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More Lies 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 $76 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 Now we have to rewrite our 10 year plan to get it passed the auditors approval because the figures were horribly out-of-date.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.

Currently our projected debt that we are consulting on is $280 million. Again, this is a complete fabrication only half the story designed to get the current mayor elected for at least one more term.

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…

… around the lies missinfomation information that was presented to both Councillors and rate-payers around the Waimea Irrigation Dam having a “P95” at $75 million. 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 the 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, if the proposal that I had moved had gone out to consultation you would have seen that the rates being paid by irrigators on the Waimea Plains would have been 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 had targeted rated 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 as much as 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 $60 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

Open Question To The Mayor

28/06/2017

TDC Mayor

There is a lot of talk about the dam in the media and even within council reports such as the Chairman of Engineering chairs report in the Engineering Committee minutes dated 30th of June 2017.

A lot of these reports contain allegations that some councillors are voting against the dam. These reports are factually incorrect. In a recent full council meeting  dated 14th June 2017 half of the council voted not to accept a motion to contribute $3 million more (that the $25 million in the long term plan), underwrite the CIL loan to the irrigators of $25 million, and pick up the lion share of the running costs going forward. The motion was passed by use of the Mayoral casting vote.

The vote against the proposed increases in council funding was not an anti-dam vote as has been often misrepresented. It was more a concern that ratepayers will be locked into a minimum of 3% per annum rate increases for the foreseeable future. It may also require some scheduled capital projects to be pushed back to try and hold council under its 3% rate increase cap. We don’t know which projects yet because we have not discussed the schedule for the Long Term Plan 2018-2028.TDC Mayor

This brings me to my question for the Mayor given that it was his casting vote that carried the motion. How can the ratepayers of the Tasman district afford to pay 3% rate increases for the foreseeable future?

I ask this question because only a few weeks ago we (the councillors) were asked to set the rates for the 2017-2018 year. We were told that we could get away with a 0.5% increase this round. There were a number of us that wanted to set a 1.5% increase (still well under the forecast 2.5% increase).

The logic behind our thinking was that the extra 1% increase could go toward paying down debt, building on the debt reduction already achieved by the last term council, and compound the benefits we are seeing from paying less interest than forecast. It would also protect us moving ahead from rate increases due to rising interest rates that we would have no control over. We feel that a little bit of pain now is preferable to potential catastrophic pain down the road.

The Mayor was leading the charge for those proposing the 0.5% rate increase. He told us that our council was in the top quartile amongst our peers for rate unaffordability. He also indicated that there are a lot of people struggling to pay their rates currently and that they simply couldn’t afford the 1.5% increase. While I agree with him that there are a lot of people struggling to pay their rates, I struggled to see how they would be better off in the long term with the 0.5% increase. That said, a 0.6% increase was eventually settled on.

Back to my question. What happened to those people? How can the people who could not afford a 1.5% increase this year afford to be paying 15% higher rates in five years time (actually with compounding increase: 3% per year every year for the next 5 years, it is more like 16% in five years)?

I have asked this question of the Mayor but did not receive a response.

The only conclusion that one can draw without further enlightenment is that issue was never one of rate affordability. Instead, it had more to do with a dam consultation proposed for later in the year and wanting to throw the public a bone prior to said consultation to help get it over the line.

Of course, this is only my “naive” and “uninformed” opinion as a new councillor, as the chair of Engineering would assert.  However, with no other explanation offered by the Mayor I have to draw my conclusions with the facts as they sit on the table.  The facts are that the Mayor has no problem contributing millions more to the dam causing rates to rise to at least 3% so he obviously does not think a 1.5% rate increase is too high as previously asserted.

I campaigned on a platform of more accountability from within the council.  I will keep asking questions where I see inconsistencies in the information presented to me, and to you the ratepayer until I get answers. This may affect my longevity in this role as one long term councillor indicated today, but if I am only showing up to rubberstamp whatever is passed before me I might as well get a better paying job where I can contribute something useful to society.

 

Filed Under: Spending, Your Say Tagged With: dam controversy, question for the Mayor, rate affordability, rates

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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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