HEARINGS

 

Alan Aagaard
This is the submission made at the actual hearings by ratepayer Alan Agaard.  It differs from his written submission and offers an insight into some of the facts and figures in the draft LTP

LONG TERM PLAN SUBMISSION
It would appear that the draft LTP is a rather temporary document, not something on which to base wholesale changes to the rating structure.

Pages 8, 12 and 22 all mention that council is reviewing a number of areas to inform a possible amendment in 12 months.

Then in Pt2, work streams underway or proposed is spelt out in more detail:

1. Review range and level of services it currently delivers

2. Evaluate service delivery options eg. Outside contractors, in house etc.

3. Review the rating system, eg. Question rating on land value. Number of targeted rates appropriate.

4. Review asset management plans

5. Review forestry and property investments, is retaining in best interest of district.

I know the LGA 2002 section 93 (5) allows for later amendment of the LTP, but did the law drafters ever envisage that to mean, produce a plan that states that within 12 months amendments would be introduced that could completely change the rating structure, services provided and asset base, I think not!!

How can you produce a 10 year plan when within the first year most of the major criteria for forward budgeting is changed. This just makes a mockery of the whole concept of forward planning.

Council has not produced an annual report for 2010/11 now 7 months overdue, so no real comparison of budgets with last years actuals can be made, we are provided with annual plan 2011/12 figures, but we all know how accurate these can be. Audit NZ contends that that there is a low level of uncertainty in the starting figures, but they have audited and approved this error ridden LTP so what reliance can we place on their opinion.

This LTP as presented cannot be adopted.

A temporary LTP should be produced based on last years plan and rating levels plus any appropriate CPI adjustment. If necessary a Bill through Parliament should be sought to allow this to happen.

A new LTP can then be produced after the Auditor General has completed her investigation, after the various work streams have completed their studies regarding to changes to funding and services provided and after council staff have revised this incomprehensible document.

I have spent hours going through the LTP as presented, I have two degrees, but they are insufficient in enabling me to understand this document.

432 pages of often complicated information, how can any normal person be expected to understand and make a rational judgement on what is contained here.

No wonder Council overheads are so high, the man hours going into producing this thing must be astronomical.

No wonder so many poor decisions come out of Council if councillors have to wade thru documents like this in order to conduct the affairs of the District.

I have just had a look at Fletcher Building’s Annual Report, this 7.5 billion dollar company uses just 100 pages to keep it’s shareholders informed.

Surely when a new LTP is produced it could be kept to say a slim 200 pages, cut out all the repetition in this one and all the meaningless platitudes like “we want to nurture local businesses and communities and attract new businesses to the area”.

Are 200 to 300% rate increases for businesses going to achieve that aim?

In part 2 of the LTP we have for example 72 pages of verbose policy statements the best of them being the 35 pages on development contributions, with such jems as page 137 - 5.3.1 (b)”the AC cost to N is the AC cost less the AC cost to F”

The LGA does in section 102 require a policy on development contributions, but surely the whole policy document can be summarised so that ratepayers can make an informed decision.

A deferral in producing a real LTP will allow time for Council staff to correct the many errors in the current document, here are a few:

GST – the accounts exclude GST, most mentions of ratepayer payments include GST, however throughout the document sums are mentioned with no indication whatsoever as regards GST. This makes it almost impossible to analyse income against expense and is certainly not in keeping with good accounting practice.

How many properties are connected to the MCWS or capable of connection?

Nobody at Council appears to know, but they are budgeting rates on some imaginary figure. In the LTP several places state 2114 users are connected and a lot of calculations of income are based on that figure.

However in Part2 page 43 there is a schedule for Mangawhai wastewater that appears to have been produced by someone at Council with brains and common sense.

Rates Total
This schedule states incl GST excl GST
Units in Harbour restoration area 2005 208   362,643
Units not connected but capable 592 974.50   501,656
Units connected 1/7/12 1522 1230 1,627,878
3x Pans 96 511     43,546

$2,535.723

Compare these figures with those on page 34 of Part 1:

60% applicable to existing users and those capable of connection

$1.8M compared to the Part2 total of $2,173M a +21% variance

25% applicable to properties in the harbour restoration area

$700,000 compared to Part2 total of $363,000 a -48% variance

A minor Discrepancy in the LTP is the extent of the MCWS scheme in one part it is stated as 40km of sewer pipe and in another 112km, maybe we are sending all our stuff to Auckland.

Another major problem is how much is the rate increase? The 31% widely published and highlighted in the LTP is a load of rubbish.

Firstly Mangawhai rates are going up by 100% plus across the board, please publish this fact so that all ratepayers in the district can appreciate the extent of the onerous burden placed on Mangawhai ratepayers especially those on fixed incomes which are a lot of us. Forget the Close UP “comment for a seaside village do you think that’s astronomical”? Because the answer to that is a resounding YES.

Page 32 of part1 states that rates are to increase from $19.6M to $25.6M in the 2012/13 year but that excluding MCWS capital rate would give an increase of 24.7% However if we multiply Mangawhai connected and capable units totalling 2114 units by the GST excl cost of $1715 we get a total of $3.625M deduct that from $25.6M gives a total of $21.975M an increase of only 12.12%. Now go a step further deduct Mangawhai sewerage operating cost payments as specified in the LTP of $2.536M gives a total of $19.44M, Hallelujah rates have actually gone down for the rest of the district and that’s before deducting the rest of Mangawhai rates such as the general rate, roading rate etc.

Clearly the figures being used to calculate this percentage are a figment of the imagination as are so many other figures in the LTP not withstanding the good offices of Audit NZ.

Now another major omission in this audited LTP:

Compliance with the LGA schedule10 Part1 4. States:

A long term plan must in relation to each group of activities of the local authority include a statement of the intended levels of service provision that specifies –

(d) any intended changes to the level of service that was provided in the year before the first year covered by the plan and the reasons for the changes and (e) the reasons for any material change to the cost of a service.

Council has completely ignored this requirement of the Act something that most people reviewing proposed accounts or budgets would benefit from knowing.

Here are some examples:

District Leadership:

Rates plus162%  0.981M to 2.568M

Fees Water Supply plus225% 0.372M to 1.210M

Refuse:

Payments staff & suppliers plus177%   0.423M to .750M

But in the next 2013/14 year plus367%  0.423M to 1.553M

Roading:

Internal charges & overheads plus167%  1.953M to 3.266M

Sewerage Operating Funding:

Rates plus187% 3.997M to 7.474M

These are the 100% plus variances, but there are plenty more in the 20 to 70% range.

Another area of interest is the actual operating charge.

The note 13 on page 33 says operating costs for 2012/13 are $3.7M of which $1.99M is interest.

However on page 35 Option 4 relating to spreading capital cost recovery over 30 years states that the proposed annual charge of $928 (incl GST) includes both principal and interest. This makes consideration of option 4 meaningless as interest charges are already being recovered in the $1,320 annual operating charge.

Another example of creative accounting practiced by KDC.

Now look at the Sewerage Funding Impact Statement on pages 121 and122.

Funding generates $7.495 million of which $4.945M is spent on operations leaving a surplus of $2.55 million. That surplus plus further budgeted revenue from development contributions of $612,000 gives a total operating cost surplus of $3.16M in year 2012/13. This surplus is spent on reducing debt $1.7M and new sewerage capital works $1.46M. Over the budgeted 10 year period total surplus operating income plus development charges amounts to $35.25 million even excluding new capital works planned of $6.6M the surplus over 10 years amounts to $28.65 being used to repay borrowing.

So even allowing for sewerage capital spending of $660,000 pa. total debt would be repaid in approx 25 years just from sewerage rates.

The alternative is to reduce the extortionate currently planned annual operating charge of $1320 to a level that actually covers costs, which would be more like $850 per annum.

Also Council should consider not only rate increases but expenditure reduction as well, especially in Council operations.

The whole area of District Leadership needs to be examined, total annual costs are budgeted at $8.7M of which $294,000 is interest which would indicate borrowing to fund this activity of around $5 million. Surely some savings can be made here.

Employee benefits are budgeted to increase from $3.486M in 2011/12 to $4.741M in 2014/15 a 48.5% increase (24% in year one). Pensioners in Mangawhai are facing 100% plus rate increases to fund employee salary rises of nearly 50%, lets get real here, cost savings begin at home!!

There appears to be a lot of creative accounting at Dargaville, the over-recovery of sewerage operating costs is just one example. Another example can be found in the Beca report of October 2006 where the extended sewerage scheme capital cost is outlined. Of a revised total cost of $57.8 million $10.1 million is Council charges and finance costs. This is for a turn-key contract with Earthtech where Earthtech fund the cost until handover which did not take place until 2009.

It would appear that MCWS is being used as a sinkhole for any inconvenient spending variance.

The sooner a competent audit is undertaken of the whole of KDC operations the better. In the meantime the LTP as presented is just a joke and cannot be implemented no matter what massaging takes place over the next two or three short weeks.
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Bruce Rogan, Chair of the MRRA offers his opinion on the "hearings" into the LTP held at the end of last week.

Sunday, 10 June 2012

The council has completed its round of “hearings” into the “long term plan”. I was not there the whole time, but I was there for enough of it to form some views, which I now share with those of you who asked for it (You asked for it!)..

From what I saw, the battle is far from over, and as Clive Boonham so aptly put it some time back, council’s current strategy is to (rates) bomb us into surrender.

We have to defuse the bomb.

Council provided those who wished to be heard with two days’ notice, without, in most cases providing information about where the hearings would take place and at what time.

A complaint is being lodged with the auditor general as to whether the form of notice used complied with the requirements of the Act, and therefore, whether the whole process ought to be restarted. (Going on past performance of the AG, compliance with the Act will have little or no bearing on anything)

Council made sure the Mangawhai hearings were conducted during the working week, when it knew that 75% of those who might wish to have been heard would be elsewhere, trying to earn enough money to live. I received over sixty emails from members who could not attend, but would have liked to.

Apart from some self-appointed messiahs who offered to lead the ratepayers and the council to the Promised Land, the tone of the submissions was uniformly hostile. There was a mixture of anger, grief, disbelief, and fear.

A young couple with their two young children stood in front of this panel of worthies sitting there at our expense, and read out a statement they had prepared that illustrated the social and economic ruin that this vile scheme would wreak on them and others in similar circumstances.

This young couple would never have done anything like that in their lives before, and the mother was so distressed that she could not read the statement she had prepared and had to pass it to her husband. They did not accuse, and they did not claim to have insight into how all this came about; they simply explained what the consequences for them and their children would be if this lunacy was allowed to proceed.

 People in the room (not the councillors- they don’t care one jot for the ratepayers) saw at first hand how the cancer of this proposal will spread far and wide. This couple, already stretched to the limit in a harsh economic environment, would either have to sell their house or lose it to a mortgagee sale, and they would have to leave the district in search of somewhere affordable to live.

They would take their children with them, and that would hurt the school. It would hurt the businesses from whom they buy their groceries, and when this awful scenario is multiplied by (at least) a hundred, you can see that the whole place collapses. One presenter suggested that it was more than probable that a kind of refugee camp would develop on the Southern boundary just outside the district, where people who wanted to stay in the area but had been dispossessed of their properties by the council, would congregate, like Libyans in Turkey, or Kaipara’s refugee turkeys, perhaps?

Business people stood in front of this charade and explained that the rates increases proposed would ruin them and they would have to simply walk away from their businesses, because there would be no buyers for them.

It became clear that the proposal to rate accommodation providers on the basis of so-called “suips” has been structured to favour the deputy mayor’s personal circumstances.

Tourist accommodation providers in Mangawhai are being smashed to smithereens.

One councillor spent much of his time playing solitaire on his laptop during the hearings, and to try to indicate that he had been listening, asked some absolutely ridiculous questions of submitters, indicating that he had neither listened to what they said, nor understood a word.

In the course of the two days I spoke with three councillors during breaks who said that they had had no idea of the enormity of what they had done. One of them was in tears when he spoke to us. One told me that by 11.00am on the first day he was on the point of moving a motion to abandon the plan, and would have done so were it not for the fact that the Mayor told him it would be ruled out of order.

The third councillor to whom I spoke, at the end, had clearly been duped by Ruru the CEO into believing that this proposal was generally OK, but would probably encounter a “small amount of” resistance. The councillor I first mentioned, who was clearly distressed by what he saw and heard told me that when he first came onto council he realised he did not have the governance skills for the role, and sought some governance training. He found someone who could provide it, and tabled a proposal for consideration, knowing that others needed it too (including our local councillor). McKerchar went into a huddle with the mayor and deputy mayor and it was agreed between them that no training would be made available, because councillors who knew their rights and obligations would be a threat to the status quo.

Many submitters related personal anecdotes of their experience with the Ecocare construction process. It was a catalogue (litany?) of waste, inefficiency, incompetence and corruption from end to end, and still on-going.

We don’t know what is going to happen next, but it seems likely that the council will simply charge on with the unworkable district-wrecking plan they have cobbled together.

But let’s get some things straight and clear. A rates rise of 31% (forget about the spread of that for a moment) will result in the council being FURTHER in debt at the end of the first year than at the beginning. So the suggestion that the second and third years of the “plan” will produce 5%-10% rises, is an unvarnished pathological lie. My estimate (verified in conversation with one of the councillors) is that if the rates rise by “only” 31% (!), there would have to be at least two further annual increases of that amount to make this council break even, and that is assuming (Big assumption!) that they exercised fiscal restraint in the meantime.

This, of course, is based on the idiotic idea that the debt is due and payable by the ratepayers. If somebody steals your credit card and, unknown to you, goes on a wild spending spree with it, you MIGHT be liable for the amount up to your card limit, although even that is unlikely, but you most certainly would not be liable for any expenditure beyond that, just because the bank had no checks in place.

Our agreed limit was (finally) $35.6 Million, and even though that was at least double what was reasonable for what we were justified in expecting to get, all the spending beyond that was never authorised by us, and we must make it absolutely clear beyond doubt that it is not our problem to recover it. Nor is it the responsibility of the other ratepayers of the district, they were conned just as much as we were. However, if we are so pathetic and weak as to knuckle under this oppression, there is not the slightest shadow of doubt that all of the debt is a burden that all of the district must bear.

The situation we are in now is that we have a bill for $80 Million, and growing, for purchases that should have cost less than $20 million, and what we actually have in the ground is not EVEN what we could have bought for less than $20 million, if prudent competent people had been in charge. This means that the additional (approx.) $20,000 that you are being told you have to pay is not going to pay for a completed system that has latent built-in capacity for the thousands of new users who are apparently, miraculously, going to spring up. The system in the ground now has, as far as we can ascertain, no spare capacity at all, and any additional users coming on will necessitate substantial NEW capital expenditure.

There is NO RATES-BASED way out of this catastrophe, and anyone who suggests there is, is either lying to you, or is hopelessly misinformed.

The council must be stopped in its tracks, and the ONLY way to make that happen is to stop funding them- that is, STOP PAYING RATES.

One of the ratepayers, faced with a rates increase of $85,000(YES!!) hired a lawyer to advise them. He told the council that the debt was the debt, and that because it had to be repaid, the council needed to come up with a range of options for the ratepayers that they would find palatable. He suggested (possibly because he himself would be in that happy position) that people should be given the option to fork over $20,000 right away instead of paying it on the drip feed, and thereby get a wee discount, whereas others, of a lower class, could be offered the hundred year repayment terms, and by taking them up, pay not $20,000, but probably something like $140,000 instead. He even inferred that if the council found it all too administratively complex the collection system could be handed over to Harvey Norman to administer! I don’t know how much that particular ratepayer had to pay for being handed over to the council by their lawyer on a silver salver, but I’ll bet it wasn’t cheap.

Even if you believed this current tissue of lies about the capital costs, what is there to stop this council from doing again, in a year, or two years, or three years’ time, exactly what it is trying to do now? It told you that you had made the capital contribution required to fund the sewage scheme. Then it turned around and said that you hadn’t, and that it needed as much as another TEN TIMES what you had already paid.

What is to prevent it from discovering in a year or two from now that it has made yet another huge financial blunder and that the $20,000 has blown out to $30,000, or $50,000, or who knows how much?

 This, people, in my humble view is EXACTLY why they are refusing to release the Annual Report from last year- The rates bomb they just hit us with is a Tom Thumb cracker compared with the Hydrogen Bomb that’s coming. Why would you fall for this twice? Why, in hindsight did we even fall for it once? How stupid are we? We either stop this now, in the only way open to us (cutting off their access to money), or many of us will have to sell our properties in a collapsed market and leave this district forever.

Please remember when I told you (those who were at the meeting) back in September last year that there would have to be rates increases of 100% to get out of the hole that Ramsey, McKerchar, King, Geange, Tiller, Smith, Sutherland, Taylor and (especially) Beca Carter had dropped us into, many of you laughed in my face. The current reality is much worse than I predicted, and getting worse still with every passing day. I admit to being a cynic, but I am nothing like cynical enough to comprehend the degree of incompetence and corruption of this council.

The council have nailed their colours to the mast, people, and in cahoots with the government and the Auditor General, are going to make a strenuous effort to make you salute them. If you do, you will spend the rest of your days in fetters, and you will consign your fellow ratepaying citizens all over the country to a similar fate. You saw very recently what can happen when those in authority try to do something that is unjust, stupid, destructive and irrational. The people DO have the power to influence things. What is at stake here is not now the size of the classes at our highly regarded local school, but the very existence of the school, and indeed the very existence of the entire infrastructure that makes this community function. And if they only had eyes to see it, after this (Mangawhai) community has gone, the rest of the district tips into the black hole that our destruction initiated.

What we face is very unpalatable, and many people are going to have to take an attitude to authority that they never believed would happen in their lifetime. There is no longer any doubt that we have been criminally treated by people acting criminally, and there is no law-abiding meek, and civilised response we can make that will get us out of it.

I know that there is a fear that “disobedience” will bring “punishment” in the form of penalties. What the council has now done for you is show you what the penalties are for NOT being disobedient, and they will be fatal for some (Yes, we seriously suggest that is true, for some decent, frail elderly people in our community), it will be economically ruinous for many others- forcing them out of their homes and businesses and the district, and for others it will precipitate an exodus from the district to places where a more rational and sensible regime exists. It is still in our power to stop this calamity, but we have to stand together and stand firm.

I once got abused and vilified (one of my formerly close colleagues at work refused to speak to me for two years) for proposing, on the morning after it happened, that the Rainbow Warrior had been sunk by the French Government. The argument (of my outraged colleague) was that no government of a civilised country would ever commit an act of such barbarity. I had no hard evidence for my claims at the time, except knowledge (available to everyone) of the motive. This time round the evidence is everywhere you look, it is only necessary to join up the dots.

Paying rates to this council is tantamount to funding the activities of a criminal gang. Would you willingly do that?

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