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Kirdan Lees says the idea of lower local government rates for everyone doesn’t stack up and cutting rates would ultimately be counterproductive, leading to deferral of capital investments

Kirdan Lees says the idea of lower local government rates for everyone doesn’t stack up and cutting rates would ultimately be counterproductive, leading to deferral of capital investments

By Kirdan Lees*

Many commentators and ratepayers are calling for Councils to hold constant, or even lower rates. We think that’s understandable but cutting rates will ultimately be counterproductive.

On closer inspection – without policy interventions – going too hard on rates reductions will defer capital investments that are much needed right now.

The opportunities foregone could be large – 20 times bigger than the gains from rates relief. Turning off the tap now to get rates lower merely holds the local economy back just when businesses need all the help they can get.

Instead, local and central government need to work collaboratively to do two things:

  1. Seek out borrowing mechanisms that enable and then speed-up investment in viable projects. This includes tapping into the RBNZ asset purchase scheme, securing central government funding secured against future targeted rates, or grant funding.
  1. Work collaboratively to help those most at need. This means assisting out-of-work families avoid the sting of higher rates payments by using the accommodation supplement and other existing welfare tools, continuing to use existing rates relief programmes and exploring other schemes to defer rates where needed.

Some councils need help with funding – capital spending is at risk

Local councils’ revenue streams are stressed. Councils already need to claw back falling income from user charges for consenting, parking, and public amenities and face political pressure to reduce rates. Without intervention, spending will hit borrowing constraints (see Figure 1) and force councils to reduce capital expenditure.

The Local Government COVID-19 Response Unit connect rates revenue to these debt limits:

“Hamilton, Auckland and Tauranga are the most at risk of reaching debt ceilings. For every $1 of budgeted revenue they do not receive, their debt cap falls by $2.50.”

Moral hazard matters – we shouldn’t simply bail out every council that gets close to its debt limit – that sets up poor incentives for councils to manage funds prudently. But borrowing covenants should be re-examined. The RBNZ is buying both central and local government bonds to keep interest rates low and markets functioning. A debt-to-income cap at 250% of income does not reflect the low interest rate environment and is too inflexible.

In addition, a time bound commitment by the RBNZ to purchase debt gives the local authority certainty and liquidity. Local authority debt purchases could first be funnelled through a Special-Purpose Vehicle, to allow all councils to participate easily. This provides a transparent, even hand from the RBNZ to local authorities to manage their borrowing. 

Borrowing and spending on capital projects supports jobs

Rates relief is small relative to the large capital investment that could be funded. For example, a 3% decrease in rates is worth around $200m. But $200m in interest payments would allow capital investment of $4 billion at interest rate of 5% per annum.

Tying the sectoral footprint of that quantity of capital investment to Statistics New Zealand estimates of employment suggests $200m of rates relief could be worth 1,700 jobs. $4 billion of capital expenditure may be worth 30,000 jobs – much needed for the construction sector and beyond as the COVID-19 hit to private sector investment strikes. The trade-offs are stark.

In our view, as we look down the barrel of cancelled private sector projects and widespread job losses and a slump in private sector investment likely to be larger than the GFC (see Figure 2), achieving rates relief by deferring capital spending should be avoided.

Rate reductions won’t be funded from cuts to operating expenditure alone. Councils already need to claw back falling income from user charges for consenting, parking, and public amenities. Austerity in recession does not work – councils would be likely to need to cut back significant capital projects (see Figure 3).(Note1)

Without intervention – the impacts are large

The size of the prize is large: $9.4 billion of capital projects are contained in council Long Term Plans for the year ahead. For some context: local government invested $5.6 billion last year and construction spending by all sectors was $30 billion.

The planned $9.4 billion of local government capital investment may protect 73,000 construction jobs and partially offset the economic fallout of Covid19 on the private sector that we expect to be much larger than the post-GFC fall in private investment. The Local Government COVID-19 Response Unit acknowledges the impact on jobs: 

“The combined effect of lower-than-planned rates and other revenue reductions means councils are likely to reduce some operational expenditure and capital expenditure, which will create job losses directly or indirectly.”

Council should work with central government to shield the most vulnerable from any rate increases 

Rates account for around 4% of total income for the typical household. But it can be as high as 8% of income for the low-income households. There is a strong case for targeted rates relief.

Welfare is centralised in New Zealand, but rates relief can be an immediate and localised way of looking after the most vulnerable in our communities.

We see three ways for local and central government to work together to help households struggling with rates payments:

  1. Use the accommodation supplement and other existing welfare tools;
  2. Continue existing rates relief programmes (about $55 million, less than 1% of the total rates bill) but keep a close eye on its effectiveness;
  3. Explore a scheme to defer rates that are then attached to the title for payment (adjusted for inflation) at the point of sale. This would create an asset for local governments and allow families to bridge the economic impacts of COVID-19.

Central government could underwrite the scheme to speed up implementation. A small charge - 1% interest rate might help those that need the scheme self-select in and ensure those that don’t, don’t. Limiting the length of time the scheme operates for reduces costs.

Downsides include the impact on valuations, the value of collateral banks will already be lending against. But since the scheme preserves an asset in terms of the rates lodged on the LIM, it is less costly than rates relief and could be rolled out widely.

This would create an asset for local governments and help firms and families bridge the economic impacts of COVID-19. Central government or the RBNZ could underwrite the scheme.

Cutting rates involves challenging trade-offs

At a time of national belt-tightening, local councils are set to cut their spending to moderate rates increases. Relief on rates increases will help some households and businesses, especially as job losses mount. Households are worried about their financial situation with household financial stress indicators at GFC levels based on the ANZ Consumer Confidence survey.

We should always demand that local government runs the ruler across all spending, and every investment project, to test what can be provided where most efficiently. But right now simply pushing for rates increase at the expense of capital expenditure hurts rather than helps local economies.


Note 1. The initial report of Local Government COVID-19 Response Unit “Financial Implications: Initial Analysis”, released on April 14 provides evidence on the problem definition and suggests: “The overall impact is likely to be a reduction in the ability of councils to fund existing planned work, or to bring forward “shovel ready” projects to help stimulate the economy.”


*Kirdan Lees works at boutique economics consultancy Sense Partners.

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56 Comments

I'd like to see genuine cost savings to fund projects, not a policy of borrowing and charging more when clearly there are many inefficiencies which need addressing.

I'd also like to see a buy local policy in place. Its imperative any spending we do incur is recycled in our economy, not for example purchasing large amounts of China manufactured product.

Finally we need to consider professional management of local councils assets e.g. Auckland Port, stake in Auckland Aiport etc. I dont have much confidence in beaurocrats with no investment or business experience taking any role in capital investment or sales decisions in these assets.

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Those blokes at AT had that buy local policy and look where it got them.

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You might want to rethink this. Auckland airport is run by business people and quite frankly the incompetence is stunning.

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I have been using Auckland Airport for 30 years. Not a single time I have passed through it when some part of it has not been "under construction" with white boards and the sound of power tools in the background.
Don't they have a mster plan?

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"like to see genuine cost savings"
"like to see a buy local policy in place"

How can you make those two conflicting statements in the same post? Restricting your supply to local monopolists is no way to lower costs.

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"we need to consider professional management of local councils assets e.g. Auckland Port, stake in Auckland Aiport etc."

I guess you have no idea how little control of these assets the council has. All controlled at arms length by "professional managers" i'm afraid.

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Coromandel council wants to up its rates by 10%..no joke..they blame the rubbish collectors they hired charging them more to pick up rubbish..apparently they never actually had a hard and fast contract????? 10%...seriously. People heads need to roll over this blatant disregard of ratepayers monies. Wait till the new Rateable Values come in and property values have declined possibly 20%..what then with possibly 20% unemployment???? They'll just come up with anew way of rating properties I guess to keep the money flowing for their consultations and conferences.

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Property values have absolutely no impact on how much money the council gets.

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I'm not sure councils have a future in their present form. Not a lot of support in the communities they are meant to represent.
https://www.stuff.co.nz/national/politics/local-democracy-reporting/121…

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Yes, many have blown the trust that communities should have in them. No CEO of any council in NZ should be on a greater salary than the PM, nor even a senior Minister for all that matters. They are non-elected public servants, not corporate business tycoons. They are contracted for 5 years, I think, then both their employment and their salary must be reviewed.

If I were CG, I'd legislate a mandatory salary scale for CEOs - with brackets based on council revenue. Pay rises no more than inflation. We need to knock the stuffing out of the bureaucratic elites in that sector - only then might they return to having a public sector ethos.

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I would be more charitable about this angle had councils demonstrated any ability to make the sort of savings they promised we'd get (super city amalgamation efficiencies, anyone?) and didn't have a track record of charging above-inflation rate increases year after year during the boom-times.

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You do realise that there would have been a need to increase rates beyond inflation precisely because of boom times? Infrastructure is not cheap. Growth is expensive to service.

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Yes, but the ratepayer no longer has the wind at their back to absorb rate rises above inflation. Yet no matter what the circumstance, they are expected to year after year. Boom? Rates rising faster than wages. Bust? Rates rising faster than wages. A gentle south-westerly on a frosty winter's morning? Rates rising faster than wages.

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Well they shouldn't have been wailing like banshees during the good times when they were making bank.

If anything we need to be bringing in land tax so that those who can afford it help fund the recovery. Those sitting on landholdings will be forced to be productive with their landholdings and those who aren't are forced to sell to someone who will occupy productively to improve NZs productivity and reduce rents and land values.

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You have completely missed the point of most of the Posts
We don't want or need higher taxes, just more accountability for the spending of current revenue.

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No I got the point. Different taxes have different incentives and different economic impacts. We need higher land taxes and lower taxes on productivity to shift the incentives away from land hoarding and towards productivity. And we are definitely going to need the rich to carry their share of the burden on the way out of this crisis.

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Higher taxes coming. So spend when the higher rate are there.

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As a former (pre-1989, so old-world, prudent-rural-Council) LG Treasurer (no fancy CFO titles back then) I have been quietly appalled at the way in which staff have usurped Councillors.

Part is structural: Councils employ a CEO, who then employs all otjher staff. So there's an instant disconnect. Councillors tend to be actively discouraged from interacting with staff ('Policy, not execution', 'Governance, not Management' tend to be the shibboleths).

Part is the 'argument from authority' - a fallacy which nevertheless traps many a Councillor into a place whence no real push-back against even plainly loopy staff initiatives is possible.

Part is Council groupthink, especially when essentially tribal voting blocks have propelled 'their' councillors into the fray and proceed as if the 'others' are anathematized.

And part is the huge information and power disparity between staff, and the councillors, committees and especially the public. Taking on City Hall is a losing proposition, so most simply don't bother.

Staff attitudes to councillors can be summed up as 'vote-hungry show ponies around a very distant table'. Who can be and thus all too often are ignored. Calling for 'a staff report' is a recipe for getting handed 'what the staff always wanted', but suitably obfuscated so as to survive the limp surveillance of Der Public, and the occasional inquisition from the latest unpaid intern reporter in a local tabloid.

Against this background, and the 'four well-beings' power of general competence (Sec 10(2) LG Act 2002) it is only to be expected that there is little to no hope of effectively managing increases in Council spend, let alone reducing it. Bureaucracies are remunerated by numbers of staff managed - a built-in growth incentive. It simply hasn't occurred to any of them that there might be Limits to Growth. Or that (as in the older models) significant pools of expertise lie outside the staff echelons, can be tapped for free via committees and co-options, and can thus serve the dual purposes of keeping community connections, and deepening the intellectual horsepower brought to discussions.

So the article's fond hope that "We should always demand that local government runs the ruler across all spending" is quite impracticable, and has been increasingly so for three decades. We are all strapped to the Rates Rocket, every year the uplift increases, and few of us have any trust left in the edifice it's funding.

Maybe the WuHuFlu might be a circuit-breaker in this dismal progression. Maybe the engineers and other unexcitable types on staff might club together and persuade the Event Managers, Tourism Promoters, Community Engagement Fluffballs, and all the rest of the 'Social and Cultural Well-being' parasites, to gracefully yield their comfortable, secure and marginally useful positions in order to fund the unexciting requirements like sewer replacements, well-head securing, bridge strengthening, and public building earthquake-hardening.

But I wouldn't bet the rating tax base on That happening in my remaining lifetime.....

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First time in a long time we agree.

I was an elected CC same era. Used to purposely vist staff after meetings, sit on their desks and listen. Was very useful, both peronally and informatively.

Not allowed now, CEO's in the neoliberal era are second only to gods. That will change, but so much will change we may not notice.

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What a fantastic report Waymad!

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Encore Waymad.

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I don’t mind paying for infrastructure. I do object to continually paying about inflation to support the obscene bloat in Auckland Council. The mayor and other elected representatives are in thrall to unelected bureaucrats.

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Couldn't agree more, but it really does need to happen within our lifetimes. It's a totally unsustainable community where the largest and best paying employer is the local council... and there are sadly many a community in NZ where that is the case. That simply cannot go on.

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As with the DHB's I think there may well be a Great Reset of the number and distribution of authorities - Councils, Regional's etc. It's simply nuts to have small authorities, each with their own fiercely guarded C-suite, systems, Plans etc - all somewhat inconsistent with each other (District Plans....) - all claiming to be Diffrunt, Speshull, and thus entitled to defend their fiefdoms until Kingdom Come. Whereas in the commercial space, large verticals and franchises tend to have a single shared or multi-tenanted set of systems, extensive supply-chain links via EDI, superb logistics etc. I did some work for a well-known retailer a decade ago, and at that stage, they were doing a weekly forecast of sales for every SKU (around 10,000) in every product category across 100 stores, 3 countries and 3 currencies, complete with expected delivery dates from logistics, landed costs, margin, and local RRP. Councils and DHB's may be able to approach this sort of performance in the best examples, but I suspect the majority are still emailing Excel workbooks around.....which is what the Verrall report found re contact tracing.

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Food for thought.

LG restructure should be in line with Super Rugby regions - total 5 local authorities.

Community boards should be in line with existing district/city council boundaries. Community boards should oversee local plan making (RMA plans having been largely written by CG template). Strict controls placed on what can be amended to accommodate local overlays.

CG needs a new MoW-type department to handle all work associated with water infrastructure (water, waste water, stormwater).

LAs remain responsible for local road works, social/culture asset management (playgrounds, museums, libraries, sports grounds, etc.) and solid waste (rubbish and recycling).

Public transport functions should be managed centrally, perhaps by expanded mandate for NZTA. And natural resource management functions provided centrally by an operational arm of MFE.

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Good outline, Kate. One of the saddest aspects of the post-1989 TLA environment is the complete shutting-out of ordinary folks from the business of maintaining their own tiny pieces of the puzzle. In a former life, as well as being a Councillor on the Otautau (pop 3,000) Town Council, I was on the roster of volunteers who ran the local swimming pool. As a County Treasurer, I attended numerous meetings of committees for Water Races, Reserves, Halls as well as the usual Council committees and sub-committees. These all served the triple purpose I outlined above: doing Useful Stuff, keeping strong roots in the communities they served, and adding on-the-ground expertise and voices. Nothing like this now exists, and one obvious result is the complete disconnect between the behemoth Councils and the populations they serve. It doesn't take degrees in horticulture to maintain a local garden, keep a local reserve mowed, trees trimmed etc. Time for a re-connection.

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There's a good tv comedy in there somewhere. It's a shame we can't laugh at ourselves any more.

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It is not time to cut genuine investment in infrastructure projects, but it is high time to cut the immense amount of wasteful spending that many Councils (especially Auckland) have indulged in.
Flocks of consultants, middle managers, coordinators, marketers etc. should be sacked as soon as possible. Councils should focus on the real priorities: the real economy is suffering and it will have to go through a painful process of restructuring and ruthless pursuit of efficiencies: it is high time that Councils did the same.
The Auckland Council should immediately remove any future rates increases and focus on cutting wastage, including reduction in personnel and in projects of dubious utility. Moreover, an immediate and general cut of 20% of any salaries over say $100,000 p.a.and maybe of 10% for salaries between $70,000 and $100,000 p.a. should be done immediately, out of decency and respect for the Kiwis employed in the real economy. Any salary increase should be frozen immediately for all Council employees. The so called SuperCity has been a joke: no real cost cutting whatsoever, and ever-increasing rates.
Stating that "cutting rates will ultimately be counterproductive" is pure BS and completely disingenuous: it would be counterproductive only if it was done at the expenses of real investment and real services, NOT if done by accomplishing genuine wastage reduction (as politically unpalatable as it may be). They say "we are in it together" - this applies to the Councils as well, and to their cushy jobs sheltered from the real life of the markets and the real economy.
Moreover, the statement "the Council should work with central government to shield the most vulnerable from any rate increases" is again very disingenuous: the Council should work towards making rates affordable for everybody, and the Government's role should be that to support the Council employees made redundant, through the usual public welfare channels. This is not the ratepayers' responsibility.

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Excellent comment!

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Brilliant! Continuous improvement 101!
And you don’t even need one consultant to do it.
The issue is, you can’t educate those who don’t want to learn.
Surely Phil has a few more donation dinners lined up to fill up his goffers.

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We need to really take a breath (and not increase rates) and see how the ratepayers (the bill payers) are coping in the later part of 2020. That will provide an indication as to how much money they still have left in their pockets for non-essential council business. Prices for infrastructure should go down (as happened 2009-2012), provided too much work doesn't flood the system, allowing some savings here. Some parts of NZ (Queenstown) are likely to be more affected than others (Auckland).

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Agreed, it's so easy identifying where the input come from when we're talking about F.I.RE economy.
Always advocating the strength part of RE, constructions, leveraged looses to future tax payers bail out.
https://www.scoop.co.nz/stories/HL1507/S00101/the-fire-economy-new-zeal…
https://www.youtube.com/watch?v=MGrBCtOt4Qs
On her speech above? she's just too kind to mention name, but any of those rationale persons? can ID them

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I suspect that your CCP-NewZild transmogrification bot has a bit of a cough. It's certainly sounding a bit strangulated. Perhaps a swab for the WuHuFlu is indicated? Wouldn't want the poor thing to sicken further - it's been a wonderful source of amusement since its appearance on these august pages lo these 5 months, 1 week....

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Perhaps we should introduce a new cast system determined by how many years a person has been commenting on interest?

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Another account Mr Chaston should look at disabling.

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I left that for US & OZ to do the trick, here's another council rates that might be of interest to you, exception?
https://www.stuff.co.nz/business/121150004/scenic-hotel-group-mothballi…

Glad as intended to entertain, amuse peoples in this lock down period, as BGM=Bright Glitter Messiah - after all. You really don't find it fancy what ones do for living specially to break bleak news.. usually in months, of the remaining individual life time. Apparently, interest still keep my rants specially in the accuracy of RBNZ moves, so? it's not far from the regular deadly accuracy illness findings.. literally.

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I'll meet you half way by fully support local government now investing any reserves they have accumulated through prudent expenditure in boom years of the past decade.

It is, of course, a cruel joke in my part but illustrates why the public have less faith financially in local government than they do in Nigerian princes.

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But, but, but....Buskers!

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Nothing about councils cutting costs here?

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I hope this is going to see council go back to their core responsibilities, rather than vanity projects and follies. Key infrastructure and replacing old infrastructure...yes.

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Sad article. Just seeks to shift the costs about. (Central Government might pay ? That's an oldie.) But not one idea of cost reduction, which anybody but the author can see is readily available.
Conversation yesterday with a Dunedin City Council staffer. "There is always something to be busy with at council. But it does not produce anything.""

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What planet does this man live on ?

Clearly he is not on planet earth right now , and ....................let me take a bet ..................he works for the Government likely as a "consultant" a euphemism for someone full of hot air and expensive impractical ideas , who swans in and out of the ministry charging big fees and adding little value ,.......... so another half-witted academic economist who has never had a proper job , created a job , made a buck or paid a salary.............and his income is g'teed

Does he not realize that tens of thousands of families are likely to have no income whatsoever , how can he even suggest that there should be no rates relief ?

It would be patently unfair to give rates relief to people who were on welfare before Covid , things have not changed one bit for them , they were doing bugger-all before the lockdown , and are still doing bugger-all all day right now , as we the employers fret and worry ourselves silly about what is going to happen next

Those owner -occupiers or property who are going to default on their mortgages are only part of the problem ............. thousands of renters will not be able to pay rent , and cause their landlords to default on their mortgages

Clearly Lees is not in touch with the reality facing ordinary Kiwis .

Does he not know that the cost of money right now , much the the price of oil, is close to zero , and councils can issue 30 year bonds at very low rates to build infrastructure and for capital projects ?

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Well, sad Boatie.. once you've dealt with them (proxy actors/actresses) in Councils, DHBs.. the soft tentacles at their disposals? always $/vested interest/hidden commission/secure cash gift grant (disperse in legal items, but at inflated price), may be? if you push this link.. he'll make an exception? - just for this one, then gone back to background.. do the same again, with 'consultancy level'.. you can always analyse the point of contact, as how 'Covid19 code injection via it's adaptable Corona' to the host/body protein.
https://www.stuff.co.nz/business/121150004/scenic-hotel-group-mothballi…

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Yes well said Boatie. This writer is showing all the signs of typical journalistic bias - suck up to the authorities, keep the proles in their place feed them on BS and keep them in the dark. all the while telling them how important Government is. Rubbish - Government, and currently it appears more Local than National, needs to understand their constituencies have had most of their income vanish. Their regulatory authority that allows them to tax is about to hit a brick wall of constituent anger.

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Beautifully said, Boatie!!! I could not agree more. If I could, I would upvote your comment 100 times.
I also completely agree that Lees is not in touch with the reality facing ordinary Kiwis, as you correctly said.
This article is almost offensive in ignoring completely the reality facing them. It is ordinary working Kiwis who are keeping the economic boat afloat, nobody should ever ignore it: it is NOT consultants, marketers, spin doctors, strategists, pen pushers, welfare recipients and the likes. Clearly this article reflects some vested interested, and it is appalling in its disingenuous approach.

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In the distant past, say a hundred years ago, councils funded assets such as libraries because without that funding the population would have had no access to books. In our IT age that justification no longer exists, yet try telling the local council that they shouldn't be building a $x million new library and you will be howled down. Councils have become hooked on the growth at all costs mantra. None of them has the basic honesty to say to developers and the like " No, you can't do that, we don't have the resources to support that, go somewhere else" Instead, they are open to all comers regardless of cost, which they know they can foist onto ratepayers.

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We do need libraries.
But we do not need perfectly good old libraries to be pulled down and replaced on some very very weak excuse.

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Look frankly I could go through these councils and there would be no rate increases for possibly years.
The CEOs and all there mates would be gone, same goes for consultants, 75% of middle management. GONE. A bonus paid if you kept staff levels below X, if you don't gone.
Then a good yarn up with the people on the ground, how can we do better...

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Come on guys, all work together, let the Councils employ us all, then they can tax and rate us all beyond all comprehension, as they can Build up Capital Buildings, all the way to the Sky and House our worthless selves, to work from Home and mail each other and stamp our passports and whatnot by Robots who can effectively work for nothing Auto-mate each and every desire to be entirely free of income and print all million dollar and trillion dollar notes to repay debt, that we do not need and Virgins and other Overseas Airways certainly do. We can borrow and recoup and split and share and continuously.. Or maybe buy a Fiat....before the wheels come off.

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In my view its time to depart from the local, regional and district models of local government entirely. Same with DHBs and all other aspects of administering the Country. The approach belongs in the mists of time when communications, travel and resources were far less readily available. Why does Hamilton City Council have an office full of executive level staff with the CEO topping out at over $400k per year within stones throw of another set of staff at regional and district offices on similar money? Can it not all be integrated nationwide and funded at a national level instead? Abolish rates entirely and increase taxes a few % instead. Standardised processes and systems nationwide would be a huge step forward. Thoughts?

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Back-end shared services for obviously technologically backward authorities (DHB's, Councils, Regional Councils, Polytechnics - not all but certainly not none) has been talked about in a desultory fashion for two decades, ever since it started to become apparent that some were - well - Backward. The only actual move in That direction has been the Polytechnic sector. Much of the WuHuFlu tracking dilemmas, as evidenced in the Verrall report, can be traced back to too many such data sources. That report quoted the fact that some were emailing data in! Backward doesn't begin to describe it. There are systems like Orion which have made their squillions by patching together all the disparate systems inside health, but within the DHB boundary only. An erquivalent needs to happen between DHB's, or a re-centralisation, or regionalisation: all of which would get these bodies somewhere close to where the big verticals (FMCG etc) had managed a decade ago..... And, but of course, Councils too....

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You are right. I've done my fair share of business with local bodies over the years and I have concluded that they are ample picking grounds for opportunistic corporations given that there seems very little in the way of national procurement for any of the local councils etc...which I don't think is a very ideal situation. Problem is...how does one solve that problem?

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This is exactly what is wrong with councils and their tame consultants: "Rates relief is small relative to the large capital investment that could be funded. For example, a 3% decrease in rates is worth around $200m. But $200m in interest payments would allow capital investment of $4 billion at interest rate of 5% per annum".

I think it is absolutely wrong to make this comparison. Imagine if householders behaved like this! Spend money you don't have till the cows come home and pay compound interest to infinity.........irresponsible is one appropriate word to use. I'd like to see these councils limit their rates rises to no more than the increase in the ability of ratepayers to pay rates. No matter what, just do it, make it happen. Yes, cancel stupid projects, take a very sharp axe to parasitic consultants, and cut all waste everywhere. Do it!

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I wonder if some councils will be offering to take equity in peoples homes who can't afford to pay rates. Almost like a reverse mortgage.

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Possible already... Don't encourage 'em.

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.

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