RDRR Rejects Rotorua’s Annual Plan promising Growth and Jobs funded by More Debt and Calls for Statutory Management

Press Release: Rotorua District Residents and Ratepayers, 11 April 2017

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The RDRR rejects the Rotorua District Council’s proposed Annual Plan 2017/18 because it is unfair, unreasonable and unwise. It is unfair because the general rates increases are proportionately higher on the cheaper properties usually owned by those on fixed or low incomes and less able to afford increases. It is unreasonable because compounding rates rises are wiping out savings and making life increasingly impossible for residents on indexed incomes and with owner-operated businesses. It is unwise because it will support wealthier investors, punish savers and retirees while funding growth and jobs by significant increases in Rotorua’s $174m debt; clearly an unsustainable strategy. The solution proposed by the RDRR is a period of statutory management.

“The proposed Annual Plan licenses Council to continue wasteful spending on vanity and legacy projects, extreme PR and subsidies to cronies,” said RDRR Chair Glenys Searancke. “They should switch the $4.5m promised for a skateboard park to funding the Museum’s $5m insurance excess and get started on restoring the income stream. Why would they levy $14.20 per household, regardless of affordability, if they have no idea what it is going to cost? The wider problem is that Council suffers from ‘group think’ that promises growth and jobs funded by yet more borrowing, and myopia about the damage they are doing to residents’ and ratepayers’ businesses and lifestyles with compounding rates increases.

“They have foolishly rejected many demographic studies that indicate the need for a “selected growth and smart decline” strategy over the next 30 years,” said Secretary Dr Reynold Macpherson. “While they have finally accepted our advice to cancel Terax, no attempt has been made to restrict spending across the board to the delivery of core services or to develop a serious debt reduction strategy. They have not budgeted for the cost of distributing treated wastewater or arterial solutions to the congestion that is impeding economic development. Combine these projects with the growth of debt already admitted for next year, and then add rising interest charges, Council will have to repeat their massive mid-term rates rises–an example of what Douglas Kass called “screwflation”.”

“It would be fairer on everyone if targeted rates pay for the post-subsidy capital and ongoing maintenance costs of new sewage schemes,” said Rosemary MacKenzie, RDRR Treasurer. “It is unfair to impose a “toilet tax” on residences in other areas. It is also unfair for Council to turn a blind eye to the commercial use of residential properties without collecting contributions towards tourism infrastructure costs. This racket is adding to the shortfall of long term rentals in Rotorua and is exacerbating the housing crisis. Like Lumbercube, Council does nothing.”

The RDRR also regards the proposed Museum Levy as an open-ended swindle that will reward the incompetence of Council. Responsible businesses insure against natural disasters and loss of income. Since the national government may well provide restoration funds, Council should now wait and then find the funds actually required by significantly compressing governance and management costs, cancelling non-core expenditure and selling off redundant assets.

However, since Council shows no sign of living within its means and using its Annual Plan to end gross overcapacity and screwflation, RDRR reluctantly calls on the Government to install statutory management.

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