New Zealand’s fiscal challenges: lessons from the Wellington City Council’s plight

Dr Bryce Wilkinson
Insights Newsletter
26 January, 2024

Wellington City Council’s current leaking water woes epitomise the misplaced spending priorities of successive councils. 

Wellingtonians now face water rationing in their homes while they see vast quantities of leaked piped water escaping down streets and across pavements. 

To add to the irritation, anti-motorist ideologues are making roads increasingly unfriendly for motorists. The ideologues’ hope against hope for an efficient government-run bus system. But most households need the flexibility that cars provide. 

Mercifully, the ill-named “Let’s Get Wellington Moving” project has been terminated. Spin-off editor Joel MacManus described it as “a giant waste of everyone’s time. It was expensive, slow and unaccountable”.

Hundreds of millions are being spent on projects whose actual costs bear little relationship to earlier cost estimates. Their value to ratepayers, as assessed by ratepayers, seems to be largely an irrelevant consideration. 

The electorate’s tendency to elect politicians with no serious financial competence or interest in value-for-money is part of the problem.  

When professing good intentions is enough to get elected, those who are best at expressing fine sentiments can spend and regulate whimsically.   

Poor quality regulations can have adverse fiscal consequences for Councils.  

Safety regulations and heritage regulations illustrate the impulse to regulate poorly. Both are well-intentioned - as long as property rights and value-for-money are not taken seriously. 

The Council’s Town Hall buildings are caught by this regulatory double-whammy. Heritage buildings cannot easily be demolished. Therefore they must be strengthened, regardless of the net cost to community wellbeing.  

Households could be made worse off by thousands of dollars each. In 2014, TailRisk Economics assessed that the government’s draft earthquake-strengthening legislation would impose a net cost to the community of $10 billion. Households would be over $5,000 worse off, on average.

Only those not caring much about New Zealanders’ wellbeing could support that.  

Pursuing greater safety, lower CO2 emissions, more sustainable management, better housing and all other worthy goals is desirable if the benefits to the community exceed the costs, but not otherwise. 

Last October, journalist Andrea Vance called for central government to consider intervention to stop the Council rot. Unfortunately, central government is commonly similarly infected. 

Better ways of putting value-for-money at the centre of government spending and regulation are needed. Much could be done. Hopefully, this government will step up.

Stay in the loop: Subscribe to updates