Council debt

‘‘The devil is in the detail’’ goes a common phrase. So it’s been fascinating to see the financial details in the Hamilton City Council’s 2016/17 Annual Report. Disturbing too. Why? Because the assertion that ‘‘. . . this council continues to finance its day to day activities from borrowing’’ goes unquestioned. Debt owed to the private financial sector is accepted as the norm.

The report notes that total borrowings for that financial year totalled $454.2 million with finance costs of $12m to keep servicing the overall debt of $385,133 million. ‘‘Money we owe our lenders less cash’’ states the report. The lenders are mainly offshore institutions, encouraged by credit-rating agencies to own as much public debt as possible.

One question council does ask itself is ‘‘how and what to fund and how to pay’’ faced as it is with ‘‘tough decisions’’. Can ratepayers dare hope that council will question how debt-servicing drains the local economy. Then look to the type of credit-funding from our sovereign Reserve Bank – similar to the multibillion-dollar facility it gave the big banks a decade ago to ease them through their liquidity crisis. As 20th century Quaker economist (and critic of public debt) Kenneth Boulding, said:’’ What has happened is possible.’’ Food for thought ....

Heather Marion Smith

Gisborne