The dark art of economics
The Far North District Council has some decisions to make over the next few months, decisions that will determine whether or not all FNDC ratepayers find themselves paying to subsidise the costs of a very profitable business that wants to set up shop in Kerikeri.
First, a quick lesson in the dark art of economics. Economists talk about ‘externalities,’ which are generally seen to be a bad thing. An externality occurs when someone undertakes an activity that generates a profit, but is able to offload, or ‘externalise,’ some of the costs of that activity on to other people who get no share of the profit.
We could well see this situation occurring locally, if FNDC grants the initial resource consent application from Arvida Group, who want to establish a retirement village in
Hall Rd, Kerikeri, with 200 houses and a 90-bed care facility. Only a handful of households are being allowed to comment under a limited notification process, despite the fact that the project could impose costs on all FNDC ratepayers.
Externality #1 — since the application surfaced, residents have been surprised to discover that there is a plan to install a water main along Hall Rd. To facilitate the Arvida development, that project would be prioritised, and the size of the main increased. That will mean higher costs, and delays for work in other parts of the district.
Externality #2 — the sewage treatment plant due for completion in December will create capacity for about 350 new connections. The Arvida project would easily account for at least 250 of those; add in 100-plus new properties in residential developments already consented, and the supposed 10-year capacity will be gone in 10 months. Remembering that Arvida reported a $59 million profit last financial year, and has 18ha available, would it be unreasonable to require them to install an onsite treatment plant rather than impose more costs on ratepayers for yet another expansion?
Externality #3 — the initial earthworks for Arvida’s project requires 8000 tonnes of aggregate to be brought on to the site. Hall Rd is scarcely 5m wide, is poorly constructed, and lacks footpaths. It is adequate (barely) for current use, but council’s own infrastructure staff have expressed serious concerns that the volume of heavy vehicle use will cause ‘terminal damage’ to the road. Against this possibility, it is proposed, Arvida will be obliged to lodge a $100,000 bond.
That amount would go nowhere near the real cost of restoring the road to a reasonable standard, and guess who will pick up the tab for the balance, while other more urgent roading work around Northland remains undone?
This project could impose costs on all ratepayers, so the current application must be denied and a fully notified process put in place to give everyone a chance to be heard. You’ll be paying for it, after all.
Maybe ask your local councillor what they think about externalities. They shouldn’t be hard to find. It’s election year.
"This [Arvida] project could impose costs on all ratepayers, so the current application must be denied and a fully notified process put in place to give everyone a chance to be heard."