Thursday, March 6, 2014

Local Govt subsidises its own incompetence

In a classic example of why sticking to core business is what local government ought to do – as opposed to playing wannabe commercial investors and developers - the Dunedin City Council finds itself subsidising its own development oddities.

The Council “owns” and developed a complex called Wall Street – a retail complex with offices – a risky little number with the apparently whizz bang design features of the day. Grand.

Seemingly this “asset” has less lettable space than it could have, due to its design, and thus to get the tenant it wants the Council is about to embark on a $2.3m upgrade of the building next door which it owns 49% of.

So the ratepayer invests in a development which is sufficiently unworkable as to require what is effectively a $2.3m subsidy from the Council to the tenant. Grand.

Needless to say there are those who don’t completely see the joke. Other local businesses and property owners for example who compete against the Council for tenants and run their businesses in such a way as maintain the jobs they provide in Dunedin much in the way the Council claims it is doing.

What local businesses do not have is a $35,000 annual grant per worker from the Council.

In a final surprise, one Councillor – formerly an ACT MP where the role of government is well understood -  is muttering about disclosure and information rather than arguing that local government get out of areas it has neither expertise nor legitimate business in and focus on its own not inconsiderable challenges in its core business.

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