Editorial: Show us the money

00:26, Mar 01 2012

A month from today, the ballot papers for the most important local body poll to be held in this region for many years will be posted to voters. Three weeks later, the counting will start and – if common sense prevails – the transition to a unified council for the Nelson province will begin.

Regardless of the outcome, a growing point of discussion and discontent is the run of high rates increases imposed on ratepayers within both council areas. Nelson MP and Local Government Minister Nick Smith says Nelson and Tasman recorded the highest increases in New Zealand in the eight years from 2002 to 2010, the rises compounding at four times faster than the rate of inflation.

Tasman has already settled on this year's general rates rise, and could be accused of misrepresenting the true picture by excluding targeted rates. Add the two increases together, and its ratepayers face an average 8.8 per cent rate increase rather than the claimed 4.75 per cent – though a new district valuation means the actual year-on-year figure will fluctuate wildly among individuals. With inflation to the December quarter running at a mere 1.85 per cent, the council is unlikely to be flavour of the month with the minister. Nelson, meanwhile, is also likely to set a figure higher than inflation, given its enthusiasm for various major projects around town.

Dr Smith is talking of a "carrot and stick" approach aimed at encouraging and driving councils to focus on traditional activities. One reason rates have climbed quickly since 2002 is that some responsibilities traditionally handled by central government were foisted on councils – though it would be interesting to know what the real impact this has had on their annual budgets, and what Dr Smith has in mind in the way of tweaks.

Some kitchen-table observers have jumped to criticise the Nelson council's financial performance while praising Tasman's. However, a snapshot of the two councils' balance sheets is revealing. Last year, Nelson posted a surplus of $42 million while debt increased by $9m. Tasman's surplus was $11m but it increased its debt by $24m. Nelson's debt level is currently a little over $50m; Tasman's is expected to be at $140 million at the end of this financial year. That is more than $2850 for every man, woman and child living within its borders. Tasman claims assets of more than $1 billion and says its proportion of debt level is well within usual guidelines. However, the assets underpinning that debt, such as roads, stormwater pipes and libraries, are not easily sold off to free up cash should the banks come calling.

Nelson has been accused of over-rating given the size of its latest $33m "surplus", although this gets carried over into future projects and so ratepayers do benefit. Equally, Tasman could be accused of under-rating, in that its debt level last year rose by more than its surplus, meaning its balance sheet is being "eroded" by $13m a year on current figures. Ratepayers might form their own opinion on which is the more prudent approach to financial management. Given the choice, would they prefer their councils to be too cautious, or too cavalier?

The Local Government Commission claims amalgamation will bring efficiencies and savings. If these are available to the two councils without a formal merger, as some are suggesting, then why aren't they both identifying and implementing them right now?


The Nelson Mail