Thursday 1 March 2018
Hamilton City Council’s 10-Year Plan goes to public consultation later this month and Mayor Andrew King says uninformed commentary and unwarranted personal attacks are confusing the important issues for the community.
“The facts are clear. We are not covering our everyday operating costs from our everyday revenue, and we have not been for some time. We need to fix this. I don’t think we should leave it to future councils and future generations when the bill is only going to get bigger,” Mayor King says.
“Unfortunately, the 10-Year Plan debate has led to a lot of uninformed comment, including in the media and on social media. This has also included personal attacks on our Chief Executive Richard Briggs and untrue, unfair and unwarranted comments.
“I have no doubt some people prefer to sling mud rather than try to research the facts, but negative comment and innuendo about how our finances are reported show a lack of understanding of the true situation and the Council’s processes. Councillors have been thoroughly briefed on our financial position and Councillors have voted on the way forward.
“We have different ways in which we measure our financial performance. We have a legal requirement to show our position at a point in time from an accounting perspective and we also have measures which give a better indication of where the city will be in the future. Our previous financial measures were not giving a true picture of the impacts of growth on Hamilton.
“Last year this Council voted to report our financial performance in a way which takes into account development contributions and other factors so we don’t end up spending money which we will need later. It’s a sensible way to budget.
“It’s like being given money to put an extension on your home in the future. If you treat that money as regular income and spend it on your rent, power and fuel you won’t have that money when it’s time to build the extension. Instead you’ll have to borrow to build it. We need to be clearly able to see what our future responsibilities are.
At December, from an accounting perspective, we had a surplus of $22.8 million. But when we apply our measure, which strips out a number of items including monies committed for future purposes (the house extension), we can see we actually made a loss of $1.4 million. In the end we haven’t lived within our means, we have borrowed to pay day to day costs (the power, the rent and the fuel) and have been for years. It has to stop.
“This Council has done a lot of work to show the true picture of where this city is financially. It’s work that has to be done because our ratepayers need to know.
“I want to be absolutely clear this 10-Year Plan is being delivered with the best information we have ever had. Richard and his staff have done an outstanding job in clearly identifying the issues facing this city and how we got to this point,” Mayor King says.
“Richard raised his concerns with me about the sustainability of our financial strategy late in 2016. He brought information back to our Council in March last year which has since been endorsed by independent experts and external consultants.
“The inclusion of development contributions in the 2012 Balancing the Books measure improved our financial results, but it was masking our actual everyday costs and income. We weren’t balancing our books – we were losing more and more each year.
“The financial strategy set in 2012, and re-affirmed in 2015 is now unsustainable. This strategy was set by the Councils of the time. It is the role of the chief executive to deliver the strategy approved by the Mayor and Councillors, and Richard has done exactly what he was asked to do.
“Now though, we are showing our financial position with an appropriate adjustment for development contributions. This is the measure our Council voted to use. This model clearly shows we are not getting enough revenue to meet our everyday expenses.
“All of our financial information is reported in our annual plans, but we have been measuring our performance against the strategy set by the Council in 2012 and 2015,” Mayor King says.
“If the city had remained in a period of low growth, with relatively low development contributions, this strategy could have been continued.
“But things changed. Growth levels in recent years have been far higher than expected, bringing higher operating costs for the city. Because our rates were already not covering our costs, the bigger we got, the more money we were having to borrow.
“On top of increased expenses as our population has grown, we have faced large cost increases due to changes in legislation, health and safety requirements and seismic repairs. Less spending on maintenance has meant more expensive urgent repairs. The chickens are coming home to roost.”
“This is not a situation caused by any one person, or even any one council, but we have an opportunity to deal with it now. This 10-Year Plan sets out a strategy to get it sorted. Our communities need to understand the issues and make informed comment on how we take our city forward.
“I hope, and trust, this discussion will be based on facts,” Mayor King says.