All have a list of important issues that they are enthusiastic and compassionate about that they truly believe are the key issues facing ratepayers and individuals. However particularly over the last 10 to 20 years in New Zealand we have had councils that have been more and more influenced by left wing ideology and as Prime Minister Luxon alluded to “nice to have” projects rather than sticking to the basics of roading, water, rubbish collection and other core services.
Whanganui District Council is a prime example of poor decision making, bad business investments, large cost overruns and borrowing to fund “pet” non core projects.
Whanganui District Council is one of the smallest councils in NZ with a total population of just under 48,000 people. It has a small growth rate, ageing population and a higher percentage on average of beneficiaries.
Fully fact checked information obtained under the “Official Information Act” confirms the Whanganui District Councils gross debt as of March 31st 2025 was $205.3 million dollars.
Back in 2020 the debt was $112.75 million
In 5 years council debt has increased by $92.55 million - an increase of 82%.
That $205.3 million debt represents over $4,000 owed by every adult and child in our region, when 5 years ago it was around half that.
Even at a very good interest rate of around 5% that $205.3 million represents over $10 million a year paid out as interest, before any principal is paid off.
That’s $10 million of ratepayer’s money that could have been spent on other essentials like roads, parks, community facilities, or those “nice to haves.”
WDC’s accounts to the end of December 2024, show a continued budget blow out. Operating costs 15% over budget ($4.5 million), Personnel costs 11% over budget ($1.4 million), Finance costs 7% over budget ($374,000).
In summary 2024/ 25 (as of the end of December 2024) is already 10% over budget ($6.4 million). Presumably WDC will have to borrow more to fund this shortfall.
$92.5 million in further borrowing over the last 5 years - where did all this money go to?
The only large expenses incurred were:
Sarjeant Gallery
Originally Mayor Annette Main said on RNZ in 2015, “the full cost to strengthen and expand the gallery would be no more than $31.5 million, that included a council contribution of $3 million.”
Latest cost estimates for the gallery to the end of December 2024 were nearly $75.3 million and still increasing. On top of this expenditure was the added costs of refurbishment and temporary move to the Taupo Quay site, estimated to be around $10 million.
How much of that increase had to be contributed (borrowed) by council?
The International Flight school
Purchased for $2.4 million
Also purchased (for accommodation purposes to house the flight students): the former Collegiate Motor Inn $4.8 million and Nazareth Rest Home $1.5 million.
Since its purchase the Flight school has never run at a profit.
As an example, for the 23/24 financial year the loss was $2.2 million.
Year to date (as of end of December 2024) the loss so far is $1.2 million.
· The Flight school has had to stop operations since May 28th by order from the CCA over safety concerns regarding the quality of the tutors and maintenance issues around the aircraft.
· no aircraft were able to fly for 8 weeks. As of July 31st only 5 out of 29 aircraft have been certified by CAA to be fit for flying.
· many students have left and returned to India
· The Chairman, chief flying instructor and at least two board members have all resigned. Also, up to half of the fulltime staff of 20 have resigned.
· At least $3.5 million and up to $7 million is currently being spent on a new taxiway just for the flight school.
Council has advised that they now intend to sell the whole operation and that there are 5 interested parties. The question is how much is the flight school worth after all the troubles and huge reputational loss?
The council has spent tens of millions of dollars on the operation and is now being forced to sell to the highest bidder.
Council staffing
In 5 years, the Full Time Equivalent (FTE) has jumped by 46 persons (19.4 percent) That’s a jump from 237 full time staff to currently 283, and that’s after recent redundancy announcements.
The average annual salary is currently as of December 2024, $76,592.
Staff paid over $100,000 has jumped in five years from 27 to 76, a massive 181% increase.
Commercial property purchases
The decision to purchase the former Whanganui Furnishers building plus commercial property in Ridgway Street for a proposed hotel development for over $5 million, was clearly a hasty ill-thought-out decision. The demolition of these existing buildings and proposed build of a new council owned hotel facility for over $50 million was quickly rejected by ratepayers leaving the council with old largely vacant, earthquake risk buildings that will either have to be demolished or millions spent on them to make them compliant before any tenants can fully occupy them which is next to impossible with the current amount of vacancies and over-supply of commercial buildings.
Summary
Clearly the impact of the WDC continued poor financial performance and big increase in borrowing can be attributed to the following;
· Sarjeant Gallery redevelopment
· The International Flight Schools costs and continued loses
· The blow out in staffing levels and costs
· The decision to purchase commercial property with little or no return.
To finance all of the above the WDC has had to keep on borrowing and also increasing rates, last year 10.6%. This year (election year) rates are expected to rise by a mere 2.2%, but next year we will be back to a 6 or 7% rate rise, more than double the expected inflation rate. The ongoing trend is rates are rising higher than inflation. The last 3 years alone rates increased by over 22%.
The council debt, cost of debt and a continuing cost blow out of existing budgets, should be a high priority issue and one that all aspiring Mayors and councillors should be aware of and have ideas about how to bring it under control.
The WDC debt should also be of concern to Central Government because it adds greatly to the cost-of-living crisis and if it (the debt) is not brought under control may require some sort of intervention, bail out or commissioners to replace the current councillors.
The Whanganui story is but one example of local body organisations typical throughput New Zealand. Kiwis rejected a left wing wasteful spending central Government only to have the same wasteful spending continue on a more localised level through local body elected councils.
Dave Hill is a local Whanganui resident, who retired after a career of 40 years in broadcasting and print media in New Zealand and Australia.
2 comments:
A total disgrace. But will the mayor and council be booted out?
Quite right that WDC are not the only ones Palmerston North CC went ahead with a street redevelopment that very few ratepayers wanted (except for a few cyclists) . Only because Central Govt helped with the cost and if they didn't use it it was lost. But ratepayers still had to pay up for the rest, and the result was a disaster. Very short sighted (Now it,s going to cost ratepayers more to fix up the Boys High pupil drop off zone. Didn't occur to the Council, just to improve the school drop off zone.) They were so blinded by shot term greed to get Govt money, they wasted ratepayers money to get it
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