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Christchurch – Picking the bones clean?

11 February 2012 3 comments

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It is fast becoming apparent that this government is eyeing up Christchurch’s community-owned assets, to “help” pay for the costs of that city’s re-build.

Gerry Brownlee recently  stated,

“Let me tell you, when the Government is spending $5.5billion anywhere, we expect the recipients of that to have some plan for how they will participate in what will be a very, very expensive recovery. And that plan has to be a lot better than ‘we’re just going to put up the rates and we’re going to borrow a lot more money’.” – Source

Which, strangely enough,  is pretty  much what National has done in the last three-and-a-bit years; raise gst; raise ACC premiums; raise EQC levies; and borrowed $380 million a week until we were (last reported) over $18 billion in debt,

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So it’s ok for Central government to raise taxes/charges/levies and borrow like crazy – but not Christchurch!?

Ok, got it.

So what alternatives are  Gerry Brownlee and John Key expecting of Christchurch City Council?

It appears that Key and Brownlee are indeed pressuring the Christchurch Council to privatise  it’s community-owned assets to raise $1 billion for re-building. Chief amongst these, I suspect would be the Orion Power company – one of few in New Zealand still in public ownership. (Orion is 89.3% owned by the Christchurch City Council and 10.7% owned by the Selwyn District Council.) Red Bus Ltd, Lyttelton Port Company, and Christchurch airport could also be privatised if Brownlee gets his way.

Brownlee stated,

“”We have asked Treasury, obviously, to give us advice about what the capacity is for Christchurch’s rating base to take on the extraordinary expense they have to face in the future,” he said.

”It is a $1billion-plus bill that they have to face and we are very interested, given that we are putting up $5.5b, as to how they might meet that cost.” ” – Source

Which is ‘code’ for “how are you guys going to cough up $1 billion for your re-build”?

It would be crazy  to expect the people of Christchurch to rebuild the second largest city in this country. After enduring so much devastation; the death of 184 loved oved ones; thousands of people leaving the stricken city; losing teaching staff and other skilled workers – expecting the local people to weather such an onerous billion-dollar cost is  patently unjust.

And it would be commercial insanity to privatise Council-owned assets at a time when, due to Christchurch’s current state, would constitute ca “fire sale” and not fetch the best possible prices.

As Gordon Campbell wrote on Scoop.co.nz.,

Please. It would be idiotic to force Christchurch to sell its assets to pay for its rebuild, under present conditions. Given the current state of the city, those assets would earn only fire sale returns. Hocking off the city’s assets dirt cheap is yet another version of the destruction of its legacy – and while it may make sense to Brownlee to sell off that legacy to any of his government’s real estate speculator mates who may be waiting in the wings, it would be a betrayal of the people of Christchurch who as [Lianne] Dalziel says, have been through enough: “What they don’t need are backroom deals being done on the future of their city and their city’s assets.”  – Source

As for the government’s financial problems – these are of John Key’s own making. Cutting taxes (April 2009, October 2010) during a recession, when we most needed to stimulate the economy via encouraging strong infra-structure investment was just irresponsible,

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Bill English may have “expected the “tax switch” to be revenue-neutral” – but his ‘expectations’ are not part of reality. Instead, National has left a gaping hole of several billions of dollars in government revenue. No wonder we’re borrowing $380 million a week – and paying hefty interest amounts on those borrowings!

Refusing to raise   taxes (except gst, which impacts mostly on the poorest) to finance the rebuild  of our second largest city simply defies logic. But then, I, and others, have long since given up trying to figure out this governments plans.

Even the business community said as much,last year,

Business NZ also released the results of its election survey of more than 1300 small to large businesses. While almost all believed it was important for the government to have a co-ordinated plan of action that raised economic performance, little more than a third thought John Key’s Government had one.

Deloitte chief executive Murray Jack said the finding was “disturbing” and the plan Mr Key had earlier in the day confidently spoken to the conference about “was obviously news to most people in this room”.” – Source

It’s fairly obvious that this government is relying on short-term “gains” (asset sales) to achieve long-term results. Applying “free market” policies to rebuild a crippled city is simply more right wing craziness.

A far better option would be the Green Party proposal for an Earthquake Levy. Such a levy would spread the cost of Christchurch’s re-build; take unnecessary financial pressure off Christchurch citizens; preserve Council-owned assets in public ownership; and retain the income stream – $100 million per annum – from these assets.

It’s a win-win-win scenario.

Does this government have the wit to investigate this, and/or other options?

Or does John Key really looking to buy into yet another fight with another community over another sensitive issue?

Your call, Mr Key.

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Additional

The Press: Brownlee turns up heat on council over rebuild

Green Party: How an earthquake levy could look

Scoop: On bank profits, and Gerry Brownlee’s asset sales plans for Christchurch

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