Wednesday, May 30, 2012

Clearing something up

I've just been reading this post on the Whale's blogsite that contains a lot of comments about rates increases in Auckland that are paying for Len Brown's CRL (City Rail Loop).

The most basic problem with local government is that no one gives a stuff about it.  Turnout is around 30%.  That ignorance/apathy shows in those comments on Whale's blog post.

So, to clear something up: Rates are not collected to pay for capital projects.  They are collected to pay for the operational spending of councils (wages, running of pools & libraries etc).  Capital projects such as the CRL are funded through borrowing.  That's why Len Brown flew to China a few weeks ago - he went searching for a money tree.

Of course the interest on the debt is funded by rates, and that is a problem, especially in Auckland where debt levels are projected to soar.  But rates are not increased today in Auckland to pay for an increasing interest bill today.  That increased interest bill is paid by ratepayers over the next 50-100 years - the expected lifetime of the capital project.

So give Len Brown a break.  Sure, the CRL is a dopey project.  But he's not hiking rates today to pay for it.  Your kids are the ones who will end up paying for it.




Judge Holden said...

How much did John "I can't recall" Banks increase Auckland's debt burden by before the voters very sensibly gave him the message for the second time?

Marc said...

The problem with Rail Projects such as this is that nowhere in the world can they be run without accumulating eye-watering and ongoing debt due to costs exceeding income. Income when the schemes are proposed is a candy-coated fantasy figure pulled out of some wanker's ass who is never accountable when the reality sets in for the people who end up paying. And this is where the suffering ratepayers get shafted - not only are they still in debt for the capital costs, but the operational costs cripple the city's future for us all. Be warned, approve such a scheme at the peril of your children's future.

Adolf Fiinkensein said...

BYW Nick, what happened to the story about North Shore rate increases of forty percent, finangled by way of a new waste water annual charge?

Paulus said...

Biggest problem in voting is that the question of how many actual ratepayers are there.
I believe that it is not much in excess of 200,000 with a population of 1.25million people.
So only those who pay are interested. Browns South Auckland rellies do not actually have any idea of rates, as they have state houses subsidised.