Council to budget for $4.9m deficit

Operating with a deficit budget is the prudent move, says a Southland District Council external adviser.

Council will borrow $20 million, increase rates by 2.31 per cent and forecast to record a net deficit of $4.9m this coming financial year.

Council’s finance and assurance committee yesterday agreed to endorse its draft annual plan, to be put to a full council meeting today.

External chairman of the committee, Bruce Robertson, said it was a deficit budget for good reason: ‘‘Because you don’t want to be tone-deaf to where your community is at.’’

Council was effectively taking a loan for the Te Anau Airport Manapouri because it didn’t want to be tone-deaf to the Fiordland community that did not have tourist dollars coming through.

The Te Anau Airport Manapouri rate will be cut from $128 to $67.69, in response to the financial impacts of Covid-19 on affordability of rates.

Cr Ebel Kremer commended keeping the annual rate rise lower than expected.

Rates were forecast in council’s long term plan to be 3.27 per cent, and earlier this year councillors discussed a 2.65 per cent rise.

‘‘I think that’s been a great achievement by those involved, considering the difficult times our district is facing,’’ Kremer said.

The $20m loan would incur 3.65 per cent interest over a 30-year term, and Cr John Douglas said it was hoped to get the loan for considerably less.

Chief financial officer Anne Robson said that would depend on the term of the loan.

Douglas also voiced concern that with a $4.9m deficit, people would think council was spending money it did not have.

However, the deficit was in part due to council funding depreciation, Douglas said.

Robson gave councillors an explanation of depreciation, and highlighted that council had not funded depreciation in years past.

Depreciation is how much an asset’s value has been used up and funding depreciation is covering the cost of replacing an asset.

Council began funding depreciation in 2015, adding 10 percentage points per year, and currently covers 60 per cent of its depreciation, Robson said. ‘‘It’s a strong balance sheet.’’ It was an uncertain time, but keeping up works for ratepayers and staff was important, Robson said.

Cr Don Byars questioned the strength of council’s balance sheet.

Ability for ratepayers to pay was decreasing but costs were increasing, Byars said.

Cr Julie Keast said Byars was making assumptions about what ratepayers could afford to pay.

Cr Paul Duffy said council knew the consequences of postponing work, that it accumulated.

If Jon Mitchell gets his way, he would run a campaign from his off-the-grid eco-home in northern Southland.

He was named the Labour candidate for the Southland electorate yesterday for the September 19 election. He has been ranked 78 on the party’s list.

He said he brought with him a professional view of the issues faced by the Southland electorate after decades of public service, most recently as deputy director of Response and Recovery Aotearoa Jon Mitchell New Zealand, for the Department of the Prime Minister and Cabinet.

But Mitchell said contesting the Southland seat was going to be an uphill struggle.

‘‘The communities haven’t had representation in Government. They’ve had representation in Parliament, and with the likely results of the election, I think it’s essential the communities of the Southland electorate have representation in Government.’’

The Clutha-Southland electorate has become the Southland electorate and now includes Alexandra and Clyde.

Clutha-Southland MP,

‘‘You don’t want to be tone-deaf to where your community is at.’’ Bruce Robertson