Collectively, the Hastings, Napier and Regional Councils project gross debt of $162 million for 2010/11.

Mayor Yule, whose Hastings Council accounts for slightly more than half of that ($85 million), says not to worry:

“The reason Hastings has more debt than Napier or the Regional Council is that they both have vast assets that deliver additional income whereas we have to rely on rates or borrow. Of course we know the debt has to be paid back, but I actually think the amount we owe in Hastings is fine and, spread across our rating base, it’s not a huge burden.”

Mayor Arnott, whose Napier Council accounts for $58 million, is also sanguine:

“Our position is incredibly manageable and councillors have been trained to be disciplined and careful. We have a very good asset maintenance plan, we don’t have ad hoc spending and we have planned for major expenses like sewerage treatment and upgrading the Art Gallery and Museum.”

And HBRC Chairman Dick, whose council will be carrying $19 million in gross debt in 2010/11, is mostly worried about Hastings and Napier attempting, through amalgamation, to raid the Regional Council’s comparatively rich treasury (i.e., an investment portfolio of nearly $300 million):

“It’s not that we won’t share wealth. We’ve recently allocated funds for the Art Gallery and Museum in Napier, the velodrome in Hastings and the Waipawa town hall refurbishment and Wairoa knows we will partner with them on a suitable project. But I would need to be absolutely assured that the Regional Council’s priorities and its economic and environmental focus would not be downgraded and subsumed by projects like swimming pools and sports parks.”

Each of these three leaders commented on their councils’ spending and debt to journalist Katherine Edmond, who reports in the August BayBuzz Digest.

Here is her full article, Council Debt … Should We Worry?, in which other community voices — like Councillor Wayne Bradshaw, Hastings mayoral contender Simon Nixon, and HB Chamber CEO (and Regional Council candidate) Murray Douglas — express greater alarm.

If you are worried about council debt, what might you be seeking from council candidates in this election year?

  • Clarity about their own level of concern … does it match yours?
  • Commitment to restraint in future borrowing … what limit, if any, would they endorse?
  • Purposes for which they regard borrowing as appropriate, or not
  • Better information about the cost of debt repayments in the future
  • More transparency in council book keeping and budgeting
  • Specific reductions in council spending they would endorse (and what savings they have achieved if they are sitting councillors)

Tom Belford

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4 Comments

  1. The debt issue is a valid one to put before the people at this years election period. I paid keen attention to the August Bay Buzz article referred to in the posting.

    The concern of the 3 people indicated is a good reason to have their names in the hat.

    There is nothing new in NCC and HDC to be looking at HBRC money to plunder. It has been the case since HBRC came into being under 1989 Local Authority Amalgamations that did away with Catchment Boards and County Councils.

    The underlying objective in promoting a single authority for has always been to get Twin City hands onto HBRC ratepayers money.

    It is a matter of public record that I ran for NCC in 2001-04-07 on the allocation of millions of dollars if ratepayers money on
    pet projects and not dealing with the major ground services and upgrades required for those and running large deferred capital works portfolios.

    This masks the true debt facing present and future ratepayers while being saddled with mullti million dollar white elephants that will not justify money spent on them in returns to ratepayers.

    The Kennedy Park complex is one that returns healthy profits but these are swallowed up in propping up others that do not meet annual operational and maintainance costs.

    ie. Marineland costing $10,000 a week closed and the Conferance Center more than that open

    I hate to think were HDC Sports Park complex is heading

    The better performing NCC debt is a red herring if what is lurking in the background requiring huge investment in upgrades to wastewater treament plants that are third world are taken into account not to mention reticulating the septic tank serviced area’s.

    I include the HDC bio plant shambles in that.

    Watch for the budget blow out on that nonsense
    too right its technical short commings and
    watch for NCC too go back to the original suspended under construction conventional proven treatment plant.

    There is a reluctance to bite the bullet and do that now but watch for it during the first year of the new term

  2. Tom to be fair this is not a situation which is unique to Hawke's Bay, rather one which is pervasive throughout the local government sector. Whilst I agree that there is a level of debt exposure, I certainly don't think it is the great 'yoke around the neck' that some purport.

    Also it is a little unfair to directly compare relative debt levels of Hastings vs. Napier. Napier City services an area of roughly 107 sq km (population roughly 58,000) whereas Hastings District services an area of 5229 sq km (population roughly 75,000).

    Debt level per capita in Hastings is around $1100 versus $1000 in Napier, so there is a not insignificant difference there, however when you factor in the area that HDC has to service, the infrastructure required to do so (and the expense associated with this) it paints these things in a different light.

    In terms of debt I agree there must be some stronger argument for better alignment and collaboration on the development of infrastructure region wide to ensure we don't replicate assets and the borrowing associated with them. However how effectively can we really expect this to happen with five councils throughout the broader region?

  3. Um…The Napier City Council owes $58 million and is building an $18 million museum that will run at a loss?

    Can someone tell me why?

  4. Just a point of clarification Max. Whilst the HBMAG project is $18M, the NCC's contribution is only about 1/3 of that. For example $6M has been committed by central government through the Ministry of Culture and Heritage's regional museums policy.

    You are quite correct that the Museum will probably never turn a profit (I can only think of one in NZ which does and that is not a traditional style museum), however there are many core council services that will never turn profits, parks and libraries amongst them. Should we stop investing in those?

    A Museum can serve many purposes within a community, one of the key roles being as an economic activator. Whilst the institution itself doesn't turn a profit the flow on it creates through tourism based visitation can be very significant (think room nights and secondary spend).

    The very best NZ based example of this is in Wellington where cultural institutions (Te Papa, the City Gallery, Museum of Wellington and the Cable Car Museum) are a key part of building a viable tourism industry. The success of this is demonstrated by Wellington's outstanding transformation over the last 20 years from a tourism wasteland to NZ's favourite winter getaway destination.

    Internationally a good example is the Guggenheim in Bilbao, which has transformed an unvisited backwater to a major tourism mecca (don't get me wrong I am not making a direct comparison between HBMAG and Bilbao here).

    Auckland Plus (the economic development arm of Auckland Regional Council) developed a paper jointly with COVEC called 'Bringing the World to Auckland'. This looked specifically at investment in the region's visitor economy and how key attractors have a significant role to play in this.

    Moreover many things which people have of late positively remarked on (yourself included) are founded on this very same premise. Here I am speaking about the cycleway funding that HDC has gained. This will be a cost centre (as the Otago rail trail is) in that it will not make a direct return on investment. However I think we would all agree that it has the potential to play a key part in revitalising the Bay's visitor economy creating greater prosperity.

    Based on recent statistics it certainly needs revitalising.

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