Councillors may reject rates plan

As I mentioned in my response to the above post, there's no reason why rates shouldn't average at inflation over medium to long terms - some years it will be higher, some lower.
In fact, it's not sustainable to continue to increase rates over the long term at a higher rate than the incomes of the ratepayers - which after all will be increasing on average at the inflation rate.

Sadly, the city's rates have been increasing faster than the incomes of those who have to pay them for quite a while now.
If the city wants to build something big it should reduce it's spending for a few years before to save for it, just like you or I would, and the continue to reduce spending until the project has been paid for.

The real problem is that we have a council which is profligate with our money - they should stop paying for one thing before start paying for something new. Really we need a bunch of our canny Scotch forebears holding the purse strings rather than the current mob who seem to think their job is to spend money rather than carefully manage it.

Maybe we need to pass a constitutional limit on our future councils requiring them to keep running 10 year rates increases to match inflation.

Yes, rates increases should average over 5 years or so to inflation. Doing this doesn't mean the city can't do new big projects, just that it must wait to pay for the old ones before it starts on new ones. After all, the current rates already include the increases over inflation from many previous years - they are cumulative.

The council's current plan to increase rates by 60% over the next decade isn't just an increase of 60% for 10 years - it's not going back down by 60% (less inflation) after 10 years it's an increase by 60% for ever and ever.

Increasing rates this way is not sustainable - if the councilors want to increase the amount of money they have available to spend they need to grow the city's economy and it's rating base - not just hit people up for more and more money.

If inflation is applied to costs, to maintain just the current capabilities of an organisation, this is the minimum increase in charges needed. It really is that simple.

If you do not adjust for inflation, there will have to be cuts in spending. To do less would be a backward step.

Increases above inflation account for new projects, passing on supplier increases above inflation and so on.

If we plan for 'something new' then 'borrow the money', that does not preclude the need to pay the money back. In essence, it will be paid  back at a rate that will be inevitably above inflation costs.

Inflation is also a driver of interest rates. When it is high, interest rates go up to squeeze the supply, When it is low, interest rates are eased. The application of the Reserve Bank Act controls this movement in our system.

Of course any cost increase "matters", but are you suggesting that organisations and companies, should continue to absorb their increasing costs for inflation and supply, without passing them on to the customer? This is financial suicide for any organisation, and leads to the day when they can no longer operate due to accumulated costs strangling them.

Another major cost is staff salaries. If salaries for staff are increased at a rate above inflation, due to falling behind market averages, then this also needs to be accounted for. Are you suggesting this cost, should also just be "managed", by keeping council employees to low salaries? This type of 'management' leads to inevitable high staff turnover, dissatisfaction and instability.

Nobody enjoys increasing costs, but any entity, whether it is a private or public, cannot absorb cost increases, for whatever reason, forever.

Increases above inflation are good, oherwise we face stagnation? And anyway, 2% - 3 % above inflation is peanuts? What an interesting point of view.

For a city there should be no need for rates rises above the inflation rate. And no, this does not mean that nothing new ever gets done. It means that the city finances would have to be well managed. Major projects could be undertaken with money borrowed for the purpose, and when they were paid off another major project could be undertaken.

The amount devoted to paying for major projects would not be such that the core responsibilities of the council would have to be chopped back. There would be no need to find ways to charge extra for basic services, with those charges also rising at a rate greater than inflation.

And for a ratepayer, is an increase of 2%-3% above inflation really peanuts? If so, it surely doesn't matter if groceries, fuel, prescription charges, school fees, telephone and electricity also rise 2%-3%.

To be sure, it won't matter if each of us gets a pay rise of 2%-3% above inflation.

Yet it seems that there is always a snag no matter how hard one tries to work out the perfect system. The trouble with that one is that then the rate of inflation would increase even more.

Throughout each year, our councillors choose to spend our money on all kinds of wasteful projects. When it comes to this time of year, they all have a personality change; they talk about being frugal and decide that they care a lot about Dunedin's renters and ratepayers.

In The DCC Annual Plan pantomime, we hear of the heroic efforts to minimise the rates increase, and there is always the small decrease they struggle to achieve to provide the happy ending.

The unhappy part comes after the annual plan, when the uncontrollable spending continues and the debt mountain gets bigger, and when the first rates demand arrives in our letterboxes. These are the things that count. [Abridged]

The stadium would only be an economic development initiative if it actually developed the economy - to do that it would have to leave more wealth in the local economy than it took out of it.

Given that it's almost all being paid for by local entities, the vast bulk of the money used to build it  - 80% to 90% - is leaving the city (don't forget to include that $109m interest bill to the Aussie banks).

So the local economy is going to be down about 80% to 90% of ($359m-$15m) or $275m over 20 years.
For the local economy to break even over the stadium it has to bring in at least $275m from outside the city over the next 20 years. That's about $14m a year.

Given that the council has said that the stadium is expected to make less than $200k per year (including money from local sources) it seems unlikely that the stadium is an economic development initiative - if anything it seems to be an economic depression initiative to the tune of about $14m per year.

Any council service you use that you do not pay the actual cost for is a subsidised service - subsidised by those that don't use it. This includes the tiny minority of Dunedin, that use buses, museums, art galleries and swimming pools. 

That's what we've been trying to say. That the most heavily subsidised facility, i.e. the ForBarStad, used by a minority (if anyone at all) must be able 'to pay it's own way'. Common sense.

How on earth do you know the rates will really go down? After all, what we're doing here is reacting to some political posturing by some councillors - if you haven't noticed, it's election year.

Expect a lot more of this in the coming months.
After all, these are the same councillors who got us into this mess of debt in the first place - we can't really give them them the credit for trying to fix a mess of their own making. They shouldn't have let it come to this in the first place.

There are other ways to grow the what the DCC does, but to do it right you have to grow the rates base, grow the economy - don't just sneak up behind ratepayers and rifle their pockets. In the meantime, we're going to have to cut back on lots of things while we pay for the councillors' stupid stadium.

We are told by 'William' the stadium is an 'economic development' issue. If this is the case, where is the much-vaunted private funding, promised at the stadium's inception? How can it be 'economically' viable to increase rates/rent and council costs and introduce water metering in order to pay for something that we have been told will only earn a profit of $222,000? 

That is a non-growth, non-progressive scenario, where nothing is upgraded or improved over, say, a 20 year period. 

Next year's "10%" increase is not happening.  It was stated in the ODT article the increases were between 5% and 6%. This is about 2%-3% above inflation. Peanuts.

All sports clubrooms located on council grounds pay annual ground rentals/leases, just as any business would. No subsidy there I'm afraid.

Where a club is located on DCC grounds items such as cricket wicket and rugby ground preparation, if undertaken by the DCC, are also charged for. Even watering the ground for hard surfaces is an additional charge to the club. So they do "pay their way".

Unlike the other "adult" facilities,  such as the art Gallery, buses, and museums, which are heavily subsidised for a minority of adults users.

Perhaps they would consider "paying their own way".

Throwing money at sports facilities and fitness promotions can do only so much to make people become fit. They have to want to do the activities.

Where there is publicity telling them they should be active, but doing it goes not only against a person's habits but is also inconvenient and costs too much, the advertising ends up only preaching to the converted.

The sports facilities cater only to those already involved in sports.

A good commonsense look at safety laws is needed - a careful evaluation of whether laws designed to remove the risks of earthquakes, disease and injury are counter-productive in that they remove opportunities. Sometimes they raise the costs people face to enjoy the healthy activity of their choice  far beyond affordability.

Risks must be balanced. Rule-makers for one cluster of risks are tasked with eliminating one cluster of undesired effects, but their brief does not include an overall view of the health effects of their overprotectiveness.

Accidents are dramatic and newsworthy. Gradual obesity and unfitness and physical weakness only show up in surveys, and these lack the urgency of a report with photos of the victim.

Their impact on an individual's well-being and their cost to society per affected person are high, but they come under a different heading from accidents so the anti-risk rule-makers do not have to take them into account.

I think NZ's obsession with introducing a stringent rule against anything that has ever contributed to harm is doing more harm than good.

The funding that people are talking about cutting is related to the promotion of physical activity. If it is in the form of an organised sport, so be it. But the funding is about 'activity', not just sport.

The 'r' in Sparc stands for recreation in all its forms. 
You're absolutely right that those who "choose" not to participate in physical activity won't reap the benefits. But who would intentionally take a path that is of serious detriment to their health and burden an already overloaded health system because they prefer eating all the pies to taking some regular exercise?

These are all very good comments about what sport does for a community, but they miss the point that local government should not fund such initiatives. These are central government issues, and the DCC's committments are simply welfare projects.

Spend time helping lobby for the central government funding, but don't spend local dollars on these.
On the other hand, a stadium is an economic development initiative.

Sport is only one of many types of physical activity, some of which are leisure-time activities e.g. gardening and walking the dog. Others are occupational e.g. builders, posties, painters & decorators, and cleaners. It is only sport that gets steady, lavish funding support.

Sport is indeed of "dubious benefit" to those who choose not play it, and statistics appear to support the view that this is the majority.

Watching sport and arguing about who should be the coach may indicate a strong interest in sport, but not the kind that improves physical fitness.

"Exercise" takes many forms, most of which get scant funding.
In some cases, it seems as if forces are working hard to limit opportunities, such as the unrealistic rules introduced for notional safety, in the absence of identified real-life problems, regarding school and community swimming pools.

How many of these popular community facilities have to be lost before someone wakes up to the fact that it is better to have children learning to swim and people of all ages exercising regularly in their own neighbourhood facility than it is to ask them to make infrequent visits to Moana pool, discouraged by distance, cost, crowds, "serious" swimmers and inconvenience?

I think we should continue to fund playing grounds for school sports - but clubrooms, which are basically private clubs, should pay rent and rates just like any other bar. The city has no business subsidising adults who can pay their own way.

Funding sport or recreation in a community is, without doubt, a good investment. Some years ago, I heard a great analogy - it was said that the provision of playing grounds in a city could be viewed as the purchase of hardware, while the provision of programmes to increase active participation using those grounds or facilities was similar to purchasing the software. Neither is any good  without the other.

What this council, and some who contribute to these posts, seemingly cannot understand is that the provision of a stadium to hold professional rugby matches has absolutely no connection with sport, but every connection with buying into the entertainment business.

Spending this obscene amount of money to encourage ratepayers to go somewhere and sit and watch a game of professional rugby has nothing to do with community health.

If the council had been serious about community health, it would have fast-tracked the Logan Park development, ensured that the many amateur codes that used the ground were funded to increase participation, and ditched the stadium currently under construction at Awatea Street.

We've made a  $360 million committment to fund sport for the next 20 years. They've had their share. I think we should reduce the funding of sport in Dunedin to help pay for the stadium. It's the same people, so at the worst such a change would be neutral to those it affects.

Ideally, our rates increases should, on average, be the same as inflation - for every year the increase is higher than inflation we should have years when it is lower. If that's not the case, over time our rates will rise and rise and rise compared to our standard of living.

Sadly, as the ODT showed us the other day, our council has a ten year plan where every single year the rates will rise at equal to or enourmously more than inflation. Over 10 years, a 60% increase

A 3% increase above inflation is not a good thing. Because that 3% increase isn't just for this year, it's for ever. Next year's increase of 10% will be over and above that again.

if I were a union asking for pay increases of this size, or a rise in the minimum wage (so I could pay my rates) I would be shot down by the government

The upgrade of the treatment plant at Tahuna is required by law to satisfy the requirements imposed by the Otago Regional Council. Deferring the upgrade is not an option.

Altering the current design is an option, providing it meets with ORC approval, and providing it will continue to meet the required standard when the next resource consent expires. The DCC does not hold all the cards with regard to this project.

Sport benefits an already overweight, sedentary populace by encouraging all people, young and old, to lead healthy lifestyles. As far as Sparc funding goes, if Sparc would fund these initiatives fully, the council would not need to step in and provide top-up funding.

As it is, they fund the promotion of physical activity as a normal part of life, which can hardly be described as having "dubious" benefits.

Community funding is used to fund events and initiatives that would otherwise not get funding from other sources.

There is no correlation between the empirical evidence and your view that sport and exercise is of "dubious benefit" to the majority of ratepayers.

I imagine the "majority" would see many benefits from physical activity, and enjoy much longer active lives because of it.

I have just 'caught this' after coming in from the council meeting. Sorry (or should that be pleased?) to say your prediction was well wide of the mark, simply because your perception of what you think I have said previously is wrong.

I have never referred to the Tahuna project as "Rolls Royce". What I have said is that we should not accept "Rolls Royce solutions" (to this or any other project) when Honda (or Toyota) ones will more than do the job at lesser cost.

And that has been my consistent approach since I led, as mayor, the council that initiated the 20-year programme to upgrade the way we collect, treat and dispose of wastewater (or sewage).
Cheers!

Well done to the current council for reducing the predicted rates increase to no more than 3% above inflation. Inflation is 2.8% and it's predicted to go higher, so the minimum increase I would expect is this figure, just to maintain the current position.

For the economically-challenged, this means that if we don't increase by at least the rate of inflation, our financial position goes backwards.

As far as "value for money" goes, for around $32 per week - less than $5 per day - I get my rubbish collected from my home, roads to drive on that are sealed, footpaths to walk on, traffic safety initiatives, Botanical Gardens, parks and reserves to enjoy, clean water supplied to my home and raw sewerage piped away for treatment.

For the fundamentals of life. I think that truly is value for money.

And we were told that the stadium wouldn't affect other projects and the day to day running of the city!
My prediction: Mr Walls will suggest cuts to the Tahuna upgrade. He's referred to it in the past as a 'Rolls Royce' project, and tried on numerous occasions to have it removed or altered.

I believe substantial cuts could be made in one of the operational areas of the budget - the area known as community life.
The council spends nearly $12 million a year on community development and support and $8.8 million on sport, recreation and leisure. A lot of this is just funding support for Sparc activities and similar, which have dubious benefit to the majority of ratepayers.

Organisations like Sport Otago are overfunded by the council. I say let these projects find private sector funding.

Also, the Botanic Gardens upgrade of $6 million, including $1 million for "building rationalisation", is mostly unnecessary. And what is the few hundred thousand they are spending on Onyix replacement?

It might also be time to let the Masters Games go. Its economic impact is dubious.

The only Rolls-Royce service observed around Dunedin in recent years has been in the name of rugby. Getting value for money for ratepayers would be a refreshing change. Unfortunately it's too late to do anything meaningful. So just expect a little softening up in anticipation of the next local election.