MEDIA RELEASE: Review validates concerns about LGC report

11 March 2015

An independent review has validated Napier City Council’s concerns over the methodology and conclusions used in a recent Local Government Commission report on Hawke’s Bay’s infrastructure assets.

The review shows the council’s financial position is +$60m rather than -$45m as purported in the LGC report.

Chief executive Wayne Jack again called on the LGC to recall their error-ridden report.

“All the people of Hawke’s Bay want are accurate figures. LGC need to acknowledge they’ve got it wrong and they need to do something about it. This is not about politics, it’s about facts.”

Concerned at the way the roading network data had been used, the NCC asked specialist infrastructure management company AECOM to review the report.

“The LGC report suggests our assets aren’t in good shape. We know for a fact they are and we will not stand by and let LGC try to suggest otherwise in order to push their case for amalgamation,” Mr Jack said.

The AECOM review confirms the value of land under roads and their formation should not have been used in the LGC’s analysis as there is no requirement to replace or renew these assets.

While the ratio of current value to replacement value can be used as a high level indicator, care should be taken in interpreting those results particularly when there are different compositions of networks, the review said.

The review also noted the amount required to obtain an equitable position is extremely sensitive to any inputs, therefore any small change can result in a significantly different financial position. It also highlighted that no consideration given to the on-going operating and maintenance expenditure, nor the levels of service that will result in different costs to the Local Government communities.

Mr Jack said his council were also concerned the LGC were now suggesting the proposed amalgamated ‘Hawke’s Bay Council’ use financial assets until 2021 to pay for renewals and replacements when there are other funding sources available. This implies that funds held by councils for community projects would be diverted for asset replacements.

“The local community should feel aggrieved with this proposal as it has had no opportunity to provide feedback to the commission regarding its significant change in approach,” he said.

ENDS

Comment_from_Napier_City_Council_Works_Asset_Development_manager_Johan_Ehlers.docx
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AECOM_review.pdf

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