When the Great Recession first began hitting the country, everyone had two choices: either hunker down and beginning cut your cut according to your shrunken cloth, or keep spending like a drunken tailor and borrow to cover your rapidly increasing debts.
You can guess the approach every council in the country took.
When Sandra Lee’s Local Government Act 2002 gave councils the power to do whatever the hell they wanted to (laughably called “the power of general competence”), to a man and woman virtually every councillor in the country began voting for grandomania. Then as the Recession hit and revenues shrunk (even with their hugely inflated rates bills and development levies) they borrowed to keep their overspending going—sailing blithely along to disaster.
The result now is predictable as the Greek decision to do much the same. Total council debt has quadrupled from $2 billion in the Year of Sandra Lee to over $8 billion today.
And the rate of still growing: $500 million more in 2007, $800 million more in 2008, $1,100 million more in 2009, and $1,800 million more in 2010.
Most councils in the country now have an uncontrollable debt, no debt repayment programme, and no plans to rein in their spending.
Dunedin and Kaipara are merely the most high-profile froth on this torrent of irresponsibility.
Listen to whistle-blower
One of the few to pay this any notice, Larry Mitchell, who has spent the last 15 years analysing council’s books, reckons
the financial tsunami currently hitting the beach of some New Zealand territorial local authorities is unprecedented. You don’t have to be a rocket scientist to go through the figures and see that it has come time to activate the warning systems.
Listen to him talking this morning on Radio NZ [audio], after which Sir Humphrey steps up.