‘Spi­ralling debt’ is pure spec­u­la­tion

Horowhenua Chronicle - - NEWS - By CR BERNIE WANDEN

There has been spec­u­la­tion re­cently in the news about Horowhenua Dis­trict Coun­cil’s debt “spi­ralling” by $22m to $99m in the last year and that this was “hor­ren­dous”, as it was sim­i­lar to the debt level at Palmer­ston North Coun­cil.

There has also been a call in some quar­ters for a com­plete foren­sic in­ves­ti­ga­tion into our ac­counts of the last few years.

I am not sure what mo­ti­vated this spec­u­la­tion, but ratepay­ers need to be aware of the facts so they can con­tinue to have con­fi­dence in the fi­nan­cial man­age­ment of Coun­cil.

Our net debt at June 30 2018 was $75m and our gross debt was $80m, as we carry $5m cash in the bank for an emer­gency. Since the new fi­nan­cial year started on July 1st we have in­creased our net debt to $85m to pay for cap­i­tal projects com­pleted near the end of the fi­nan­cial year. We have also added $9m to our cash liq­uid­ity to pre-fund debt re­pay­ment due in March 2019. Cash liq­uid­ity en­ables us to bor­row at a lower whole­sale rate and then in­vest money at a re­tail rate so we gain rev­enue.

In com­par­i­son the net debt at Palmer­ston North is $108m, but it is ex­pected to rise to $367m over 10 years to fund ma­jor waste­water in­fra­struc­ture projects. Ka¯ piti Dis­trict Coun­cil pre­dicts a debt level close to $200m in the next 10 years. The debt we have in­curred is a re­sult of the An­nual Plan and Long Term Plan process that is ro­bustly de­bated and an­a­lysed by all elected mem­bers. This has en­abled us to man­age the growth we are ex­pe­ri­enc­ing and add to the fu­ture well­be­ing of the Dis­trict.

As for the call for a foren­sic ac­count­ing in­ves­ti­ga­tion, no ev­i­dence has been pro­vided to sub­stan­ti­ate the claims around our ac­counts that warrants an in­ves­ti­ga­tion. It would be an ex­treme waste of money and re­source, and it is dis­ap­point­ing that those mak­ing this re­quest will not ac­cept the opin­ions of Au­dit NZ, who have given Horowhenua Dis­trict Coun­cil un­mod­i­fied au­dits for years, nor of Stan­dard & Poor’s, which has rated us A+ since 2015. It is also a base­less and un­sub­stan­ti­ated at­tack on the in­tegrity and com­pe­tence of your fi­nance team.

Coun­cil­lors are aware of the need to be pru­dent and care­ful fi­nan­cial man­agers and recog­nise the need to en­sure all cur­rent and fu­ture ratepay­ers ben­e­fit from our de­ci­sions.

We all need to ac­knowl­edge that debt pro­vides ratepay­ers with es­sen­tial in­fra­struc­ture projects that en­able them to en­joy the lev­els of ser­vice they need and ex­pect.

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