Trouble brewing as council debt soars

Auckland Mayor Len Brown. Photo / Greg Bowker

Ratepayers face a legacy of debt as council borrowing soars to replace creaking assets and cater for growth, while keeping rates down.

Local authority debt is expected to reach $19 billion by 2022 with the fast-growing Auckland Council leading the charge.

The super city's borrowing will treble in the current 2012-22 planning period, reaching $13.1 billion in 2022.

At the same time, councils are charged with keeping rates rises low under stringent accounting rules imposed by the Government after an era of high annual rates increases.

High-debt northern councils which risk falling foul of borrowing limits - inviting Government intervention if balance sheet projections change - include Auckland, Hamilton, Tauranga, Western Bay of Plenty and Kawerau.

Local Government NZ (LGNZ) president Lawrence Yule says small rural councils with declining populations face headaches funding wastewater and water supply upgrades to meet new environmental standards to combat pollution.

The Auditor General's Office has already warned that delaying asset renewal risks asset failure which can rebound on communities.

LGNZ says alternatives to property rates and existing fees and charges need to be found and is launching a review of local government cost drivers.

Auckland Mayor Len Brown wants Aucklanders to use the upcoming long-term plan review to decide whether they want faster progress on transport and other infrastructure projects - using controversial alternatives such as congestion charges - or slow progress using rates and fuel charges.

"The choice is stark - it will be pace or no pace," Brown said.

Local government commentator Larry Mitchell says several councils owe more than $10,000 per ratepayer.