What on earth is going on in the People's Republic? The council has purchased a company which processes recycling material that no one wants. The logic from the Deputy Mayor is very poor:
Christchurch Deputy Mayor Norm Withers said it was essential to bail out the company to avoid a "citywide disaster".
"If this were to cease, one could only imagine the chaos," he said. "There was a degree of urgency. We have a duty of care to the ratepayers of this city to maintain the collection of refuse."
There is a difference, supposedly, between refuse and recycling. But if no one wants the recycling material, why not just dump it? There is a perfectly good dump available at Kate Valley, which would last at least a decade. Then when prices improve, perhaps some other fool could be found to start the plant up again.
The company does not even collect the material! A quick re-route of the trucks and it would all be sorted.
The price for recycled newspaper had fallen from $210 a tonne last year to $80. Meta was unable to find a buyer for newspaper for the last three months of 2008.
Recycling as a business is dodgy. It seems that in a recession it is the first to go. Councils should respond to this by quietly dumping the material, not by putting up $19m of ratepayers money.
"Our cost of borrowing is less than Meta's, so we are confident that by restructuring the debt there are cost efficiencies we can make," he said. "We can operate it for three months with no cost to the ratepayer."
And no risk? Why can the state not understand the difference between a sure thing and a risky venture? If Meta cannot make money out of recycling, how can the council? A company cannot borrow incessantly to keep afloat, and neither can the council. Furthermore, the shareholders of Meta have taken a risk and should now be the ones taking a bath. A sensible approach would be to wait for someone else to buy the business, presumably offering less than $19m, and probably less than the $15m debt. That is capitalism. As a shareholder myself, well accustomed to baths, I can attest to the painful but refreshing experience.
The decision was made without consultation because the situation was urgent and commercially sensitive, he said.
Well the price of recycling actually started falling a year ago, so any urgency was at least predictable. But the point is that the wrong decision was made. It is clear from the remarks by Cr Norm Withers that he saw and investigated no alternative. If this is the quality of decision-making at the CCC then ratepayers are in for a prolonged bath.
The real reason for this decision is nothing to do with 'chaos' and everything to do with politics. The council has been berating the city's school children with 'reduce-reuse-recycle' for years now and it would be embarrassing to have a period, however short, where the recycled material is just dumped. That is the real reason why the council spent this money.