Philip Jacobs

I refer to Keith Melville’s letter to the editor titled, “Whakatāne people need a break not a bridge” (Beacon, July 9)

Mr Melville has peeled back a layer or two of the Whakatāne district’s debt onion by focussing on recent major projects and unrecognised costs associated with another bridge crossing. But there are many more layers of this onion to be peeled to gain a full understanding of its massive debt problem.

We can start the discussion with council’s 2024-34 long-term plan to run its debt up to $318.3 million by June 30, 2030. Then reset the LTP’s opening debt balance to the 2023-24 Annual Report closing debt balance, allow for extra borrowing likely to have occurred in the just-completed 2024-25 financial year, and council debt at June 30, 2030, is running up towards $350 million.

And then there are the auditor’s comments in the council’s 2024-34 Long-Term Plan. “Council reduced its planned capital expenditure on Three Waters compliance and resilience-based projects by between 30 percent and 50 percent, due to significant funding constraints” (without adjusting project scope) and “the council’s plan to defer $260 million of Three Waters capital expenditure for the next 10 years.”  The council is simply not counting and reporting its debt correctly.

Then there is the proposed $50 million-plus Matatā sewerage scheme (for 240 houses) and the newly proposed $30 million-plus Murupara sewerage scheme upgrade.

And then there is the operating deficit debt. Against a 96 percent revenue to planned operating expense ratio (4 percent revenue deficit) for 2025-26 in the long-term plan, the council has recently reported a 2025-26 Annual Plan Balanced Budget Benchmark of 89 percent (11 percent revenue deficit). That suggests a major blowout in its operating costs and a nearly three-fold blowout in its operating deficit for 2025-26 requiring millions more debt.

As for the planned $107 million Rex Morpeth Hub project approved in the long-term plan - council recently received an update report. But we don’t know how much has been spent already, why council staff abandoned redevelopment of the War Memorial Hall in favour of refurbishment, why there is now an “addition of an indoor court facility” and what the cost impacts of these changes are.

How the council’s required Water Service Done Well Thirty-Year Plan due to be filed on September 3 will impact council debt going forward is also unclear.

And, finally, there is the proposed disingenuous integration of the plains water scheme into council’s main equalised water scheme. The plains water scheme comes with 150-plus kilometres of old water pipes and infrastructure. Equalisation will require up to $110 million, with say $80 million directly related to worn out Plains infrastructure.

To understand the financial destruction occurring at the council, the community should compare the council’s 2021-31 and 2024-34 long-term plans.

Planned debt at June 30, 2030 has risen over three years, from $127.6 million to $318.3 million, while planned borrowing across the four years from July 1, 2024 to June 30, 2028 has risen from just $13 million in the 2021-31 long-term plan to $121.5 million in the 2024-34 plan. Aargh!

In preparing this opinion piece, I am aware that there may be some element of duplication in my analysis that I have not uncovered. Likewise, I (and the council) am not able to determine the extent of external funding available to reduce borrowing for each project.

However, $318.3 million of council debt at June 30, 2030 seems be a figment of the council’s imagination, masking hundreds of millions of dollars of other delayed or proposed new capital works debt.

And regardless, the numbers for council borrowing and debt are a huge concern and should be front and centre of mind (along with rampant rates rises) for all voters casting their votes in October.

As Keith Melville has suggested, ratepayers deserve a break from rampant spending on upgrading and improving council services. The only way to get that break is to vote for change at the forthcoming council elections by electing councillors likely to be very circumspect and prepared to vote ”no” with regard to project spending requests not absolutely required right now.