The Rates Debate
Updated: Jun 28, 2021
The following is a transcript of an address I delivered to full council on 8-Jun-21 as part of Whakatāne District Council's (WDC) Long Term Plan (LTP) deliberations. The transcript was subsequently circulated by e-mail to all councilors and the WDC executive team. It is a statement of my position on the various themes addressed as part of the recent LTP public consultation process.
It was comforting to see the number of submissions that were made. For my part I provided encouragement to the various clubs with which I have some involvement to make submissions and I hope they did. In any case, it would appear that our efforts were rewarded with decent engagement. If we now turn around and ignore any clear signals that we received from the community, then in future, the response may not be as good. In fact, the already widespread opinion that we are not listening would actually be vindicated. As an elected representative I promised to listen, and I have.
Doubtless, each of us councillors will have gone through the submissions and we will have our own particular biases and come to our own conclusions. Whilst some written submissions might be subject to interpretation, answers to some of the six questions were relatively unequivocal and I did my own counting as you know.
It was gratifying to see that requests for additional spending were relatively restrained in dollar terms. This to me suggests that the community understands the delicate balancing act that the Long Term Plan (LTP) requires.
It has always been my opinion that the rates strike of 6.8% smoothed and compounding over three years is too high, especially in the current climate. I indicated this in this council’s LTP workshop of 18-Feb-21. As I have said many times, given my perception of the limited capacity of a large sector of our community to pay, I would prefer the rate strike to be around the 4-5% mark. This would be nearer the CPI + 2% range. I voted down the Annual Plan (AP) because it crossed my threshold, and this LTP threatens to cross my threshold also. Many submitters made scathing comments about rates increases (e.g. submission #60). I suspect that, as always, the silent majority did not make themselves heard.
In this chamber we have had some discussions of what ‘affordable’ means and it is clear that the term is subjective, meaning different things to different councilors.
In the future it is clear that we need to put affordability onto on a more quantitative footing, as I believe it can be. Be that as it may, if I take the median district household pre-tax income of $60K, then the median household has to survive on $4,000 per month. If you are paying an average mortgage (or astronomical rent), then that does not leave a lot to live on. What worries me most are those on the bottom end of the income distribution, the bottom quartile, not the rich since they will always be able to take care of themselves. So whilst those around this table will have no problem paying rates increases of 6.8% compounding over three years, it is my belief that a large swathe of our community will struggle. That is why we need to be responsible and prioritize the NEEDS above the WANTS.
I am not necessarily advocating a reduction in spending, but rather a reduction in rates. How can this be I hear you ask?
What I am saying is that we should keep rates down and think outside the box to access other funding. Government grants and other private funding sources are one of the traditional means to supplement council income and expand the project base. The outdoor pool covering is one example. For this project council rightly used such methods to fund the WANTS as opposed to the NEEDS. And we absolutely need to be judicious in the choice of the projects we take on.
Another method to increase council income (and do more stuff) is to lobby central government harder and obtain direct RBNZ funding as per the submission of Don Richardson (#119).
Richardson has rightly pointed out that direct government funding through the RBNZ should be possible. This is what I call being creative! I have mentioned many times in this chamber that the COVID-19 response resulted in the creation of $100B of new money out of thin air. The process goes by different names such as quantitative easing, RBNZ asset purchases or whatever, it amounts to the same thing, money from thin air. In fact the growth of the NZ money supply looks like a hockey stick.
Alternatively, we simply ratchet up the debt and leave it to the lender of last resort to take care of the bail out as was done during the GFC of 2008 during which the very financial institutions that caused the crisis were deemed too big to fail.
PositiveMoneyNZ and the PositiveMoney Europe have therefore rightly pointed out that all new money is created by governments and their Central and Reserve Banks and that they should therefore direct fund infrastructure spending. As far as I am concerned PositiveMoney, is right on the money! Instead, all that has been done by government and their buddies at the RBNZ so far is to provide a licence for private banks to create new money that has gone into mortgages and inflating the housing market to the detriment of 1/3 of the country. And in so doing they have ignored one of the major objectives of the RBNZ act.
“It shall be an objective of the Bank to exhibit a sense of social responsibility in exercising its powers under this Act”
Government has ultimately been responsible for monetary expansion but has not allowed the right thing to be done with the new money. We, the elected members, are government and therefore it is not unreasonable to ask that infrastructure be supported by government directly rather than to expect rates and debts to do the heavy lifting. Council should sign the PostiveMoneyNZ petition and forcefully lobby central government for direct support. The Boat Harbor Project and Te Ara Hou are examples of how government can easily find large sums when it wants to. It also seems to me that there has been too much emphasis on the CBD and more emphasis needs to be given to outlying communities.
In our LTP there are clearly two broad categories of expenditure as already mentioned. The NEEDS and the WANTS. In the NEEDS camp I would firmly place 3-water matters and climate change.
I believe that there is plenty of scope for trimming our present LTP capital expenditure in order to bring rates down. In my opinion we spend far too much on roading, consulting, staffing and perhaps bike tracks. In my opinion we have not tried hard enough to bring the rate strike down.
2. Climate Change
As far as the vast majority of scientists are concerned, the science of climate change is virtually settled and there will be serious ramifications for New Zealand. If anything, it would appear that the latest science is indicating that change may be happening much faster than has been anticipated. (Xu et al., Global warming will happen faster than we think. Nature 2018, 564, 30). Climate change will bring disasters on multiple fronts and on unprecedented scales. Few nations will escape unscathed. We are facing the end of organized human life if serious action is not taken.
Yet our recent national budget directed only a paltry amount of funding toward climate change action despite declaring climate change a national emergency. If there is an emergency you fund the response, but we aren’t. This type of hypocrisy is exactly why NZ was not given a speaking slot at the recent climate leaders summit hosted by the Biden White House. Unfortunately, when it comes to climate change, we are seen as ‘all talk and no action’. That we humans are now seriously talking about mitigation measures requiring atmospheric CO2 extraction should be a serious warning to us all. Elon Musk has offered $100M to anyone who can solve this problem, so he gets it.
We in NZ on the other hand have left methane out of the zero carbon bill and are planning to leave methane out of the future carbon accounting unless the Climate Change Commission Advice to Government consultation makes a case to have methane re-introduce. That report is due to be released very soon. The relevance of total emissions I have highlighted many times in this chamber. Our targets can only be met if we leave methane and CO2 emissions from our Waste Water Treatment Plant (WWTP) off the ledger. If at some time we are forced to include all GHG emissions in our accounting (as I believe), we will never reduce emissions to zero as I have already emphasized in writing to councilors and executive.
Aside from WDC putting in place documents and some carbon accounting, which is performed by a third party, we are not really taking what I would call serious action. We have made a start, but we should not rest on our laurels. The gravity of the situation deserves serious action!
The submission by Richardson (#119) and Dr Derek Caudwell on behalf of Trust Horizon both made reference to solar energy initiatives and they seemed hardly to have been noticed.
Trust Horizon: “We are of the view a well-considered solar PV arrangement would support the Council’s intent, demonstrate climate change leadership while also embedding solar/renewable energy as part of the value proposition for the district”.
I was invited to present to the full Trust Horizon board a couple of weeks ago to speak on climate change and the energy system. It seems that they are listening and are keen to act as reflected in their submission.
Several other submissions also mentioned solar.
About a year ago Vector Powersmart also put a proposal on the WDC table (no cost to council, just provision of land). In my opinion these things must not be allowed to just fall off the table as they have!
Climate change is expected to result in extreme weather events including droughts, floods and storm surges. Indeed we have just experienced some of the worst flooding in 100 years in Canterbury.
What has possibly escaped notice of most punters however is that we have been in a relatively long term dry period. The data I recently received from BOPRC supports this assertion. This is the likely reason that wholesale electricity prices on the spot market have been drifting upward since 2016. Increases in wholesale electricity prices are putting significant pressure on energy intensive industries such as the pulp and paper industry with predictable impacts on viability.
Increasing dry periods due to climate change will expose serious vulnerabilities in our electricity generation system since it depends heavily on water resources (60 % of generation). We essentially have all our eggs in one basket and this is dangerous. This, together with population growth, and faster than expected adoption of electrified transport, will put significant pressure on electricity generation and grid infrastructure. We need to move quickly and councils need to be part of the initiative.
In a region that consistently boasts the highest amount of sunshine hours in the country. And yet, solar PV is conspicuous by its absence. Even if recent initiatives by Loadstone do result in the build-out of substantial solar PV generation in our region, it will be little more than a drop in the bucket, especially if Huntly generation needs to be curtailed in order to meet international commitments and national emissions reduction targets.
Rather than simply talking, we should take action. As already mentioned, more than one year ago this council was presented an opportunity to be a leader in promoting solar development in the district and nothing happened. All that was required was to make available the land. Trust Horizon has clearly indicated in its recent submission a desire to fund such activities.
A number of submissions criticized the lack of real activities (e.g. #44, Mawera Karetai).
The financing of climate change mitigation and emissions reduction is going to require us thinking outside the current economic paradigm as already mentioned. Tinkering around the edges of the economic system, as central government has been doing so far, simply will not do.
3. 3-Waters Infrastructure
No question in our consultation related directly to water infrastructure although it does get mentioned in a number of submissions. However, provision of water infrastructure is one of the most important things that council does and has been doing well for more than 100 years.
However, there is clear uncertainty in this area as the 3-water reforms are ongoing. These so-called reforms appear to me to be a knee-jerk reaction to one incident, and no cause for upending a system that has by and large worked extremely well. We need to take stock of where we are and what needs doing. Our asset management plans are for this.
As far as I can see, our main water treatment plant (Valley Road), which has many years of remaining life, is coping well so far and there is a high degree of certainty that it will cope well into the future provided it is maintained through our normal practices. There are risks due to saline intrusion, cyanobacteria outbreaks and increased turbidity especially during extreme events.
Climate change effects mean that issues of water intake level & storage need to be dealt with on an urgent basis as it seems they are. Priority needs to be given to addressing vulnerabilities by bringing in alternative water from say the Otumahi source (Paul Road). At a cost of $6.8M (see p13, WDC Infrastructure strategy LTP 2018-2028) this would seem to be money well spent considering that 2/3 of the district population depends on water from this plant.
As far as I can tell there are no immediate vulnerabilities in the Whakatāne-Ohope potable water system that caters for more than 60% of the district population. Minor weaknesses I believe can be remedied with relatively minor strategic investment having relatively negligible impact on the LTP. e.g. peroxide treatment for cyanobacteria, replacement of some of the primary pumps which are > 40 y old and the rising main to town storage. Certainly the storage should be expanded ($3M) and is planned.
I am happy to see that a backup generator is finally being installed on site at the 3-waters plant. Other water schemes also need some attention, especially Murupara. Here I believe that the problem is more about education than technology.
The single largest item of expenditure by this council is roading which typically accounts for about 45% of council expenditure.
Much of what is roading I would put in the WANTS category. I am OK with a certain amount of sealing (say 2 km), and BAU activity, but am opposed to straightening the Thornton bends which has a major impact on the LTP. This section of road has had bends on it since I was a kid and the surface has undergone many improvements over that time. I do not subscribe to the Transport Agency’s “Road to Zero” strategy which I consider an absurdity (a road to nowhere).
“Improving safety on New Zealand roads is a priority for Waka Kotahi. Road to Zero 2020-2030, New Zealand’s road safety strategy, tells us what New Zealand needs to do to make improvements in road safety. It sets us on a path to achieve Vision Zero, a New Zealand where no one is killed or seriously injured on our roads.”
NZTA have stated in this chamber that it is an aspirational target but this is not the impression given by their web site. Road deaths have come down steadily over the past three decades, mainly due to motor vehicle safety innovations and we are reaching a temporary asymptote.
5. Active Transport
The community is generally in favour of enhancing active transport measures. Caution however should be exercised in interpreting feedback due to the existence of a very active and vociferous lobby, viz the MTB lobby.
I am a cyclist and casual mountain biker myself, and although I have some sympathy for the cause, I do think we need to distinguish recreational activity from transport. Therefore, I would put MTB activities in the WANTS basket.
We have become a nation obsessed with the motor vehicle. As I keep saying, ‘the average kiwi would rather divorce their partner than their car’. I don’t see this changing any time soon. We should continue to explore options to cater for MTB activities and there are several on the table. We should explore development of tracks on a voluntary basis.
I think we already have enough funding directed toward active transport measures. Despite being an active walker and cyclist myself, my indifference to funding active transport is because I believe that Whakatāne is already a great place to walk and bike around. In any case, $1M per year over ten years seems more than enough.
Whakatāne is one of the best places for biking I have ever lived in, maybe even better than Canberra. There really is no excuse for not being active in our district and yet people do not want to part company with their cars. I believe that we are in a sort of attitudinal crisis. I wonder how many of us arrived here today on foot or on a bike.
Given our demographic, and the increase in mobility impaired transport, more attention should probably be given to ensuring these elder folk can get around easily. Submission #44 (Ruth Gerzon) makes a good point in this regard.
Although Whakatāne has not featured in cycling fatality statistics for more than a decade at least (I have already provided stats in the past), more low-cost passive safety measures should be employed to enhance protection of cyclists and pedestrians. For instance, more speed humps and signage such as “respect cyclists and pedestrians”. Our population has doubled in the past 30 years and so has car ownership, yet the roads are essentially the same, there are fewer passengers per car and the cars have got larger. So I think that the options are quite limited. This is the tyranny of growth!
What may put parents off sending their kids to school on bikes as they used to do is probably an increase in traffic density as a result of population growth and a doubling of car ownership per person.
6. Civic Center Upgrade
Community objection to Option 1 (full Monty) was overwhelming (3:1 Option 3 v Option 1). We asked for feedback and we got it, and for this particular question, it was absolutely unambiguous. Some of the commentary was quite harsh.
I was never in favour of this upgrade of the existing structure and I have made my opinion known. I would simply install air conditioning and improve ventilation as a matter of work place health and safety, not comfort. To me it would seem worthwhile to explore a green-fields development of just an EOC that meets earthquake compliance standards.
I can see significant cost over-runs on this project if it goes forward. From the moment I heard of this $3M project, I recommended multiplying by pi. Little did I know that even this would be short.
Already $1.25M has been spent and no significant physical work has actually been undertaken. Aside from concept plans and designs, what else have we done? We could have had HVAC installed for that amount.
At a fundamental level, the proposed modifications are not going to decrease density of people. i.e. persons per m2.
According to NSZ 4303:1990 (ventilation for acceptable indoor air quality) the max staff occupancy for offices should be no more than 7 persons/100m2 (14 m2/person). We should also have 20 cfm/person. Where are we in terms of staff density?
According to WorkSafe, ventilation must be sufficient to provide workers with safe clean air.
Sometimes I wonder if we haven’t already forgot the lessons the ongoing pandemic is teaching us. Allowing airborne pathogens to spread in densely occupied and poorly ventilated work spaces is not good practice.
7. Second Bridge
For over a decade our community has been crying out for a second bridge. The Gabites & Porter - Traffic Study (2008) concluded that LOS (Loss Of Service) values would be at critical level by 2016 in the region of the landing road roundabout as well as Landing/Eivers Road roundabout, and the Domain Road/McAlister Street roundabouts.
In 2021 we would have to say that the predictions of the traffic study have been realized. Aside from Landing/Domain Road traffic banking up to Commerce Street over peak hours, the consequences of another earthquake or extreme flood event taking out the existing bridge is not insignificant. In the case of a major disaster, the bridge will represent a major bottleneck. However, NZTA, in their infinite wisdom, have stated in this chamber that this is only one of many other bottlenecks in our town and therefore there is no point contemplating a second bridge at this time. I am sorry, but I refute this.
We should take lessons from past experiences and the recent flood-induced damage to the Ashburton bridge. The need for a second bridge is not just a matter of traffic flows and inconvenience. I consider it a public safety issue. Do we need to wait for another major disaster such as a flood, earthquake or other in order to act? The Edgecumbe earthquake of Monday (1.43pm) 2-Mar-87 caused some liquefaction under the bridge pillars and this could easily happen again.
Population pressures are going to greatly exacerbate congestion and greatly worsen consequences in the event of natural disaster.
Although there was no question relating to a second bridge included as part of the consultation, there was nevertheless plenty of commentary in the LTP public submissions regarding the matter.
8. CBA Development
I believe that our CBD is quite adequate as it is; it’s a beautiful town I would say. The Te Ara Hou project for me is a waste of money that could have been better spent elsewhere in the district including Kopeopeo and further afield.
Betsy Stephens’ submission (#66) of a private development of the CBD has some merit and probably warrants debate.
My reservation however is that rather than luxury apartments we need more housing for folk of more modest means.
We have a housing crisis, not a luxury apartment crisis!
9. Miscellaneous Items
- Didn’t see to be much mention of Matata wastewater specifically in the feedback. In any case, we seem to be moving on this.
- Sutherland Lake and the Awatapu lagoon should be managed as part of business as usual.
- No comment on the Multisport Event Center which apparently is going to involve $10M of expenditure from 2025. This is not a NEED!
- Is the Phoenix Palms issue really a problem (#69, Linda Conning)? I’m not so sure.
As for the privet problem, this needs to be investigated. There is some research around that suggests that the link to health effects is quite weak (Study finds weak link to privet pollen, 26-Jan-16).