22/04/2004

Councils spar at forum

About 100 people listened to the leaders of Waitomo and Otorohanga districts argue why they are for or against uniting the councils, at a meeting on Tuesday night.

Some audience members said they were none the wiser after listening to arguments and counter arguments, but one of the forum organisers, Murray Loewenthal said he felt the councils presented themselves "pretty well".

He said it was significant that council leaders met on common ground to debate the issues. Otorohanga Community board chairman Dale Williams snared a clear win for the Otorohanga panel in a discussion about roading.

Mr Williams spoke of the importance of presenting our roads in the best possible condition - his sentiments were warmly endorsed by the crowd.

However, Waitomo District Council chief executive David Jack scored a hit against the foundation of ODC's argument on the issue of capital valuations.

ODC has maintained that Otorohanga's capital value has traditionally been about 20 per cent above Waitomo's, with an expectation that this trend would continue.

However, Mr Jack revealed that both councils had made contact with Quotable Value New Zealand valuer Keith Williams, who estimated Otorohanga's capital value would rise by only about 20-30 per cent when a revaluation is conducted later this year.

Mr Jack said, with a 25 per cent increase, Otorohanga's value would be about $1.825 billion - marginally higher than Waitomo's $1.631 billion.

This undercut ODC's claim that Otorohanga ratepayers would 'bail out' Waitomo to a significant extent if the councils merged.

Mr Jack said the two councils' combined rates take was about $13 million, and with predicted savings of $1 million annually, the only significant question that remained was how to distribute those benefits.

Waitomo mayor Allan Andrews started the debate by saying residents had the opportunity to discard the differences of the past and create a completely new organisation.

"The two districts are substantially the same in most respects," he said. Otorchanga mayor Eric Tait said in his nine years as mayor of Otorohanga, the district had become prosperous and financially strong.

He would not seek the mayoralty of a united council.

He said some savings forecast from amalgamation had already been made.

Mr Tait referred to WDC's projected public debt of $53.4 million in 2014 and said the location of the merged council's administration headquarters was an issue left unresolved.

Mr Tait said the Local Government Commission would have taken "a lot of sting out of our argument" against amalgamation if it had included a rating differential in its proposal.

LGC chairman Grant Kirby earlier told the Waitomo News why the commission did not make differentials or 'ring fencing' part of its final scheme.

"The commission did not consider that the new council should be hamstrung by the existing arrangements," said Mr Kirby.

"The provisions of the final scheme would enable a new council to take an holistic approach to the issues of the new district as a whole."

A new council would be free to choose to ring fence existing rating arrangements, he said.

Mr Andrews and Mr Jack alluded to marketing opportunities that would be readily available to a combined council, particularly in the tourism sector.

However, Mr Williams reminded the Waitomo panel that WDC's lack of support for tourism led to the amalgamation proposal.

Mr Jack said WDC's decision to stop funding Tourism Waikato was a decision made by a previous council.

LGC says yes to fewer WDC

There will be fewer councillors from the Waitomo district after October's election, regardless of whether amalgamation with Otorohanga district proceeds.

Four councillors will be elected from the existing Waitomo district, including two from Te Kuiti, if the districts amalgamate.

However, the number of Waitomo councillors will also be reduced from 10 to six if voters reject the amalgamation proposal this month.

There would be three councillors elected from Te Kuiti and three from a single Waitomo rural ward.

After hearing an appeal and objection, the Local Government Commission backed Waitomo District Council's plan to reduce the number of councillors and have them elected from two wards.

The council initially proposed that its membership comprise the mayor and five members elected from the district as a whole.

Following consideration of submissions - many of them from concerned rural ratepayers - the council's final proposal was for six members to be elected from two wards, plus the mayor (elected from the entire district).

The commission came to the view that, because of the diversity of the district, effective representation of the various communities of interest could only be achieved through councillors being elected on a ward basis.

The appellant and objector said the rural part of the district contained several distinct communities, requiring separate representation.

They also argued the size of the rural part of the district would make it difficult for councillors elected from a single rural ward to effectively represent their communities.

However, the commission was satisfied WDC's proposed representation structure was appropriate.

"Having considered the information presented to it, the commission is satisfied that the wards proposed by the council more or less equate to the communities of interest requiring separate representation on the council," wrote the commissioners in their decision.

The election would be held on October 9.

Plan poser: Is Inframax for sale.?

There are no current plans to sell Inframax Construction Ltd, according to Waitomo District Council chief executive David Jack.

Addressing a public meeting on Tuesday night, Mr Jack said WDC management was investigating the value of its asset, but selling the company was not on the immediate agenda.

"There will be no proposal unless we have something to put together for councillors to look at," he said.

Tuesday night's meeting was organised to debate the merits of merging Otorohanga and Waitomo districts.

The Inframax asset and dividends, which are currently owned by WDC, would be shared with Otorohanga if North King Country residents vote to unite the districts.

"It is not possible to reduce our shareholding before amalgamation," said Mr Jack.

However, Waitomo District Council has also given some of its broadest hints yet that part of Inframax will be sold at some stage. In its draft community plan, the council referred to its dependence on the success of the company in a medium-risk market, as well as the council's high public debt levels. Council owns the company "as a matter of history" and will be reviewing the 'validity' of its investment this year.

WDC may choose to divest itself of its $7.5 million ownership - either in part or in full. "The company is well-performed, but functions in a business environment that is considered to be at the limit of acceptable risk to a local authority in Waitomo District Council's situation," stated the draft plan.

"Key concerns are the level of public debt being maintained to finance the ownership and the retention of employment provided by the company within Waitomo district." Inframax employs about 220 staff.

In the annual plan executive summary, WDC chief executive David Jack said Inframax dividends made a significant contribution to the council's income, which offset rates.

"The income, whilst welcome superficially, is a factor of some concern given the extent of council's dependence on the continued success of an enterprise operating in a medium risk market," he said.

"Council will be determining the long-term wisdom of its investment during 2004/2005 and the potential for substantial change in respect of this strategic asset cannot be discounted."

Inframax has bases in Te Kuiti, Taumarunui and New Plymouth, and has expanded into fields other than roading.

"It provides satisfactory cash returns to the shareholder," stated the draft annual plan. "The company has good prospects in terms of future work commitments (an annual sales turnover in excess of $23 million), is able to fund its own capital development and is well placed to continue making good returns to the shareholder."

At the meeting, Mr Jack said Inframax dividends would obviously be treated as income. Otorohanga District Council general manager David Hall said ODC had treated Inframax dividends as income, although the council's financial analysis excluded the dividends from income.

Excluding Inframax dividends from income had the effect of minimising the savings ODC considered would arise from amalgamation.

Otorohanga mayor Eric Tait said ODC would treat the dividends as a windfall - like a lotto win each year.

Mr Jack said since Inframax was established in 1995, it has returned in excess of $5 million of income to Waitomo District Council.

The book value of the asset has also doubled from the council's initial investment of $3.6 million.