MEDIA RELEASE: LGC have blinkers on says Napier Mayor

6 March, 2015

Napier mayor Bill Dalton says he has no faith in the Local Government Commission given their decision to stand by a report he says is “totally erroneous”.

“I’m quite flabbergasted,” Mr Dalton said. “They have got numbers wrong in the report they released last week, specifically in their roading data which is out by $955 million. If they can’t get their numbers right on that, what faith can we have they can do their sums correctly around the cost savings they claim would result from amalgamation?”

Mr Dalton said his he would not back down and would continue to call for the LGC to withdraw the report because the reputation of his council and how it manages its roads and finances are at stake.

“Industry specialists will tell you, you never depreciate land formation. Despite this, their so-called ‘experts’ included road land values and road formation when they shouldn’t have yet no one is willing to put up their hand and say they got it wrong. Road land values and formation should not be included in the report’s analysis around asset replacement because they never get replaced! The fact they refuse to recognise this is a major and fundamental error. They are being negligent and deceptive.”

The Local Government Commission has included $955 million of land and road formation in error, Mr Dalton said.

“This is significant because the total depreciated value of assets that do need replacement from time to time is $1.8 billion. Land and formation are not depreciated and because most of the $955 million have been included with Hastings and Central Hawke's Bay's valuations, it makes their asset valuations appear a lot better. When land and formation are stripped out, only then to you get a comparable base - and the numbers then show a completely different picture to the LGC's conclusions. In actual fact, none of the Councils need to make a big adjustment to their planned infrastructure spend.

“The LGC seem to have set out to try to undermine our reputation to push their own cause. They have a predetermined view on amalgamation and they will not let facts get in the way. The LGC have blinkers on. They are determined to try to show our position as being a negative one when in fact we are in a very positive position,” Mr Dalton said.

“Napier has a good track record of managing debt and infrastructure in an enviable manner yet the LGC seems to want to create their own story by ignoring the facts.”

Figure 1: Depreciated Asset Values. This graph shows the significant value of the Land and Road Formation that has been included in the Local Government Commission's figures

Figure 2: Depreciated Asset Values as a percentage of Replacement Value. This graph shows that average asset condition in the different Districts is a lot closer aligned than what is suggested in the Local Government Commission's report

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