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Christchurch City Council announces plans for 7.1% rates increase this year and deficits of NZ$73.8 mln over next 3 years

Christchurch City Council announces plans for 7.1% rates increase this year and deficits of NZ$73.8 mln over next 3 years

The Christchurch City Council has announced its annual plan with a proposal to increase rates this year by a combined 7.08% this year, partly because of extra costs linked to the February 22 earthquake that devastated the city.

"The earthquake dramatically affected the normal Annual Plan process causing a complete revision of budgets, capital projects scheduling and levels of service," the City Council said in a release on Friday evening.

"Because of the earthquake the Council is facing budget deficits of NZ$73.8 million over the next three years and is proposing an additional rate of 1.76% to pay for this, over and above the 5.32% rate increase indicated before 22 February," the Council said.

Christchurch Mayor Bob Parker said most of the NZ$2.5 billion of damage to city infrastructure caused by the quake will be covered by insurance and Government subsidies but the council would still be  faced with significant costs.

"These are unbudgeted costs and they will impact on our activities, our major projects and our finances. In addition, we are faced with a significant loss in revenue as a direct result of the earthquake including: loss of dividends from Council-owned companies of NZ$14 million, loss of parking revenue of NZ$6.9 million and loss of income from sports facilities," Parker said.

"All of this adds up to a forecast deficit of NZ$27.2 million for the current financial year (and a total of NZ$73.8 million over the next three years). It is unusual for the Council to face a deficit - over the past four years we have recorded surpluses of NZ$23.7 million - but we are in extraordinary times and this is the most prudent way for the City to cover the costs of the earthquake."

The council proposed the deficit be paid off over five years through an additional 1.76% on rates for five years, over and above the 5.32% increase forecast for 2011/12 prior to the February earthquake.

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Well said Hugh. Thanks for the updates from Chch.


Well I don't think it's well said, Amanda.

It's just the same self-serving, small-thinking, narrowly-focussed nonsense we've had from that poster, forever.

Spot me the original thought in that lot. Just one.

Further down-thread, there's another bit of nonsense - sayng that "7%" was 'too much'.

These folk aren't in the real world anymore. Anyone who just thinks his problems will be solved by getting rid of a Council, is failing to see the real limits around him. Anyone who repeats %tages YOY, is only thinking linearly - and the earthquake rendered all relativity null and void in any event.

There is less 'developable land' than there was around Chch, pre-quake. There will be higher insurance costs, and pre-verification costs, in tandem, with what is future-viable. . Unless Hughy is advocating leaving his (ain't it sweet?) precious first-home cheapie buyers to caveat sinktor - I somehow don't see developer-lobbyists offering to underwrite.......

You could take the Councl out of the picture, and the cost of energy, plus the increasing (totally associated) inability to repay debt, would still stifle his mantra.

Why can't the Governemnt print the money necessary to help Christchurch. That will reduce the increase in rates on a City that has been badly affected economically by the earthquake particularly if they require repayment of that printed money over say a 20 year period.  I cannot believe that will increase the possibility of inflation if the money is required to be paid pay back over X period of time.  What is the difference between borrowing money and printing money and paying it back? It would certainly help the Countries deficit..

And a Labour government will do just that ! ..... All of the country's problems will be solved by merely giving Goofy , Klinger & Cunny the green-light ..... and the pixies at the bottom of the Labour party garden will fire up the Gestetner printing machines .......

....... easy peasy , Patricia ...... Vote " Red " in November .....

Look at it this way Pat....would you lend money to NZ if the RBNZ started with a home grown QE you bloody wouldn't....meaning the bond buyers would crash the Kiwi$ as a Mac truck splats a Possum...QED petrol would be oh about $10 a litre...go figure Pat.

No, you haven't answered my question.  What is the difference between borrowing and paying it back and printing it and paying it back.  Why do we have to always be frightened of what those lenders might or might not do.  Be brave. Gummy Bear and Wolly you are too gutless.   It is oh so easy to see what you would have done in New Zealand in 1935. 

Ouch ! ...... below the belt , methinks . But hey , what you interpret as gutless , I see as being responsible . We're borrowing mega quantities of Chinese munny to prop up Michael Cullen's seriously dopey vote buying bribes ....... and now you suggest we just create $ 20 billion plus , out of thin air , and launch it into the Chch. economy ..........

....... well , the Forex boys will collapse the $Kiwi quick smart ! ... interest rates will go to the moon , mortgage rates will scootle up precipitously , and Bernard will finally get the property market collapse that he has predicted since 2007 ......


Hugh gives an awesome serve to the CCC , above . They are a dysfunctional bunch of incompetents . I had the misfortune of 3 months employment with them in 1999  ....... nothing has changed in 12 years . They take idiocy & largesse , and raise it to an art form . ..... rates should not have to rise by 7.1 % this year !

In simple economics 101, printing more money does increase inflation as there is more money in circulation, simple, just because you do not understand it, doesnt make it not so. 

Now in a liquidity trap and where the consumer is not spending so the money supply is contracting at say 5% per annum, printing at 2% still means a net shrink at 3%, hence no inflation.

But if we simply print, that devalues our currency and the ppl willing to lend to us demand a higher % to ocever that there is an immediate cost to the "printing" its not free....


Patricia - good thinking:

"Foreign credit is the most obvious yet also most needless form of Australian dependency today. It is created without cost on computer keyboards in Japan, the United States and Britain and lent out at LIBOR rates as low as 1% to arbitrageurs buying Australian securities yielding at least 4.50% and rising. The 2 or 3% arbitrage gain is a free ride for speculators – at Australia’s expense.

Over and above being a domestic expense, it must be paid in foreign exchange. This repayment will cause future pressure to drive the A$ back down, perpetuating Australia’s roller-coaster exchange rate cycle.

There is a widespread impression that if Australia created a similar amount of credit at home, this would be inflationary. That may be true – but it is more inflationary to allow foreigners to manufacture credit and add an interest charge that domestic credit creation could avoid." 

"Where then does the foreign lending come from, if not saving? The answer is hard for many people to believe, but it is new electronic “free lunch” credit creation. 
Australia can create credit itself just as easily as foreigners. It is merely a policy choice to let foreigners perform this task and extract income from Australia with its higher interest rates. Meanwhile, the balance of payments makes its manufactured exports less competitive, and even eats into the earnings of its mining industry. (Mineral prices are set in U.S. dollars or other foreign currency, which yields fewer Australian dollars as the latter’s exchange rate rises.) 
No nation need borrow in a foreign currency for spending in its domestic currency. Whether loans are created in Australia or at home, only Australia itself can create Australian money and credit."

Replace Australia with New Zealand and ....

Think Zimbabwe



uh nuts frankly I dont know where John is getting this idea but is strikes me as totally loopy, its backwards IMHO......Weimer was totally different, industrial capacity was taken off line by force of arms plus printing.....right now we have industrial over-capacity, significantly so.   Is John saying more money will boost production? it could to a limited degree possibly but thats been tried in the UK in the 1960s and 70s, result inflation, have you forgotten that failed "pseudo-keynesian" experiment so readily? are you that young you dont recall the mess?  maybe it was more of a UK thing? but it simply didnt work.

Borrowing could lead to inflation except of course paying it back takes the money out again plus interest so there seems to be no Inflation from borrowing. Now ppl are not spending, so even with the Govn spending more, its spending less than private spending that has been withdrawn so overall is less spending (deflation), while essential goods rise in price and while I suppose you could print a bit there is no mechanism to get us withdraw the excess money in a timely and adequate way.

.....NZ's and the Globe's situation right now is not a lack of industrial capacity its a lack of buyers.  So printing in NZ will simply cause inflation provided we are not ( in NZ anyway) in a liquidity trap, the USA is clearly, I most definately think Marc Faber is wrong....hyper-flation is a whole depression and 20+ years away...


Patricia is still re-living the "The Magic Isle of Guernsey" story GBH that we discussed to death on this site. And you're right. Day One of NZ money printing and my cash is out of here, and many others I'd warrant. But, hey, NZ can print all it likes of it's own money, then! Mind you, no one will trade with them, so I do hope they strike oil and don't want to drive imported cars.

Yes St Nick , I have this niggly-naggly feeling that Patricia has spent many years within the public service , wantonly splurging other peoples' money ....

.... It's an entirely different mind-set in the private sector , trying to create money , the honest way .......

One small point, New Zealand has simply privatised the printing of money. we now leave it all to the private sector- just about. So the flood of debt (money) that turned up  2000-2006 (approx) created massive inflation (say value of NZ dollar halved in a few years). Labour seemed to ignore it at the time.

National - Do nothing National. currently ignorethe problem as well. Key says he can do nothing about it . Therefore we can assume he would have done nothing about it in 200-2-006 as well.

WFF- National - has done nothing

Student Loans- why try to fix a problem of a massive misallocation of our most precious resource by putting kids in debt- is a bit strange really. Problem far too many people at University doing vocational training- eg accountancy. what a joke- a degree in accounting- it is a tradecraft. Learn on the job, night school exams. But not a degree really.

If you want to make people pay for their education start when it really matters. 5- 12 big learning years, if you don't go to school then, you end up making bricks for a living (by hand). So charge them for the early years.  It means the debt accures from a much earlier age- so the amount owing by adulthod is much  much bigger. Or you could commit the sin of saying that progressive taxation was a really simple way of people who got that education (at uni) pay a bit more. see no debt required at all. Afterall the actual education they get is paid out of current income anyway so the debt is really just a targeted tax. But lets face it - it is a really mean way to do it and smeels like a banker thought of it which is never a good thing.

The picking on Labour thing is creepy, they are not in government. The task is to call the government in power to account, not be a cheerleader form the current bunch of fools(whoever they happen to be) that is too easy. And lets face it- gutless.

Let's deal with the magic money for a start...Pat's pipedream would work great if we did not trade with other works sort of ok for the USA because the US$ is a world currency...but soon they too will discover the world market sees their money as used toilet paper...not in high demand!

And to claim it is wrong to point the stick at labour and blame them for 9 years of uselessness, when National are now govt and that we should blame National....this is total garbage. Bloody stupid argument is another way to put it. Yes Key and Co have been playing at making tough decisions for over two years in the hope that this time it was not different...either they are poor judges of world events and rather dumb in the economics area...or they have been given some very idiotic advice by Sir Humphrey et al.

National trapped themselves this term by promising their way to office..promising to keep the Labour porkfest going no matter what....this outcome is a judgement on the points to a "me me" mentality by too other words Labour was very successful over those 9 wasted years at creating and boosting the dependency electorate...this is the cancer Labour is what they continue to want to nurse into a permanent state of misery that promises them permanent power...They are shites.

National are only just waking up to having been dorks for two years...the reality of the world debt crisis has finally sunk into the fat between the post the election expect the govt to set about kicking arse big time...because if they revert to tweak and fiddle and hope...they will be turfed out in 2017 and we will be in deep shite.

Well said Wolly , you encapsulated in words all the shite that goes through the Gummy Numbskull in nightmares . ....

...... Labour really are a scourge , their entire modus operandi consists of keeping more than 50 % of the voters in a weakened , welfare dependent state . ..

.. The irony of course , is that it is only from the benefit of the productive efforts of capitalism , that these socialist loonies can exist . But I think that little gem is lost on them .

What is about local councils? Nelson seems hell bent on driving people away. I have a part ownership of two buildings on which the rates will have trebled since 2004 if the council have their way for next year. So far they have doubled. The buildings are unchanged commercial premises (well maintained but not improved).

They build sports stadia like there is no tomorrow, amassing monstrous debts for the children to pay when they grow up.

So what happens? The bright and capable leave town, only the retired, the fish filleters and the summer birds from overseas remain. Presumably that's what they want.


"This  Christchurch City Council has enormous scope to start cutting the fat out of the place, with some 1.300 administrative / regulatory staff at the central Hereford Street office - that is, when it is functioning."

especially town planners? Gloucester Towers demonstrates what happens when a developer puts private interest ahead of public; it sits like an elephant in the corn (two story villas), having been built through a loophole in the city plan.

"Clearly this building is not fit for purpose."

as aren't all those other big buildings owned by the private sector. Tch, tch.

"Unfortunately - the ONLY reason we have a Canterbury Earthquake Recovery Authority in place, is because the Christchurch City Council is seriously dysfunctional."

my understanding is they need special powers because multiple owners creates a log jam situation; demonstarted by CERA  giving the ulimatum to building owners re demolitions.

"Power it would appear is more important than performance and cost effectiveness."

we need to remember that the city belongs to the people not just the building owners. If we left it to the developers we would get the sort of changes our hummer driving friend who bowled the villas of Merivale produced: boxes designed by a mathematician.

some comparison shots from japan---3 month time frame post tsunami----mean while in chch it,s ground hog day|

See what I mean?

Alle same blameshift.

Council, PDK for godsake. What next?

Just face it. Energy underwrites everything. It's at least doubled in price in the last couple of years. If it drops in price, it will be because of reduced demand ie recession.

No housing will ever be cheaper than now, for that reason alone - to say nothing of the reduced options post-event.

Mind you, you already thought there was an infinite amount of land available forever, so I'll grant you it's probably difficuly to see subtraction from that starting-point.

Sorry PDK, while I agree with your view on energy, I fully support Hugh's view on the CC council and how the almagation has turned them into oversized burecracy that is sluggish and come across as totally useless when it hits the fan.  

(out of interest do the Japanese have similar types of council amalgamation?  If so then why have they been so effective in clearing away the debris and getting on with it??)

I have lived in Oxford and Cheviot which were both places that were in the black prior to the amalgamation but after amalgation found their resources greedily sucked up by the parent council and left with poorer services.

Looks like japans progress had a lot to do with the tsunami?

exactly so. Sinking into the mire every aftershock isn't  one of their problems.

Interesting to note the Urban Cowboy - Ole Johhny One-note - mistaking the building for the governance.

Or is that, mistaking the form for the function?

Remings me of our goat, trying to head-butt his hutch into eterninty. Not a lot going on there, either.

My wife's two cats are behaving seriously weird tonight. Usually they don't do much of anything besides eating and sleeping, but tonight they're like Paul Henry on drugs, only infinitely less stupid and charmless.

The only other times they've ever behaved like this was in the early morning of September 4th 2010, and before lunchtime on February 22nd, 2011.

Maybe it's just the volcano dust temperature and surreal red sunset...

Cats. See. All.

Well, it's official: even cats are smarter than Ken Ring.

Good article from the Telegraph on oil consumption

States in the US are doing that and have run up monstrious debts and are about to go bankrupt....however I tend to agree....some caps are needed, money on stadiums galore is plain crazy.


Ivan - no offence, but that summarises the nonsense very well.

Define inflation - properly.

We have gotten goods and services cheaper and cheaper, and when the increase-in-supply of real resources started to fall off, we outsourced cheap labour and pollution to - largely - China. We paid for that stave-off with debt, not productivity.

Now those real resources (Council activities are all oil-cased, look around - roads, diggers, potholes) are becoming scarce, and exponentially thus. As another poster noted, Saudi Arabia isn't building 10 new nuclear plants because it is awash with oil.

If you want the roads, you will pay more, and more, and more, relative to your ability to pay. This is what happens - no amount of wishful thinking will change that.

And - replacing Councils entirely with the lauded 'private enterprise' won't change that either.

Welcome to powerdown - whether you accept it or not.

Days to the General Election: 20
See Party Policies here. Party Lists here.