Merger rate rise fears allayed

Cr Wayne Bradshaw.

Fears Hastings ratepayers could face massive rate hikes to pay off council debt if amalgamation goes ahead are unfounded, the Local Government Commission says.

A commission pamphlet being distributed to Hawke's Bay households says if the council merger plan goes ahead, until 2021 "loans raised by the current district and city council's would be serviced and repaid by their current ratepayers".

Hastings Mayor Lawrence Yule.

In a letter published in Hawke's Bay Today yesterday, Hastings district councillor Wayne Bradshaw said servicing and fully repaying the council's $87.8 million debt by 2012 would require a 25 per cent increase in rates, or a jump of $550 per year for the average ratepayer.

But a spokeswoman for the Local Government Commission said yesterday it was not proposing existing council loans be fully paid off over six years.

"The ring-fencing provision simply requires that the repayments over the first five years of the new council (2016-2021) would be made from the area for which the loan was taken out," she said.

"The remainder of loan balances that have longer than 2021 on their repayment terms would be addressed by the new council."

Hasting Mayor Lawrence Yule said the commission was proposing a similar approach to that taken following the last major round of council amalgamations, in 1989, when Hastings City Council merged with Hastings Borough Council to create Hastings District Council.

At that time the city had $40 million of debt and the borough had $2 million. The new council dealt with the disparity by introducing a charge the following year for city ratepayers which has remained ever since.

"Since 1990 we've had ring-fencing of debt," Mr Yule said.

"It's not in any legislation; it's just that the council thought it was a fair way of dealing with things, and that's how it has dealt with it."

He said the move meant farmers did not feel they had been unfairly lumped with urban debt and the regime had never been challenged.

"In 2021 that will be exactly the same conversation the council has - what is the best way of fairly apportioning debt, et cetera. For anyone to automatically assume all debt is going to be harmonised is a long way from the truth because [councillors] look at things around the table and say what is a fair way of doing things. If you don't do things that are fair, you soon get a community reaction."

Mr Bradshaw, a former chairman of the Hastings District Council's finance committee, said he was pleased the commission had clarified the situation.

"Perhaps they should have done that in the first place," he said.

"If they're not definitive in what they're saying, a lot of people assume a lot of things and I think this is such an important debate you can't have that. You've actually got to be as definitive as you can be."

Central Hawke's Bay Mayor Peter Butler raised concerns about the wording of the pamphlet with the commission earlier in the week.

Napier City Council has demanded the commission retract the pamphlet, along with reports it distributed last Friday which the council says contain financial errors totalling almost $1 billion.

The material has also been criticised by Wairoa District Council.

The commission is currently considering its response to the Napier City Council complaint.