NCC say LGC report needs to be recalled

Napier City Council are calling for the Local Government Commission to recall their recent debt and infrastructure report because it is riddled with inaccurate information – information that is out by more than half a billion dollars.

“It is so inaccurate, it actually defies belief,” said Napier City Council chief executive Wayne Jack.

“The data they’ve used in the report is old. It’s strange they haven’t chosen to use more recent information, which is available. At best, it’s deceptive.”

“The only option is to withdraw this report and release the true figures.”

Mr Jack, said his staff had been working through the report over the weekend and they had found numerous errors, mainly around the roading figures.

“They are not comparing apples with apples and therefore have come up with assumptions that are not correct. The future financial requirements also excludes NZTA subsidy. This will have a material impact on the councils future financial position.”

Discrepancies were largely due to the fact the report does not use the same starting point for each council. The difference in starting values is at least $500 million.

“As a result the rest of the region’s road assets look better than Napier’s despite the fact that anyone who uses the roads would know the roads across the region are generally well maintained,” Mr Jack said. “We were asked to provide information, which we did, however they then released it without coming back to check their assumptions with us. If they had, we would have been able to put them on the right track.“

Examples of key errors are:
- More than $500M of land value and formation value has been included with the road valuations. This skews any conclusions about the conditions of the roads because land isn’t depreciated and doesn’t get ‘repurchased’ when roads are rebuilt

- The report has mistaken sewer asbestos cement pipelines for water supply pipes

- The report has assumed that all asbestos water supply pipes will have to be replaced in the next 10 - 30 years despite Napier City Council having independently verified information that the pipes will be not need to be replaced for at least 30 - 50 years.

In 2014 Napier City Council commissioned an independent report from Waugh Infrastructure Management Ltd on NCC’s infrastructure which concluded: “The picture the authors have built up during the analysis completed in this report is that Napier City assets are professionally managed in accordance with appropriate practice, and that Napier is very well positioned to meeting any future infrastructure related growth or renewal challenges. “

Local Government financial and asset specialist Philip Jones said the writers of the LGC report had got it wrong.

“The writers of the report and LGC had the Waugh Report and should have been aware the Napier City Council would be considering revising the useful lives of its infrastructural assets, therefore the difference between replacement cost and the residual value would be a very poor basis to estimate the renewal cost. Furthermore there was no assessment as to when the renewal expenditure will need to occur and the estimated financial position at that time considering the resources available to the Council.”

Napier Mayor Bill Dalton said the people of Hawke’s Bay had been treated appallingly.

“I hope the Local Government Commission can see sense and recall the report, otherwise people will have absolutely no faith in the process going forward,” he said.
“The public are going to be surveyed on their thoughts around amalgamation this week and I would suggest that people reject amalgamation based on the fact they can’t get their sums right, so what faith can people have in what they telling us. This calls the whole process into question.”

ENDS

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