By Laura Baker
Walking into the mayoral office at the Christchurch City Council, Lianne Dalziel looks relaxed and fresh from the summer holidays. She greets me with a smile and enthusiastically shows me photos of her summer holiday in the Coromandel.
“I’m feeling very positive about this year,” she cheerfully says as we sit down for the interview. It’s definitely a good thing the mayor is feeling so chipper because she has a full-on year ahead and the council has some tough decisions to make, including the potential sale of council owned assets and rate rises.
Baptism of fire
Lianne’s appointment to the council came during a time when there were many people in the city crying out for a change in leadership. She answered the call successfully winning the position of Christchurch mayor in the October 2013 local body elections.
Her initiation into the council was a baptism of fire. The council she inherited was facing a number of mammoth challenges. It had been stripped of its accreditation rights to issue building consents and its budget was facing significant shortfalls. But piece by piece she is tackling these challenges head-on and the city is beginning to see some progress.
Now a year and a half into the job she has a firm footing in the position and has built a collaborative team with the councillors. But she says it has taken some getting used to as parts of the job are not what she anticipated.
“In many respects it’s quite different from what I expected.” She says the mayor is just one vote around the table that holds 14 votes. So she has learnt it is necessary to compromise.
“We don’t agree on everything but we understand how important it is that the council is united around the issues that are important for the city, which is quite different to how the council was before.”
Back in control
The former council was stripped of its rights to issue building consents in July 2013. The act signalled the final nail in the coffin for the outgoing council and many long hours work to re-establish its accreditation rights for the new council.
Under Lianne’s watch the council won back its accreditation rights in December last year, marking one of the biggest achievements in council to date.
“It is extraordinary that a council facing the biggest rebuild ever could lose its accreditation and no one noticed it happening. It was a failure of governance and management and was a debacle of the highest order; heads had to roll because it was so serious.
“It was a huge confidence boost winning back the rights. The confidence boost was felt right throughout the council building. It really meant a lot to the whole council and we felt like we could hold our head up again.”
And she is reassured the strong structure of both management and governance over the Regulations and Consents Committee will ensure such a huge council failure won’t slip past anyone’s notice a second time; not under her watch she says confidently.
Opening the books
In the first week of her appointment Lianne faced the daunting, but extremely necessary, task of opening the council books and discovering the true state of the city’s finances.
A report from Cameron Partners in August last year revealed the council’s debt stood at $900 million. But the potential deficit has since soared to an estimated $1.2 billion. The mayor says the shortfall is partly due to the fact insurers are unlikely to pay the full settlement.
“One of the biggest problems the budget faces is the insurance recoveries. We’ve got no guarantee around when we are going to settle with our insurers and how much we’ll get.
“I want to be able to tell the people of Christchurch what needs to be done, when it can be done and how it can be paid for; I feel like that’s my responsibility, but at the moment I still don’t know.”
She says one of the reasons the figure has increased dramatically is because the council now has more information than when earlier estimates were done. She says the council is working through every single claim individually and doing detailed analysis of the true cost of repairs or replacement.
Assets face the chop
The term ‘asset sales’ often creates strongly divided opinions within government and the general public, and it is always a source of controversy when a state owned asset faces the chopping block.
Lianne can relate to these feelings herself, traditionally opposing the idea in her former role as an MP. But with the title of mayor comes the task to lead the city in a financially sustainable direction and the responsibility to make hard decisions for the greater good.
Bearing this in mind Lianne has changed her tune about asset sales, making it no secret she is strongly in favour of the sale of assets owned by its commercial arm, Christchurch City Holdings Ltd.
Late last year the council agreed to the proposal to release $551 million in capital through the sale of assets, including at least 34 percent of Lyttelton Port Company and nine percent of Christchurch International Airport.
But it left the door open for further release of capital if necessary and has now approved the option of releasing up to $750 million in capital from CCHL in order to reduce debt and increase funds to meet the cost of rebuilding the city’s earthquake damaged infrastructure.
“I want to be able to tell the people of Christchurch what needs to be done, when it can be done and how it can be paid for, I feel like that’s my responsibility, but at the moment I still don’t know”.
“I understand people generally have a ‘thing’ about asset sales. They say we’ve built up these assets, they are the reason why our city is strong and why our rates are lower than other parts of the country, and that is normally where I come from myself.”
But she says if the council does not sell shares in some of its assets, the alternative is unprecedented double figure rate rises to cover the shortfall. The latest draft of the Financial Strategy contains proposed rate increases of 8.75 percent, 8.5 percent and 8.5 percent during the next three years.
“The Financial Strategy is a delicate balancing act and we will make every effort to reduce the burden on ratepayers while still meeting our share of the cost of the earthquake rebuild.
“We need to look at our sea port and airport as strategic assets for the region. We are looking at selling shares in these assets to a strategic external partner who is interested in growing these assets and increasing their worth. So, while our share in those two assets may decrease, their rate of return and the dollar amount that we receive might actually increase.
A final decision on asset sales will be made in June after public hearings.
Investors welcome
At the top of Lianne’s personal goals for 2015 is the creation of a Development Authority – an objective she can’t emphasis enough is critically important.
She says developers are flocking to the city in droves with exciting plans for investment and construction in the city, but they are leaving almost just as quickly because there isn’t a clear channel to assist in bringing their plans to fruition.
“What’s happening at the moment is investors come to us with a good idea and we say ‘wow, that’s a great idea’ and then they go to see CERA and they say ‘wow, that’s a great idea’, but nothing happens.”
She says these local and international investors need to be made to feel welcome and connected to the rebuild, and an independent Development Authority would serve this purpose.
The proposed Development Authority would be separate from government, with the final sign off going through council. The authority would have the ability to analyse proposals, consider costs and benefits and develop a business plan.
She admits the council would normally be capable of undertaking these functions, but the scale of the job makes it nearly impossible, “there is plenty of work to justify the establishment of an agency”.
A Development Authority should have been established long before her appointment she says. But it’s better late than never because without an agency of this nature the city will continue to miss out on critical investment from developers, stifling its rebuild progress.
Time will tell
Lianne has stepped up to the plate in her role as mayor and shown she is capable of moving the council forward in a positive, inclusive direction. But she has also shown she is capable of making the hard decisions, which not everyone will agree with.
It is clear her intentions are good, but only time will tell if the tough decisions she is making are the right ones.
