Candidates from top left, clockwise: Lee Vandervis, Andrew Whiley, Dave Cull, Kevin Dwyer, Pete George, Steve McGregor, Olivier Lequeux, Aaron Hawkins. Centre: Hilary Calvert.
Dunedin's debt mountain is reaching new heights, but the
Dunedin City Council says everything is under control.
Reporter Chris Morris speaks to the city's mayoral candidates
about whether they would do anything differently.
The eight men and one woman who want to be Dunedin's next
mayor are divided over debt.
They are divided over the figures, divided over the plan and
divided over what they would do differently.
Some have declared themselves happy with the Dunedin City
Council's approach to debt repayments.
Others remain opposed, and have called for cost-cutting, more
money from the council's companies and even for assets to be
sold, including Wall Street mall and Forsyth Barr Stadium.
And, in the meantime, the debt mountain continues to climb
towards a projected peak that is still two years away.
As it stands, the council's consolidated debt - shared
between the council, its companies and the stadium - has
reached $623 million, council staff confirmed yesterday.
That was up $125 million since the start of incumbent Mayor
Dave Cull's term in mid-2010, albeit mostly - but not
completely - as a result of spending on major capital
projects agreed to by previous councils.
Within the debt mountain, core council debt - the bit
ratepayers are directly responsible for servicing - stands at
That has actually gone down $15 million, from $240 million in
2010, but only because stadium debt - totalling $145 million
- has been split from the core council debt tally, to become
its own category, since 2010.
If taken together, core council and stadium debt has
increased $130 million, from $240 million to $370 million,
during the past three years.
Add the $253 million in debt held by Dunedin City Holdings
Ltd and its subsidiaries - the council's group of companies -
and the total reaches $623 million.
And still it is going up. Core council debt - excluding
stadium debt - is expected to peak at $272 million in 2015-16
before beginning a gradual decline.
Despite that, the council's financial plan envisages reducing
that figure to $200 million by 2021, after which ''modest
headroom'' would begin to appear in the council's budget,
chief executive Paul Orders has said.
Dunedin Mayor Dave Cull told the Otago Daily Times yesterday
the council's debt levels remained ''a constraint'', but one
the council was addressing.
Debt had risen under his watch, but that was not a ''fair
reflection'' of decisions made by the present council, Mr
Councillors had agreed to $14.4 million in new debt-funded
projects, such as a new Waitati library and cycleway
improvements, while removing another $39 million in planned
capital spending on projects including a Logan Park upgrade,
That resulted in a net saving to the council of about $23
million, and was on top of the $22 million in debt paid down
during the term, Mr Cull said.
The council remained ''on track'' to reduce core debt to
under $200 million by 2021, while using any future surpluses
to accelerate that, but success would depend in part on the
discipline of future councils, he said.
Some of Mr Cull's mayoral rivals - while warning debt
remained a major issue - agreed the council seemed to be on
the right track.
Green Party candidate Aaron Hawkins was one, although he
warned the council would have to balance cost-cutting and
debt repayments with further investment in the community, to
attract more people to the city.
He was against asset sales to repay debt, but wanted the
council to find new ways to increase the revenue stream
coming from its companies and ease the burden on ratepayers,
Pete George was another to support the council's
''reasonable'' debt plan, although the next council would
have to remain ''vigilant'' to keep costs and rates down.
''The key thing now is keeping costs under control and
sticking to the plan,'' he said.
Hilary Calvert said the council's debt burden remained ''a
''The bigger the debt gets the bigger the issue is.''
Uncertainty over the exact return offered by investments such
as Wall Street mall also meant the council's real financial
position was not yet clear, Ms Calvert claimed.
Once it was, the council should consider selling
underperforming assets, beginning with Wall Street, and
scrutinising others, she said.
''[Wall Street] is something that, if it is underperforming,
should be looked at seriously. But we might need to look at a
whole lot of things that people wouldn't want to have looked
at if we were in a better position.''
Cr Lee Vandervis said the council's repayment plan was ''just
a fond hope'', as was the original plan for DCHL to pay for
the stadium by providing $23.5 million a year in dividends to
''The problem with this plan was that DCHL have never made
clear profits of anything like $23.5 million and have had of
a culture of borrowing which they misrepresented as
Instead, Cr Vandervis wanted the DCC to merge with the Otago
Regional Council to create a unitary council, before selling
the ORC's harbourside leasehold land.
The proceeds could be used to pay back most of the stadium
debt quickly, ''to prevent Dunedin succumbing to impossible
interest costs, especially with likely interest increases
within a year'', he said.
Andrew Whiley said debt remained a ''dramatic issue'' because
of concerns interest rates could rise, lifting the council's
costs and forcing rates up.
''I think it's quite serious and I don't think we have really
appreciated it,'' he said.
The council needed to invest, particularly in marketing and
tourism, to grow the city's income stream, rather than just
retrench by cost-cutting, he said.
He believed the council's plan to repay stadium debt over 18
and-a-half years was wrong, and the term should be extended
again, to about 25 years, to reduce up-front costs.
Kevin Dwyer also worried about rising interest rates and the
level of company debt, which he said prevented them bidding
successfully for some work.
The council needed to do more, beginning by selling the
stadium and investing in the city's economy, but Mr Cull was
not doing enough.
''The mayor seems to be a bit of a fence-sitter. He's not
Olivier Lequeux said the council needed to ''stop spending'',
but doubted future councils could stick to their debt
reduction plan, pointing to planned investment in cycleways.
''The council seems to commit more debt, to commit more
money, for future councils to service, especially with the
''The message from council is `everything is fine, we are
going to pay the debt very quickly'. But I doubt it is
Dunedin's ninth mayoral candidate, Steve McGregor, could not
be contacted yesterday, but has previously said he did not
think the council was doing enough on debt.
More investment was needed to grow revenue and accelerate
debt repayments, he said in an ODT mayoral profile last week.
Kevin Dwyer: ''The mayor seems to be a bit of a
fence-sitter. He's not bold enough.''
- DCC needs to do more to reduce debt.
- Sell Forsyth Barr Stadium and use proceeds to pay off debt.
Andrew Whiley: ''I think it's quite serious and I don't
think we have really appreciated it.''
- Not happy with DCC debt plan.
- Need to invest more to promote city and grow economy.
Mayor Dave Cull: ''It [mounting debt] is not a fair
reflection on who is responsible for committing to that
- Debt remains a constraint but plans in place to address
- Future councils will need to stick to the debt plan.
Aaron Hawkins: ''I wouldn't want to see that burden fall
too heavily on the ratepayer.''
- Supports DCC plan.
- Future councils need to balance debt repayments with
Hilary Calvert: ''It isn't under control. It's far
too big and everyone's concerned about it.''
- Not sure DCC debt plan a good one.
- Better understanding of DCC finances needed, asset sales a
Pete George: ''The key thing is keeping costs under
- DCC debt plan a reasonable approach.
- Future councils need to control costs and stick to the
Lee Vandervis: ''The current repayment plan is not a plan
but is just a fond hope.''
- Not happy with DCC debt plan.
- Unitary council needed to sell leasehold land and pay back
Olivier Lequeux: ''When the tough get tough you have to
play ball. We have to to go back to core business.''
- Doubted DCC would stick to its debt plan.
- Next council needs to cut costs and repay debt as soon as
Steve McGregor*: ''I don't think we should be relying on
the stadium to pay all its debt off. It would just be
- Doesn't think DCC doing enough on debt.
- More investment to promote growth, increase revenue and
* From Otago Daily Times mayoral profile interview,