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Wednesday
Mar252015

Ouch! - Leach Goes On The Attack!

I guess that then given the number of pointedly critical posts that I have put up recently, that there would be a concerted reaction at today's Council meeting, and so there was.

The subject of the attack was well and truly signalled at the outset of the 'Finances' paper when Steve Baker indicated that he would outline the subject of the complaints of "a concerned rate-payer" to the Auditor General dated 2 February 2015. He was of course referring to my letter posted here, Steve indicated that he had legislated obligation to bring my complaint and the response of the Auditor General to the notice of the full council, through the Audit Committee, and proceeded to outline  these matters in considerable detail.

But not before Leach insisted that he ‘out’ the identity of “the concerned rate-payer,” – this was apparently intended to embarrass me, and cause much squirming in my seat in front of Council and a considerable number of staff. Fortunately I have rather a thick skin, but the contrived nature of what was to follow left me wondering just what democratic process has come to in the context of this Council – dominated as it has been from day one by this overbearing bully.

Worse was to come – Steve’s presentation was followed by an intemperate outburst from the ‘bully pulpit’ regarding the costs incurred in responding to my complaints to the Auditor General since the advent of this Council – he demanded that Steve bring back a report on the subject to the next Council Meeting where no doubt a further effort will be made to ‘put me in my place.’ Apoplectic hardly describes his demeanour at this point, and I began to worry whether he would finish the meeting.

What is concerning is the inference that no one really has any right to question any actions of this Council or its Mayor, The fact that I am unable to locate a single complaint to the Auditor General regarding the financial affairs of the Council other than that dated 2 February 2015 is immaterial – I think he is getting me confused with another complainant from Whitianga, or is just simply confused.

I do attempt to achieve accuracy and objectivity, but sometimes I quite freely admit that I get it wrong. In the case of the subject of this particular complaint to the Auditor General is concerned – I have posted my letter, and his response – I leave it to you to judge whether he has adequately responded. I don’t think so, though I concede that Steve did answer some of my concerns in a face to face meeting he arranged for the purpose – nothing in writing!

But it seems that that I am to be bullied into submission just the same as anyone else who has stood up to Leach since he was a school-boy. It must be that my posts most grievously offend his confidence and sense of place. Whatever the case, he probably does feel that he and his Council are put under quite egregious pressure by this upstart who dares question their activities and decisions. After all, there are few others elsewhere in his position who are subjected  to this scrutiny, and criticism.

I have said before, and again at this time that I will not respond to his bullying in any other way than to report it as accurately as I am able. Everyone reading my blog will have their own opinion of  the man, and make their own minds up as to whether what I write is fair or otherwise.

 

 

 

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Reader Comments (2)

As a commentator and reporter on Council matters you have every right to ask for information on stuff you don't understand, as does any member of the general public. In this case the office of the Auditor General thought enough of your request to follow it through and verify if there was a problem, or not. In the event they accepted that the TCDC like lots of other councils uses money collected as rates for other than the purpose it was collected for, if they are keeping rates down, and make a note of the "loan" so that later on other money collected can be used to "pay back" the "loan" which is a bit of a paper shuffle but no more then that. You asked, they investigated, they answered. That should have been the end of it. It did not deserve a 40 minute play skool presentation to council to vilify you for asking the question. What no one seemed bothered by is the Debt which is about the same as a years rates. Sooner or later the debt will have to be paid, or we keep paying interest. Either way rates here are about double what they are in lots of other places. Debt per ratable property, rates per rateable property are out of all proportion, and nearly all of the cost saving measures presented to council have not been put in place because the staff who knew where savings could be made have 'left'. All of this after a presentation showing how many councils in NZ have NO DEBT AT ALL. Yes the borrowing is within limits but the end game should be reducing debt and interest payments which will in turn make this an attractive place to invest in.

March 25, 2015 | Unregistered CommenterRobert Jeffares

Actually Robert there is a huge misconception about Council debt that generally arises from the assumption that "Councils need to be run like a business".

Sure Councils need to be run "in a business like manner" insofar as they should use resources in the most efficient manner possible, however the logic that all Council debt should be paid down as soon a possible is one characteristic of business practice that does not necessarily apply to Councils.

Advice about this is available from Local Government New Zealand (LGNZ). Look up their website www.lgnz.co.nz and you will see that in Council operations, unlike pure business practice, there is a need under principles of fairness to create 'intergenerational equity' when funding capital development in projects such a wastewater, water and storm-water and that this is best achieved through the use of long-term debt so that future capacity built into that sort of infrastructure is paid for by the future generations that eventually connect to them, rather than by current ratepayers.

This approach is regarded as best practice for Councils right across NZ by LGNZ. Note that the logic of this has entirely escaped our Council who wish to shift $46.6 million of future capacity debt from future ratepayer to current ratepayers. This action is based on little more than ignorance. I do not think any of the current Councillors fully understand their function - and if they do then they are too afraid to start spelling things out.

Incidentally, there is no financial crises at the TCDC. This becomes apparent when understanding that the current system of debt funding (introduced by the previous Council) is based on utilizing the principle of creating intergenerational equity through the use of debt as recommended by LGNZ and that the Council debt parameters lie well within what is recommended by that organization.

To illustrate this, note from the Councils last annual plan(see pages 126-131) that future capacity debt in all Council infrastructure, including wastewater, is $86.6 million and that with the interest on that future capacity debt being paid by ratepayers (consistent with using this form of funding that interest as a 'safety valve' when there is doubt over the speed of development), all money received from development contributions can there be used to directly pay down future capacity debt. Assuming a very conservative annual growth rate of half a percent (.5%), a current number of rateable units of 28,229 and an average development contribution fee of $20,000 then all outstanding future capacity debt can be repaid through the collection of development contributions in about 30 years.

The logic for this is simple:

Current rating units = 28,229
0.5% of these rating units is 141 x $20,000 = $2.82 million
$2.82 million x 30.5 years = $86.010 million

Bear in mind that the repayment period of all current future capacity debt over 30 years is consistent with the time frame of most first home property mortgages taken out by private citizens - that it still falls outside maximum time frame for this sort of debt recommended by LGNZ which exceeds a period of 50 years.

Hence, with proper and balanced analysis, there is also scope too, if development picks up, to move a fair chunk of debt repayments back to future development from current ratepayers.

I am absolutely appalled at the total lack of understanding demonstrated by many people as to why Councils are not just any other business operation. I guess when enough people who are supposed to know what they are doing repeat often the mantra that "Councils should be run like a business", it becomes accepted as a fact by many, especially when there is no balance in the debate (actually there hasn't even been a debate!).

Dal Minogue

March 26, 2015 | Unregistered CommenterDal Minogue

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