Hard News: Housing: the Feudal Model
99 Responses
First ←Older Page 1 2 3 4 Newer→ Last
-
Ian Dalziel, in reply to
buoyed with optimism...
house boats
...now that opens up a raft of possibilities!
-
Sacha, in reply to
You seriously think Watercare's capital costs aren't built into their prices?
-
Swan,
No. Watercare own a huge amount of capital. My reading of their finances indicates a return n capital of perhaps 2%. And that includes charges directly on developers. If Watercare priced its water and waste services assuming a fair return on capital (say 5-10%) it would have no need for development levies, and in fact could probably return a dividend to the council. But it is barred from doing so.
-
linger, in reply to
Ummmm ... your response seems to confuse "capital costs" with "profit margin". The two are in no way the same.
-
Sacha, in reply to
Why should a 'fair' return on capital be the same for a profit-seeking private business as a public monopoly?
If Watercare could inflate their prices for all their customers then they could reduce them for developers, sure. How that's good for anyone else is unclear.
-
Steve Barnes, in reply to
If Watercare could inflate their prices for all their customers then they could reduce them for developers, sure. How that’s good for anyone else is unclear.
Not quite sure what you mean by “inflate”. The true cost of Watercare’s services do not include infrastructure costs other than maintenance. Building the infrastructure for a new development had fallen to the developer, who then passes that cost onto the new building owners and that cost is reflected in the resale price too. There is this money being charged onto the buyers of property and only the initial part of that goes to Watercare.
As the price of property is tied to demand then it makes sense to decrease the burden of that demand by increasing supply by making it cheaper to subdivide and construct by Govt. paying for infrastructure.
And that, is good for everyone.
Sure, those evil developers don’t have to spend that extra fistful of dollars but they also won’t have to reap them back in higher house prices.On another point… As usual this Government has tried to solve the problem by decreasing demand from the unworthy poor.
ETA.
As I said earlier, the problem in affordability is also exacerbated by a low wage economy, something that this Govt. sees as a good thing. -
Sacha, in reply to
The true cost of Watercare’s services do not include infrastructure costs other than maintenance
Who pays to build any new water and sewage lines across the region, not just within a subdivision to which development levies may apply?
-
Swan,
I have a quick look through the 2012 annual report.
Assets are valued at 7.8 billion, equity is 5.5 billion
Revenue (2012) 440 million. Operating expenses. 185 million. Interest costs 73 million. Depreciation and amortisation 180 million.
Return on equity - (0.8%).
So it is a good question about hoe they fund capital investment. Based on these figures they simply can't sustainably invest in capital. Not unless infrastructure charges come to the party (the cyclical nature of this revenue source might means it may go up dramatically over the next few years as the construction industry roars into life). But that is my point, they are totally reliant on these charges to stay afloat (and they aren't at the moment).
-
Swan,
^^ Sorry again for typos. I really should proof read these things.
-
Steve Barnes, in reply to
Who pays to build any new water and sewage lines across the region, not just within a subdivision to which development levies may apply?
TLDR? Central Govt. Spread the load, works for all not just the privileged.
-
Sacha, in reply to
Not asking who should do it, just who you understand does right now.
-
Steve Barnes, in reply to
If you just happen, through right if inheritance, own a bit of land that could be developed then why should the onus be on you to provide infrastructure that will be to the benefit of society at large? I suppose you could just run a sewage pipe to the nearest river but that is so Canterbury farmer attitude for the likes of the majority.
We have a Govt. for a reason, this is one of the major reasons.. -
Sacha, in reply to
If you just happen, through right if inheritance, own a bit of land that could be developed then why should the onus be on you to provide infrastructure
So water/sewerage/road/electricity/internet connections from the closest current network are someone else's responsibility?
-
Sacha, in reply to
Canterbury farmer attitude
indeed.
-
Matthew Poole, in reply to
Watercare in AKL for example is not allowed, legally, to make a profit.
Watercare is not allowed to return a dividend. That is a vastly different situation to not being allowed to earn more money in a year than is required to cover operating and depreciation expenses. It is absolutely legal for Watercare to retain earnings between years in order to provide for future costs.
ETA: Watercare is somewhat hamstrung in setting pricing because its board is ultimately answerable to elected politicians whose constituents have these utterly bizarre ideas about affordable access to clean water being a fundamental human right.
-
Steve Barnes, in reply to
closest current network
I can see where the confusion comes from but....
We are, or should be, looking at a country we all want to live in, not just Aucklanders or those with the ability to have the wherewithal to live there. What ever happened to the egalitarian principals this country was founded on?
It is the responsibility of central Govt. to do that in my humble opinion. -
Swan, in reply to
Being barred from returning a dividend is effectively the same thing as being barred from making a profit in the long run.
Re pricing and human rights - underpricing water is regressive. Those who use more water get more of a subsidy.
-
Sacha, in reply to
Pressure for expansion beyond current infrastructure is likely to happen in Northland too.
-
Steve Barnes, in reply to
underpricing water is regressive.
Water falls from the sky, others collect it and charge for it. The infrastructure that reticulates is just another way of making us have to pay for our survival.
. Who wins there?.
I guess we could get “Mum and Dad” investors to take the risk and profit but I sincerely hope National will lose the next election regardless of how many people with two first names they can recruit to their sick power play. -
Ian Dalziel, in reply to
Good buy Mr Chips…
What ever happened to the egalitarian principals
this country was founded on?They were all replaced by Charter Schools?
Apparently they get a better rate of interest…
;- ) -
Swan,
"Water falls from the sky, others collect it and charge for it. The infrastructure that reticulates is just another way of making us have to pay for our survival."
Those bastards - building dams and water mains, labs and treatment stations for ensuring the water is potable! Going around stealing the water just falling from the sky! I mean what have the Romans ever done for us!
-
Revenue (2012) 440 million. Operating expenses. 185 million. Interest costs 73 million. Depreciation and amortisation 180 million.
Return on equity - (0.8%)
I don't see a problem with that.
The water infrastructure belongs to its users (the people of Auckland) and is more or less adequate for the current population. Costs of rebuilding it as it reaches end of life are covered by the depreciation number.
As new consumers are added due to development, the costs of additional infrastructure should be paid for by the developers, who benefit from it.
The alternative is either that existing residents should subsidize development, or that water should be taxed to encourage conservation.
-
Steve Barnes, in reply to
the costs of additional infrastructure should be paid for by the developers, who benefit from it.
And, like I said, pass it on to the home buyer. You really think developers, out of the kindness of their hearts, actually cough up the cash?. The whole point of Govt. paying the upfront cost was to help make building new homes more effectively and cheaply without the horrendous cost of infrastructure. The way the system works at the moment is that somebody who wants to develop land often find themselves having to stump up money that could be better spent on better quality housing. Not holding my breath there though.
-
Latest from the NZ Initiative: There's no such thing as free parking.
This article seems to lean toward the NZ Institute half of the NZ Initiative.
Post your response…
This topic is closed.