OPINION: I had the pleasure, if you can call it that, to attend the latest Full Council meeting. What a circus it turned into, led by Mayoral candidate Cr Ludlow.
His initial gesture was to stop an attempt by the Mayor to allow each Councillor to express a view on whether next elections voting form should list names in alphabetical order (as it has previously done) or in random name order. Ludlow claimed that standing orders did not allow for more than three Councillors to speak in support of a motion. While he is correct, for a Councillor aspiring to be Mayor, I would have thought it would be a great thing to allow everyone to transparently have a say on this matter, given it was an open meeting with media present.
It was not too long ago that Cr Ludlow was removed from the Deputy Mayor role by his colleague Councillors, so stopping their feedback at this meeting didn’t show him in a very positive light.
But even worse was to come.
There has been publicity that HoldCo (the Council owned company that arches over Councils’ four trading companies) may withhold $2m in dividends from Council.
Councillor Pottinger, sought some clarification of why this was occurring and tried to get support from his colleagues for a report to be provided by HoldCo to the Risk Committee he chairs. His reasoning, which I support, was that with Council shortly having to consult with the public on any investment in the CDB upgrade project, there needed to be clarity for the public on the financial state of HoldCo, which has been described recently as “cash strapped in the short to medium term”.
I would have expected that one or more of the three Councillors (Ludlow, Thomas and Lewis), who are also HoldCo Directors, should have given some of the reasoning behind the holding back of the $2m dividend, to Cr Pottinger at this meeting. But as is the norm, these HoldCo Directors sat there like ‘stunned mullets’ as they have done on other issues relating to HoldCo. They either don’t know or don’t want to say. So, when Mayor Shadbolt suggests in the past that having Councillors as paid Directors of Council owned companies is a way of ensuring control and knowing what is going on, the real scenario is the direct opposite.
We didn’t get any reasoning and in it’s place, Crs Ludlow supported by Cr Lewis tried to ensure that any report from HoldCo went to the Finance Committee that Cr Ludlow chairs. That motion was defeated after Cr Pottinger suggested that such a move was a conflict in interest.
From my previous investigations into HoldCo I can advise that the $2m being withheld will be for Directors fees, HoldCo insurances and more predominantly, to service the inappropriate debts that Council has created in the commercial sector. My recent articles have highlighted that Council is losing annually a quarter of a million dollars on the Awarua Industrial Park project and more half a million dollars on the Don Street project.
But, here is the really scary bit.
Our rate increase forecast takes into account projected income dividends from HoldCo. This year our rates went up by 4.71% with a similar increase for next year.
If the expected level of dividends is not available to offset the need for higher rate increases, that $2m equates to 4% of council expenditure, according to Council Finance staff at the meeting.
As Cr Pottinger correctly reflected, if the dividends are not forth coming, something has to give. Either forecasted projects in the Long Term Plan would have to be delayed or rates would have to go more than what was forecasted for the next 5 years.
If rates were their preferred option, simple maths shows that next years’ rates could look more like 9% than the current forecast of 4.5%.
And this is purely because successive Councillors have got us into the commercial sector, an arena that they should not be involved in with our rates, resulting in budget blow outs and massive debt servicing.
And for Cr Ludlow to state publically that “Council would cope without it (the $2m)”, when last year he was party to approving a $2m rate increase for us, and some months later, agreeing to a surplus of $1.97m of operational funds going into reserves as ‘not being needed’, shows he has little regard for the well being of ratepayers, especially those on low income.
And never let it be said that I just bash Councillors.
A big shout out for Cr Pottinger, who yet again, asked the tough questions of those Councillors who receive a handsome fee for their Directorships of HoldCo (and the trading companies) and then continue to present a wall of silence.
The sooner that HoldCo and it’s Directors cease to exist, the better. The trading companies should report quarterly directly to all Councillors and be open to scrutiny.
Nobby Clarke intends standing for Invercargill City Council in October.
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