Mayor hits back at cover-up claim
It’s high time Wellington City Council was just as transparent with the people and businesses of Wellington.
Wellington city councillor Diane Calvert
Wellington Mayor Tory Whanau says suggestions of some sort of “coverup” regarding financial challenges the city council is facing are laughable.
Whanau has hit back after a city councillor applauded Auckland Mayor Wayne Brown for being upfront about the city’s financial horror show yesterday and says the capital needs to be just as transparent.
Brown revealed the numbers are going to be nasty for ratepayers if councillors are not prepared to make cuts to services and sell assets.
Heading into a new 10-year budget next year, the starting point for rates is 13 per cent and a senior council source said water bills could rise by more than 20 per cent.
Wellington city councillor Diane Calvert welcomed Brown’s openness.
“It’s high time Wellington City Council was just as transparent.”
Calvert resorted to seeking legal advice to lift the lid on the state of the city’s finances during a public debate in a committee meeting this month.
Councillors had been briefed on financial challenges but this was behind closed doors and in confidence.
But Calvert was able to say publicly they have been told tens of millions of dollars, if not hundreds of millions of dollars, in capital expenditure, will need to be cut.
She has called the situation a looming debt crisis.
Councils around the country faced similar challenges to Wellington, but some were dealing with it sooner, Calvert said.
Whanau said external pressures such as inflation, interest rates, building costs and insurance premium increases were being experienced by councils nationally.
“These are not new concerns, but they are now coming to fruition as expected and we are preparing to chart a steady course.”
Council staff are working on a range of options to be presented to elected members in November and made public, Whanau said.
“The community will have full opportunity to make their views known on these spending and affordability issues over the next few months . . .. ”
In response to the state of Auckland’s finances, Labour Wellington City councillor Ben McNulty posted on social media the capital was fortunate to be starting from a healthier debt position for its long-term plan.
But he said the challenges facing Auckland Council were universal — from Wellington to Gore.
McNulty agreed projects similar to the city’s recently opened convention and exhibition centre, Tākina, should be nowhere near the council’s books any time soon.
In 2021 Wellington City Council increased its debt ceiling from 175 per cent to 225 per cent.
This debt ceiling, or debt-to-revenue ratio, is self-imposed.
A significant proportion of council borrowing is done through the Local Government Funding Agency (LGFA).
The LGFA is how local authorities use the scale of debt issuance and collective security of rates revenue to get increased access to debt, and lower interest rates than would be possible individually.
The LGFA increased the upper limit for borrowing from 250 per cent to 300 per cent in 2020, freeing up capital for councils with a credit rating of “A” or higher to manage their way out of the Covid-19 crisis.
The limit will be reduced to 285 per cent by 2025.