A $1 billion hole in books of woke Wellington Council

A $1 billion hole in books of woke Wellington Council

I have been talking about this for years.

Now, it seems the chickens might be coming home to roost while there is official denial. 

This is Auckland media talking about this – where is the Wellington press?

Independent experts find potential $1b hole in Wellington City Council books

Three prominent Wellingtonians are so worried about the city council’s finances that they’ve paid for independent experts to take a look at the books.

The resulting economic analysis suggests the council could be facing a $1 billion funding gap in unbudgeted costs and is on track to breach its debt covenants.

But the council has hit back, saying the claim is based on old figures and the basis behind some costs is unclear.

The research, based on publicly available documents, was conducted by Castalia on behalf of retired lawyer John Swan, digital entrepreneur Luke Pierson, and businessman Robert Fisher.

The Herald has seen a summary of the analysis in a submission from the trio to the council.

There is at least $500 million in council spending that’s not included in the most recent 2021 Long-Term Plan, and a further $500m in unbudgeted spending, the submission claims.

Projects driving some of these costs include earthquake-strengthening the Town Hall, Opera House, and Michael Fowler Centre, as well as water infrastructure upgrades and community housing investments, the submission said.

Wellington City Council's planned capital expenditure as of 2021 and Castalia's estimates for unplanned capex.
Wellington City Council’s planned capital expenditure as of 2021 and Castalia’s estimates for unplanned capex.

Swan said the council could not afford the costs of more debt or big rates increases off the back of a 12.3 per cent increase this year.


“We must as a city now push pause and potentially take some very challenging decisions around how we navigate our current financial situation. Continuing on as we have is simply not an option.”

Swan said even on conservative economic assumptions, and factoring in National’s promise to get rid of Let’s Get Wellington Moving, it is clear ratepayers are facing at least a $1b financial hole.

The council intends to publish full details about the council’s financial issues, including options to deal with them, in November. The community will be consulted on these options in April next year.

Mayor Tory Whanau said the council is following a Long-Term Plan process and wanted to hear the views of the community at the appropriate time.

“It is important that input is made with up-to-date information, including the projects we are progressing with so that we can have an informed debate,” Whanau said.

“I encourage those wanting to feed into the process, as is their right, to do so within the timeframe of consultation early next year. This is common practice for councils across New Zealand, to pre-empt decisions from old figures is to create uncertainty for Wellingtonians.”

Whanau said council officials were providing open and honest advice to elected members to help them with Long-Term Plan deliberations.

“There will be hard decisions to make and it’s my job to lead the council so we get good, affordable outcomes for all Wellingtonians.”

Wellington City Council's debt-to-revenue ratio under different scenarios.
Wellington City Council’s debt-to-revenue ratio under different scenarios.

Whanau has rejected claims the council is facing a financial crisis, despite claims to the contrary from councillor Diane Calvert.

This compares with Auckland, where residents are facing a financial horror show. Meanwhile, in Christchurch, Mayor Phil Mauger recently told The Press the council was in “s**t creek financially”.

Pierson said it was good to see those mayors calling it as it is.

“We wish ours would do the same.”

Pierson would not say how much the trio paid for the independent analysis but said it wasn’t cheap and that signalled how important the issue was to them.

Council chief financial officer Andrea Reeves said their submission made assumptions based on information from 2021 at a time when the council hasn’t yet made decisions about what projects it will and won’t pursue over the next 10 years.

“For example, the submission provides an estimated cost for spending on the Michael Fowler Centre and Opera House earthquake-strengthening, bringing water infrastructure up to standard, major transport projects and community housing investment,” Reeves said.

“The basis behind these costs is not clear from the submission provided. Further, it provides another $500 million on other expenditure without making it clear what this relates to.”

Reeves noted Castalia had not spoken to the council about its assumptions.

Pierson said the fact they have had to use old numbers summed up the problem.

“The only publicly available information is the information Castalia have used for this report. The council has not been transparent and the mayor is prohibiting her councillors from speaking publicly about the state of the city’s finances and we just don’t know, so we went and found out ourselves.

“We’d love to be shown that we’re wrong, that would be a great outcome from this, but there’s nothing publicly available that suggests that we’re wrong at present.”

Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.

Behind a paywall

Why Wellington’s ‘financial crisis’ is being kept secret

Wellington City Council is facing a financial reality that could pour cold water on Mayor Tory Whanau’s big campaign promises and see hundreds of millions of dollars in capital spending cut.


Leave a Reply

Your email address will not be published. Required fields are marked *

Wordpress Social Share Plugin powered by Ultimatelysocial