The things that worry voters

17:00, Jul 02 2012
VOTING FOR VOTING: Referendum will ask voters to choose between keeping or getting rid of MMP.
RICHARD LONG: It's not asset sales that worry voters.

We can forget all the shouting about the sell-down of state assets. Voters at the next election are more likely to be concerned about hip-pocket issues: rising prices and, most of all in Wellington, huge increases in insurance and rates.

The aftermath of the Christchurch earthquake, and the continuing aftershocks, will be a massive bill for the quake-strengthening of buildings in Wellington  many owned by the council  and the sky-rocketing cost of earthquake insurance.

After Christchurch, which was never expected to face a quake problem, insurers now seem wary about dealing with Wellington, which was always regarded as the major national risk.

The council cannot lump all its own earthquake-upgrade costs on ratepayers without facing a rebellion. And many individual apartment owners, especially those in retirement, will not be able to fund the increases. There will need to be an option for owners to opt out of earthquake insurance and take the risk.

Either that, or be forced out of their apartments at big losses.

All this comes on top of the huge leaky-homes scandal, estimated at more than $11 billion in a PricewaterhouseCoopers report, but up to $23 billion by others.


This is a national tragedy bankrupting some owners, causing vast legal costs and leaving inhabitants of some affected buildings at risk of respiratory diseases.

An ideal solution would be for the Government to step in on the leaky homes repair bills, recouping the cost when houses were sold on the death of the owners, as in British Columbia. But such a vast addition to the national accounts, considering the parlous state of the books, would send jittery international bankers over the edge.

National's 1991 Building Act, which reduced building controls and standards, is widely blamed for the leaky-homes epidemic, but developers who cut corners were at least partly to blame And these building plans were approved by councils, which now face compensation claims.

The Government's Local Government Act 2002 Amendment Bill, now before a select committee, is aimed at improving local government efficiencies. But there are some concerns it is simply taking the big Auckland local body amalgamation approach, rather than fundamental reform. That's a concern as questions are surfacing about whether amalgamated Auckland is going to be the success that was anticipated.

Former Act MP Muriel Newman's Centre for Political Research group points the finger of blame for local body profligacy at Labour's 2002 changes.

These required local councils to address community well-being rather than just dealing with the fundamentals such as water, sewerage, rubbish disposal and libraries.

In the 10 years before Labour's changes rates rose on average 3.9 per cent annually; afterwards they went up nearly 7 per cent.

Tackling local body excesses, enabling rates to be pinned back, could be a vote winner with exasperated ratepayers. The Government has a toehold for action with its inquiry into the wildly indebted Kaipara District Council, which had proposed an average rate increase of 31 per cent to get out of its economic quagmire.

That bears comparison with the California river port of Stockton (population 290,000), which is declaring bankruptcy after a spending spree that included paying US$1 million to Neil Diamond for a concert and $2 million to a noted chef to open a bistro that then closed.

Frankly, I'd be inclined to haul in the cost-cutting Thames-Coromandel mayor Jim Leach, who rejected financial advice for a 7.5 per cent rates increase when he came to office, instead slashing multimillion-dollar projects. His ratepayers will now pay on average 5 per cent less than last year  5 per cent less in Thames itself.

He sounds like just the white knight that Prime Minister John Key could dispatch on a nationwide purge of grandiose local body projects.

The Dominion Post