Council debt spirals

Residents in some small regions face huge repayment bills. Photo / Martin Sykes

Residents in some of New Zealand's smallest communities may soon face rates rises that far outstrip their big-city cousins.

The increases will be driven by the need to pay interest on council debt that has spiralled out of control in recent years.

Kaipara in Northland heads a grim list of councils that have laden their ratepayers with massive levels of debt. Others include Waitomo, Western Bay of Plenty, Tasman and Buller.

Their total debt levels are considerably smaller than those of the big cities but are out of proportion to their populations.

Residents have become increasingly concerned and are, in many cases, demanding their councils rein in their spending.

Kaipara District Council has a net debt of $80.7 million, in part the legacy of building a $58m sewerage system at Mangawhai.

That debt is equivalent to $4395 for every person in the district and ratepayers cannot escape their debt liability by liquidating the council.

Residents are frustrated that they do not get the same council services as they would in a city like Auckland.

Craig Douglas, a sheep and beef farmer who farms 4000ha on a peninsula west of Kaiwaka, said he paid a large annual rates bill but had no services such as rubbish collection or recycling. "You can't keep screwing the goose that lays the golden egg," he said.

Douglas' concerns were echoed by the rural group Farmers of New Zealand, which has called on the Government to appoint a statutory manager for the Kaipara District Council.

First-time councillor and farmer Jonathan Larsen said the council had a debt addiction.

"Unless we act now to change our addiction to debt and start living within our means we will be in serious financial trouble," he warned.

Resort towns such as Queenstown, Rotorua and Taupo were also high on the net-debt-per-capita list but say they have many absentee ratepayers, such as holiday-home owners, who help share the rates burden.

Tauranga, Dunedin, Hamilton and Auckland also feature high on the per capita debt list the Herald on Sunday compiled this week.

Ratepayer Matt Whitaker, from the semi-rural neighbourhood of Dairy Flat, said they received little more for their rates than those in small farming districts.

"I get nothing, no street lighting, no footpaths, no sewerage and I pay $3600 a year," said Whitaker.

At the other end of the scale, eight councils reported no external debt: Rangitikei, South Taranaki, Kawerau, Mackenzie, Waitaki, Central Otago, Clutha and Southland.