Lies, damned lies and statistics

Those readers holding their breath awaiting the day the Audit Office rides into town, take one look at Wanganui's LTCCP and claps the Diva in chains for over-stepping his authority had better learn to breathe through their noses. The Audit Office website essentially says next years visit will be an "audit lite", since nearly every Council has done nearly everything wrong anyway.

Now you'd think that the prospect of getting off lightly would be cause for celebration in the Mayoral office, but that overlooks the way he operates - which is to create a climate of fear, loathing or distrust and then position himself as the solution to a manufactured crisis. If it's not litterbugs or marauding gangs or the residents of Whakatane (after all they might move to Wanganui in droves) it's asset management. This is one area which virtually every Council appears to have screwed up, so Wanganui is by no means alone.

All aspects of Local Government are now subject to internationally accepted accounting practices for the first time, and the situation revealed is not pretty. A pipe that's been in the ground for 50 years, having depreciated over that time, is worthless and must be replaced according to the bean-counters. The state of the pipe is neither here nor there: it gets listed as requiring immediate replacement and is written up as a debit on the books. In Wanganui, the peak debt level might now be $100 million, not $53 million. Since this picture is repeated nationwide, it seems central government will have to become involved, either to relax the rules as they apply to capital assets, for example, or come up with the cash to put everything right.

While we might rail at these meddling bureaucrats, it is worth noting that had these rules been applied over the last 50 years, Wanganui would already have a Gallery that meets OSH standards, and a Splash Centre in good repair.

Clearly it's a major issue for any local authority, and the Diva opened Monday's Council meeting with news of his recent meeting with the auditors:

I wish to alert councillors to problem that we share and will share with a large number of other councils.

The audit office have the responsibility of auditing both our annual report and more importantly the LTCCP that will occur and that we will be required to deliberate about for public comment next year. The ten year plan for 2006-16.

The difficulty is one that we share with virtually every other council in New Zealand but one that is no less horrendous. And the LTCCP that we did in 2003 missed a lot of things that it should have included. Particularly relating to the valuing of assets and also the depreciation of those same assets and their replacement cost.

So far so bad, but then the Diva got completey carried away, stating:

Now this has meant strange things, like - I’ll give you an example today. The Auckland City Council had looked at the possibility to deal with their rates - sorry to do with their asset management and replacement and depreciation. The rates bill was up 200% over the next two years - ten years. 200%.

Yes, except that it's not true. Auckland City Council have publicly acknowledged that it is the wish-list of assets that will cause their budget blow-out. As the NZ Herald said, "Auckland's wish list exceeds its grasp". Heading the list, ironically, are Mayoral dreams such as the "Outside the Square" project, which Council officers have ranked near the bottom of a list of 36 new projects (heading the list are much more prosaic things like transport and stormwater). And it has very little to do with the 2003 LTCCP because it factors in a swag of new spending dreamed up by the present Mayor and Council.

Not being able to wave the demands of a referendumb about to demand his pet projects be given priority, Auckland Mayor Dick Hubbard has been forced to accept the counsel of his Council, saying that he hoped to be allowed to "spend a little bit of money cleverly to start with".

Unless Councillors throw away the recommendations and insist that every project on the $3.7 billion wish list be built (others not thought a priority include both an $18 million swimming pool upgrade and a $40 million arts precinct) the Diva's dire predictions of 200% rates rises in Auckland (and thus, by implication, a possibility in other towns including Wanganui) are a nonsense.

Cr Sue Westwood was the only one awake enough on the day to question whether the 200% prediction was a result of the LTCCP revelation and he fudged thus:

"Yes, in some cases because they have got to - obviously infrastructure problems up there in terms of their transport and others they simply haven't done the work that is required in terms of revaluing their assets, depreciating them and also planning for their replacement."

So with Council finances in such disarray up and down the country, will Wanganui be in for particularly brutal treatment at the hands of faceless evil Government auditors? The Audit Office have this to say:

...the extent of procedures and testing undertaken for an audit is determined based on the risk that information might be mis-stated such that it would lead readers to draw incorrect conclusions about the position and intentions of the council. Accordingly, the assumption that every asset management plan will need to be reviewed is not correct. As with the other areas of our audit, we will be considering: The high-level systems and controls that the council has in place to establish the service levels and the financial and asset management implications of service level decisions. If the council has good systems and controls, it is likely that we will test (on a sample basis) how well these systems and controls work and have been applied in preparing the LTCCP.

And Wanganui? - here's the Diva again:

Our finances are obviously going to undergo a serious inspection in the next couple of - two to three months.

So either Wanganui doesn't have "good systems and controls", thus necessitating a "serious inspection" rather than an "audit lite", or another example over-dramatisation. Of course, that's what Divas do. Then again, the Audit Office might be motivated to give Wanganui a good going-over if it thought that Council was mis-stating information "such that it would lead readers to draw incorrect conclusions".

How is a District Councillor to make sense of it all? The NZ Society of Local Government Managers (SOLGM) comes to the rescue with a series of documents about "The LTCCP Jigsaw". Here's a quote:

...the Act asks Councils to describe how additional capacity, maintenance, renewal and replacement is undertaken. But what does this entail and to what extent do you go in describing the "how"?

Some Councils in 2003 / 2004 LTCCPs thought it meant stating the service delivery mechanisms (eg contracting). Others pretty much ignored the "how".
What’s best? We suggest the "how" information should be brief:
(a) noting major new projects (when and where) that will add to asset capacity
(b) for maintenance, renewal and replacement of assets merely referencing to Council’s asset management plans which describe asset management strategies.

While Wanganui (in common with virtually every other local government area in NZ) clearly has a problem, it's hardly responsible governance to leap out at startled Councillors and handily-placed reporters yelling "Boo!!". But it's good politics, talking up a crisis in order to somehow be seen to be saving the city from the Axis of Government-LGA-LTCCP evil. And politics isn't just what the Diva does best, it's all he does.

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