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Ominous Trickles before the Flood

Written By: - Date published: 5:35 pm, April 5th, 2009 - 13 comments
Categories: local government, national/act government - Tags: , ,

The attack on democratic local government is taking shape in the public domain.

1. Hide was not made the Minister of Local Govt for nothing. Radical changes are planned and National chose an ACT Party frontman to deflect public reaction. The Bill about to be introduced, and likely passed, to ‘cap rates at the rate of inflation’ will cripple councils ability to fund essential new projects and is clear evidence of the agenda.

2. The opportunity created with another round of amalgamation to create ‘super-cities’ whose governance is accessible only by those with wealthy backers. Already we have an established history of these right wing councils looking to sell assets such as airports whenever they can.

3. The technical advisory committee to the govt on RMA streamlining has come up with the ‘surprising’ suggestion to axe Regional Councils. Imagine my shock, again the Nat cabinet is using other entities to ‘Hide’ it’s real agenda. Most Regional Councils manage important public functions and are fat targets for selling off major parks, water and transport assets worth many tens of billions of dollars. In general these will be handed over into Council Controlled Organisations (CCO’s) that neatly packages them into saleable entities.

4. A lobby group calling itself ‘Water New Zealand’ is promoting water metering. Metering is a nonsense. The cost of water supply is 90% fixed overheads, reducing demand does little to reduce the total costs, therefore in the long run the price/unit has to go up in response. The sole purpose of metering is to use public funds to ready the asset for sale. (Potential private owners don’t want to have to spend a lot of money installing meters.)

‘No Asset Sales in our First Term’…. because it will take National about that long to get them ready and neuter the opposition.

13 comments on “Ominous Trickles before the Flood ”

  1. Greg 1

    I don’t get the big issue with water metering. It seems like a win, win. Even if 90% of the costs are fixed overheads, that still leaves households that choose to with an ability to save. Its the small stuff that counts right?

    Furthermore, the user pays scenario will mean we use less water. You’d change your habbits a bit if you could save money right? Thats good for the environment – less dams, less worry about water shortages etc etc.

    I would have thought the greens would love this proposal?

    • RedLogix 1.1

      It only seems like a win-win on the surface. I’ve explained it in more detail up in “Your Water Footprint”.

      It actually makes no sense from either a fairness nor value for money point of view. There are plenty of equally effective ways to save water, many of which cost much less to implement.

      Worse still, overseas experience with meters is quite perverse, especially with private providers. Once meters are installed, demand drops, but because the costs are fixed, the price/unit has to rise. Which causes demand to drop again…. you quickly get locked into a death spiral until you hit the steep inelastic part of the demand curve (about 120 litres/person/day in developed nations). At that point a monopoly supplier can pretty much charge what it likes, because no matter how high the price per unit you have to pay it. Soon everyone wonders why the hell, like the electricity system, we ever ‘commercialised’ it.

      If you think I exaggerate the rapaciousness of capitalist enterprise to act in this way, have a think about the behaviour that has directly led to the financial crisis we are plunging into.

  2. Gooner 2

    Capping Rates to inflation + population change is a necessary requirement or else the ‘Super City’ will treat ratepayers as a money printing machine. It’s absolute rubbish to argue it will ‘cripple’ councils ability to fund projects. Their are countless alternative funding mechanisms with local council bonds being a favourite of mine. The biggest capital expenditure of most councils is roading and Labour already introduced the northern tollroad: a Transit initiative admittedly but there is nothing wrong with tolling local roads also.

    What a shrilly post.

    • RedLogix 2.1

      Their are countless alternative funding mechanisms with local council bonds being a favourite of mine.

      Sure, but it’s still not free money. The bond has to be repaid with interest eventually. That still has to come come from rates eventually.

      but there is nothing wrong with tolling local roads also.

      So all you are doing is trading off rates for tolls. As with water supply, the so-called ‘user pays’ model for roading is much weaker than expected. A road does not just benefit the actual user, but those who benefit from lower congestion elsewhere, and everyone who utilises freight services directly or indirectly. It’s a nonsense to think that any given road exists in isolation. They are all really part of a much larger network that we all benefit from.

      Besides you may want to consider Maurice Williamson’s fate before advocating road tolls too enthusiastically.

  3. gingercrush 3

    Welcome to The Standard Team Redlogix. I always think your replies to other authors have been excellent and no doubt your posts will add to The Standard. Of course I completely disagree with you on this issue. But I’m sure you’ll have interesting comments to make in the future.

    • RedLogix 3.1

      GC,

      Thanks. I doubt I will be as prolific as other better established authors, but it’s going to be a challenge keeping up.

      And unlike many right wing commenters who can do nothing better than carp and troll, you’ve earned respect here for putting up some decently thought through arguments.

    • agreed GC, welcome to the Standard RL.
      you’ve long been a superb commenter so I really hope you enjoy your posting here.

  4. Tigger 4

    Who are Water New Zealand? I see from their links page that there are a lot of people they appear to think are ‘releven’t but there aren’t any environmental organisations that they consider worthy of a link…so who are they working for? I couldn’t make heads of tails of their site – what do these people actually do?

  5. randal 5

    the thing is that nodbody is talking about is how many services will be privatised and gobbled up by new “OWNERS”!

  6. Joshua 6

    Welcome Redlogix, I’m glad to see you’ve joined the list of contributors for The Standard.

    Some interesting points you make about Local Government, which could get rather scary for the future of local democracy and also environmental protection. I agree that Regional Councils are a very critical part of local government in the enviornmental protection roles they fulfil. It would be pretty shocking to see them disbanded in any shape or form. The loss of the ARC through the creation of the super-city is definitely something that will have to be carefully managed so we don’t completely lose the benefit they bring Auckland.

    I have said before that a very important role the ARC plays is that of “environmental advocate”. You have a look at any plan change, large resource consent application or new district plan around and the ARC have probably made a big submission upon it. That submission will be very cleverly thought out and well articulated. The local council will take it on board and generally makes a significant number of changes directly because of the ARC’s submissions. Who is going to fulfil that role in the super-city organisation? I can’t imagine the Auckland Council will be quite so forthright in submitting against its own plans and I can’t see it taking itself to the environment court to ensure the best interests of the environment are taken into account in the formation of a plan or plan change.

    For example, fairly recently it was the ARC who joined in an Environment Court appeal against the demolition of Building 5 at Greenlane Hospital, after an initial demolition consent was granted by Auckland City Council. How would that have happened in a super-city structure?

  7. insider 7

    If 90% of the cost of water is the fixed costs, then that implies to me that you want to do all you can to defer building new infrastructure. In that way price could be really important to drive efficiency of use to maximise use of existing infrastructure. No pricing signal to me would tend to hide the cost of water supply so you end up overbuilding and absorbing far higher costs than you otherwise might.

  8. jcuknz 8

    The trouble with councils is that they are run by do-gooding staff who sitting on a good if not exhorbitant salary have no appreciation of the problem that rate payers have in increasing rates above the reasonable inflation and population increase rate which is a reasonable burden … although their income doesn’t rise to match inflation rises let alone the foolish dreams of council staffers. All power to Rodney.

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