Unrelenting pressure

Otago's district councils begin their new terms facing a common and perpetual problem; how to save money.

The pressure is greater than ever this term because rates rises in most areas have soared, the economy continues to stutter and many recession-battered households and businesses face acute money woes.

Dunedin's surging rates and climbing debt are prompting changes, but the issue of rate increases is also high on the election agenda for every Otago council.

Waitaki was the only district where the incumbent mayor kept his seat, although it should be noted that the previous Queenstown Lakes mayor did not seek re-election.

Waitaki, too, was the sole area where the average rates rise was within reasonable range of inflation, 2.65% as against inflation of about 2%.

While elections are seldom decided on one matter, the fate of the various mayoral candidates can be linked to council success in controlling costs.

Queenstown Lakes - with a population of 27,800 - not only had an average rates increase of 9.1% this year but debt, which stood at $14 million in 2007, is now almost $100 million.

The council's long-term plan estimates it will reach $400 million by 2019.

The alarm bells were clanging long before the October elections, and a year ago a working party was established to reduce proposed debt levels. It has cut $170 million so far, yet much more needs to be done.

New Mayor Vanessa van Uden recognises that fact, and hard thinking and decisive action will be needed.

Of course, the pressure from the community wanting services and new facilities will remain unrelenting as this imperative to limit rates and borrowing intensifies.

The council, particularly in a region relying on tourism, cannot build or maintain second-rate, cheap, amenities.

Nevertheless, it is going to have to pick what it does with caution and discernment.

At the same time, as well as deferring worthwhile projects as it concentrates on core functions, it will have to tackle operating costs.

Queenstown Lakes has depended on development contributions from rapid growth to ameliorate the worst of rising rates and debt levels, but these have fallen away with the recession.

Once again, perhaps with the help of central government, the district needs to seek alternative funding, perhaps through the likes of a bed tax on tourist facilitates.

While being careful not to threaten the very industry on which much of its wealth is based, the district cannot just rely on traditional rates to provide services for not just its residents but also tens of thousands of visitors.

Central Otago is also suffering from the slowdown in development levies, and its 7% rates rise this year is acknowledged as too high. Depreciation funding receives much of the blame.

It, like other districts, finds itself squeezed not by extras like sports centres but the basics of water upgrades.

Because of this pressure, all councils are forced to look hard at expenses, be they small, large or medium. They are compelled to borrow as well for the likes of water schemes, although they have been, and must be, more prudent than Dunedin or Queenstown Lakes in this regard.

Clutha, in slicing a planned rates increase of 7.66% to 3.89% this year, cut what is generally seen as a core task, reducing roading maintenance.

While councils cannot postpone maintenance if this later creates greater problems, they are having to limit the extend of their reach and what they do.

Waitaki, like Clutha, is smaller, making it easier for ratepayers to keep a closer eye on the quality and quantity of spending.

Waitaki, too, however, is hit by government requirements in accounting, transparency and long-term planning that can consume considerable resources for little gain.

And it, too, is finding that changed national water standards are forcing expensive upgrades.

Nonetheless, ratepayers - faced with ever rising bills - are not looking for excuses, however valid.

What they seek are trim, sharp, effective organisations that do the basics with a little left over for the trimmings.

What residents will have to accept, though, is that money for most of the community's wish lists simply will not be possible.

 

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