Whanganui district councillors are grappling with our debt levels as they review the 10-year plan, and I believe there is an opportunity to slash this debt by as much as $20 million.
Our council debt is expected to be $120m in the near future — not excessive in the great scheme of things, but certainly enough to constrict a few sphincters perched around our council table and probably more debt than most of us in Whanganui would like to see.
Ratepayers must fund this debt — one reason why rates are so high in Whanganui. The debt amounts to about $2700 for every man, woman and child living in Whanganui and, at a rate of 6 per cent, servicing it will cost ratepayers around $8m a year.
So if there is some way to reduce this debt, councillors must do whatever they can do to rip away the millstone hanging from our necks.
My idea may be controversial and philosophically challenging for some councillors, but they should sell off council-owned community housing.
Other councils around New Zealand (Hamilton, Whakatane and Horowhenua) have made this sensible decision. But when it comes to governance and running a district council, politics and philosophical ideology get in the way of sensible business decisions.
Some Whanganui councillors, and other opponents of this idea, will argue we cannot throw the elderly out on the street, and that we have a responsibility to help the needy.
But let's make it quite clear — these elderly tenants will not be thrown out on the street. In fact, there is every chance council tenants would be better off if council community housing was sold to a registered community housing provider, such as the Sisters of Compassion, who recently bought the Horowhenua District Council housing portfolio.
Groups like the Sisters of Compassion, founded by Suzanne Aubert in 1892, are far more capable of looking after the elderly than our council staff. In addition, being a registered community housing provider means they can apply for a capital grant from the government to fund building and to make income-related rent subsidies to tenants, an option not available to any council.
The Ruapehu Masonic Association Trust here in Whanganui already look after the elderly in their Masonic Court property in Whanganui East. This group has shown an interest in purchasing council community housing in the past and also offers residents advanced healthcare services, something that will never be an option for our council.
Some will argue that the existing portfolio of community housing in Whanganui is not costing ratepayers anything, as it is self-funding. This is true, but it is also misleading.
These properties operate on increasing deficits funded by borrowing, which must be repaid. Capital expenses are also projected to increase as maintenance is required, and that does not include adding to the stock of community housing when more is likely to be needed.
More importantly, who is responsible for housing the needy? Central government or local councils?
There is no doubt in my mind that this responsibility is with central government, but because Whanganui also supplies community housing, we pay for it twice over — through general taxation and again in our rates.
Hamilton District Council sold 344 units in 2015 to Accessible Properties, a wholly-owned subsidiary of IHC New Zealand, for $23.5m ($18.8m of that will be paid in March 2019). The Whakatane District Council sold 79 units in October 2015 for $2.5m and the Tauranga City Council is considering selling its 246 units with an estimated value of more than $30m.
There will be debate over how much our council housing is worth. However, a public tender would soon find out its value — and what better time than now, when there is strong interest by groups in this sector to buy.
Add to this the sale of various under-utilised surplus property, which council is considering, and we could be well on our way to reducing debt, ongoing debt servicing and high overheads.
The potential is there, but can our councillors get over their political ideology and make this happen, or will we still be talking about debt levels in 20 years?
Our council needs to get back to providing core services, so we can start reducing rates sooner rather than later.
■Steve Baron is a Whanganui-based political commentator, author and Founder of Better Democracy NZ. He holds degrees in economics and political science.