Debt de­clines as pro­jects go un­fin­ished


‘‘Debt lev­els will rise in fu­ture’’ Chief fi­nan­cial of­fi­cer Grant El­liott

Ev­ery man, woman and child in Palmer­ston North would have to find $1119 if the city coun­cil de­cided to re­pay all its loans.

The coun­cil’s to­tal debt has fallen to its low­est level in four years, sit­ting at $95.7 mil­lion, ac­cord­ing to the coun­cil’s draft an­nual re­port.

The debt was fore­cast to have in­creased to $114.7m by the end of the fi­nan­cial year.

The coun­cil’s debt is more than its an­nual rates in­come of $83.5m, but less than its to­tal in­come of $110m. . The debt breaks down to $2934 for ev­ery rate­able prop­erty in the city, or $1119 for ev­ery res­i­dent.

The re­port showed the coun­cil ended the year with a sur­plus of nearly $2.6m.

That helped it to put more than $6.5m to­ward pay­ing debt, as well as the $5.2m it had bud­geted to re­pay – a to­tal of $11.8m.

In turn, the re­pay­ments eased the bur­den of in­ter­est costs, down by $1.6m against the bud­get.

Act­ing chief ex­ec­u­tive Ray Swadel said the coun­cil’s healthy fi­nances could be at­trib­uted, in part, to in­creased rev­enue from reg­u­la­tory ser­vices, higher than ex­pected sub­si­dies from the New Zealand Trans­port Agency, and other ex­ter­nal and cen­tral govern­ment fund­ing.

But the re­duced debt was largely be­cause of de­lays in spend­ing on cap­i­tal pro­jects.

Out of a $52.3m cap­i­tal bud­get, only $30.9m was spent, al­though that was ahead of the $23m spent in 2014/15.

Some of the pro­jects were wait­ing for ap­provals or money from out­side the coun­cil be­fore they could go ahead.

Pro­jects lag­ging be­hind timetable in­cluded the Ju­nior Road Safety Park, Pa­paioea so­cial hous­ing project, Wild­base Re­cov­ery (which has just been given the green light to call for ten­ders), the James Line up­grade, and sec­tions of the Manawatu River shared­path­way de­vel­op­ment.

Chief fi­nan­cial of­fi­cer Grant El­liott said while debt was lower than bud­geted, that could be a tem­po­rary thing.

‘‘When th­ese cap­i­tal pro­jects are car­ried out, debt lev­els will rise.’’

He said by bor­row­ing for pro­jects, the cost was paid over time, rather than by billing the cur­rent gen­er­a­tion of ratepay­ers for fa­cil­i­ties avail­able well into the fu­ture.

Cr Ross Lin­klater said he was dis­ap­pointed the coun­cil had not ac­com­plished as much of its cap­i­tal pro­gramme as hoped.

‘‘But the level of net debt is the low­est for some time, along with the in­ter­est bill, and that sur­plus has been put to good use.’’

The coun­cil pays for re­newal of ex­ist­ing cap­i­tal as­sets from op­er­at­ing rev­enue, not bor­row­ing.

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