Monday, June 07, 2010

No stopping the big spenders at Wellington City Council

Over the years I have talked a lot about Wellington City Council’s debt. I now have a further update which you may find of interest.

In a recent presentation to Council during Annual Plan deliberations the acting CFO gave Council some Borrowings Charts that show Council’s borrowings jumping from around $280 million in 2010 to $360 million in 2011 and $370 million in 2012.

That figure doesn’t include leaky buildings. It could rise by $100 million or more. So far we have only estimates/guesstimates until more information comes to light. Its not as if we haven’t known what is coming as there has been plenty of media about this issue. To begin with the weather tight issue was dealt with in public excluded but as it became clear how big the issue is the public exclusion has been lifted. Most of the impact is in Auckland but we have enough here in Wellington to be concerned.

Weather tight buildings are a systemic problem that began in 1991 and was well underway by the time I was elected to Council in 1996. One of my first battles on Council was about “business process re-engineering” Council. I can remember arguing that neither the library nor the building section of Council should be re- engineered. The building section on council should be better resourced with more attention to best practice and better inspections. That didn’t happen and the profit sector was invited to participate in certifications and inspections. There was political influence and calls for the use of untreated timbers and the liberalising of building codes. The profit takers wanted cheaper homes to be built and new products were introduced and the banks helped by expanding credit. The rest is history and we are now once again socialising the losses that the profit takers have left us. All this happened under the watches of Mayors Blumsky and Prendergast. Under the mayors of private profit Wellington changed and we are now dealing with the mess that has been left. Not only have the business rates been switched onto the residents, so has the losses caused by the profit takers.

It is about time Wellington woke from its stupor and faced the reality of 15 years of apathy. Next year rate payers are in for a big shock to their wallets. We have lived beyond our means for 15 years and we are now in the midst of the worst recession since the 1930s; there has been tremendous wealth destruction and there is more to come. Many property owners cannot get certificates of compliance which is adding further pressure on the property market and the finance sector. There is more financial stress to come for many residents as a consequence of the profit takers being giving control of the public interest.


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