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Central Rail Link Could Eventually Lead To A Bankrupt City

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The nationwide campaign to replace the present system of council rates with a fairer system which reflects ability to pay and value for money.


MEDIA RELEASE

23 November 2012

Central Rail Link Could Eventually Lead To A Bankrupt City – Or Bankrupt Ratepayers

[Statement from David Thornton]

Today’s media story of a ‘leaked report’ on the Central Rail Link is yet another attempt to convince Aucklanders that the Central rail Link is inevitable and vitally necessary.

There is no mandate for the expenditure of more than $3 billion on the proposed Central Rail Link in Auckland over the next seven years.

Despite Mayor Brown’s frequent claims that Auckland supports his Rail Link, and his use of an unscientific ‘phone-in’ survey to back his claims, most ratepayers do not support significant rates increases to pay for this project.

And ratepayers are aware that there will be permanent demands for subsidies to bridge the negative difference between fare revenue and cost per passenger.

While many ratepayers may approve of a Rail Link at some time they will not give full support until they are given the true picture of the impact on rates.

Recent public transport usage statistics do not indicate the level of growth in passenger numbers which would be needed to support a business plan strong enough to attract Government into paying for half the cost.

There has been no convincing evidence so far that forecast passenger growth could be achieved.

Who will these passenger be – shoppers, workers, tourists, - where will they be going to and from?

What will be the fares they will pay? What will be the subsidy required from rates for all of these extra passengers

And even if the Government does eventually contribute to 50% of the cost Auckland Council will still have to borrow at least $1.5 billion to meet its share.

We are all well aware that major projects such as this have a tendency to incur huge cost overruns – and, with the Council already planning to borrow up to, and occasionally beyond, its maximum prudent borrowing limits, the financial viability of the Council would only be saved by increased demands on ratepayers.

Ratepayers are aware of the Kaipara Council nightmare, and the latest credit rating downgrade for Dunedin City Council – there is no reason why Auckland will not suffer a similar downgrade with consequent hikes in interest on borrowing.

A recipe for bankruptcy – but Councils don’t go bankrupt, they use their power to set and collect rates to avoid this.


ENDS

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