Hard News by Russell Brown


Transferring wealth to Wellington

The Herald's Bernard Orsman has a good story this morning on the Auckland City Council submission highlighting a dimension of the government's Super City structure that has received scant attention until now – the tens of millions of dollars in tax that will be paid by the CCOs the government wants to run 75% of services in the new city.

This is essentially a transfer from Auckland ratepayers to central government coffers. Auckland City Council's proposed solution – a 10-year tax holiday for CCOs while the new Auckland Council restructures the agencies – is barely credible. It's tempting to suppose that John Banks' council has suggested such an extraordinary idea chiefly to scare Wellington into a rethink.

Orsman writes:

Ratepayers will be hit three times. They will pay rates, GST on rates and higher charges or rates for tax on CCOs.

They also face a bill of $34.4 million to get the Super City up and running.

It's actually worse than that; indeed, they'd be lucky to get IT consolidation alone done for that figure. In consultation with the Department of Internal Affairs, as much as two thirds of the real costs of the accelerated transition have been pushed back until after Day One. Until that was done, the mantra amongst existing local organisations was "a hundred million to get to Day One".

Orsman also notes:

Prime Minister John Key and Local Government Minister Rodney Hide have been careful not to promise savings from the biggest shake-up of local government since 1989.

Not quite true: Hide briefly ventured on – but did not quantify – "real savings" in a speech to chief financial officers of Auckland companies earlier this month.

But it was exactly a year ago that the Royal Commission's report on Auckland local governance predicted, on the basis of a very different model for change:

… estimated efficiency gains of between $76m to $113m per year," the report said.

"It should be noted, however, that securing the anticipated savings will require excellent transition and management arrangements."

It seems fair to say that much has changed since then.


On a completely different note, Internet NZ is running a public briefing on ACTA (the secret and controversial Anti Counterfeiting Trade Agreement) this afternoon in Auckland. It runs from 2pm to 4pm at the fruitily-named Rendezvous Hotel, corner Vincent St and Mayoral Drive. All welcome. Details here.

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