Hamilton City Council’s financial position is undeniably precarious. But according to councillor Sarah Thomson – now campaigning for both re-election and the mayoralty – the real culprit isn’t overspending or poor planning, but depreciation.
Mark Flyger in the Modern Transport premises.
In a recent interview, Thomson called depreciation the “biggest additional cost pressure” facing council, blaming unpredictable asset revaluations for stalling growth. While this may sound plausible, it dangerously misrepresents the true drivers of Hamilton’s financial distress.
Depreciation is a non-cash accounting cost that spreads the expense of capital assets – roads, pipes, libraries, playgrounds – over their useful life. If an asset lasts 10 years, one-tenth of its cost is recognised annually. This reflects wear and tear and ensures replacement costs are accounted for gradually. It’s not new spending, nor a surprise bill – it’s a planned recognition of existing commitments.
Sarah Thomson
Yes, asset revaluations can increase depreciation, but they simply reflect inflation. The real issue isn’t depreciation – it’s council’s persistent failure to balance its books.
Last year, Hamilton ran a $34.8 million deficit. This structural imbalance has become routine under Thomson’s tenure, with council increasingly relying on borrowing to fund not just infrastructure, but basic operations. Rates revenue is no longer used to repay debt or invest in growth — it’s used to plug holes.
Thomson claims growth is the problem. But the real issue is how we plan for it and how we fund it. A clear example is the proposed wastewater plant near the Peacock development. Council has already spent millions piping waste across town to Te Rapa, when better planning could have kept it local and cost-effective.
Saying depreciation “halts projects in their tracks” is misleading. What halts projects is a reluctance to make tough financial decisions — to prioritise spending, cut inefficiencies, and stick to realistic budgets. Deferring projects and underfunding depreciation leads to asset failure and future fiscal shocks. In fact, failing to fund depreciation properly results in potholes, broken footpaths, and worn-out public amenities — the very things Thomson says she wants to improve.
Thomson supports debt-financing major infrastructure, yet under her leadership, borrowing has extended to operational needs. The balance sheet is drained — not by depreciation, but by fiscal mismanagement and an addiction to spending beyond our means.
In 2024, S&P Global Ratings downgraded Hamilton City Council’s credit rating from AA- to A+, citing ballooning debt and weakening financial management. The warning signs are clear – not buried in depreciation schedules.
Thomson’s claim that depreciation is the primary problem isn’t just inaccurate – it’s a distraction. Hamilton’s ratepayers deserve honest leadership, not accounting sleight of hand. The city’s books must be balanced, debt controlled, and infrastructure funded through sustainable planning.
Let’s stop blaming the mirror for the reflection. Depreciation is a reality – not a rogue variable. What’s truly wreaking havoc is years of deficits, missed opportunities to rein in spending, and a reluctance to lead with financial discipline.
- Mark Flyger is a candidate for Hamilton City Council’s west ward
- This column has been abridged.
