Philip Jacobs

I refer to Ken Ingram’s letter to the editor in Wednesday’s Beacon, “New source of funding must be found”.

Although his thoughts are admirable, Whakatāne needs far greater understandings “to re-evaluate the council’s directions and its fiscal position”.

I attended a meeting with Simon Watts, Minister for Local Government on May 30.

He made the point very clearly that local government in New Zealand has a spending problem and not a revenue problem.

Spending comes in two forms – capital works (infrastructure) and operating costs.

Firstly, the minister talked about infrastructure builds at “least cost – no frills”, which brings to mind Whakatāne District Council’s $100 million-plus lavish Rex Morpeth Hub redevelopment project and its proposed $100 million-plus merger (upgrade) of the Plains and Whakatāne water supplies.

Hopefully, the council will not line up to spend another $100 million-plus project to build another bridge crossing.

Not to mention unaffordable land-based sewerage schemes.

Secondly, I have undertaken an analysis of council’s core spending and rates from 2019 (the last “normal” year before Covid) to 2027 using historical and long-term plan data (see table.)

This analysis shows the council’s core spending and rates will rise 90 percent over eight years whereas the Consumer’s Price Index (all groups) and the Local Government Cost Index (operating costs) over the same period are likely to rise less than 30 percent.

The 60 percent real increase in council spending (attributable to rising staff numbers, new services, nice-to-haves and no doubt some waste) is where the real council spending problem lies and why rates rise restraint, even a small rates decrease, might be possible when the council’s recent big spending increases are unwound.

Not to mention the rapid rise in loan interest costs.

Ordinary households cut their spending when their mortgage interest costs rise – not so the council.

It needs to urgently update its financial management policy to either borrow and reduce spending to match the additional interest costs (to retain a balanced budget and live within its means) or simply not to borrow for unaffordable projects because it does not want to reduce services.

For too many years, the council has had its cake and eaten it too, excessively borrowing for new projects, continuing the same (or increased) spending on services and allowing its current massive operating deficit (loan interest costs) to emerge.

The way the council runs its finances has just got to stop and that is why (by running for mayor) I am offering the community my extensive financial management experience. The problems are severe and need urgent attention.

Only someone not steeped in years of council culture serving as the mayor or a councillor can call out “stop the bus – it is time to get off” and provide the transformational financial leadership urgently required.

As for Mr Ingram’s search for” increased revenue” – I am sceptical.

The now abandoned boat harbour was supposed to be a big money-spinner creating hundreds of jobs.

And there are other plans afoot to manage council (harbour board) properties more aggressively to generate more rental income – inflicted as unwanted cost increases on the town’s struggling small businesses.

But what about the strategic purchase of the Wally Sutherland building – it seems to be a case of interest on borrowed acquisition funds, lost rates revenue, substantial renovation/repair costs and likely little revenue? (Aargh!)