Lo­cal gov­ern­ment debt soars

Kapi-Mana News - - NEWS - By SI­MON ED­WARDS AN­DREA O’NEIL

and Those ped­dling a vi­sion for a Welling­ton su­per-city will have to per­suade the re­gion’s cit­i­zens to look past the cap­i­tal’s piles of debt.

Welling­ton City Coun­cil’s cur­rent debt is $358 mil­lion and with li­a­bil­i­ties for leaky homes, build­ing earth­quake strength­en­ing and other big ticket items, it is fore­cast to rise con­sid­er­ably.

Last month WCC pub­lished pa­pers that sug­gested try­ing to stick to a bor­row­ing tar­get of $500m by 2021 and a bor­row­ing limit of $700m.

Welling­ton, pop­u­la­tion just over 200,000, has a big­ger cur­rent debt ($ 358m) than Porirua, Up­per Hutt, Lower Hutt, Kapiti Coast ( to­tal pop­u­la­tion 241,000) com­bined – $241m.

How­ever, it’s not as if the wider re­gion doesn’t re­sort to lenders also.

The debt in Kapiti Coast, for ex­am­ple, is fore­cast to climb to $148m by 2015 and higher af­ter that be­fore fall­ing to $77m by 2032.

For­mer Min­is­ter of Lo­cal Gov­ern­ment Nick Smith cited lo­cal gov­ern­ment debt as a ma­jor rea­son why the Gov­ern­ment will in­tro­duce new fis­cal re­spon­si­bil­ity re­quire­ments for all coun­cils in New Zealand.

Lo­cal gov­ern­ment debt has quadru­pled over the past decade from $2 bil­lion to $8 bil­lion.

Porirua mayor Nick Leggett says Welling­ton’s debt is a worry for other coun­cils but the out­look is not en­tirely gloomy.

‘‘I think that’s ab­so­lutely an is­sue, Welling­ton has high debt, but it has also got a sig­nif­i­cant chance to ser­vice and pay off that debt be­cause it’s got a very large rat­ing base,’’ he says.

‘‘We also lack some of the ex­cit­ing com­mu­nity fa­cil­i­ties that Welling­ton has.’’

Welling­ton City’s op­er­at­ing rev­enue this year is a mas­sive $355m against Porirua’s $70m.

The re­gion’s may­ors have not dis­cussed the im­pli­ca­tions of merg­ing greater Welling­ton’s ac­count books, be­cause dis­cus­sions could not progress be­yond dis­agree­ment about the mer­its of a su­per-city, Mr Leggett says.

‘‘The real truth is we’ve never got to that level of de­tail,’’ he says. ‘‘The de­bate has been whether to have a de­bate. It’s dis­ap­point­ing.’’

A Greater Welling­ton Re­gional Coun­cil- ini­ti­ated panel re­search­ing amal­ga­ma­tion should study op­tions for bal­anc­ing rates and debt, he says.

Porirua’s rates should not rise with amal­ga­ma­tion, be­cause they are al­ready com­par­a­tively high in the re­gion, Mr Leggett says.

This wouldn’t be the first time lo­cally that debt was raised as an amal­ga­ma­tion bar­rier.

One of the rea­sons East­bourne, Pe­tone and Wainuiomata re­sented the forced amal­ga­ma­tion in 1989 was that their ratepay­ers didn’t want to shoul­der a share of Lower Hutt’s debt.

The Lo­cal Au­thor­ity Loans Act and sink­ing funds sys­tem of that time meant that the debts of Lower Hutt and the for­mer bor­oughs were kept sep­a­rate for a while.

But a cou­ple of years later, this was slammed as a ‘‘ jam jar’’ ap­proach to ac­count­ing and all fi­nances were amal­ga­mated.

Hutt City Coun­cil’s chief fi­nan­cial of­fi­cer David Wolt­man says though that leg­is­la­tion has been su­per­seded, a su­per- city coun­cil could de­cide ex­ist­ing debt at the time of amal­ga­ma­tion re­mains a charge on prop­er­ties in the old cities, to be paid off over time by those ratepay­ers.

But equally there’s noth­ing to stop the new coun­cil, which could be elected as early as Oc­to­ber 2013, from de­cid­ing all debts should also be merged.

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