Highlanders at Risk

The ODT reports:

Highlanders chief executive Richard Reid says people in the South need to realise there is a risk they may lose the Highlanders.

If there is a risk that Dunedin may lose the Highlanders, then it is too risky to build the new Stadium. The financialHighlanders chief executive Richard Reid says people in the South need to realise there is a risk they may lose the Highlanders. viability of the Stadium relies on large crowds at rugby. But projected crowds are based on those during the golden years of Otago Rugby in the 1990's. Otago Rugby has now lost its fan base. The fundamental problem expressed by Richard Reid is the same as that expressed by opponents of the Stadium: Dunedin just does not have a big enough population base to support it. It is notable that Richard Reid has waited until the decision has been made to proceed with the Stadium, before expressing these views. Over the last couple of years, Otago Rugby has been very quiet about the crowd numbers at Carisbrook.

But once Dunedin is commited to the Stadium and needing rugby to maintain cashflow, then we can be held to ransom by Otago Rugby: "subsidise us or lose the franchise".

The Stadium Will Be Built

Following the decision of the Government to underwrite Stadium funding with $15 million from the Rugby World Cup budget, the Stadium will be built.
But can it be built in time for the World Cup?
This is related to price. It may cost more if there is a deadline, so will the Dunedin City Council be faced with an extra bill if, as a condition of the underwriting, the Government requires the Stadium to be finished in time for World Cup Rugby.

New ORC Headquarters : The Next Battle

In an Opinion piece in the ODT, Otago Regional Councillor Doug Brown raises questions over the Council's new harbour front office project. This will be the next ratepayers battle, after the Stadium debate is decided, one way or the other, in the coming days.
Doug puts forward these issues:

• Lack of consultation
• The large increase in cost
• The requirement of funds for other projects

The funds for the new building may come from Port Otago dividends, but it is not true to say that this spending does not affect rates. The dividends could just as easily be used to cover other spending which is ratepayer funded.

We do not need a palace for bureaucrats and politicians.

Reponse From Rodney Hide

I have had a response from Minister of Local Government, Rodney Hide to my email opposing Government funding for the Stadium.
It includes this : "We have deliberately set a very high threshold for publicly funded infrastructure projects. We will not commit public funds to projects that do not make an enduring contribution to the economy and our national productivity".
Rodney cannot be suggesting that the Stadium would pass this test, can he?
It almost implies that the Government is going to refuse to contribute to the Stadium.

Dunedin Politicians Debate Online

It is good to see two Dunedin politicians joining the online debate.

Richard Walls on the ODT site discusses Carisbrook crowds.

Sacked Otago District Health Board Chairman, Richard Thomson argues his case on Kiwiblog. He he has come out strongly as a Labour man and he has admitted that this is one of the reasons that he was appointed. The Government is entitled to appoint someone in whom they have confidence. The way Thomson has acted in the last few weeks shows that he could not have the confidence of a National Government.

National Business Review Gives Stadium Figures

Today's National Business Review has an article on the Stadium with information that I have not seen published elsewhere. Unfortunately, it is not on-line, but here is a portion:

Athol Stephens said that the effect on forecast dividends to the Council remained the same as forecast in March last year - a reduction of $5 million.
This was achieved because while the amount of debt taken on by the council-owned companies to help fund the project had increased from $92.3 million to $108.8 million, the 2% cut in interest (from 9% to 7%) would make a "material difference" to their ability to service it.
Mainly because of the reduction in interest rates, the average residential property in Dunedin would pay no more than the originally anticipated $66 a year in general rates to fund the stadium, Mr Stephens said.

By my calculations:
$92.3 million borrowed for 20 years at 9% means about $10 million a year payment.
$108.8 million borrowed for 20 years at 7% also means about $10 million a year payment.

Because interest rates have dropped, the Council can borrow the increased amount required while still making the same $10 million a year payment on the loan (includes interest and capital repayment).

Note that $5 million of the $10 million is coming from rates, the other $5 million comes from Dunedin City Holdings Ltd. Without the Stadium, the dividend to the Council could be increased by $5 million rather than being reduced by $5 million, and rates decreased by $66 a year rather increased by $66 a year. The effective of this Stadium loan is that rates will be $132 a year more than they would have been without the Stadium.

By the way, why is that the National Business Review's Dunedin correspondent, Mark Pearl, consistently providing better analysis of Dunedin issues than is found in the Otago Daily Times.

Cost Cuts Keep Auckland Rates Rise At 2%

I hope that this does give Peter Chin and the Dunedin City Council an idea.

Mr Banks said cost-cutting extended to a freeze on staff wage and salary increases, and a demand for council consultants, contractors and suppliers to "sharpen their pencils" if they wanted to keep the council's custom.