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Wednesday, September 30, 2009

Excuses to privatize


Local government debt forecast to double
Local government debt is likely to double to $11 billion during the next seven years as councils borrow to pay for core services. By June 2019, total debt is forecast to be at $10.765 billion, a rise of 99 per cent over June this year. Local Government NZ president Lawrence Yule said the introduction of compulsory asset management plans had forced many councils to deal with long-neglected infrastructure such as roads, water and sewerage systems, and they had no option but to borrow for the work.

This debt that has built up from long awaited infrastructure upgrades will be the main excuse Hide will use to privatize local government services as the glorious solution to the ever increasing rates tsunami. Rates going up while home owners face slumping house prices and W recessions breeds the exact type of conditions that generate quick fire asset sales.

Do not take your eyes off Hide, ever. He’s working on TABOR and the changes he is planning for local government will be the privatization blueprint for the country post 2011.

2 Comments:

At 30/9/09 2:20 pm, Blogger Truth Seeker said...

Old Tory tactic to pillage the Commons: run it down then claim it MUST be sold off (to their mates).

They cry "Governments can't do it as well as private business!".

What that really means is THEIR government can't do it as well....because they don't want to. There is too much money to be made from doing it badly.

maybe THIS time voters will realise the Tories really are pirates when it comes to public assets?

...oh wait...forgot. Hitting your kids is more important than anything else.

 
At 30/9/09 5:10 pm, Anonymous Anonymous said...

Yes, Rodney hide is working on his TABOR plans (to cap rates with a sinking lid, forcing service cuts medium term).

But you should not just accept the statement from ex-Nat MP Lawrence Yule that "the introduction of compulsory asset management plans had forced many councils to deal with long-neglected infrastructure such as roads, water and sewerage systems, and they had no option but to borrow for the work. "

First, to pay for the work they could:
1) raise rates
2) borrow (raise rates over a longer term)
3) cut service levels
4) charge user pays fees for services
So there are many options - even if they are ALL undesirable!!!

But the issue I raise is that infrastructure construction companies have successfully 'raised the bar' on many building standards over the last 3 decades, which forces councils (and schools, hospitals, etc) to rebuild/strengthen/build new on a more frequent basis than before. This increases revenue (and hence profits) to the aforementioned construction companies. That is the unquestioned story here.

For example, a new council pool was recently built in my suburb on stable new land, replacing the old pool built on a swamp. Despite higher standards of concrete, steel & paint, etc than 30 years back when the old pool was built, the new pool was given an expected life of just 25 years - 5 years less than the old pool (and ignoring that most Akld City pools last far longer than even 30 years).

A recent academic study (in news, dunno source) said Wellington earthquake standards had been over-designed to twice the standard required, but Wgtn Council refused to lower the standards to the strength now shown to be enough to withstand most earthquakes. Businesses suffer the higher strengthening costs, but so too does council - only the infrastructure companies win.

Ditto in transport - the planners (who often revolve their employment between infrastructure firms and councils) slap the 'safety' label on any new road widening or new bridge project, and no-one questions it. Even if it is laughable, but lucrative, nonsense...

 

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