Brown’s advisor says Mayor toast if credit rating drops

March 11th, 2014 at 4:00 pm by David Farrar

The Herald reports:

’s principal policy adviser James Bews-Hair says the Auckland Mayor will be “political toast” if the council’s credit rating is lowered.

In an email accidentally sent to the Herald, Mr Bews-Hair said the mayor’s office has been advised there is a risk the council’s credit rating will be downgraded.

The email was circulated to senior mayoral staff on Sunday following Herald inquiries about council debt, which has soared from $3.9 billion to a projected $7.4 billion in the first four years of Mr Brown’s mayoralty.

In a candid email to Mr Brown’s chief of staff Phil Wilson, head of communications Dan Lambert and chief press secretary Glyn Jones – and copied to the Herald – Mr Bews-Hair outlined the mayoral position on maintaining the council’s AA credit rating.

“We need to keep on using the KPI [key performance indicator] for debt that we set for ourselves in election policy – retaining our rating.

“If we do that right, that can become the basis on which we are judged.

“We are advised that there is a risk that we will be downgraded … frankly, though, if we get downgraded in an improving economic environment then we are political toast anyway,” said Mr Bews-Hair.

I’d say toast regardless of the credit rating, but that certainly would deepen the searing.

Mayor Brown, who doubles as treasurer of the Super City, has borrowed $875 million on average in his first four budgets. This is nearly three times the average annual borrowings of $355 million by the former eight councils between 1989 and 2010. Debt repayment in the current financial year is $367 million.

Borrow like there is no tomorrow.

Mr Brown has refused to talk to the Herald on debt issues.

I would have thought a Mayor would be willing to talk to their local newspaper on any civic issue.

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31 Responses to “Brown’s advisor says Mayor toast if credit rating drops”

  1. Yogibear (375 comments) says:

    Not being an avid follower of the comings and goings in the Mayoral offices – wasn’t there big stink in KB and WO a few months back over Bews-Hair not getting on with Phil Wilson and getting the boot?

    Now it seems hes back (possibly with a vengeance).

    Can someone enlighten?

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  2. chris (647 comments) says:

    It’s good to see the media are finally reporting the huge amount of debt Auckland is in. But they need to talk about it more. I believe that most people are completely unaware a) that they city is in debt and b) if they do, how much it is. I knew it was fairly big, but I had no clue it was as big as that. How are we ever supposed to pay that back, especially when Len Brown & the rest of the council keep spending like there’s no tomorrow. So much for the super city saving us money.

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  3. Nigel Kearney (1,097 comments) says:

    Not sure how 875 is ‘nearly three times’ 375. It’s slightly closer to two times before allowing for inflation. Obviously still far too much though. If the credit rating doesn’t change, this can only be due to the likelihood that Brown will no longer be mayor after the next election.

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  4. burt (7,428 comments) says:

    Resign Len !

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  5. mjw (401 comments) says:

    So he has leader and finance … who does that remind us of? Perhaps I should bow to the inevitable and propose mjw’s law:

    “As discussion on Kiwiblog grows longer, the probability of a comparison involving Sir Robert Muldoon approaches 1″

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  6. lolitasbrother (774 comments) says:

    One thing I couldn’t do, if i was working for a person who was good for me, is let that man him down over trivial politic.

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  7. labrator (1,851 comments) says:

    We need to keep on using the KPI [key performance indicator] for debt that we set for ourselves in election policy – retaining our rating.

    What a wonderful overall objective to have for your debt level; borrow as much as possible without getting downgraded. Absolutely no correlation to performance, value or goals. Spend until you’re about to get downgraded, then stop spending. The super city was a horrific idea.

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  8. UglyTruth (4,554 comments) says:

    This isn’t a problem which is limited to the regional councils. Any system which depends on a popular mandate is going to find it impossible to repay debt which is secured by income from voters because of the unpopular nature of being rapidly bled dry by usury. Leaving things as they are results a boiling frog scenario which ends with economic collapse.

    The only realistic solution I know of is to abandon these systems, returning the provisioning of services to the free market with dispute resolution regarding municipal services being handled by courts which do not have a vested interest in the market itself.

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  9. OneTrack (3,372 comments) says:

    UglyTruth – Or the only people who have a vote are ratepayers ie the people whose pockets Len’s largesse will have to be recovered from.

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  10. Ross12 (1,486 comments) says:

    Yogibear

    There is abit on a WO thread saying Wilson wanted to get rid of Bews-Hair but Brown wouldn’t let him go.

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  11. David Garrett (7,701 comments) says:

    This getting worse and worse! How can the prick simply refuse to talk to the Herald – even though it is a rag – about the level of debt the Council is carrying??

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  12. Fox (206 comments) says:

    ……council debt, which has soared from $3.9 billion to a projected $7.4 billion in the first four years of Mr Brown’s mayoralty.

    And all this before a single piece of railway track has been laid for Loopy Len’s loop.

    I imagine by the time the project is completed, Auckland’s credit rating will be nearer to that of Detroit.

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  13. UglyTruth (4,554 comments) says:

    UglyTruth – Or the only people who have a vote are ratepayers ie the people whose pockets Len’s largesse will have to be recovered from.

    If rates were paid by agreement then I would agree with you, OneTrack.

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  14. rouppe (983 comments) says:

    Auckland City Council are running a retail bond issue at the moment to raise funds. They’re only paying 5.92-5.95% for a 10 year bond.

    I said no thanks. Not enough upside.

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  15. JeffW (327 comments) says:

    Len’s legacy will be the brown pile ….. of debt.

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  16. KevinH (1,257 comments) says:

    “In an email accidentally sent to the Herald” Yeah right. The council is leaking like a sieve, but for all the right reasons.

    It was inevitable that following amalgamation that there would be a blow out in the budget, however the figure quoted $7.4 billion, is an eye watering projection and is enough to send shivers down the spine of Auckland ratepayers who will inevitably be wearing the debt via one off levies.
    Clearly it is time to take a closer look at council expenditure i.e. a cost/benefit analysis and start pruning now before the debt gets larger, especially following the construction of the rail loop.

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  17. SPC (5,669 comments) says:

    He’s electoral toast because he supports an income tax for Aucklanders.

    That would involve those in rentals paying rent plus a tax, and a reduction on rates for their landlord, all while the tenant is trying to save a deposit to own their own house. Low income earners who own housing and who pay rates receive the rates rebate. His proposal involves establishing a reduction in rates for landlords (often creaming large untaxed CG) at the expense of the rest.

    It’s a betrayal of those who voted for him.

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  18. SPC (5,669 comments) says:

    Why hasn’t the credit rating been increased since a super city was formed – because amalgamation does not result in the savings/improvements that advocates claimed?

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  19. twofish (108 comments) says:

    Just how does any one accidently send an email to the Herald instead of the Mayor of Auckland City?

    1] transliteration, 2] cognitive preobsession, 3[ fat typing finger syndrome, or 4] simple fucking sabotage [Occam’s razor]

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  20. RightNow (7,015 comments) says:

    ” and a reduction on rates for their landlord”

    Wait, you really believe property owners’ rates would be reduced? I guess it’s possible, maybe some token amount, but it’s plain to me that this is just a money grab.

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  21. SPC (5,669 comments) says:

    Why does a super city need more money – no savings from super sizing …

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  22. secondcumming (93 comments) says:

    As my dear old mum used to say, “Son, always remember, repeated masturbation will make you completely doolally”…..obviously Lens mother wasn’t quite as worldly wise.

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  23. marcw (260 comments) says:

    You Aucklanders had better start learning the lesson that ratepayers in Kaipara have had the misfortune to inherit. A Council can do what it likes in secrecy and aginst all the rules in the LGAct, but you the ratepayers will end up paying for the eye-watering cost when the Auditor General and your Members of Parliament look the other way and pass retrospective laws to make sure no-one is held accountable. In fact, the perpetrators get to retire with their golden handshakes.

    DG can fill you in with the details I’m sure.

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  24. leftyliberal (651 comments) says:

    Hilarious that folk here complain about ‘loopy len’s loopy train’ when that is less than 5% of the planned expenditure as per the integrated transport plan to 2040. The much, much larger costs are the proposed roading projects (22billion), but there’ll be no whining about them here, will there?

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  25. RightNow (7,015 comments) says:

    “Why does a super city need more money – no savings from super sizing …”

    Why does any local (or central) government need more money?

    For clarity my answer is that they don’t. They need to shed some fat and plug the leaks.

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  26. wiseowl (979 comments) says:

    Yes it’s no wonder there are some Mayors with brains that met about the predetermined programme to form more super cities.

    The same mistake could be repeated with more amalgamations because they all follow the same path and borrow,borrow,borrow knowing they can suck the life blood out of the ratepayers.Guaranteed income.

    For a National Government to pursue this policy is unbelieveable.

    Auckland will be like Detroit before someone cries enough.

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  27. greenjacket (486 comments) says:

    “Mr Brown has refused to talk to the Herald on debt issues”
    So lets get this right – Len Brown won’t talk about his inappropriate behaviour, and he won’t talk about his city’s finances. So exactly WHAT will Len Brown talk about?

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  28. prosper (172 comments) says:

    Lefty liberal. The council is spending more money than we can afford. It doesn’t matter if it’s trains, roads or more parks the rate payers cannot afford it.

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  29. igm (1,413 comments) says:

    When in hell is this decadent disgusting apology for a mayor going to get the message and go? He is more than an embarrassment, now becoming an unaffordable liability, with an ego and hide thicker than “Tojo” Cunliffe.

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  30. trout (957 comments) says:

    Having just experienced Council performance on a small roading job: highly paid managers in new expensive vehicles coming and going’ , gangs of road workers in new vehicles coming and going; and job taking 6x longer that private contractor would do it, I can see where the money is going. Makes the old MOW look efficient.

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  31. wreck1080 (3,999 comments) says:

    i don’t get this.

    How on earth isn’t the mayor already toast?

    He is operating on a legal mandate only.

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