Selling Council assets is only putting off the evil day

Legislation needed to limit rates levels.

Selling council assets is a short-term attempt to hold back the tide of ever-increasing council rates increases.

In some cases it is proposed to sell assets help buy or start new projects and services – which will then become a drain on future rate demands.

The real answer is to stop spending on non-core projects which rapidly become tomorrow’s rates crisis.

Projects like the Auckland Central Rail Loop. There is no business case for this, nor is there adequate population growth in the forseeable future to support the proposed rail extention.

Other asset sales are proposed to pay for past mistakes, projects such as Hamilton’s multi-million dollar losses on a car race, and over budget costs of its stadiums. The same applies to Dunedin and its hopelessly over budget stadium and the ensuring operating losses.

There are smaller councils with similar debt problems, but fewer saleable assets, such as Kaipara and Far North Councils, where coastal sewerage systems have run wildly over budget and ratepayers are now faced with 300% and above rates increases.

Selling assets to cover debt repayment only puts off the evil day – especially when new spending on non-core projects continues to grow.

For years we have suffered the annual outcry from outraged ratepayers faced with councils raiding their pockets and purses.

Five years ago the Independent Rates Inquiry acknowledged that rates were becoming un-affordable and that council income from rates should be no more than 50% of total council income.

If that simple target was applied councils would immediately find they were inside a strait-jacket which would squeeze the life out of any grandiose projects, and would make them concentrate instead on maintaining the necessities the community needs.

Certainly asset sales, where appropriate, will take some immediate pressure off councils, but what happens when all the saleable assets are gone and new debts accumulate?

That will be the time when councils will use their draconian powers to demand huge one off payments from property owners [the ratepayers] to meet the guarantees given by councils as security for borrowings.

Or maybe that will be the day when councils will face the need to sell sewerage systems and water supply systems to private profiteers.

To avoid such prospects requires immediate government intervention to legislate for firm financial control over local councils.

It is quite obvious that many councils are totally incapable of handling their ratepayers’ funds with any level of responsibility.

ends

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