Thursday, July 25, 2013

Monumental council debts

This is some interesting spin from the head of Local Government NZ:

Councils spent $700 million more than they earned in the past financial year, leading to the worst operating deficit on record, but officials say this was one of the symptoms of keeping rates low in tough economic times… Local Government NZ head [and mayor of underperforming Hastings Council] Lawrence Yule said councils had tried to keep rates as low as possible since the economic downturn and so had incurred some operating deficits.

What the hell is Yule talking about? “Keep rates as low as possible,” says the dickhead! They’ve risen every year since Sandra Lee’s Local Government Act reform took the handbrake off their spending, with rates nationally rates having risen an average of 7 per cent a year for the past decade. And that’s not slowing down any time soon.

_YuleBasically, since at least 2002 councils have been spending like drunken sailors on non-core council business. Their problem—and their ratepayers’ problem—is that when the economic downturn began not one of them bothered to exercise prudence and cut their overspending. Instead, they all borrowed. They borrowed billions.

Their debt positions are purposely made as opaque as Yule’s spin, but council watchdog Larry Mitchell says

Sector-wide total debt, (including the Regional Councils) has quadrupled from around $2 billion seven years ago to $8 Billion by 2011-2012.
   
Of greater concern, according to Council long terms plans forecast sector debt is scheduled in the period to reach around $25 Billion, with Auckland Council taking a disproportionate share of this at $16 or more billion … or over two thirds of the total.

And that is before Len Brown’s plan to have us pay for all his monuments.

Councils (and government) need to urgently rein in their spending, or today’s children will be working most of their adult lives to pay off the debts of irresponsible politicians. The head of Local Government NZ should be in the forefront of making councils live within their means. Instead, he is an apologist for their failure.

He deserves a good kicking.

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