Article: Property Investment
Rates Matter with Frank Newman
Like it or not, local government has a significant effect on our lives as property owners and commercial property tenants. For a start, each year they put their sticky fingers into our pockets and drag out thousands of dollars per property; and if that they were not bad enough, they then act as though they own our property by telling us what we can and can’t do with it.
That’s why it’s important to take an interest in what your local politicians are up to, even it is only for the sake of trying to limit their reckless use of our money.
A case in point is the $365,000 they have wasted so far on a review of local government in the north. This spending was not budgeted and may as well have been flushed down the toilet because nothing good has come from their gerrymandered review.
The crux of the local government reform scandal is this. The Whangarei and Far North district councils want to dissolve the Northland Regional Council and assume its responsibilities, and in the process get their hands onto its assets worth $126 million.
They attempted to justify the review by saying we needed to know what the reform options are, before an option is imposed upon us by central government. This is despite the fact that the Minister of Local Government said he had no interest in local government reform beyond the Auckland super city (and it’s not hard to see why given that unravelling disaster).
After months of dithering and stonewalling, the Whangarei District Council has finally released the reports by Sir Peter Trapski and Dr Don Brash who were appointed by the district councils to hear submissions and review the issues. Despite both men finding the public preferred things to remain as they are, true to their brief each recommend some form of consolidation.
Don Brash delivered a recommendation the local councils had hoped for - dissolving the Regional Council and giving its assets and responsibilities to the WDC and FNDC. Retired Judge Peter Trapski however did the opposite, recommending all of the councils be dissolved into a single unitary authority - effectively an enlarged Regional Council. In delivering his recommendation Judge Trapski lambasted the process as lacking independence, including a damning email from one of the mayors.
What both men did agree upon was something that was obvious to many from the outset. Any form of change was not likely to pass the hurdles required for it to go through as each affected council must gain 50% support from ratepayers. (This was not required in Auckland because the changed was forced upon them by Parliament.)
This process has been a farce that should never have happened. It should be obvious from the Auckland super-city example that amalgamation is a can of worms best left unopened.
There is no question, the bigger governments become the less they serve their community. In my opinion the merger of council’s, even going back to the amalgamations in 1989, has not provided better councils and reduced costs as is invariably promised at the time. Local councils have become corporations with their own corporate culture and ratepayers have become servants. It is the nature of bureaucracies that they become bigger and the only people who benefit are councillors and senior council staff who get paid more.
There are some things our newly elected WDC mayor and council should now do and learn. They should throw the fancy “independent” reports in the rubbish and promise the public they will not be so reckless with our money in the future. They could also promise to do what they say they are going to do, as this has been far from the case in the past.
Comparing the 2010 projections in a long-term plan published in 2004 against what it actually achieved in 2010 tells the story. In 2004 Council projected total debt would be $50.4 million on 30 June 2010. The actual debt was $144 million. Likewise, in all but one of the six years the council under achieved is surplus targets, and by a substantial $69 million in total!
The bottom line that their wasteful over-spending is always paid by ratepayers who end up paying more than they need to.
Frank Newman is the author of numerous books on investment matters and the creator of the NZ Investment Game which may be ordered at http://www.investmentgame.co.nz. He is a director of the accounting firm Smart Business Centre. He may be contacted at .(JavaScript must be enabled to view this email address).
