Our Council Features in AG Inquiry On Stormwater 
Wednesday, January 23, 2019 at 4:43PM
Bill Barclay

The Auditor General has undertaken an inquiry specifically in the administration of stormwater  throughout the country by picking on three councils for an 'in-depth' examination of their practices. The three were Dundein City, Porirua and Thames Coromandel, and it was pubished last mointh. Find it at the Auditor General Webite here.

The AG has drawn attention to historic under-investment in stormwater in particular, which has "identified a level of urgency" in this regard. 

What is reemarkable is that the AG has now pointed out practices concerning the use of depreciation reserves to which I drew attention several years ago. - even writing at the time to the AG about what was happening here in TCDC. This related specifically to the manner which mandated reserves were beinh used for purposes related to the acquiring of new assets, and ignoring 'renewal' of existing stormwater iand other infrastructure.

This prectice commenced under Leach in order to enable the funding of his 'pet' projects, resulted in the run-down of depreciation reserves from over $100m to around $8m - succeefully hidden within accounts until after the deparrture of Hammond and Baker et al, and resulting in the famous back-down in last year's Ten Year Plan wherein the decision was taken to reverse this policy forthwith in order to rebuild reserves - this from my November post on the subject that included yhe following Council paper extract:

"Depreciation Reserves

We have removed the ability to fund new assets from the depreciation reserves to ensure the depreciation reserves can recover and build up for the renewals that are forecast into the future."

My comment at the time regartding this disgraceful state of affairs has now been vindicated:

"Steve Baker stubbornly maintained that that it was perfectly acceptable even though logic told anyone with any knowledge of Council finances that this was not the case. If depreciation reserves cannot be preserved for the purpose of replacing the assets for which depreciation had been deducted, it defies the very purpose of depreciation, and perpetually postpones liability, while cushioning councillors from electoral disapproval having to substitute real rate increases in order to satisfy their desire for extravagant pet projects." 

Perhaps the 'powers that be' at the Council became aware of the criticism about to be aimed in their direction by the Auditor General when this new 'supplementary' policy was mooted in November long after the draft plan was pubished 

What the AG identified was the extraordinary and unacceptable shortfall in expenditure on renewals required to bring stormwater (and other) infrastructure up to standard - a relatively deplorable state of affairs where our Council only spent 36% of the planned capital expenture on stormwater between 2014 and 2017 - far less that the other other two councils, and well below the national average, but totally understandable in the light of the run-down in reserves over the same period.

Remarkably, the AG draws attention to the massive shortfall in expenditure without relating it to the run-down in the legally mandated reserves. And remember - our Council is far more prone to flooding, road, bridge, and slip damage than almost any other - this makes it even more reprehinsible for Thames Coromandel rate-payers to have been placed at risk in this manner. It really does put the Leach/Hammond administration in context.

I can well remember drawing attention to the shortfall in stormwater expenditure in 2014 that followed Leach's direct intervention to ensure that he had funding for all his other pet projects, and he was aided and abetted by the confused coterie of councillors at the table, and staff who were quite incapable of exercising the necessary control over what was arguably illegal expenditure.

The sudden interest of the AG in water matters is pointer in the direction of the soon to be revealed  desire of the Labour Government to move to consolidate administration of the "Three Waters"  throughout the country. The AG Report is just the first 'shot across the bows' - Minister Nanaia Mahuta has already indicated her utter disdain for the manner which these essential functions have been performed in the past nationally, and undoubtedly the axe is about to fall.

Councils will then need to amalgamate in order to survive. These changes may or may not be front and centre before the LG elections later this year, but they will happen. Interesting times indeed!




Article originally appeared on BillBarcBlog (http://billbarclay.co.nz/).
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