Wellington City Council: Angry ratepayers vindicated as Government puts in Crown observer - A Capital Letter

THREE KEY FACTS

• Wellington City Council is amending its long-term plan after a bid to sell its stake in the airport failed.
• As a result, Local Government Minister Simeon Brown has moved to appoint a Crown observer at the council.
• Wellington Mayor Tory Whanau said she will not resign but has accepted the council must do better.

Senior journalist Georgina Campbell’s A Capital Letter column takes a deeper look at issues in Wellington, where she is based. She has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.

OPINION

The Government has poured cold water on Wellington Mayor Tory Whanau’s insistence high rates increases are a bitter pill the capital has to swallow.

Local Government Minister Simeon Brown has moved swiftly to place a Crown observer at Wellington City Council. He has accused the council of financial mismanagement and front-loading costs on ratepayers to the extent that Wellingtonians could be overcharged for water services by more than $700 million over the next decade.

Government intervention comes after the council voted to stop the sale of its 34% share in the airport – upending the long-term plan (LTP) it signed off just three months earlier and potentially triggering hundreds of millions of dollars worth of cuts to capital spending.

Advice from the Department of Internal Affairs (DIA) showed the council was not using its balance sheet appropriately - like using rates revenue to pay for water infrastructure up-front rather than debt financing to spread the cost, Brown said.

Net borrowings for water were set to increase by just $66m with the remaining $1.10 billion of capital investment proposed to be funded by rates. Brown said this was an inefficient and expensive way to fund infrastructure leading to ratepayers being overcharged.

The typical Wellington residential rates bill will be $3000 more expensive by 2028 with Wellington City Council rates accounting for the lion’s share of that. This year’s rates increase averaged $1000 a household, equating to an increase of 21%.

Whanau has consistently cited the council’s record investment in water infrastructure as something she is proud of.

But even investment to fix Wellington’s erupting pipes, one of the only things the city council actually agrees on, is unravelling.

The mayor has previously championed the council’s LTP and has acknowledged the latest rates increase was hard to stomach because people weren’t seeing progress yet.

“I can understand why people find this really frustrating,” she has previously told the Herald.

“They can’t see where it’s going, but my goodness in 10 years’ time we will have a city we can be proud of.”

It was a tough ask for ratepayers to stay the course as buildings closed due to earthquake risks, public servants lost their jobs, precious drinking water was wasted through leaks and long-standing businesses shut up shop.

It is almost an impossible ask now DIA officials have found “the council has demonstrated an inability to understand the mechanisms it has available to manage financial pressures it is facing”.

Wellington mayor Tory Whanau says she does not accept there has been financial mismanagement at the council surrounding water infrastructure investment. Photo / Mark Mitchell

The revelations behind Brown’s decision to intervene at the council have further damaged Whanau’s credibility with ratepayers after her deal to reopen the Reading Cinema building also soured and personal issues plagued her first year in the top job.

They are also vindication for many Wellingtonians who have raised wider concerns about council spending, even though DIA rightfully does not pass judgment on common gripes like cycleways and a plan to remove cars from the Golden Mile.

Earlier this year, Karori resident Judy Rohloff started a Facebook group called Wellington Rates Revolt where disgruntled ratepayers air their concerns about council decision-making. She’s refused to pay her rates increase, saying she won’t until the “frivolous spending” ends.

Both Pandoro and Bordeaux Bakery have blamed the council at least in part for their recent closures, and a group of businesses have banded together to try and fight the council’s upcoming Golden Mile redevelopment.

Whanau has said she doesn’t accept there has been financial mismanagement at the council surrounding water infrastructure investment and that this accusation came as a surprise.

She said Wellington City Council funded water the same way as other councils around the country.

Except other councils don’t have Government ministers breathing down their necks.

Why now is the right time for a Crown observer

There have been several calls for government intervention at Wellington City Council in recent years, all of which have been a disproportionate reaction to the issues at play – until now.

Previous calls for the Government to intervene at the council, mainly while now-NZ First MP Andy Foster was mayor, were driven by fiery council politics.

Foster’s council was painted as divided, councillors and the mayor were regularly at loggerheads with one another, and spats between them were publicly aired more than once.

But Foster’s council did not vote to undo a key strategic document outlining billions of dollars worth of spending just months after signing it off.

That’s the difference.

The Local Government Act says the Government can intervene with the likes of a Crown observer or commissioners if it’s believed there is a “significant problem”.

A “problem” is defined at the very least as something that detracts or is likely to detract from a local authority’s ability to meet its obligations under the act.

Brown is right to be apprehensive about the ability of councillors who have walked out of meetings, refused to participate in votes, and criticised one another and staff, to amend an LTP they just voted to tear apart.

He said that sort of environment was not conducive to effectively managing the LTP process and leaving those challenges unresolved would likely have adverse consequences for Wellington residents.

Brown’s decision to intervene now risks association with further controversy Wellington City Council has signed itself up to.

If a left-leaning council with a Green-endorsed mayor wants to sell assets and make big budget cuts, why not leave them to it?

Brown said the Government was clear it was not taking responsibility for any decisions made by the council by appointing an observer.

That responsibility remained with the mayor and councillors who also continued to be accountable to their constituents, he said.

Such accountability is best exercised at the ballot box and with local body elections less than a year away, several high-profile names are already being floated as possible candidates to challenge Whanau for the mayoralty.

Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.