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More ████ More Debt

26/02/2021

You elected more of the same, and they delivered for you.

I ran for mayor against a deputy mayor with 20 years of experience that told the residents of Tasman that he believed he could keep within our debt cap and rates cap by making the hard decisions. At the time, I said I would like to think we could but I don’t see how it will be possible with a dam that is continuing to over-run and Government reform (such as the freshwater and three water reform) increasing our costs. Other elected members also claimed to want to stay within our fiscal caps.

The first 12 months of Council saw us spending millions of dollars of unbudgeted money, which alone sent us over our already maxed out debt cap of $200 million. Not a single debt control “hard decision” in sight.

Then along came the first of the dam overruns, taking our dam from $75.9 Million $79 million $83 million $104 million to $139 million.

How did we propose to keep all this under our debt cap?

Easy. We just inflation-adjusted out the debt cap and backdated the adjustment to the time of installation, and like magic, we were now under the debt cap again.

Awkwardly, the dam has overrun again just before we published our 10 year plan. Now we have to rewrite our 10 year plan to get it passed the auditors approval because the figures were horribly out-of-date.

What does our “debt cap” look like now?

First of all, let us stop using the lie that it is a debt cap. It is a projected level of debt figure. It is not a cap under the current Council. We will continue to adjust it upward to accommodate spending. There is absolutely no appetite around the table to cap spending at all.

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Already, we are deliberately not including figures to house our rapidly increasing staff numbers (unless Government reform robs us of our duties and our staff – in which case they will have to be housed somewhere but it is not the Council’s problem?). We know that to solve the projected numbers of staff within the next 10 years we will have to spend a figure that will push us over $300 million in debt.

How do we intend to hide debt going forward?

I am pleased you asked.

We are concurrent with the Long Term Plan consulting on a proposal to create a holding company to amalgamate the Port and Airport under. Sounds pretty harmless?

The purpose of creating this new CCO is that we sell our shares in Port Nelson and the Nelson Airport to the bank. Much sneakier than the less politically palatable prospect of selling the shares directly. Once we have established the CCO we can move debt into the company and then for accounting purposes we don’t have to record it as debt on Council’s books.

Instantly, we can pay out special dividends to the Councils and load the new CCO with debt magically reducing our debt levels. I say magically because we haven’t reduced our debt, but we have reduced future dividends from the Port. Effectively, we have sold our shares to the bank.

I am sure the Council spin doctors will tell you a different story.

I tried to ask for some accountability within Council…

█████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████ This is a technical statistical term that has requirements to meet before you can use it. I asked to see the workings that enabled Council to use the term. My request was denied.

I also asked for accountability around the statement made to Councillors on the day the dam was signed off, in response to a question that I asked of what assurance do we have the dam will be built for $104 million given that we had a “P95” at $76 million. We were told that we are even more sure, “it is almost a fixed price contract” now. There was only a tiny portion that wasn’t fixed price and we had the “equivalent of 30% contingency” on the small amount that wasn’t fixed price.

Obviously, this was a case of my word verses others word as to what was said and the mayor wasn’t prepared to debate that, so again, there will be no accountability for fabrications told. I previously asked Mike Scott for an estimate of how much of the contract was actually fixed price. I have not been provided with that information.

Have we seen the last of the dam over-runs?

Based on the previous performance of Waimea Water and the irrigator run predecessor to Waimea Water, it is highly unlikely that the dam will be delivered for $164 million.

Meanwhile, back in the Council Chambers:

In the recent Council meeting, the Deputy Mayor moved a motion to reverse the decision that I had previously managed to get passed where the irrigators would be target rated for “their share” of all future cost overruns. The proposal now being consulted on has the ratepayer picking up even more of the irrigator share of the dam. Surprising that the people of Murchison and Tapawera are so supportive of this approach. But then I guess I shouldn’t be surprised because this is apparently also the view of Golden Bay and the majority of Motueka, Richmond, and part of the Moutere.

To illustrate the gross subsidization of the handful of irrigators that the Waimea Irrigation Dam was built for, the proposal that I had moved for consultation would see the rates being paid by irrigators on the Waimea Plains are almost identical to the water users downstream of the Kainui Dam.

Let’s put that in perspective. The Kainui Dam built some 15 years ago at a final cost of around $3 million dollars is costing the water users a similar amount to the projected cost of the Waimea Irrigation Dam (at the $139 million figure) if we target rate the users for “their share” of the costs. So not only would the Waimea water users not been paying any more than the users of a $3 million project, they wouldn’t even be paying for 15 years worth of inflation.

Your duly elected members think it unfair that the Waimea irrigators should even be paying more than the Kainui Dam water users. Therefore, they have proposed that we consult on a financial model whereby general rate-payers pick up all the overrun costs (both the current estimated extra $30 million blow-out and any future blow-out). Once the precedent is locked in, it will be in perpetuity.

In addition, I am informed by members of the community that the running costs of the dam that were well below a million dollars when we had a P95 $76 million dollar dam, and are now predicted to be $3 million a year, will likely be double that again by the time the dam is commissioned.

This information is of course coming from the same “naysayers” and “fear mongers” that said the geology of the dam site would mean costs would be far in excess of the P95 price that Council was touting. And despite Mike Scott’s assurances that they were on bedrock and there was bedrock plainly visible up the valley, it turns out to be more of a “moonscape” and has caused the budget to blowout again. Who is more reliable?

To summarise: we are consulting on a debt cap, that is not a debt cap but a debt target, of $280 million. It is a fabrication that does not reflect costs that we already know will push it over $300 million. We plan to hide more of that debt by selling our shares in the Port and Airport to the bank under a proposed new company structure. General rate-payers should subsidize the Waimea irrigators further because they can’t afford their almost free water. You haven’t seen the last of cost increases for the Waimea Irrigation Dam.

This is the choice you endorsed at the polls, and they have delivered for you.

Filed Under: Dam, Spending, Your Say Tagged With: rate affordability, Rate increase, Tasman District Council, Waimea dam

Rate Increases Ahead

13/03/2020

Rate increases ahead

It never ceases to amaze me how fiscal responsibility is not one of the top considerations in Council decisions. We have a global crisis on our hands, with countries in lock-down, stock markets crashing, and businesses shedding staff. And yet it appears that our ratepayers still have unlimited funds to meet all the spending demands of the current Council.

Tasman Rate Increase Coming
Rates Increase

In the Regulatory Committee meeting this week we spent in excess of an estimated $150 000 for an early partial review of the dog bylaw. There was another considerable sum spent on the in-committee item. This was all unbudgeted expenditure.

Unfortunately, this is not the exception but has been the norm this year. Every meeting seems to consist of unbudgeted spending being allocated. In an ideal world, these “small” increases might be manageable, however, we are not living in an ideal world. We are living in times of extreme hardship ahead especially for many of our lower-income ratepayers. Those working will be facing reduced hours if not job losses. Retired people will likely have had many thousands wiped off their net worth in the Stock market over recent weeks, and those with money in the bank will be reduced to spending capital as interest rates head toward the negative.

As if this is not bad enough the rot of the Waimea Irrigation Dam is starting to fester out with another $25 million added to the initial $21 million overrun.

There are no signs of the overruns abating as they continue to dig into “the unknown.” Unknown that was pointed out at various stages during the investigation and consultation phases but apparently ignored by the various parties involved.

Extreme overrun risk certainly didn’t come through with the story that was being pitched by the likes of head of TDC engineer Richard Kirby (P95 it can’t go over budget), John Palmer who was in charge of getting the project over-the-line (some have questioned that he crossed the line), and later by the now CEO Mike (we’re on bedrock ) Scott. Nor was it mentioned as a concern by the TDC appointed directors who paid themselves $324 000 over and above their directorship fees to review and manage the early stages of the project. Especially when compared to the extreme risks we warned about in constructing riverside storage ponds.

The first hint that the various parties had been hiding the true risk of overruns was at the dam ground breaking ceremony where the comments were setting us up for the true cost of the dam yet to be revealed. Perhaps if the gruelling process of the 17-plus years of investigation had shone a light on the risks the former mayor might have found it easier to imagine a scenario where Council might have pulled out of the project.

Any reasonable person…

One thing is certain from this whole process – Tasman rates will not be dropping from the ranks of the most expensive district in New Zealand list any time soon. In fact, I think we will soon be a clear winner. A true legacy to Mayor Kempthorne and his band of faithful Councillors. Many of whom are keeping that legacy alive and thriving in the current Council.

Filed Under: Dam, Spending, Your Say Tagged With: Rate increase, Waimea dam

Introducing Dean

Dean McNamara Husband, father, and a fourth generation local from rural Tasman. Now acting as your voice on the Tasman District Council (TDC). More about me.

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