The shady adventures of Fiscal Hole


    All last week, the trailer for a Fair Go television episode asked, incredulously, how someone could just lose a million dollars. 

    Three days later, I’m writing this editorial and wondering how Auckland Council, an operation with a guaranteed revenue stream of $5,676 million and 11,000 employees has managed to spawn the villain of this tale, Fiscal Hole, all $295 million of him and still growing. 

    I will probably never get used to Auckland Council’s presentation of what were once careful and important public consultations documents now turning up looking like books for preschoolers: silly stock figures in bright primary colours and words in that slightly over-loud and repetitious tone that some people use to talk to very young children – or inferiors. 

    In September last year, Fiscal Hole’s very existence was dismissed as a bogey to frighten children. Council’s performance figures were right and tight, balanced to the last dollar.

    Over the intervening months – with the council’s share of the enormous rail link budget blowout still undisclosed – Fiscal Hole appeared and is now centre stage in a public consultation (that lasts until Tuesday 28 March) in a breezy “have your say” exercise. 

    He’s on every page, a cautionary tale telling us, the stakeholders, to choose whether we want to relinquish our remaining legacy asset airport shares, or our libraries, zoo, parks, arts, community grants, swimming pools  and discretionary funding for local boards. 

    Rates or asset sales? More may happen closer to year’s end in June, officials say, sounding a bit weasley about the council’s own share of frugalities. Wait and see how old Fiscal works out before then, eh?

    The new mayor and holder of this poisoned chalice says it’s a structural problem 12 years in the making (which puts the blame squarely on the Key government’s second and quite iniquitous supercity restructuring).  

    The breezy feel is an illusion we ignore in the submission process at our peril.  If we, the punters, aren’t very definite on the issue, the bureaucracy has a mandate to carry on this rake’s progress that includes massive contracts to offshore contractors and the sort of opacity and favouritism with the big boys that got us into the mess in the first place. 

    $1.8 billion dollars of airport shares, or part of it, would paper over some of the debt but the city visibly haemorrhages money, usually on the things that officials want rather than citizens need. They shouldn’t see this process as a mandate to carry on as before.  

    In the way of politicians and administrators, the optics on the airport shares are fairly one-dimensional. The council says the shares do not make a cent.  

    It’s that old simple lie beating complicated truths. As researcher Kushlan Sugathapala said in a NZ Herald column last week, council’s stake tripled from $632 million to $1.8 billion from 2011 to 2018, a capital gain of $1.2 billion in seven years. And $485 million in dividends and a share buyback – a profit of $1.7 billion in eight years from 2011 to 2019.

    Cost saving would average just $24 million per year until 2027 and less after that, he said. “We deserve better. It’s like selling an investment which has tripled in value in eight years to pay off debt, ignoring any potential gain. Shouldn’t we have better protection against trigger-happy politicians and government officials from selling our family silver?”

    The council’s website copy of the draft budget plan for Aucklanders taking part in the submission process outlines a huge divestment of services, while the all-or-nothing questions are really quite dishonest.

    On Waiheke, we will share the pain of a 16 percent cut in discretionary funding to the city’s local boards, standing to lose operating funding of $382,493. 

    Waiheke’s funding impact statement in council’s annual report to 30 June last year showed a $878,000 reduction in debt for capital funding on the year’s budget. Payments to staff and suppliers and capital expenditure were lower than planned and the year’s alloted $2.3 million capital spending budget remained unspent. 

    Another million saved to ransom our villain, Fiscal Hole? Or is it really necessary anyway? $295 million is derisory in the scale of council expenditure and its management’s self indulgent annual expansions.

    Reduced local library hours, cutting back mowing for open spaces and funding for events, community grants, community climate action, environmental education, water quality and waste minimisation grants are also on the block. 

    They shouldn’t even be considered. If the council doesn’t want to provide the traditional and most basic services people need for their rating dollars, it shouldn’t increase rates at all. 

    And the airport shares are family silver and shouldn’t even be considered at this early stage of trimming the fat either. Fiscal Hole is there to reprise profligate, kleptocratic Thatcherite political management and we should not stand for it.    Liz Waters

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