Regional rates

A rare piece of good news emerged for beleaguered ratepayers this week: the Otago Regional Council draft annual plan shows no increase in the general rate. The ORC chairman points out it is a draft budget only, but nevertheless, how refreshing. Why can't other councils do the same?

To be fair, as a regional council, the ORC is not charged with those large and expensive tasks like supplying water, processing sewage or maintaining roads which fall to district and city councils. But, as clearly evidenced in the Canterbury regional council's woes, the regulatory and planning demands are exacting and no easier with every passing year.

Although the Otago council's long-term community plan predicted a rate increase, corporate services director Wayne Scott said higher-than-expected interest income and work on cost control helped reduce the need for general rates.

It is difficult to know from the outside about cost control, although Mr Scott and the regional council over many years mostly have had a good reputation for close care with expenditure. One glaring exception is the council's planned $31 million headquarters project on the waterfront.

It has been "parked", as options are considered, and this has, at least for the time being, cut spending from reserves. In turn, much more interest income to subsidise the general rates is available - $887,000 instead of $432,000. What this makes obvious is spending from reserves does come with costs to ratepayers.

While there is widespread agreement the current headquarters are too small and inadequate and something substantial needs to be done, the fact that money is coming from reserves - or Port Otago dividends for that matter - does not sidestep the issue that it is ratepayers' money and such spending will impact on them.

Any spending justifications have to be on the same basis as if the money came directly via rate demands.

The "parking" of the headquarters also allows a special dividend from Port Otago to be reduced from $12.7 million to $6.8 million. If Port Otago's balance sheet is strengthened and debts limited, its position in the future to subsidise rates through dividends will be a little stronger, as will its position in negotiations with Lyttelton Port Company.