Big divisions remain as Hamilton’s 10-year plan passed

Thursday, 4 July 2024

Continued strong divisions over finances have seen Hamilton councillors vote for adoption of the city’s 10-year plan with just an 8-5 majority.

Thursday’s vote would likely have been closer at 8-6 if absent councillor Ewan Wilson - on a pre-planned overseas trip - attended.

Those voting for the plan included mayor Paula Southgate, her deputy Angela O’Leary and councillors Anna Casey-Cox, Louise Hutt, Kesh Naidoo-Rauf, Moko Tauariki, Sarah Thomson and Maxine van Oosten.

Against were councillors Andrew Bydder, Mark Donovan, Tim Macindoe, Emma Pike and Geoff Taylor.

Southgate insisted the plan was a “fair and reasonable outcome” in “trying times”.

“This is not a budget of pet projects or extras.”

But Taylor, a potential mayoral candidate, said it failed to reduce the scale of the council’s operations enough to make it more financially sustainable.

The 8-5 split reflected divisions during last month’s plan deliberations.

Comment from opponents on Thursday again highlighted debt-related risks from the approved approach.

They failed last month, by a slim margin, to get majority support for an extra $100 million-plus in staff and consultant cost reductions over a decade.

This and a more restrained rate rise this financial year weren’t seen by them as sensible.

That’s in part because it means less “headroom” when it comes to the council staying within critical debt to revenue limits.

The approved plan is to have a 16.5% rate rise this financial year and double digit rises for the next four years.

An alternative promoted last month by Wilson suggested 18.5% this year, with lower rises in the next four years, meaning more debt headroom in the plan’s earlier period.

Council finance director Tracey Musty noted on Thursday a new Audit New Zealand report highlighted the plan’s current projected headroom “that obviously isn’t as large as we’d like it to be”.

Taylor said there could be credit rating downgrades and higher interest costs if debt to revenue limits were breached.

“All it takes is a ‘black swan’ event, a worsening economy, and we’re in trouble.”

He noted, for example, how new pauses on Kāinga Ora housing projects in Hamilton could cut development contributions revenue.

Macindoe, another potential mayoral candidate, also worried about financial risks associated with not cutting costs more.

It meant “we are in a position where we have very little room for manoeuvre”.

“An unforeseen significant downturn would have drastic consequences for us all.”

Donovan said he’d heard from some ratepayers that the council “looks like a boat full of holes and heading towards an iceberg”.

Pike felt the council was “scarily close” to breaching debt to revenue caps.

Van Oosten, however, said “our council isn’t broke and we’re not wasting money”, noting the Audit NZ report suggested the council was in a good position overall.

Thomson said bigger staffing cuts would have been unsustainable and warned if services were reduced too much “the city will just look like a mess”.

Hutt worried services reductions could be a “slippery slope to privatisation” of council operations.

“You de-fund public services, they don’t work, people get angry…and it ends up being handed over to private business who charge the public through the roof.”

Southgate stressed the plan reflected a range of significant new savings, taking into account community concerns about an earlier proposed 19.9% rise for this year.

It also reflected how rates were needed to run and grow Hamilton appropriately, she said.

“We are the fastest growing modern city in New Zealand - do we want to be a good city or a run down city?”