Councils: Unaccountable, ready to tax? #DCC #ORC

When decisions are made in secret, and councillors know that the people will never know what was said and done at the meeting, there is no way of holding them to account.

Hilary Calvert [Critic issue 17, 2013, article-3175] 2 re-imaged### ODT Online Fri, 11 Apr 2014
Wherefores of council decisions should be public | Secret democracy is an oxymoron
By Hilary Calvert
OPINION The DCC has come a long way in providing more transparency and therefore more accountability. Fewer meetings are held behind closed doors. More information is made available after meetings when there have been non-public proceedings. However, we should not give up the search for more transparency with the job half done. All sorts of things still happen behind closed doors in council chambers.
Read more

****

There is no doubt debate on the matter is needed – but giving councils the option to impose extra taxes, without some guarantee the profligate spending of some will be closely monitored, will be a recipe for disaster.

### ODT Online Fri, 11 Apr 2014
Editorial: Property rates not enough
OPINION Local Government New Zealand says basing rates on property values alone may soon be no longer sustainable as the sole form of taxation for many councils. Instead, it says, it will investigate other forms of taxation, such as local consumption and local income taxes, as complementary alternatives. This may lead to residents, workers, visitors and motorists within a council boundary contributing to a council’s bottom line through targeted taxes.
Read more

Posted by Elizabeth Kerr

*Image critic.co.nz – Hilary Calvert (Critic Issue 17, 2013. Article 3175, posted 28.7.13 at 4:45pm by Jack Montgomerie). Re-imaged by whatifdunedin.

38 Comments

Filed under Business, DCC, Democracy, Economics, Media, Name, New Zealand, ORC, People, Politics, Project management, Property, Site, Sport, Stadiums, Tourism, Town planning, Urban design, What stadium

38 responses to “Councils: Unaccountable, ready to tax? #DCC #ORC

  1. John P.Evans, concerned citizen

    As I have said previously, Parkinson (C. Northcote Parkinson) has predicted “taxes will rise until the customer complains”.

    Whilst you are hearing about “the fairness of tax” generally from those paid by the government, few will evaluate this act as Bob Jones and Kerry Packer did – abject theft from those who create income to those who spend other people’s money.

    Rise up against this rort, Now.

    If you don’t you will see the heads of departments at the DCC, getting $500,000 pa and penury in the productive classes.

  2. Hype O'Thermia

    Coincidentally –

    “Internal Affairs is demanding two poker machine trusts slash the “excessive” salaries of their chief executives, or lose their licences.
    The two small South Island trusts, Mainland and Air Rescue Services, were both slammed in Internal Affairs audit reports released last week under the Official Information Act.
    While Internal Affairs blacked out the numbers in the reports, it was clear both trusts were paying salaries well over $120,000 a year to their senior executives despite having only a handful of employees and pokies in just a few venues….. ”
    Complete article is at http://www.stuff.co.nz/business/industries/9936059/Pokie-trusts-told-cut-salaries

  3. You don’t have to read about higher taxes elsewhere in tbe New Zealand economy or bearing down from the immediate future. Just open the starter pages of DCC’s draft annual plan – setting out all the increased charges and fees across all departments. Stunning! While the council ‘budgets’ for glory projects of no significance or value to poor and vulnerable residents of the wider Dunedin territory (most of which is rural land with sparse population in any case), but whom of course powerfully outnumber the decision makers, well-paid councillors and very comfortably remunerated staff, and the local rich, who want their playthings.

  4. Elizabeth; as we all know, Dunedin, if it is to grow needs all the support it can get. Growth invariably entails building either new, or altering to suit, any new enterprise. Be it to accommodate a new residence or business. Go to pages 280/81 in the Draft Annual Plan for charges relative to any resource for all of the likely work. It is really ‘nose bleeding stuff’. For instance, erect single dwelling $3.690. Erect garage/Carport (non inhabitable) $1.620. Alter dwelling (under $20,000) like new kitchen or similar, $1.340. Erect Deck $1.080. For commercial; New single level commercial building $4,840. Alterations to existing single floor $2,660. Retail fit out plus plumbing & drainage $1.460. That is just some of it. The question is; what value is created there? And they wonder why Dunedin has sluggish growth.

    • Calvin (heck, I’m only up to page 98…) but my inkling is:

      Debt repayment (including by seriously out of wack charges) + Ongoing spending = Fiscally Corrupt Council + More Personal Debt + Working Population decline.
      Total: DEAD DUNEDIN.

      Note to calculation (exception): DCC keeps grass growing at stadium, by any means.

      • Elizabeth; you will have read Forsyth Barr Stadium page 15 then. If you have emptied the bucket, cut straight to page 125 for the ‘Funnies pages. Try the graph on page 133, the joke of the year. It shows the Gross Debt chart in solid lines with debt in 2013/14 at $265.060m dropping to $258.872m in 2014/15. But the dotted line extension from 2010/11 which includes the Stadium debt climbs to some $410m. But hey! that doesn’t count, because DVL purchased the stadium for $146.6m from the DCC. Neat eh? Of course the ratepayers still pay for it, because if you look back to page 15 you will see that Sue Bidrose says it costs us $9.15m pa. But then that doesn’t count the fact that DVL has racked up another $5.2750m of debt to total $151.332m liabilities. Then DVML has total liabilities of $12.348m and we know that they are predicting further losses of $3m in this next year. Altogether it looks like the stadium is in hock for around $166.668m. Which really means that the true DCC/Ratepayer Gross Debt is the $258.872m plus $166.668m which is $425.54m. That doesn’t include DCHL’s portion which brings the Consolidated Debt to around $622m, or so we are told. DEAD DUNEDIN?? You better believe it.

        • Calvin: I’m about to do another couple of hours on it, like doing hard labour splitting rocks. Love the way you cut to the chase.

          My powers feel considerably diminished though, the Bible now appears preferable as a read.

    • John P.Evans, concerned citizen

      Calvin, surely the ODT will have someone onto this. Erect garage $1620!

      Almost every house in Dunedin has a garage, so let’s assume 40,000 houses that means the DCC would gross $65 million just for approvals for garages!

      How does that relate to the cost of processing such consents?

      Surely the council or any council must justify their charges relative to their workload!

      Slater- Gordon are taking the banks to task for charging more for dishonour fees than it costs. Perhaps we should alert them to the opportunity council charges represents to them.

    • DCC on growth…..

      DCC DAP 2014/15
      Revised Draft Development Contributions Policy
      (pages 223-270)

      BALD STATEMENT
      Overview (page 224) The Dunedin City Council (DCC) is expected to continue to experience growth in resident population, visitor numbers, development and economic activity. The DCC must make significant investment in additional assets and services, and assets of greater capacity, in order to meet the demands of growth. The Development Contributions Policy provides a transparent and consistent basis for requiring contributions from developers towards the capital expenditure incurred to provide for growth. cont/

      WHAT GROWTH?
      Statistics New Zealand figures show very little growth has occurred at Dunedin for more than a decade !!

      Read this comment from a developer that was highlighted by Whaleoil in a recent post. In the public’s interest we reproduce the whole comment here.

      [he makes sense, and remember, this is DCC we’re dealing with…..]

      Why do Property Developers hate development contributions?
      By Cameron Slater on February 10, 2014 at 4:00pm

      A property developer writes:

      Lately Developers and Councils have been busy preparing submissions on the proposed changes to the Local Government Act relating to development contributions.

      There are many issues. Firstly the issue with charging developers for improvements that have nothing to do with growth.

      (1) Hiding the real cost apportionment and charging developers for improvements that having nothing to do with new development growth:

      When developing up capital works and budgeting the Annual Plan, Councils develop formula and apportion some of the costs to ‘growth’ – which is then charged to developers.

      Councils argue that as cities grow and intensify – the costs of that growth include replacing or improving infrastructure. Hence they want new developments to pay for it.

      Developers take issue however with the amount of money required from them to pay for the infrastructure improvements not that they have to pay for their share of growth. As such the argument is about whether the right pro-rata apportionment is applied.

      Obfuscating the debate is that all Councils must replace infrastructure as it ages and is due for replacement. Additionally, most Councils are in recent times adopting new development standards that increase the capacity of assets and they improve assets as technology advances.

      Replacing assets is supposed to occur from a built sinking fund that is generated over the life span of an infrastructure asset. Councils receive money over the lifespan in cash as depreciation as part of rates. Over time, and subject to annual revaluation each asset builds up a depreciation sinking fund that should be sufficient to replace it. Developers are concerned that Councils spend that money through internal loans to OPEX and other creative accounting and then hope to use ‘growth’ as a mechanism for replacing the assets. A psuedo ponzi scheme with ratepayers the duped investors.

      Development standards are also changed. In decades gone stormwater pipes were designed to handle 1 in 50 year storm events at most. Now new standards mean replacement pipes are designed to handle much larger storm events such as 1 in 100 year events. Developers are concerned that this improved capacity is being charged to ‘growth’ because it is an additional capacity. But is it really the result of growth or more realistically a new standard that should be born by ratepayers through the normal CAPEX income channels?

      Technology changes the way we deal with waste. Cities around our country are improving the network connections to re-direct waste to more centralised sewer plants rather than local schemes and or dumping into the sea and rivers. These technological changes have nothing to do with growth.

      What Councils have learned to do is be cunning about it. They refuse to release any information that would allow scrutiny of income and costs to ascertain if the above activities are fairly attributing the costs. There is great suspicion that in refusing to release the information Councils are trying hard to hide the truth. Changes in legislation forcing Councils to publish and present all information are required to ensure the costs are fair. If it is fair developers won’t whinge.

      (2) Localised costs

      Developers most often are required to fix infrastructure around new developments. For instance a new development might only be able to be consented if stormwater and sewerage pipes are replaced in surrounding streets. Roads may require widening and traffic management systems like traffic lights may be required to be installed.

      At some point in time all of those Council owned assets would be replaced due to capacity and age. Councils collecting income for those purposes should pay their share of the improvements. For instance a Council should provide at least what it is saved in its sinking fund for the replacement of those assets to the benefit of the wider ratepayer catchment that is also using them. But they don’t. Developers believe that some applied discount should occur so that they are only paying for the growth portion their developments generate.

      But then after Council’s make developers improve assets they put their hands out for full development contributions.

      All of these add significantly to the cost of housing.

      Double dipping.

      Lately Councils have come out hitting hard against the proposed changes. It is highly likely that their opposition is because the proposed changes will have radical implications on their cash flow and capital works projections. If developer suspicions are right – that Councils have spent the money already and are trying to get developers to pay for it – then the changes will mean many Councils will have to fess upto their dodgy behaviour and that they have mismanaged ratepayer’s money.

      The proposed changes must happen. Cleaning up of Local Government is overdue. A stronger more robust and transparent process will ensure that who pays for what is more fair. But what it will do moreso is ensure that Councils manage their books better.

      Developers are not whinging for the sake of it. What developers are doing is merely pointing out that Local Government is shafting everyone through dodgy practices and therefore reform is needed to ensure and protect the future for all people including themselves.

      [ends]

      {This also featured at an earlier post (12.2.14) DCC: Growth v development contributions and in associated comments. -Eds}

      • Hype O'Thermia

        Isn’t this a giggle, for connoiseurs of scrambled thinking:
        “Now new standards mean replacement pipes are designed to handle much larger storm events such as 1 in 100 year events. Developers are concerned that this improved capacity is being charged to ‘growth’……”

        Growth causes very big storms. Yes, nice one Einstein!

        • Nightmare territory.
          Meanwhile, the SciFi DCC draft annual plan (DAP) has issued the sleeping pills for most to not notice or care.

        • Hype O'Thermia

          By the way when did storms become storm “events”?

          It’s just as well there are events managers now.

          In the old days they would have been managed after they happened by people with shovels, the fire brigade with tarpaulins and pumps, sandbag fillers and diggers, loaders and trucks moving slip material. Pre-storm the city engineer would have had experience of what areas are vulnerable, would have taken all relevant historic information into account and kept up to date with modern technology. He would have filtered the glossy-new, checked how it compared with experience and the older techniques and materials. He’d have understood the importance of steady maintenance irrespective of the weather forecast because when the water is coming into houses is no time to realise the gutters, and the pipes below, are blocked with leaves, gravel and debris.

          He would have known esoteric stuff like, how much salt water can esplanade metal railings take. He would have known about the sucking action of waves against a solid wall and how, if they can’t break the wall they spread their energy to every vulnerable part within coo-ee, over, under, beside it. He’d have seen it, or known where to find the reports on when and where the same kind of thing happened before.

          He’d have known about the drains, the ones that weren’t coping, the ones where fixing previous breaks had revealed fragile old pipes that needed to go to the top of the list for total renewal.

          But he wouldn’t have had a qualification in Events Management.

  5. Despite the optimism expressed by the DCC Dunedin is not substantially growing. My recent research on which I wrote an opinion piece in the ODT, shows that Dunedin reached its peak at around the turn of the 20th century, or 112 years ago. Comparatively speaking it has been in a slow inexorable decline ever since. Why? Just look at the demographics. In the 1901 census Dunedin’s population was 70,000 while NZ’s was 815,882. We were 8.5% of that total. In 1921 we were 81,848 and NZ 1,284,873. We were 6.3% of that total. Then in 1936, 82,000; 1950, 91,200; and in 2006, 118,683. Meanwhile, NZ in 2013 is 4,480,182. We are just 2.64% of that. Now in 2013 Dunedin numbers around 122,000 all counted. But if we look at the university/polytechnic student rolls we find the following. In 1961 FTS (full time students) were 3,000. Now the number is upwards of 18,000. As that increase is primarily transient numbers, not permanent residents, if we deduct the increase of 15,000, Dunedin’s true population is around 105,000 to 107,000. That is about where we were sixty years ago. One only has to cast one’s mind back and think of all the industries, warehouses, shipping, stock & station agents that have disappeared right up to the present day with Hillside and Bell Tea to understand that. That is what our councillors and bureaucrats just can’t, or won’t seem to get their heads round. They should be realistic and cut their cloth to suit. There will be no great burst of activity despite their earnest wishes.

    • Calvin, I don’t see any earnest wishes on the part of DCC. What I see is the chance for this council to borrow against monies budgeted for growth (stripped from developers) but not spent since the prophesised growth was of course never real or expected. I’m told this is a common rort entered into by councils and which is perfectly legal. Another of the underhand things this council is capable of.

      • Hype O'Thermia

        No, they’re not “earnest wishes”, nor strategies, plans, or anything else that’s anchored by realism. They’re the pull-a-wishbone, wish on a star, genie of Aladdin’s lamp kind of wishing. The only way to make them come true is by trickery. Fiddling the books, making up “services” that have to be charged for, and making up reasons why these puny jobs take a ludicrous amount of time that has to be charged at several times the going rate of a top Hollywood plastic surgeon.

        • Submissions should say that.

        • Hype O'Thermia

          Submitters are welcome to copy & paste. Many of us are so disillusioned after years of putting considerable thought and effort into submissions, taking the time to present them in person to a few disengaged councillors and in the end ignored.

          It’s even more galling when you consider the number of people who had worked out well ahead of time the reasons the Fubar Stadium was Olympic-grade stupidity, eligible to enter all Thick, Venal and Delusional events. Had there been such Olympics the damn thing could have been paid off out of gold medals.

        • Hype O’Thermia, I considered all that, indeed for the past two weeks I decided NOT to write a submission. BUT in the face of the Crooks who put the DAP together, I wish to record at the very least my displeasure at being robbed. And other such sentiments. Protesteth where we will :|

  6. Anonymous

    Just as a reminder, the Dunedin Economic Strategy (10,000 new jobs, $10,000 added income per capita in 10 years) requires a population growth of 2% per annum and a GDP growth per capita of 2.5% per annum.

    • And this…

      ### ODT Online Mon, 14 Apr 2014
      Upstart merges with powerHouse
      By Sally Rae
      Dunedin’s Upstart business incubator has announced its merger with early stage technology investment firm powerHouse Ventures. The merger will provide seed funding and support for businesses within the research-based technology sector. It follows a partnership between Upstart and the Christchurch-based powerHouse Ventures, which was announced in November last year.
      Upstart, which is jointly owned by the Dunedin City Council, University of Otago and Otago Polytechnic, has been helping high-growth companies get started since 2004, by providing incubation and angel investment services.
      Read more

  7. Anyone intending to make a submission on the DCC draft annual plan shouldn’t panic too much before Tuesday’s (15 April) formal deadline at 5pm. Just remember most of us do short sentences or bullet points as an overview summary at this stage and send them in. We then produce a full submission (written and or oral) to hearing in May.

  8. Mine will be so short as to be invisible. The only bullets I would contemplate require a gun to deliver and that would not be acceptable I’m sure.

  9. ### ODT Online Mon, 14 Apr 2014
    ‘Really solid’ results from council companies
    By Chris Morris
    The Dunedin City Council’s group of companies are set to deliver ”really solid” results to councillors this week, despite some mixed performances, Dunedin City Holdings Ltd chairman Graham Crombie says. Mr Crombie told the Otago Daily Times he was encouraged by the performance of the companies, even though some continued to feel the lingering effects of the global financial crisis and Canterbury earthquakes.
    Read more

    █ Agenda and Reports (including six-month financials for council companies) for the Monday 14 April Council meeting here.

    • Great comment from JimmyJones at ODT Online.
      Clears up a few ‘avoidances’ in the formal reporting (choke).

      ODT blind-spot
      Submitted by JimmyJones on Mon, 14/04/2014 – 2:15pm.
      Let me help you by explaining that there are two stadium companies: DVML and DVL. The loss for the 6 months was about $0.5 million (as mentioned above) for DVML, but for DVL their loss was $2.3 million (combined losses of $2.8 million). The DCC prefers to not mention DVL in their press releases because they know we only like good news.

      The other blind-spot is harder to see, but very significant: in order to [lose] a total of only $2.8 million in the 6 months, required that the ratepayers of the city paid a subsidy of $8.4 million. So for just half a year, the FB Stadium has made the city over $11.2 million poorer ($8.4m + $2.8m = $11.2m). The real figure is much more than $11.2 million because of other subsidies and costs, including interest on stadium related DCC debt. Double these figures for the full year.

      The $8.4 million subsidy is the sum of “subvention payments” ($3.64 million) and equity injections ($4.74 million) paid to DVL and DVML. In addition, ratepayers are affected by other subsidies such as the DCC rates subsidy and revenue skimming for assets like the Edgar Center and the Town Hall/DN Center.

      [ends]

    • Creative chartered accountant GM sounds not unlike Athol….

      ODT 2.5.14 Letter to the editor (page 10)ODT 2.5.14 (page 10) [click to enlarge]

  10. ### ODT Online Mon, 14 Apr 2014
    It’s all tickety-boo at the council
    By Jim Sullivan – Nothing Too Serious
    OPINION As you know, to find out about city council matters it is usually necessary to invoke the provisions of the Official Information Act but this column is fortunate in having a mole within the council who, for the price of a few beers, happily hands over documents of all kinds. Like this transcript of a recent staff meeting. Good morning. My word! There are a lot of us, aren’t there? It is certainly good to see the convention centre getting some use. We may have to use the stadium next month. Well, someone has to! Just my little joke. The stadium is good enough for royalty, so let’s put an end to this endless apologising for the damn thing.
    Read more

  11. The Upstart operation, whereby it invests in promising startup fledgling companies, many of which have nothing more than a good idea, is an interesting conception. Upstart is jointly owned by the Dunedin City Council, the University and the Polytechnic. What is its capital and its shareholding equity? We don’t know (least I don’t). Question: when investing in these companies, does Upstart have an equity holding, or is it simply a loan? If a loan, does Upstart get it repaid with interest over the term? If it is equity, does Upstart share in any growth and profits? If the answer to either of these points is no, then it is simply a handout from the taxpayer via the University and Polytechnic and ratepayers via the DCC, again. Someone ought to pose those questions.

    • If open and transparent six monthly or annual financial reporting is happening for the Upstart/powerHouse – then we (ratepayers and residents) would like to see it ‘upFront’, cleanly and accountably from DCC. That is the council’s job!

    • Calvin, I can tell you that DCC, UoO and OP have 300 shares each in Upstart (Upstart Incubation Trust). They provide equity to their prospective businesses. They used to have an expectation that the successful businesses would pay profits so that Upstart would not need as much funding. Unfortunately the city has been paying them $150,000 every year with no sign of a reduction. Possibly they get some more funding from OP and UoO.

  12. Hype O'Thermia

    The way I see it, helping new companies, inventions, developing product to the point where it can be sold is not a handout but an investment. New ventures are dead risky, it can be expected that there will be more failures than successes. However out of a dozen attempts one may turn out to be a major winner, and some will do OK, earn their keep, employ some staff, pay rates and taxes. I agree that repayment should be part of the deal, low enough and slow enough not to strangle newborn ventures when they are taking their first breaths though. Not kneecapping them when they are learning to walk and need new shoes so they can expand beyond the garden gate. We have seen the risks in student loan investments and paybacks, seen money squandered, then the “Omigod!” recognition of debt the size of a house, seen graduates take off overseas because they can’t earn an income here with their qualifications, or to escape the loan repayments that would have them living like burger-flippers for years.

    Anything that involves investment, especially of public money, has to be examined with a devious eye looking for unintended consequences, whether ripoffs or schemes that start off good and then self-sabotage.

  13. Jeez Jimmy, is it as bad as that? So again, the ratepayers are the fall guys, and on the off chance that these ventures come good they are away laughing all the way to the bank. No wonder the path to the city money tree is so worn.

  14. Anonymous

    Go look up Norman “Dr Business” Evans (ex of DCHL Boards) as the superstar of Upstart in the early days. Be sure to mention the extraction process from the board of TracPlus Global and the unsavoury “oh I left the blueprints at the Chinese factory by mistake” incident.

    • Oh dear. Sounds like you could write the book.

    • Mike

      Um yeah, I’ve had what could best be described as “unsatisfactory” dealings with Upstart in that era. Bunch of cowboys, in the local tech community they’re pretty widely perceived as wanting investment deals that are pretty unreasonable, which look good on paper but put them in a position where potential future investors are disadvantaged and less likely to invest.

      (I know little about the new partners, maybe things will get more reasonable)

    • Remember Evans was cheerleader for “The Street”, the online mall which was going to be “bigger than Google”. Dunedin ratepayers lost their $700,000 investment when it went bust.

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