Brian Anderson The Western Front www.sunlive.co.nz

Last week I reported on the pensioner who had to pay her rates weekly.

A number of people contacted me with similar rate problems, but also reported on their inability to sell their houses and move to a rest home. We are supposed to feel sorry for young people who haven't saved and are unable to afford their first house, but the elderly have saved and fought for thirty or forty years and are now watching the value of their hard-earned asset being stripped. With this evidence, why would any young person ever want to buy a house?

Cutting back
Everyone has to cut back, but council is choosing to defer rather than cut any of its projects and is accumulating further debt and interest payments. Within three years, the interest payment alone on council debt will add close to $500 to a household rates bill. Instead of cutting up its credit card and facing reality, council is now planning further heavy borrowing, in effect trying to pay off its credit card with another card. The evidence is in the Annual Plan. The consequence will be borne by the people for years.

Annual plan
A third of the Annual plan is an explanation of the council's desire to join with other councils to pool its financial commitment and borrow off each other, a sort of financial commune. The only problem is the council standard and poor's rating will determine its interest rate. This rating is determined by the value of the council assets. This means that the council will not be able to have a garage sale to get out of debt because its interest rate will go up. Unlike the elderly, they haven't noticed the collapse in market value of properties which are selling well below government valuation. This is particularly disastrous for rural coastal and lifestyle properties. Last week, a $900 000 GV property fetched $346 000 at auction. Six months ago, sales of rural properties averaged 37 per cent below GV. As council has significant assets in land, it is not considering that its assets are disappearing also. If it has, it is not admitting it.

Covering debt
Borrowing to cover debt has started already. The Omokoroa sewerage scheme outlined in the plan initially budgeted for a $1.3m interest payment this year. Recently it was reported some money had been found for the project, taking the Omokoroa debt down from about $70m to $40m. The revised plan now reports the interest debt this year has actually risen to $2.1m. Further down the page it refers under ‘Other Funding' increases to future surpluses. This sounds suspiciously like council has been pawning our future rates for cash now.
The financial smoke and mirrors is a bit beyond most people, but we are expected to run a ruler over the council's projects and have only until the end of the month to submit to the Annual Plan. There are meetings advertised to discuss Annual Plans throughout the Bay. We have until the end of the month to sharpen our axes and start swinging.