I was born in Christchurch and I've lived here all my life. I have had the privilege of serving the city for over 20 years as a Member of Parliament. Eighteen months ago I had no intention of standing for the Mayoralty. I was ultimately persuaded to do so by people from across the city, from all walks of life and various political persuasions appealing to my sense of duty.
I had said on many occasions that I understood what needed to be done to get this city
back on its feet and they asked me to put that to the test. They said they would back me
– not just to get elected, but also to support me through the term ahead.
My story is not unique. Several of my colleagues were persuaded to abandon the
relative comfort of their previous lives and commit to serve their city.
Together with only four of the previous Councillors, we have formed a strong team,
with a single focus in mind – the future of our city of Christchurch.
Each one of us campaigned on the promise of transparency and accountability; and
with this came a commitment to opening the books.
We needed to confirm the true financial position of the city so we could confront the
issues head on, with all the cards on the table. This would allow us to consider all the
options available to us so we could produce a carefully considered and robust financial
strategy to take us forward.
Hence the Korda Mentha report and today's release of the Cameron Partners report.
Like thousands of Canterbury businesses and households, the Council's financial
position has been adversely impacted by the earthquakes.
And like many in this city, our ability to plan with confidence for the future has been
hampered by continued uncertainty about our insurance recoveries. At the same time
we face the double jeopardy of escalating earthquake related costs and declining rates
revenue as a result of the loss of residential and commercial properties. This will lead to
unsustainably high debt levels leaving us no room to move.
But we can't stand still any longer. The Crown's substantial and ongoing commitment
of capital and resources to the recovery and rebuild means much has already been
achieved. But much still remains to be done in the areas which are our first
responsibility as a Council: restoring local facilities such as swimming pools, libraries and community centres as well as the physical infrastructure – the pipes and the roads.
This simply cannot wait.
More importantly we have communities to restore to health. Nearly four years after the
first of what became known as the Canterbury Earthquake Sequence, we know that at
least a quarter of our residents are continuing to lead lives marred by multiple stressors
– anxiety, frustration and fear – these are challenging people every single day.
The good news is that we are not helpless in the face of this challenge. We are a city
with resources – we have substantial assets, human capital and financial capital.
As your elected Council, we are taking decisive action to utilise all our resources to
produce a financial strategy that will be a firm foundation for the next decade through
the 2015/25 Long Term Plan and beyond.
Accountability demands that we take this proposal out to the people of Christchurch
and today's announcement begins the process of engaging with the community about
the issues, proposed solutions and timeframes for dealing with them.
We want to provide people with the facts so they can judge for themselves. It will
continue over the next two months as we embark on a special consultative procedure to
get feedback on what we will be proposing to do and when.
At the outset we need to be very clear about what is within our power to do as a Council
alone. There are other things we could do that would require the ongoing support of
our partners in the rebuild – including the Crown.
The Cost Sharing Agreement reached between the Crown and Council in June 2013
created the sort of certainty necessary to move forward with confidence in a post-
disaster environment.
It also committed ratepayers to avery large scale expenditure before our insurance
claims were settled and before our true financial position was known.
The Cost Sharing Agreement is a living document. It produced scale and momentum
for the rebuild at a critical time, accepting that priorities change.
A lot has changed in the past year – much of it for the good – I don't need to repeat the
infrastructure repair statistics or all the announcements that have been made about
projects underway – but new priorities have come into sharp focus: affordable housing,
flood mitigation, addressing mass land movement, reinstating critical routes, for
example, Sumner Road.
In light of what the Korda Mentha and Cameron Partners reports say we are reassessing
our priorities. We need to revisit what we do and when we do it - across all Council
activity. And in responding to this new information we will be working with the Crown
to ensure our new priorities and budget processes are fully aligned and that they
promote the regeneration of the city as a whole.
Council staff and Councillors have spent the last six months working with our Chief
Financial Officer, Peter Gudsell, and top financial advisers (Cameron Partners, in
addition to Korda Mentha) to get a clear picture of our financial position and the way
forward.
Today's announcement is our first step towards engaging on solutions in response to
our financial situation. It is specifically about removing uncertainty which will assure
central government and the private sector that they can continue to invest in our city's
rebuild with confidence.
After months of investigation and analysis of options, releasing capital from our
balance sheet alongside the other options, (including increased income, reduced
operational expenditure and government assistance), is clearly one of the ways we can
address the uncertainty around the city's finances. We need to make sure our city
recovers as quickly as it can, while taking full advantage of the opportunities that are
on offer.
The purpose of releasing capital would be:
· To generate funds to assist in solving the identified funding shortfall
· To provide the level of confidence and certainty required to develop a credible
long term financial strategy and get on with the rebuild of our community
facilities, infrastructure and housing
· To allow Council to buffer Christchurch residents and businesses from the
exponential rates increases we would otherwise have to impose; and
· To allow Council to align our vision and strategic objectives for the rebuild with
our asset portfolio - that is, what we own and operate.
As a Council, we will be making it clear that if a decision is made to release the capital,
Council proposes to maintain our key infrastructure assets, which are Christchurch
International Airport, (of which we own 75% with central government owning the
balance over which the council has the right of first refusal, followed by Ngai Tahu), the Lyttelton Port Company (a publicly listed company in which we hold 79.6% of shares) and Orion (of which we own 89% alongside the Selwyn District Council).
This is in keeping with the pre-election pledge to "support keeping all significant
public assets and services of the citizens of Christchurch in public ownership and
control..." that was made by many current councillors and community board members.
One of the options we will engage on as part of the mix, however, is to invite one or
more strategic partners to take a stake in CCHL (Christchurch City Holdings Ltd). We
would protect the city's long-term interests by ring-fencing the quantum of any such
proposal and ensuring that the shares return to the Council through a Right of First
Refusal so they are not available to the open market.
From the financial reports we have received and subsequent analysis of those reports,
we would be looking at releasing up to $400 million from CCHL. Measured against the
$8.3 billion Council balance sheet, we believe this is a prudent proposal.
The Council's new Chief Executive, Karleen Edwards, is also introducing a policy of
continuous improvement. She has been asked to work with CFO Peter Gudsell to set a
minimum target to reduce operating costs for the Council for each of the next three
financial years on a cumulative basis.
The Chief Executive and I will continue to work with the Crown to ensure we as a
Council have the necessary flexibility to work through these issues. We'll be looking at
how we manage the phasing, operating costs and ownership of those anchor projects
that the Council has a major stake in.
As outlined in the Cost Sharing Agreement we'll be working together on a review aimed
at resolving the outstanding issues about the timing of, and relative contributions to,
the repair of the horizontal infrastructure. And we'll be working together on the new
priorities I mentioned before that have come into sharp focus. .
We want to work alongside CERA to scope the possibilities for a one stop landing point
for both local and foreign investors. This would help speed recovery by providing a
long-term focal point for economic development and a clear and stable point of entry
for private capital.
It could also act as a focal point for joint venture, private and public investment and
could take a proactive approach to development projects than can drive economic,
social or special interest outcomes. It will also mean a different and more joined-up
approach to consenting – both resource and building – from the Council.
We are setting up an expert advisory group or think tank as part of this whole process
so they can help contribute to and work with the Council as we develop our Long Term
Plan (LTP). This will enable us to tap into the wealth of knowledge that exists in
networks within our city and beyond.
Joining the 100RC Network sponsored by the Rockefeller Foundation has helped put us
on the world map, not for our disaster, but for our commitment to building resilience as
we recover and rebuild.
We will draw on local, national and international advice and expertise - in areas like
housing, business, the environment and the community - and the advisory group will
work in a fully transparent way, in the public arena.
We intend to commence preliminary public engagement on our options on the 4th
September – the fourth anniversary of the beginning of the earthquake sequence that
has changed our city forever.
This will be a defining moment for our city, a turning point in our recovery.
I want to conclude by answering a question we were all challenged to address from the
outset – Why Christchurch?
· We face the Canterbury Plains – we produce safe, quality food with sustainable
farming practices and have access to the best untreated water of any city - food and
water security are huge global issues;
· We face the coastline – another global issue with half the world's population in
large coastal cities exposed to far more extreme weather events and sea-level rise;
· We face natural hazards much closer to our city than we thought – we can
contribute to understanding the physical and social sciences, as well as new
building technologies. We are learning how to build resilience within our
communities, our regional economy and our natural and built environments.
· We are now linked to the world of risk, the understanding and measurement of
which are equally interesting to governments, as they are to insurers and
reinsurers;
· We are only one of five gateway cities to Antarctica in the world – a place where by
international treaty we do not exploit for commercial gain and where nations
search for knowledge and understanding about the future of our planet. United States, Italy and Korea base their Antarctica programme support here in Christchurch - with their scientists and researchers visiting regularly;
· We are the gateway city to the Aoraki-Mackenzie Dark Sky Reserve, a place where
we also search for knowledge;
· We are the gateway city to the South island, where authentic visitor experiences
abound;
· We are passionate about sport, which challenges us to think about the role of
protein, diet and exercise – we can take on the global obesity challenge that affects
so many cities;
· We love theatre, music, cultural events, art and produce some of New Zealand's
best – creativity has always had a home here;
· We have some of the world's leading expertise on all of these in our world-class
Universities, Institute of Technology, Crown Research Institutes, organisations and
private companies. We are writing more software here than anywhere else in the
country - innovation is what we do; and
· We have an international airport and seaport to support all that we bring in from
and send to the world.
When we look at "Why Christchurch", we see that investing by the public and private
sector in legacy projects like Sensing City – which will measure our environment in real
time so we know instantly cause and effect, (nutrients in soil to congestion in streets)
and creating open source data with spin-off potential from apps through to life-saving
technologies, will mean a reason for our young people to stay, or more importantly,
come home.
Investing by the public and private sector in centres of innovation like EPIC, and
developing opportunities for social entrepreneurship and co-working will make the city
relevant to a generation who do not seek employment to have fulfilling careers.
Investing in participatory democracy including visualisation tools that enable people to
participate in budgeting decisions will help the Council respond in a more effective way
to what people want for their communities.
The Lonely Planet and New York Times both highlighted the energy, innovation and
creativity that are marking our transition from what we were to what we will become.
We need to capture that energy and turn our attention to the global issues we can help resolve here. We can be global leaders helping to solve global problems. We are small enough to test solutions and big enough to produce meaningful results.
That does not make us a living laboratory, but a hothouse where ideas will be seeded
and grown. As our Chief Executive said recently, we will know we have achieved
success when people from all over the world are asking 'what would Christchurch do',
such will be our reputation for providing solutions to complex problems.
We are part of a stable democratic country that has regulatory frameworks, seeking to
balance consumer protection and individual freedom. It is a good place to do business.
It isn't a cliché when we say Christchurch is a great place to raise children. We have a
strong sense of community, reinforced by our shared experience of crisis, a park at the
city's heart and a universal commitment to a clean, green, safe, smart and accessible
city. We have a temperate climate and we have beaches to our east and ski-fields to the
west.
We can be the magnet that attracts the researchers and scientists, as well as the
creators and innovators, the investors and the entrepreneurs, and brings our young
people home once they have done their OE.
Christchurch will be a place where everyone can live the life they want to lead - a safe
haven and a place of opportunity, where anything is possible.
We can't afford to stand on the sidelines any longer.
We need to make it happen and with the support of all of the communities that make
up our city and central government standing alongside, we can and we will.
back on its feet and they asked me to put that to the test. They said they would back me
– not just to get elected, but also to support me through the term ahead.
My story is not unique. Several of my colleagues were persuaded to abandon the
relative comfort of their previous lives and commit to serve their city.
Together with only four of the previous Councillors, we have formed a strong team,
with a single focus in mind – the future of our city of Christchurch.
Each one of us campaigned on the promise of transparency and accountability; and
with this came a commitment to opening the books.
We needed to confirm the true financial position of the city so we could confront the
issues head on, with all the cards on the table. This would allow us to consider all the
options available to us so we could produce a carefully considered and robust financial
strategy to take us forward.
Hence the Korda Mentha report and today's release of the Cameron Partners report.
Like thousands of Canterbury businesses and households, the Council's financial
position has been adversely impacted by the earthquakes.
And like many in this city, our ability to plan with confidence for the future has been
hampered by continued uncertainty about our insurance recoveries. At the same time
we face the double jeopardy of escalating earthquake related costs and declining rates
revenue as a result of the loss of residential and commercial properties. This will lead to
unsustainably high debt levels leaving us no room to move.
But we can't stand still any longer. The Crown's substantial and ongoing commitment
of capital and resources to the recovery and rebuild means much has already been
achieved. But much still remains to be done in the areas which are our first
responsibility as a Council: restoring local facilities such as swimming pools, libraries and community centres as well as the physical infrastructure – the pipes and the roads.
This simply cannot wait.
More importantly we have communities to restore to health. Nearly four years after the
first of what became known as the Canterbury Earthquake Sequence, we know that at
least a quarter of our residents are continuing to lead lives marred by multiple stressors
– anxiety, frustration and fear – these are challenging people every single day.
The good news is that we are not helpless in the face of this challenge. We are a city
with resources – we have substantial assets, human capital and financial capital.
As your elected Council, we are taking decisive action to utilise all our resources to
produce a financial strategy that will be a firm foundation for the next decade through
the 2015/25 Long Term Plan and beyond.
Accountability demands that we take this proposal out to the people of Christchurch
and today's announcement begins the process of engaging with the community about
the issues, proposed solutions and timeframes for dealing with them.
We want to provide people with the facts so they can judge for themselves. It will
continue over the next two months as we embark on a special consultative procedure to
get feedback on what we will be proposing to do and when.
At the outset we need to be very clear about what is within our power to do as a Council
alone. There are other things we could do that would require the ongoing support of
our partners in the rebuild – including the Crown.
The Cost Sharing Agreement reached between the Crown and Council in June 2013
created the sort of certainty necessary to move forward with confidence in a post-
disaster environment.
It also committed ratepayers to avery large scale expenditure before our insurance
claims were settled and before our true financial position was known.
The Cost Sharing Agreement is a living document. It produced scale and momentum
for the rebuild at a critical time, accepting that priorities change.
A lot has changed in the past year – much of it for the good – I don't need to repeat the
infrastructure repair statistics or all the announcements that have been made about
projects underway – but new priorities have come into sharp focus: affordable housing,
flood mitigation, addressing mass land movement, reinstating critical routes, for
example, Sumner Road.
In light of what the Korda Mentha and Cameron Partners reports say we are reassessing
our priorities. We need to revisit what we do and when we do it - across all Council
activity. And in responding to this new information we will be working with the Crown
to ensure our new priorities and budget processes are fully aligned and that they
promote the regeneration of the city as a whole.
Council staff and Councillors have spent the last six months working with our Chief
Financial Officer, Peter Gudsell, and top financial advisers (Cameron Partners, in
addition to Korda Mentha) to get a clear picture of our financial position and the way
forward.
Today's announcement is our first step towards engaging on solutions in response to
our financial situation. It is specifically about removing uncertainty which will assure
central government and the private sector that they can continue to invest in our city's
rebuild with confidence.
After months of investigation and analysis of options, releasing capital from our
balance sheet alongside the other options, (including increased income, reduced
operational expenditure and government assistance), is clearly one of the ways we can
address the uncertainty around the city's finances. We need to make sure our city
recovers as quickly as it can, while taking full advantage of the opportunities that are
on offer.
The purpose of releasing capital would be:
· To generate funds to assist in solving the identified funding shortfall
· To provide the level of confidence and certainty required to develop a credible
long term financial strategy and get on with the rebuild of our community
facilities, infrastructure and housing
· To allow Council to buffer Christchurch residents and businesses from the
exponential rates increases we would otherwise have to impose; and
· To allow Council to align our vision and strategic objectives for the rebuild with
our asset portfolio - that is, what we own and operate.
As a Council, we will be making it clear that if a decision is made to release the capital,
Council proposes to maintain our key infrastructure assets, which are Christchurch
International Airport, (of which we own 75% with central government owning the
balance over which the council has the right of first refusal, followed by Ngai Tahu), the Lyttelton Port Company (a publicly listed company in which we hold 79.6% of shares) and Orion (of which we own 89% alongside the Selwyn District Council).
This is in keeping with the pre-election pledge to "support keeping all significant
public assets and services of the citizens of Christchurch in public ownership and
control..." that was made by many current councillors and community board members.
One of the options we will engage on as part of the mix, however, is to invite one or
more strategic partners to take a stake in CCHL (Christchurch City Holdings Ltd). We
would protect the city's long-term interests by ring-fencing the quantum of any such
proposal and ensuring that the shares return to the Council through a Right of First
Refusal so they are not available to the open market.
From the financial reports we have received and subsequent analysis of those reports,
we would be looking at releasing up to $400 million from CCHL. Measured against the
$8.3 billion Council balance sheet, we believe this is a prudent proposal.
The Council's new Chief Executive, Karleen Edwards, is also introducing a policy of
continuous improvement. She has been asked to work with CFO Peter Gudsell to set a
minimum target to reduce operating costs for the Council for each of the next three
financial years on a cumulative basis.
The Chief Executive and I will continue to work with the Crown to ensure we as a
Council have the necessary flexibility to work through these issues. We'll be looking at
how we manage the phasing, operating costs and ownership of those anchor projects
that the Council has a major stake in.
As outlined in the Cost Sharing Agreement we'll be working together on a review aimed
at resolving the outstanding issues about the timing of, and relative contributions to,
the repair of the horizontal infrastructure. And we'll be working together on the new
priorities I mentioned before that have come into sharp focus. .
We want to work alongside CERA to scope the possibilities for a one stop landing point
for both local and foreign investors. This would help speed recovery by providing a
long-term focal point for economic development and a clear and stable point of entry
for private capital.
It could also act as a focal point for joint venture, private and public investment and
could take a proactive approach to development projects than can drive economic,
social or special interest outcomes. It will also mean a different and more joined-up
approach to consenting – both resource and building – from the Council.
We are setting up an expert advisory group or think tank as part of this whole process
so they can help contribute to and work with the Council as we develop our Long Term
Plan (LTP). This will enable us to tap into the wealth of knowledge that exists in
networks within our city and beyond.
Joining the 100RC Network sponsored by the Rockefeller Foundation has helped put us
on the world map, not for our disaster, but for our commitment to building resilience as
we recover and rebuild.
We will draw on local, national and international advice and expertise - in areas like
housing, business, the environment and the community - and the advisory group will
work in a fully transparent way, in the public arena.
We intend to commence preliminary public engagement on our options on the 4th
September – the fourth anniversary of the beginning of the earthquake sequence that
has changed our city forever.
This will be a defining moment for our city, a turning point in our recovery.
I want to conclude by answering a question we were all challenged to address from the
outset – Why Christchurch?
· We face the Canterbury Plains – we produce safe, quality food with sustainable
farming practices and have access to the best untreated water of any city - food and
water security are huge global issues;
· We face the coastline – another global issue with half the world's population in
large coastal cities exposed to far more extreme weather events and sea-level rise;
· We face natural hazards much closer to our city than we thought – we can
contribute to understanding the physical and social sciences, as well as new
building technologies. We are learning how to build resilience within our
communities, our regional economy and our natural and built environments.
· We are now linked to the world of risk, the understanding and measurement of
which are equally interesting to governments, as they are to insurers and
reinsurers;
· We are only one of five gateway cities to Antarctica in the world – a place where by
international treaty we do not exploit for commercial gain and where nations
search for knowledge and understanding about the future of our planet. United States, Italy and Korea base their Antarctica programme support here in Christchurch - with their scientists and researchers visiting regularly;
· We are the gateway city to the Aoraki-Mackenzie Dark Sky Reserve, a place where
we also search for knowledge;
· We are the gateway city to the South island, where authentic visitor experiences
abound;
· We are passionate about sport, which challenges us to think about the role of
protein, diet and exercise – we can take on the global obesity challenge that affects
so many cities;
· We love theatre, music, cultural events, art and produce some of New Zealand's
best – creativity has always had a home here;
· We have some of the world's leading expertise on all of these in our world-class
Universities, Institute of Technology, Crown Research Institutes, organisations and
private companies. We are writing more software here than anywhere else in the
country - innovation is what we do; and
· We have an international airport and seaport to support all that we bring in from
and send to the world.
When we look at "Why Christchurch", we see that investing by the public and private
sector in legacy projects like Sensing City – which will measure our environment in real
time so we know instantly cause and effect, (nutrients in soil to congestion in streets)
and creating open source data with spin-off potential from apps through to life-saving
technologies, will mean a reason for our young people to stay, or more importantly,
come home.
Investing by the public and private sector in centres of innovation like EPIC, and
developing opportunities for social entrepreneurship and co-working will make the city
relevant to a generation who do not seek employment to have fulfilling careers.
Investing in participatory democracy including visualisation tools that enable people to
participate in budgeting decisions will help the Council respond in a more effective way
to what people want for their communities.
The Lonely Planet and New York Times both highlighted the energy, innovation and
creativity that are marking our transition from what we were to what we will become.
We need to capture that energy and turn our attention to the global issues we can help resolve here. We can be global leaders helping to solve global problems. We are small enough to test solutions and big enough to produce meaningful results.
That does not make us a living laboratory, but a hothouse where ideas will be seeded
and grown. As our Chief Executive said recently, we will know we have achieved
success when people from all over the world are asking 'what would Christchurch do',
such will be our reputation for providing solutions to complex problems.
We are part of a stable democratic country that has regulatory frameworks, seeking to
balance consumer protection and individual freedom. It is a good place to do business.
It isn't a cliché when we say Christchurch is a great place to raise children. We have a
strong sense of community, reinforced by our shared experience of crisis, a park at the
city's heart and a universal commitment to a clean, green, safe, smart and accessible
city. We have a temperate climate and we have beaches to our east and ski-fields to the
west.
We can be the magnet that attracts the researchers and scientists, as well as the
creators and innovators, the investors and the entrepreneurs, and brings our young
people home once they have done their OE.
Christchurch will be a place where everyone can live the life they want to lead - a safe
haven and a place of opportunity, where anything is possible.
We can't afford to stand on the sidelines any longer.
We need to make it happen and with the support of all of the communities that make
up our city and central government standing alongside, we can and we will.