A recent league table of councils that ranks Tauranga and Western Bay poorly for their financial management has been rejected by the mayors as inaccurate.
The Local Government League Table, just released by local government financial analyst Larry Mitchell, ranks Western Bay Council 58 of all 67 district councils (down from 42 last year), while Tauranga comes in a little higher at number 48 (down from 32).
Local government financial analyst Larry Mitchell says Western Bay and Tauranga councils are not operating financially sustainably.
Larry rates the councils' debt levels as unsustainable saying the councils were not making much effort to control their debt.
Both mayors reject the table as inaccurate and say their finances are fine.
'They do not go anywhere near telling the full story. They lack the full context of our particular circumstances,” says Tauranga Mayor Stuart Crosby.
Stuart accepted that Tauranga does have a high debt level of $400 million as a 'straight out consequence of putting in infrastructure to cater for our growth”, and said the assessment did not take into account moves the council had made to control finances.
He says all councils experiencing high growth – including Auckland, Hamilton, Western Bay of Plenty and Queenstown Lakes District - had high levels of per capita debt to pay for infrastructure.
Western Bay of Plenty Mayor Ross Paterson rejected the assessment that the council's high debt levels were unsustainable, saying debt was the council's preferred approach to pay for infrastructure including five wastewater stations and three water stations.
'We do not like to place the debt costs on the present ratepayers, we believe it's only fair that it's shared by everyone it benefits.”
Ross says council debt of $150 million will be kept at the same level in the next four years, before being paid down to $110 million in the following six years.
'Debt is very much part of the way forward, whether it's as a household or a business or a council. It's just a matter of how you are performing and we believe we are doing fine.”
Larry says the councils debt levels need to be reined in and encourages residents to use the annual plan submission process to call for action. Submissions close on April 19 for Tauranga and on April 29 for Western Bay.
'I would encourage anybody who is really interested in the details of the finances and I suggest that has to be the number one priority for both of those plans, I would encourage them to look at the league tables and to ask some ‘please explain' questions.”
Stuart says Tauranga has made a 'significant change” in its finances in the last four years to bring costs down and currently has a debt of about $400 million.
The changes taken include cutting the forward works programme to 'the bare essentials”, selling property to reduce debt, restructuring the council to cut costs and setting its own cap on rates of CPI plus two per cent for growth.
'The rating requirement proposed for 2013-14 is 0.6 per cent, which is the lowest since 1989. If we continue to make positive reforms we can continue to have low rating requirements over the next three-five years.”
17 comments
Here's the solution
Posted on 12-04-2013 09:55 | By Contradictus
Council should stop thinking it's either of these two things, a great businessman or a Santa Claus. This would cut out unnecessary spending and doomed ventures, thereby saving the ratepayer millions and allowing debt to be repaid.
Fitting the cap...
Posted on 12-04-2013 11:13 | By penguin
Hey Councillors - if the cap fits, wear it. Current performance placing is probably accurate!
Posted on 12-04-2013 11:34 | By crazysteed
How can you say that TCC are rejecting how they rank hell $190.000 on tsunami siren and its not even installed what about the pilot bay board walk whos going to be paying for that not TCC but the tax payers maybe TCC need to look at whos playing with the rate payers money and start repaying the high debt for a start stop trying to prove they run the place its the rate payers that pay for eveything are the ones who run the city not TCC muppets i would like to see TCC muppets take a BIG pay cut and put it towards the high debt they have created
Simply amazed
Posted on 12-04-2013 11:52 | By drgoon
I went to Australia a few years ago to earn some decent money and then come back here to pay off mortgage etc. What do I find, a Council so far off the game in making financial decisions that the debt per Ratepayer has risen drastically. Huge debt on the harbour link roads. land banking for goodness sake, i'ts ok when the forecast is good but what has happened now. We are stuck making huge interest on a short sighted and poorly planned idea. Land banking, this is the sort of stuff that should be left to developers and speculators. It's about time Crosby and co got the boot.
Disagree
Posted on 12-04-2013 12:49 | By HPBenjamin
I disagree, I think the report is perhaps correct. Everyday we see examples of how bad mismanagement from our cronies at the TCC really is......
Confirmation
Posted on 12-04-2013 13:02 | By jeancraven@kinect.co.nz
This just confirms what we already knew.
I am no Rhodes Scholar
Posted on 12-04-2013 13:17 | By Sambo
but even I can understand basic mathmatics, the unfortunate thing is come election time, if this crew is thrown overboard, they will not have to worry about what a financial mire this area is in, and not pay their penance!!!,and who out there is going to replace them?, its time to put up or shut up Western Bay, VOTE that is what democracy is about, I think.
Titantic thinking
Posted on 12-04-2013 13:56 | By Waydgo
"All's well full steam ahead" not at all common for elected leaders to disagree when they are told they should be doing better....This lot blame the previous administration so one can only assume so will the next.
performance cuts
Posted on 12-04-2013 14:05 | By traceybjammet
yep Tauranga is in dent as is wbop therefore the councils are not good managers or businessmen therefore they should get wage cuts simple really
Very True
Posted on 12-04-2013 14:28 | By Jitter
Both Mayors refuse to accept what is quite obvious to all ratepayers. Both councils are up to their necks in debt but refuse to admit it. Crosby says Tauranga has "made significant changes to bring costs down" and yet TCC debt is still $400 million plus. That is very bad for a city of Tauranga's size. What a mess.
Whats the Solution
Posted on 12-04-2013 14:59 | By waiknot
Here is the key sentence in the report "Western Bay and Tauranga councils are not operating financially sustainably." Before a problem can be resolved, the participants must acknowledge there is a problem. "Both mayors reject the table as inaccurate and say their finances are fine." The above quote highlights the problem, I would say the chances of these Mayors tackling this problem are remote.
Waiknot
Posted on 13-04-2013 11:20 | By PLONKER
"Remote" is an overstatement, we all know already that TCC is well over its Treasury imposed debt limit ages ago and lots like WOPDC is actually worse.
LOKS LIKE THEY ARE JOINED AT THE HIP READING FROM THE SAME SONGSHEET
Posted on 14-04-2013 11:48 | By EYESPY
Well the Councils fianancial critics say it now an independent source confirms it both TCC and WBDC are fiscal turkeys.Mayors Crosby and Paterson can huff and puff as much as they like but they are goneburgers with this spindoctoring.
A blond moment?
Posted on 14-04-2013 15:27 | By PLONKER
This looks like a Police Academy still shot from the movie, the question is about who will get on top of the podium first and how long will they last, I suspect they will not make it to October?
Spot the colour
Posted on 16-04-2013 15:19 | By YOGI
Western BOP rates as two red lights in both years, the only other one to do that is Kaipara, ominous isn't it? That an independant review of the financials of WBOP rate it the same as Kaipara.
Major debt means ....
Posted on 17-04-2013 22:43 | By Crash test dummies
More rates sooner or later bigger is worse for rates. More debt means rates very simple equation.
The pregree revealed
Posted on 19-04-2013 14:30 | By TERMITE
That is all this is about, denial of how it really is and head in the clouds for no apparent reason. That will not survive to long as reality has a bad habit of catching up. Just take a look at: Equity Corp, Blue Chip to name a couple of examples, no difference here.
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