High cost to super region

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Amalgamating the Waikato’s nine councils into a super region could come at a high initial cost to ratepayers despite the suggestion of long term savings.

Waikato District Council chief executive Gavin Ion told the Waikato Times the council’s experience so far with merging with part of Franklin District was there would be significant short-term costs.

Initial estimates showed it would cost the district’s ratepayers about $1.3 million in transition costs and up to $1.5 million in capital costs, depending on whether Waikato District Council carried out services in-house or adopted Franklin’s outsourcing model.

“We think there’s going to be a problem certainly in the short-term and we are quite concerned about it,” Mr Ion said. “We don’t think we will receive enough rating income to meet our requirements in terms of servicing assets, roads and pipes to provide services currently provided to ratepayers.”

He was unsure whether the Waikato would be financially better off if the councils merged, but said that historically there were no savings in merging a number of councils.

Environment Waikato chief executive Bob Laing doubted there would be any savings from an amalgamation of the councils.

He did not think improved efficiencies and a reduction of councillor, mayor and chief executive salaries would offset the set-up costs. Amalgamation would not reduce the costs of services provided by councils.

“If people are looking at amalgamation in terms of savings then I would urge caution about that,” Mr Laing said.

Hamilton mayor Bob Simcock said that in the short term costs would increase, but there would be a reduction in the long term. There was no detailed working on the estimated costs of the amalgamation because it was undecided about what a reorganisation would involve.

“For me it’s unlikely this (cost savings) is sufficient reason on its own to justify amalgamation,” he said.

“The main reason for me is there is going to be dramatic growth in this area and we will not get the best results with three separate councils and three separate district plans.”

Waipa mayor Alan Livingston also expected a reorganisation of the nine councils to be costly in the short term.

Mr Cox said short-term set-up costs of about $1 million per council would be outweighed by savings in the medium term.

“The new chief executive has just saved $5.1 million at Waipa District Council.

“If we can do that in one council, my estimate is there could be savings of $50 million in the medium term.” The restructure cost $500,000.

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