Rates shock doesn’t inspire faith in council

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Business doesn’t like surprises:
Commerce 101.

Given Hamilton City Council would have us believe it surprised itself with the discovery of a serious rates revenue shortfall, are we to assume it doesn’t see itself as a business?

A scary thought given how much of our hard-earned rates and tax money washes in and out of its books.

Certainly nothing has been business-like so far about the great unearthing of unpalatable financial facts by council manager-archaeologists circa late 2016.

Questions, so many questions. First up, why the first paragraph of last year’s annual report?: “The city’s finances continue to be in excellent shape again. The council has performed better than expected….”

On and on goes the self-congratulatory introduction, signed by former mayor Julie Hardaker and chief executive Richard Briggs.

I know we’re all suffering whizzing-time syndrome, but the 2015-2016 financial year they’re talking about only ended in June last year.

Less than three months after this report, and before the October council elections, Briggs reportedly set his team to investigating the business-as-usual cost of running the city. Bizarrely, he’s reported as saying the big dig was sparked by councillors’ questions about city growth.

Anyone breathing in and out knows Hamilton has been growing like a teenage boy’s shoe size.  And isn’t the council, as a red tape development agency, better placed than any of us to monitor growth? So why did it take until six months ago for a bunch of well-paid city managers to think about acquainting themselves with the facts?

The result of their sifting through the sands of recent time was new mayor and businessman Andrew King, rocking the socks off councillors and ratepayers by pragmatically calling for a 12 percent rate increase this year to balance the books.

Reportedly he said it was to make up for six years of under-rating. Not a whisper about under-rating in last year’s glowing annual report.

And for councillors who’d been briefed on city finances pre-election, the news was a bombshell.
It got worse. King reportedly told dumbfounded colleagues the great excavation of recent history showed 12 percent was way less than the doctor ordered.

To get back to where Hamilton needs to be in its annual plan, a 17 percent increase was in order.
The majority of councillors went dog and retreated to the 3.8 percent increase position voters had been primed to expect.

Inevitably, there followed calls for an independent investigation into the cause of the rates shocker.

Briggs’ reported response was that it wasn’t a case of financial mismanagement and that the verdict of anyone auditing the books would be the council had done a bloody good job given the challenges since 2012.

A classic example of why, when you’re in a hole, stop digging.

If it was doing a good job meeting those challenges until June last year, what’s happened in the few months since?

Barring a market shock, if a public company had come out with a similar self-satisfied report to shareholders and within a few months issued a dire financial health warning, there would be more than confusion and bewilderment – there’d be blood on the floor.

Our council’s not a public company. But with revenue last year of $278 million it’s hardly the corner store.

And while ratepayers are not shareholders, they are captive investors in this city and can expect transparent accounting from its leaders.

It’s unlikely the city’s about to go broke and finding an extra $250 a year to continue to enjoy the rewards of living in Hamilton perhaps wasn’t a huge ask of many of its residents.

But looked at another way, a 12 percent rate rise is a 200 percent increase on the 3.8 percent lift we had been told to expect this year.

If the under-rating problem is as dire as Briggs presented, we haven’t heard the last of the council’s case for heftier rates increases.

So, please explain: what exactly was that (is that) 12 percent going to buy us?

And who will be accountable for delivering the fruit of our 12 percent (or whatever) increase investment?

And by when?

Still digging away in his hole, Briggs is reportedly hiring consultants to write a report to better explain the rates revenue shortfall shock.

I’m told there’s unlikely to be much change from $30,000 for that job and that’s conservative.
There springs another question.

Why are consultants needed to explain to us what senior council managers are being paid to thoroughly understand?

Being able to string words together coherently is surely not too much to ask of people claiming their salaries?

Ok, rates increases and public outrage go together like knives and forks.

Councillors make ratepayer-funded political careers out of howling against rises along with us, their paymasters.

But now it seems we have a whole new reason to be suspicious of city hall.

Ratepayers – whether business, homeowners or both – don’t like surprises.

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About Author

Andrea Fox is a business journalist, a former Waikato Times business editor, Fairfax Business Bureau journalist and author. Andrea.fox@xtra.co.nz

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