Now is not the time to slash Dunedin City Council budgets or cut major projects, writes Dunedin Mayor Aaron Hawkins.
The great news that Baldwin St had reclaimed its crown was quickly tempered by the fact that we can’t celebrate in lockdown.
I can’t wait to welcome life back not just to our steepest street, but to all of our streets, and especially to our city centre.
What a party that will be.
We have plenty of big decisions ahead of that though, as we work through this year’s annual plan.
In these trying times, we know that far more people are struggling to make ends meet than when we signed off the draft budget.
The challenge for us is balancing our need to maintain council services, with the ability of our community to pay for that.
We also have an obligation under the Local Government Act to support the economic, social, environmental and cultural wellbeing of our community. Slashing spending to focus solely on essential services like water, roads and rubbish isn’t an option.
This isn’t the time to run slash and burn budgets: cutting major projects, making significant numbers of our staff redundant, and shrinking what we offer the city in both the short and long term.
There’s no more certain way to make our recovery slower and more painful.
But it is unlikely that the budget we’ll approve at the end of May will look the same as the one we saw in January.
Covid-19 will impact both our income and expenses. Staff are currently reviewing those assumptions, in order to bring back options that better reflect our current circumstances.
Our chief executive and senior staff have all accepted voluntary pay cuts in the short term. We’ve asked the Remuneration Authority not to increase the wages paid to elected members.
We also need to look how we prioritise spending in some areas. Given the ongoing challenges with international travel, is focusing on Project China still a priority for economic development?
Likewise, where large gatherings are no longer possible, is the money we invest in major and premier events more usefully spent supporting organisations on the frontline of the welfare response?
Cancelling our major projects — the George St redesign, the Tertiary Streets project, the Mosgiel Pool wouldn’t make much of a difference to next year’s budget, because the costs are spread out over a 10-year period, and they’re debt-funded.
Using this opportunity to relitigate our decisions around George St, for example, would take only $3million out of next year’s capital work plan, and save the cost of servicing that debt (roughly $55,000).
This comes at the expense of the jobs and the people friendly city centre that project will create.
The one exception worth making to this is the proposed development of the Steamer Basin. Council’s contribution to this is the bridge connecting it to the city centre, to leverage private investment on the waterfront.
In the current climate that now seems unlikely, so we should defer construction until such time as that condition changes.
Perhaps more important than what we spend is how we raise that money in the first place.
The draft budget includes an average rates rise of 6.5%, though that will be higher for some residential properties due to the recent revaluations, and includes a decrease in rates for farmland.
It’s clear to all of us that this will not be sustainable across the board. What are the alternatives?
As I mentioned above, staff will identify targeted opportunities to cut spending, without major alterations to levels of service.
This will be both offset and limited by losses of revenue in areas like parking, venue hire, and admissions to Moana Pool.
We could reduce the amount of money we rate for and borrow money instead.
You could argue that the city coming out the other side of this in the strongest possible position will be beneficial for both current and future residents.
We have the option of not running a balanced budget, basically borrowing to pay staff, but it’s a last resort.
I’ve previously said I’d support not increasing the rates, and debt-funding the shortfall instead, but the more I think about it the more I think that’s too simplistic.
Rates are a blunt instrument. In trying to come up with a universal option you end up with something that supports people who have a genuine need but also dishes up tax cuts to people like me who don’t.
This is a hard time for some people, but not everyone.
We need options that expand the scope of our rates remission or postponement policies, while still allowing those who can to contribute to our work.
What we’re facing right now is the Baldwin St of economic recoveries, locally and around the world.
We need to make sure we invest in our long-term wellbeing, without loading unnecessary pressure on those being hit the hardest.
- The DCC Annual Plan is open for feedback. The deadline for submissions has been extended to April 24.
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Comments
Quoting Mayor Hawkins: ‘ We also have an obligation under the Local Government Act to support the economic, social, environmental and cultural wellbeing of our community.’ No, local councils do NOT have an ‘obligation’ to do this - they have only the legal power which is a different thing entirely. This part of local government law, defining the PURPOSE of local government, has been a bone of contention between National and Labour ( now with the support of the Greens) for decades. National legally defined the purposes of local government in 2012 as limited to regulatory functions and cost-effective public services. Then in 2018, the new Labour Greens government changed it back again, allowing councils to do anything for their people’s ‘wellbeing’ but in no way requiring them to keep spending down. Read the debate in Parliament here. https://www.parliament.nz/en/pb/hansard-debates/rhr/combined/HansDeb_201...
Mayor Hawkins seriously misunderstands this legal situation. If councils did have a legal obligation to do all they could to ‘promote wellbeing’, then they would spend more than ratepayers could afford - which was exactly why National changed the law in 2012.
Well written Diane, you raise a point that many, including Mayor Hawkins would be unaware of.
Mayor Hawkins states- "I’ve previously said I’d support not increasing the rates, and debt-funding the shortfall instead, but the more I think about it the more I think that’s too simplistic."
In light of the fact we have no idea what awaits us at the other end, 'simplistic' is exactly what is needed right now. A 12 month rate rise deferral, is all that is asked. Time to take a breathe, a period in which we all get a chance to come to grips with the outfall and plan decisively when we can see all the cards on the table. We're driving along slowly in the dark right now, and we will be for some time. We should be investing in brighter headlights, NOT a new car.
You've obviously had a 'flea or two in your ear', and it echoes of councils past.
Get those powerpoles sorted, get onto the landfill that has been deferred for years, where are we at with South Dunedin sea level rise infrastructure? Get the jolly Akmons along St Clair and St Kilda before the old dump gets washed open. Focus on domestic tourism campaigns. So many more important things to do Mr Hawkins.
I wonder, truly I wonder, if Mayor Hawkins wants to be a one-term mayor? Because that's exactly what will happen if council raises rates at all during this unprecedented year, not to mention throughout the long depression (both economic and otherwise) that will ensue.
And not only that, but, as I will continue saying, the pitchforks will come out if rates are not frozen exactly where they are, even though the vultures at QV managed to squeeze in an increase before the pandemic hit.
It is the height of callous stupidity even to mention, let alone actually defend, an exponential rise in rates during a time of crisis wherein exponential growth has finally hit the mainstream, even though many of us with advanced degress in maths have been attempting for years to explain the exponential function to the lay public, to little avail.
In the present case, an increase of 6% per year means that rates will double in exactly twelve (12) years!
That bears repeating: Hawkins and the DCC propose (nay, insist!) on seeing our rates double in 12 years.
For those who wish to verify this estimate, please look up the Rule of 72.
Theophrastus, I fear that few of our sitting councillors understand that successive annual rates increases are COMPOUNDING.
@Diane: I agree completely, sad to say. Rightful anger, however, is always better than a resigned depression, because it provides the fuel to reject docility and reveals the modern catchphrase "It is what it is" to be nothing more than an empty-headed bromide.
There is no reason to accept the compounding increase in tax rates, now or ever, but especially now, because this is exactly the time for us ---all of us--- to ram a collective refusal down their contorted gullets, out of which issue nothing more than palliative doublespeak, if not outright lies. Certainly, our wages and salaries will not double in 12 years, and hence this perverted compounding of our tax rates is nothing less than kleptocratic, sociopathic, and criminally insane.
Sometimes, it's best not to keep calm and carry on, but to get angry, call out the malefactors, and rebel against their extortion, especially when they disguise their grasping and thuggish behaviour behind smiling faces.
If not us, then who? If not now, when?
Especially when you factor in Capital Value increases of recent times. Who would of thought we would see such massive increases as we recently witnessed....and now will pay for, on top of the proposed DCC rates increase.
They're in effect, double dipping now, let alone a doubling of rates in the next few years.
(cont'd)
So, here we are at the start of the worst economic depression in at least a hundred years, with all of the considerable anguish and grief that this will cause (domestic violence has skyrocketed in NZ during the lockdown, for instance), and our elected officials have the insolent temerity to propose a doubling of rates during the very period in which many of us will be fighting for our lives, not only against the contagion of viral infection but also against the contagion of vast stupidity, enormous egocentrism, weak-minded policies, and an extreme selfishness disguised by a goofy grin and playful banter, as in "What a party that will be."
Barbarism with a human face is still barbarism.
Furthermore, if we all do manage to recover in two years time, the council had best eliminate any percentage increase in rates, because that is exactly what exponential growth is: the increment gets bigger with each passing year, even at fixed percentage, because the growth is compounding. The only fair, just, and equitable rates increase is a fixed amount each year, which provides linear growth, which by definition does not compound.
Otherwise, beware the Ides of March.
Re DCC rates rises, a lot of the damage was already done in the Council’s last Long Term Plan. ODT covered this at the time https://www.odt.co.nz/news/dunedin/dcc/dcc-850m-plan-adopted
And, yes, this Long Term Plan did amount to a doubling of rates in ten years.
Domestic violence is the fault of perpetrators, not the lockdown or economic conditions, but you have to be a bit more mature to understand that.
Notice that Hill is attacking me instead of addressing directly any criticism she/he/it (the new generic pronoun) may have about my earlier statements. This is a fallacy of argument called ad hominem (to the person) and is used by the nefarious when they have no counter-argument and must resort to name-calling, which reveals them to be operating from a position of weakness and fear, not strength.
Furthermore, she/he/it is also employing the straw-man fallacy, in which an alternative argument (i.e., who is to blame) is presented in order to deflect attention from the actual argument.
Hence, this creature is presenting a twice-invalid statement as, somehow, coherent. This is the height of immaturity, yet it's doubtful that such subtleties will register, perhaps because the prognathous brow inhibits intellectual ability (couldn't resist that ad hominem).
Here is a rebuttal, wherein we see that the lockdown has, indeed, created conditions in which domestic violence thrives. Note carefully that nothing is claimed about whose fault it is.
https://www.stuff.co.nz/national/health/coronavirus/120822626/coronaviru...
Theophrastus...you are correct. In reading comments by Hill remember what rolls downhill; need I say more?
We need new local body elections NOW !!!
Mr Hawkins and the greens simply don't seem to understand that DCC debt is RATEPAYER debt. That will need to be repaid by future ratepayers. NZ, like most of the world, is sliding toward recession. Warnings today forcast 26% unemployment for NZ.
Ignoring reality, the greens still want to waste millions destroying George st as a shopping hub. Ratepayers who will be struggling to maintain a wage let alone have wage increases, will be pressured to pay ever increasing rates bills. For what? A vanity project that will need massive rework anyway as people shun the George St cycleway.
If DCC still want to spend money then fix the old and failing infrastructure. That isn't paint blocking roads, it is old sewers, failing drainage and power poles. Not sexy, nothing to open, but work that need be done rather than some foolish pet idea.
Exactly right. Cheers.
Had Covid19 happened 6 months ago, CV's may well have reduced, just as they did with the GFC of 2007/8. And yet this council extends it's wicked revenue gathering reach, see's this as an opportunity to fill the coffers, ignores the hardship that will become even more entrenched as Grant Robertson outlined today, yet DCC looks for even more money. For what? when they insist on ignoring the basic needs of our City? If Mr Hawkins has indeed rethought his original stance in deferring rates increases, it has come from the string pullers from behind. Their influence coaches the very future of Dunedin, not our current Mayor, have no doubt in that. Sadly the simularities of behaviour are far to profound, and notwithstanding, in a global, national nor community crisis,
In reading the mayors comments, it’s clear he has the most rudimentary understanding and experience with budgets. He’s in way over his head and has no understanding concerning the way business works. Given the long-term issues with the economy, a prudent person would consolidate assets and minimize spending. Nobody knows when the lockdown will end, and the PM said yesterday that the borders will remain closed for at least a year. Dunedin isn’t going to recover quickly from the lockdown. Students aren’t going to be coming back to Dunedin any time soon. The mayor and DCC are in denial. Things aren’t going back to what they were any time soon. Their vision of grandiose expansion isn’t going to happen. In light of these facts; what Brainiac borrows money to pay staff? Given the situation, DCC can’t possibly provide all of the services it currently does. Hawkins needs to refocus his efforts on saving the city of Dunedin not the staff of the DCC. These people are clueless! Absolutely clueless about the most basic aspects of economics. DCC staff needs to be cut; resources need to be reallocated, services need to be reduced. The economy is going to grow smaller no larger. Get a clue!
This guy is delusional. He clearly wants to keep the pet projects while going through the motions of cutting the proposed rates increase. Dunedin is already a heavily indebted city so borrowing now makes no sense. Remember too that Aurora wants to impose a massive increase on their lines charges in the coming years. The mayor went very silent on this issue after his election and still hasn't addressed this.
"Slashing spending to focus solely on essential services like water, roads and rubbish isn’t an option," Mr Hawkins says.
In other words, he refuses to stop wasting ratepayers' money, wants us to pay MORE for his vanity projects, and wants to continue to dig us further into debt.
Am I wrong in any of my interpretation of this?