Curbing the debt addiction - Act 2 Scene 2 – The hunt for a SCAPEGOAT

Posted by WorkBoot on 27 August 2011 | 27 Comments

WorkBoot had another Council day in Dargaville on Wednesday.

Surprises a plenty.

As readers of this blog will know, I believe our current Proposed District Plan should be withdrawn. I am supported by reasons and the views of many including the eminent QC Paul Cavanagh.

Prior to the morning workshop it was announced that there were some “housekeeping matters” to deal with.

This is where the surprise was delivered. The key issue appeared to be how to ban WorkBoot from the planned confidential, public excluded workshops to be held it was announced on the 7^th, 8^th and 28^th of September on the grounds of conflict and bias in that I had made a submission on the Proposed District Plan

The Scene unfolded with these innocent housekeeping matters supported by letters of advice from our lawyers, Brookfields and Alan Dormer, a barrister (here).

This issue of conflicts is so clear it is not a surprise that the attempt to have me banned was not supported by Brookfields or Alan Dormer.

What a waste of money.

My submission was similar in form to others. My submission to the PDP can be found here.

If asked, I would have withdrawn my objection, leaving the issues I raised for others to raise. Of course then I would still be accused of being 'biased' because I had already expressed my views.

But the relevant Act (the Local Authorities (Members' Interests) Act 1968 – often called simply the LAMIA) specifically states that such a submission is not a conflict.

Section 6 (1) of the LAMIA states “A member of a local authority or of a committee thereof shall not vote on or take part in the discussion of any matter before the governing body of that local authority or before that committee in which he has, directly or indirectly, any pecuniary interest, other than an interest in common with the public.”

If the rider at the end of that clause was not clear enough Section 6 (3) goes on to make a specific exception in relation to RMA submissions stating “Nothing in subsection (1) shall apply with respect to any of the following matters: .... (e) the preparation, recommendation, approval, or review of a district plan under the Resource Management Act 1991...”

So why all the secret advice on my 'conflict' or 'bias'?

After all, and here is the real absurdity, I was not on the hearings panel so had no part in the review of objections.

The planned workshop, at which the ban was to apply, is a talk-fest – it listens to expensive 'experts'.

I could not change anything. I certainly could not influence anything – the Mayor and the Councillors that support him block vote, so what was the risk?

It was suggested I might have an advantage on preparing an appeal because I would have extra time. Really?

Perhaps if such ratepayers are disadvantaged then implicitly they may not have enough time to prepare their appeals. Perhaps ratepayers should be given more time than the 15 days to appeal -something like the months the Council has to consider issues, like getting out a simple cashflow!

Anyway if the Mayor or the Deputy (who was also weighing in on my 'bias') had asked me, I would have told them I do not want to appeal. As you (but apparently they do not) know my view is the whole plan should be shelved. Why? because it is flawed (see Cavanagh's opinion here) and it can only be processed through appeals by BORROWING more money and we have enough debt.

So the old game, play the person not the issue (more on this to follow in a later blog). The pity is that $1000s of dollars again have been wasted on lawyers for nothing.

The context for this strange and disturbing train of events was set by consideration of my two notices of motion.

First up was the motion I filed to form a committee to urgently find ways to reduce Council’s need for further borrowings. You can read the notice of motion here.

As part of my submissions to Council, I urged action now.

As part of this submission I created and presented the diagram here to Council. I also quoted from Financial analyst Larry Mitchell as follows.

“I believe councils tend to get locked into their plans. If it was a private-sector company, it could react within a month or at most within a quarter. Given council inertia linked to their legislative and operational environment its like turning around the Titanic.

“Councils are going to have to get pretty active in the next 12 to 24 months because they won‟t have many easy options left. And now they just have! to take the correct actions.”

You can read the full article here.

This push to deal with our urgent debt situation NOW didn’t find favour with the majority of Council. Many thanks to Councillors Linton and Wade for supporting this endeavour.

The Executive explained we can’t look at the numbers yet because they are still trying to figure out what the numbers are.

No reasons were given as to why such a committee could not get on with the job of working out how we could reduce our addiction to debt.

No reasons were given why the numbers on cashflow can't be generated.

No reasons were given why the Council should take responsibility if the Executive is unable to function.

In fact I am sorry to say as a Councillor, that nothing was clear other than the Executive hope to have the numbers together by 21 September when they plan to have another Council workshop (not the Plan workshop – another workshop, confidential, public excluded, and probably not open to me because hey I am biased because I have expressed 'views').

Is this the way Council should discharge its responsibilities to you?

I would be interested in your thoughts.

The second motion was that the Mayor and CE cease issuing unauthorised press releases purported to be the official position of Council. The official position of Council, as required by Council’s Code of Conduct, must be approved by Council in meeting. On this matter I am grateful to Councillor Wade for seconding the motion in order to allow it to be debated. You can read the notice of motion here.

At the end there was no support for the motion so in effect the Council voted to ignore its own policy on Press Releases which is in its Code of Conduct – see my previous blog here.

The Mayor led an attack on me that was fast and furious. Evidently, if I understood the attack correctly, the press releases were all my fault. The issue as to whether the press releases were authorised or contained any fact somehow was missed in the excitement.

More extraordinary the Mayor suggested that, single-handedly, I have destroyed property values and development in the golden-egg of the District, Mangawhai.

I suppose I should be flattered that I have such market power but alas I think that Mangawhai might be affected by things outside my doing or control such as:

1. Jack's management of the ECOCARE project under which the promise of a project at an already dangerous $26 mill exploded without any detailed explanation to $53 mill or more
2. Jack and Neil's ECOCARE DEBT from the project – borrowed against the equity in ratepayers homes and 'ring-fenced' to the ratepayers in the Ecocare drainage district but not ring-fenced in the loan documents.
3. the KDC approach to developers as piggy banks on resource contributions
4. the Unit of Demand fiasco
5. the recession and
6. our approach to ratepayers through press releases that seek to make assuring statements from on high but have no FACTS.

On FACTS the PR spin continues. The Northern Advocate headlined Jack McKerchar's comments “Council is healthy, CEO says" (here).

Let’s look at 10 reasons to question how healthy the KDC is:

1. KDC ratepayers have the highest debt in New Zealand and those ratepayers are already challenged during a recession and have limited ability to pay more rates. If we need any evidence of stress KDC ratepayers already owe in excess $ 1 million of rates arrears.
2. KDC revenues are falling
3. KDC is planning to borrow more at a time when KDC’s debt is even higher than Waitomo who went bust.
4. KDC's Ecocare system is unsustainable
5. KDC is committing itself to more unbudgeted expense with its dubious Proposed District Plan (I have argued here as much as $4million – this figure has not been challenged – we have $1million of BORROWINGS for this this year budgeted after BORROWING $900k last year for this project)
6. KDC plans to spend around a million on a new computer system
7. KDC is at risk of a massive debt write down on ECOCARE
8. KDC executive can’t produce reliable cashflows or balance sheet.
9. KDC debt servicing model is based on flawed assumptions about growth.
10. KDC's payroll expenses are unbudgeted due to payments to retiring/fired executives and new layers of executives.

So where to from here?

Firstly, I do not intend to sign the Larsen Gag Version 2 - sorry - Confidentiality Deed. As signing the Larsen Gag Version 2 sorry - Confidentiality Deed, has been made a pre-condition to my attending the workshop, I will not be attending the workshop.

I hope that my not attending will save ratepayers money as the consultants will not need much time to brief everyone on what to do – wishful thinking?

Secondly, if the consultants have anything worthwhile to say, as they usually send teams on the clock to such exercises, they can say it all over again at the full Council meeting so that you, the ratepayers who are footing the bill for this exercise, can hear why they are right and I am wrong.

Thirdly, for those who have urged appointment of a Commissioner – that is not a subject that I can engage in. I am a mere, as has been made very clear to me, first term Councillor.

Appointment of a Commissioner is a central government role. As the Mayor advised in the meeting he has corresponded with the Minister. The Minister has urged the Council to get on with getting our financial house in order (here).

We can't do that because the majority of Council voted against my motion to set up a committee and the Executive can't produce even a cashflow. My job is, as I see it, to soldier on and keep trying to get some action on stopping spending YOUR hard earned money by stopping borrowing.

I admit my efforts are not succeeding and for that you have my deepest apologies.

So a Commissioner ....don't hold your breath. It will need huge efforts to get central government to do anything now with the RWC and election. As for the borrowings the Executives view is the planned extra $5mill BORROWINGS is budgeted so tough luck – oh and by the way to add to the misery– it appears that there may still be more bills for ECOCARE. No apologies can be expected.

Finally, seeing I am only supported by two Councillors and then not fully, and Tiller will never resign and probably our CE will now be re-employed as a consultant, it might be expected that I should resign. What do you think?

OH but before I am run out of town, I have just a few more revelations so in the meantime watch for Act 3.