GUEST BLOG: Mike Lee – Goff’s ‘Toilet Tax’ – Auckland’s ‘winter of discontent’ set to continue

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Just one week after the imposition of the council’s regressive fuel tax and a bunch of new targeted rates, came the disclosure in the NZ Herald that mayor Phil Goff has been planning ways to impose a so-called ‘Toilet Tax’ on the ratepayers of Auckland.

The new tax would be used to repay the $1.2bn capital cost of the long-talked-about ‘Central Interceptor’, the planned sewer pipeline, in a tunnel, running deep beneath the city, 13 km from Western Springs to the Mangere Wastewater Treatment Plant. The new interceptor is needed to take the extra sewage and to reduce overflows resulting from Auckland’s continuing population growth. Subject to funding, construction is planned to start in late 2019.

Heavily redacted Treasury documents obtained by the National Party reveal that Goff has been talking to the government since November last year about ways to borrow the money for the project and yet keep the debt off the council’s books. Central to the plan is a ‘special purpose vehicle’ (SPV), which is jargon for an entity, separate from the council, underwritten by the government, which would be set up to borrow the $1.2bn and empowered to send ratepayers bills to repay the principal and interest.

Why would this SPV be needed, you may ask, with council income (rates and charges) now $4.1bn per year. After all, sewerage provision is a basic local government responsibility, and in Auckland the job of Watercare Services, the water and wastewater agency established by the ARC in 1992.  Over the past 26 years Watercare, the ‘quiet achiever’ in the Auckland Council family, has successfully delivered a number of major projects, including Project Manukau, the $500m upgrade of the Mangere Wastewater Treatment Plant, Project Waikato, the $100m, 37 km water pipeline and treatment facility bringing water to the city from the Waikato River, and Project Hobson, the $114m tunnel from Parnell to Orakei which enabled the replacement and demolition of the old Hobson Bay sewer line.  

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Watercare says it could fund and build the Central Interceptor itself. Furthermore it admits this approach would work out cheaper for ratepayers.  

So why?  The answer sadly is that the Super City, since its establishment in 2010, despite hundreds of millions of dollars in asset sales, has profligately run up an enormous debt – currently at $8.7bn and rising, with interest costs currently at $471m a year.  Council finance managers fear that the cost of the Central Interceptor would push the council over its borrowing limits, endangering the council’s credit rating with the international rating agencies, resulting in an increase in interest costs.

The SPV then is essentially a financial instrument, a bankable package if you like.  But we are told it will come with ‘governance’ attached – that is people – directors, managers, consultants – in other words the usual suspects.  

So the SPV will also mean the establishment of a parallel local authority in Auckland.  Except that it will be an undemocratic, unelected authority, and given its proposed legal stand-alone status it is unclear to whom it would be accountable. It is supremely ironic, given the cost and disruption of abolishing the old legacy city councils and the ARC to form a single unitary ‘Super City’, that the mayor and council management are now attempting to persuade the government to establish another, non-democratic, authority to rate Aucklanders.

This is all very disingenuous – up until now carried out in secret.  Sadly, as we are learning, Phil Goff is proving to have form when it comes to concealing important information.  He apparently hopes to claim he is not increasing rates to repay this loan; Auckland ratepayers apparently being expected to take comfort that the ‘toilet tax’ bills they will be getting is from the ‘SPV’ – not the council.  The government would be mad to go near it.

In response to the disclosures, Goff is saying, quite correctly, that no formal decisions have yet been made.  However he did tell the Herald, that if the council could move the cost of the Central Interceptor from its books to appear on the SPV books, that would free up $1b to invest in other ‘areas of public need’.

However Mr Goff’s ideas on spending for ‘public need’ such as a $2bn ‘downtown national football stadium’ are not necessarily shared by the public.

Auckland really deserves better than this.

 

Mike Lee is an Auckland City Councillor 

6 COMMENTS

  1. Phil the neoliberal obsessed with xtra taxes for ordinary folks and zero accountability going to private companies or the council itself, and accounting fiddles to try to say he’s not running up additional council debt when he is.

    The most pertinent point seems to be “Why would this SPV be needed, you may ask, with council income (rates and charges) now $4.1bn per year. After all, sewerage provision is a basic local government responsibility”

    As usual the new COO, Metrowater should be accounting for this expense but somehow failed to do so, and now a new ‘entity’ for accounting purposes is being offered to do their job for them at additional expense and reduced accountability. Win win for a handful of business neoliberals, bad news for the million plus inhabitants of Auckland!

    Phil seems happy for ratepayers to pay for America’s cup infrastructure for a billion dollar yacht race (he does not consider the billionaire sport a situation for PRIVATE funding and givealittle for supporters), as well as being keen for a billion dollar stadium for his ego. Phil and his executive team does not seem worried about how organisations like AT spend around 1/2 their 1.4 billion a year budget on themselves before the transport costs and still need a petrol tax so they can keep it up, and I certainly don’t think Metrowater should be hailed as a success.

    Also where is the so called executive team, aka CEO when not making cheap shots at Penny Bright and then forcing the ratepayers to pay his legal bills, apart form that, he’s a man missing in action.

    The billion dollar overrun on IT has never been solved or even presented as something wrong by council, either.

    The council seem to have achieved more fees, more pollution and an inability to convey planning risks from consenting more while producing more luxury and large scale intensification and development and then at the end say, “oh by the way, we need more money”.

    What happened to user pays for the new developments to pay for their own infrastructure when they pay their contribution on consenting, where has the money gone?

    Not only that, the pollution is not just about the sewerage, it is also about diesel and asphalt pollution due to the councils obsession with having more cars, more roads, more footpaths, more cycle paths, more hard non permeable surfaces, everywhere, with bigger houses, more intensification at the expense of cheap and simple grass verges and yards that soak up the wastewater naturally before being expelled into the seas. If they do a tally they will find that planning has routinely IGNORED their own planning guide lines on permeable surfaces and building percentages, thus allowing constant overintensificaiton AGAINST their own planning guidelines. Now pollution is here, the answer is a sewage line, more taxes and not necessarily going to stop the pollution either from other sources.

    The neoliberals love user pays, but clearly have not used ‘user pays’ in charging and using that money from the culprits who profited from the population growth.

    The population growth has mostly benefited multinational corporations who use the cheap labour and can profit from more consumers and who own real estate but don’t work here on low wages.

    Often these non resident corporations contribute little (most commercial real estate make the tenants pay the rates), so rather than another tax on residents how about a ‘non resident’ tax from those who make profit in Auckland but somehow don’t need to contribute a cent.

    Apparently billions of down town commercial reals estate, just been sold to Singapore, for example… but inspite of all their wealth, the neoliberal way does not require them to contribute a cent to the running of the city – that’s for the poor residents and tenants of Auckland to find the money for not billionaire non residents. sarc.

    The council has introduced additional taxes for hotels, the ratepayers and those using petrol, isn’t it fair to now look at non resident billionaires who are not expected to pay a cent as a new ‘additional’ tax!

    Discriminatory you say, well what about all the other new taxes the council has introduced to discriminate against various resident groups, in the last year with more being dreamed up as we speak.

  2. We also have this ‘brilliant’ sarc. example of local democracy at work with the Kaipara council’s PPP sewerage experiment which saw a 20% increase in rates, while devaluing ratepayers properties and not actually solving the problem.

    This is what happens with poor leadership, private partnerships, punts of development (global crisis could just bankrupt council INC and we are probably due one), financial engineering, and secrecy.

    The council auditors didn’t notice a thing about the risks for Kaipara council and the council chief got a golden handshake!

    All with a a public/private partnership deal for wastewater arranged through bankers ABN Amro Bank with a lot of secrecy. Only after signing contracts for the construction of a sewage treatment plant did Kaipara District realise there was no provision in the contract to deal with treated wastewater! No worry, the ratepayers will pick up the bills. sarc.

    https://nzbloglex.blogspot.com/2014/05/rates-mangawai-ratepayers-v-kaipara.html

    Kaipara council chief given $240k golden handshake
    http://www.stuff.co.nz/national/7522398/Kaipara-council-chief-given-240k-golden-handshake

    There is also the international, Detroit situation where the council assets were bought by private companies after going bankrupt and then they shut off the water to the poor.

    https://thinkprogress.org/detroit-shuts-off-water-to-thousands-of-broke-residents-a4056e424137/

    Council assets like water, wastewater, sewerage, transport etc are the new assets to acquire for private equity and corporations Councils have more ability to make people pay whatever sum the council or ex council asset company demands, than banks!

  3. Phil the outright traitor who signed the Free Slave Agreement with the Chinese dictatorship; don’t like paying rates? Become a renter… see how the other half lives 😉

  4. What is democratic about the Auckland Council?

    It was set up by National and one of the little bonuses it came with was pointless elections for councillors who have next to no control on the business modelled Council Controlled Organisations. All to keep elected members well away from the assets.

    The way I see it, our harbours are filthy open sewers and you would have to certifiable to go near them, all thanks to years of rates freezes and thanks to the previous government’s open door immigration policy. How can we jam more people into Auckland and do nothing to upgrade the infrastructure to suit?

    Be angry at the idiots who requested the OIA, National. Those arseholes led us to this point, not Goff!

  5. Amazing how stupid National and Auckland City Council have been with not realizing we needed to upgrade our Infrastructure to accommodate an additional 600,000 new immigrants. I can not recall much sensible discussion going on in Parliament or in MSM.

    All I heard was Winston Peters was being a racist whenever he brought up the Immigration Issue. I guess “the pigeons are coming home to roost and the Coalition Government Labour & NZF are going to have to tidy up the mess?”

  6. A couple of things.
    I could have a field day with the narrative of this Post. Poo, riche Aucklanders pooing, what to do with the poo, who’s to pay for the poo to go away etc.
    Here’s what I’d suggest. Levy NZ Farmers for the costs of Auckland’s shit issues. Farmers earn our income, they just love national and national’s inbred bastard child, neo liberalism. They don’t know why however, they just know they do. Auckland is the very nest within which the Natzo’s and the new liberals breed and scuttle about under so get NZ Farmers to foot the bill to help them get rid of the shit their mates shit into their own nest.
    The rest of you Aucklanders? The ones already flattened by debt and now the horrors of a looming readjustment coming to the wholesale cash rate to keep you and your whanau company of a 4.00 AM.
    Is goff running while screaming yet? Is that gap toothed traitor scrambling for his very life?
    No?
    Then, dear Auckland rate payers, you’re not doing your job properly. Remember to ask yourselves this? Does the lack of transparency equal dodgy shit being done behind closed doors to make phil’s mates richer?

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