7 May 2014

CCC to look at all options over blowout

6:58 pm on 7 May 2014

The Christchurch City Council will look at all options in a bid to make up a $534 million budget shortfall, which has been identified in an independent review of its finances.

The financial health of the Christchurch City Council was revealed at a news conference, with the release of a KordaMentha report.

The firm was appointed last year to look at the council's finances.

The report also warns the shortfall could be significantly higher depending on the level of the council's final insurance settlement and its share of the earthquake rebuild costs.

Council finance committee chairman Raf Manji said all options were on the table to help the city make up the shortfall.

Options included rates rises and selling off assets.

"Another is to revisit the major expenditure around the Anchor projects. Another one is to look at our own operational expenditure and capital expenditure, and another one, obviously, is to look at raising cash from our commercial assets," Mr Manji said.

"The final one is, obviously, raising rates."

The council hoped for about $1 billion from its earthquake insurance settlement.

An aerial view of the central business district showing demolished sites a year ago.

An aerial view of the central business district showing demolished sites a year ago. Photo: PHOTO NZ

Shortfall no surprise

Christchurch Mayor Lianne Dalziel said the shortfall was not a surprise to the council and it would deal with the debt problem responsibly.

The city's cost share arrangement with the Government to rebuild its broken infrastructure did not allow for "cost escalation" or "unexpected expenditure", she said.

The infrastructure repair costs were under-estimated when the rebuild cost share was reached with Crown.

"That three-year plan was developed at a time where there was considerable uncertainty, and it was a plan that was required to be brought together in a relatively short period of time," Ms Dalziel said.

"There were many, many variables that existed at the time."

Council staff would meet this weekend to discuss the debt recovery recommendations before putting them out for public consultation.

Canterbury Earthquake Recovery Minister Gerry Brownlee said the Crown had concerns about some of the assumptions made in the KordaMentha report and the accuracy of some of the data.

Financial consultants Morrison Low had been asked to provide an independent assessment of how the council's financial position, as presented in the Korda Mentha report, related to the Crown's role in the rebuild, Mr Brownlee said.

He expected to receive that report in about 14 days.

Mr Brownlee said it was disappointing the council had chosen to release the KordaMentha report as the Government was not in a position to make a fully informed comment on it until it had the Morrison Low report.

Releasing the report on Wednesday raised many more questions than the Government could answer, he said.