Duck and cover

Going DOWN:

• Wanganui itself apparently, which scientists say is sinking and is now 350mm lower than it was just two years ago. It's all due to earthquakes, they say, it's just that we don't feel them. Watchers have made a note of this theory in order to explain lacklustre performance in, shall we say, domestic duties. The ground did move for you, it was just a "silent quake". Time to corner the market in scuba gear, Watchers. The only consolation is that Manawatu is sinking at the same rate, and we have all those paintings in the Sarjeant - yards and yards of waterproof canvas just waiting to find a proper use.
• The NZ dollar, last heard of at US69 cents and falling. So just not imported scuba equipment, then. Still, there's an upside to that, too. It means imported rubbish like American Idol becomes more expensive for the TV channels to buy, so they'll make more local rubbish, like a Game of Three Losers (a.k.a. Idle Celebrities).
• Business confidence, now at a 20 year low. Export expectations are at a 17 year low. So domestic scuba sales only. Might even have to sell some to people from the Manawatu.
• The NZ stockmarket, last heard of almost 13 points down, with the most recent quarterly survey of business opinion showing a net 61 per cent of firms expected conditions to deteriorate in the next six months. So better make that a private scuba company, because there isn't going to be a surfeit of investors around. Which is a pity, becuase there could have been a lot of fun to be had with a play on the word "float" during your IPO.

Going UP:

• Wanganui's borrowing, by $2.6 million to fund the Splash Centre extension.
• Wanganui's debt servicing costs, which Council finance guru Julian Harkness warns could increase by anything from $0.6 million to $1.6 million by 2008/09, on top of the annual charge of $2.9million. And that doesn't take account of an estimated $3.5 million for Heart of Wanganui.

Is it just us, or does borrowing in the midst of a... well, no one's using the "r" word yet, so let's just say an "economic downturn"... seem just a little reckless? Watchers don't claim any great depth of economic insight, but it seems that the typical pattern of local spending during a recession is that it remains fairly steady, falls sharply in subsequent years, and recovers more slowly than the rest of the economy, at least according to this article from the US Federal Reserve of San Francisco.

While there are significant differences in scale between US and NZ government, and US states have additional taxation and revenue options available to them, the lessons of the article are still applicable. It concludes:

The key point about [local] budgets and the economy is that the health of the economy determines the health of [local authority] budgets. Ongoing economic weakness limits [local authorities]' abilities to grow their way out of current problems...

If Wanganui follows that pattern, the "subsequent fall" part of the theory suggests that this diVision-led Council is tying the hands of future administrations, who'll be lumbered with paying for their profligacy. And talking of lumber... we can't rely on that to bail us out, so what's left? Bussing in genetically deficient tourists from Raetihi and offering them cheap entry to the Splash Centre?

The fact that the Wanganui District Council, in common with other local authorities in NZ, relies heavily on rates revenue for the largest portion of its income leaves it with few options if debt servicing costs grow further. So wave a fond goodbye to local assets. Or be prepared for something considerably more than a "nil" rates rise...

Update (5.25 pm): We hope, for the sake of Rangi Wills, Ray Stevens and any other Councillor who's ever dared suggest the Diva might, just possibly, be wrong about something, that he's not an avid reader of the UK press. Seems Tony Blair is about to set MI5 to phone tap, spy on and otherwise trample on the democratic rights of MPs. Can Wanganui be far behind?

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