14th August 2012

MEDIA RELEASE

[statement from David Thornton]

Appointment of Commissioners to run Kaipara Council a sign of things to come.

New legislation will allow early intervention.

In the end the Kaipara Mayor and Council had no option other than to request the Government to take over and sort out its problems with bankruptcy-level debt and rates increase its ratepayers were unable or unwilling to pay.

The Commissioners will not have an easy task, faced as they are, with significant debt, guaranteed by the Councils power to levy sufficient rates income to repay and service that debt.

The best that ratepayers can hope for is that the debt can be rescheduled or replaced on terms which would allow a much longer repayment period, giving time for more development to occur, thus providing addition income from rates.

The Government has already stated it will not use taxpayers funds to pay off the Kaipara debt – but there should be an option for a Government supported loan to replace the existing loans.

It may be that the Commissioners come up with new funding methods, but under existing legislation the ratepayers will, in the end, almost certainly foot the bill.

New legislation, currently before a select Committee, will give the Government the ability to intervene at an early stage if a council is seen to be heading for trouble.

Kaipara residents have lived with this problem for many months, but the elected council has proved incapable of fully understanding what was happening with its finances.

The proposed new legislation will put in place financial prudence requirements limiting debt and the level of rates increases, and any signs that a council is heading for trouble will allow the Government to intervene at an early stage.

With this new legislation any signs of councils breaching the financial requirements should trigger ratepayer action such as that taken by Mangawhai ratepayers in the Kaipara District.

All ratepayers should be particularly aware of high cost projects which their local council might enter into which may not be fully funded, and where final costs are not known.

In particular, ratepayers in Auckland should be very watchful of projects such as the Central Rail Loop, on which the council has committed over $240 million to buy land buildings for a project which can only be partly funded by the council.

ends

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