left an incompetent debt behind.

To pick up another 'elephant' point: :

Yes, in Whitianga until the end of 2006itianga the level of future capacity in wastewater infrastructure was being driven by very strongly voiced developer concerns. This was driven by a huge demand for apartment development that started when the Lux Council rezoned the Whitianga central area to allow for this - but even more so by Whitianga Waterways, who in a booming economic environment had ramped up its own development initiatives by expanding 'provision for extra density housing' on their land and by planning a massive retirement complex which they had obtained consent to build.

If the Council had not responded to Whitianga Waterways and provided for this extra planned development, then probably they would have ended up in court and been forced to build extra capacity by that company.

It is no secret that most of Whitianga Waterways extra density development concepts have since been put on perennial hold along with their consented retirement village.

Does that impromptu decision make Leigh Hopper and Evans Young any smarter that any of the members of the previous Council? Measured on their performance of predicting economic activity, no.

It doesn't matter who you are, rich or poor, a plumber or a qualified economic advisor (or even Berl), a developer, a lawyer or a District Councillor - you are going to be in the same boat when it comes to making those sorts of predictions.

However, one thing about modern economics is generally true and is held to be so by most intelligent people - economic cycles are temporary things and any long term view will see predicted averages run fairly true. Whitianga Waterways look at their development like that and the Council is right to plan its development contributions that way too.

What you don't need in that circumstance is a bunch of Councillors who act like headless chickens, lose the 'big picture' and give away the family silver because of predictable complaints by developers who will, without mercy, use economic difficulty as an opportunity to trim their Council costs.

Unfortunately, politics in this District makes short work of the truth. That is because it is generally determined by the biggest 'gang' who can make what say become the truth. Perhaps that is now the 'constructors cabal' referred to in the previous comment.

December 23, 2014 | Unregistered CommenterDal Minogue

Our mayor has stated " The Ratepayers " Will get What they NEED, NOT What they WANT "
How true, The Developers have got everything they want and the Ratepayers have got Little of what they need.
Sad that the people we elected and who appeared so strong prior to elections have found the most comfortable position for their hands is under their bottoms and not waving in the air for fear of a bully.

December 23, 2014 | Unregistered CommenterDIGGER

"So I find it a bit rich being accused as a previous Councillor of not reading the global financial crisis three years before it happened and of having left an incompetent debt behind." ..DM

I hope you don't think I am accusing you of this, The record shows you [alone] preached a conservative long term view, feisty at times [that's called dysfunctional by those who would have you out]. The shifting of costs from 'Area of Benefit' to 'Regional' loaded Thames with higher rates to pay for Mercury Bay water. [it saved a lot of money for those paying rates for more then 1 section] Enter Bill Barclay: The Don Quixote scene is complete. [That's Barclay on the Donkey] The councilors who could have supported you didn't, Thames, Coromandel, Tairua, Pauanui, and Whangamata are paying the price. This was not a global financial crisis victim this was a 'pie in the sky' plan which would make a great musical or a farce. Chu Chin Chow has nothing on this. Cast: M Mclean G Leach.. I can see it now.. "I am the Mogul of Mercury Bay, people here do just what I say, I make the residents pay pay pay, yes I am the Mogul of Mercury Bay" The TCDC Panto now playing in a Chamber near you!

December 24, 2014 | Unregistered CommenterThe Elephant

No I wasn't accusing you of that, I was referring to the attempt by the current Council to blame all the previous Councillors for unjustifiable wastewater debt!

I am not sure about your reference to Don Quixote and the guy on the Donkey though. That would make Bill Barclay Sanhco Panza and I suppose I woulkd be Don Quixote.

Hell that's a thought.

Liked the panto rhyme though and some of your comments.

December 24, 2014 | Unregistered CommenterDal Minogue

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