Staff across the Dunedin City Council group have been granted
millions of dollars worth of home loans sourced by the
council's financial services arm, the Dunedin City Treasury.
Figures released to the Otago Daily Times showed DCT
had granted 43 loans to staff across the council and its
council-controlled organisations (CCOs).
The loans stretched back 14 years and were together estimated
to be worth between $4.5 million and $5 million.
DCT chief executive John Knight confirmed most had since been
repaid, and the policy of granting loans ceased last year,
but 13 loans - together worth $1.1 million - were still
Staff qualifying for the loans were offered up to 80% of the
valuation of their house, based on market rates and with
repayment terms capped at 20 years.
Available records for the past 12 years showed the average
loan was $114,000. Many were for much smaller sums and the
largest individual loan was believed to have been about
Mr Knight defended the loans, saying they did not cost the
council or ratepayers anything and any suggestion of
impropriety was "absolute nonsense".
"There's absolutely nothing smelly about it at all.
Instead, the loan scheme was designed to create enough work
with DCT to justify employing a part-time worker to support
Mr Knight, he confirmed.
DCT was part of the group of companies under the umbrella of
the council's holding company, Dunedin City Holdings Ltd, and
provided funding and financial services across the group.
Cr Lee Vandervis told the ODT he accepted the loans
did not cost the council anything, but criticised the scheme
anyway as "misconceived".
"It's just not a wise thing for the DCC to be doing, because
of the perception that you are giving your own employees some
kind of perks.
"It could be perceived as being part of a perk culture," he
Cr Syd Brown, chairman of the council's finance, strategy and
development committee, disagreed.
He questioned the scheme after first learning of its
existence earlier this year, but had been reassured when
details were explained to him and he "didn't have an issue"
Neither did Dunedin Mayor Dave Cull, who said if staff were
paying market rates, and DCT was making a margin, then "I
don't see what's wrong with it, and I certainly don't see it
as a perk".
Mr Knight said the scheme was offered to staff in Dunedin,
and those working for CCOs buying homes elsewhere, including
DCT was "in the business of lending money" to other DCHL
companies, and it "just seemed sensible to expand that".
DCT's directors wanted a second staff member to support Mr
Knight because he was then the company's sole employee, and
the directors "felt quite vulnerable" about what would happen
if Mr Knight fell ill, he said.
It had been hoped the loan scheme would have the part-time
employee handling up to $5 million in loans at a time, but
the total only ever rose to $2 million, he said.
That generated a small surplus of several thousand dollars a
year for DCHL, but not enough to justify continuing the
A policy change in May last year meant no new loans would be
approved, but the increased workload associated with stadium
debt meant DCT's part-time employee remained in their job, he
Mr Knight said he thought staff opting to take loans were
attracted by having payments deducted directly from their
wages and by being able to discuss matters they might not
want to raise with a bank manager.
"Some of our rates were cheaper than some banks, but they
were never cheaper than everybody's.
"I looked at all banks to make sure we were competitive, but
not undercutting the market."
Details had also been included in DCT's financial statements
for "years", and were cleared by Audit New Zealand each year.
The company had been "pretty conservative" in lending, and
not all staff who applied had qualified for loans.
Of those who did, none missed payments, he said.
"The last thing I wanted to do was have to go to a staff
member and seize his house, so we were pretty cautious."
It was not clear last week whether other councils offered
their staff similar schemes.
A Wellington City Council spokesman said its staff did not
have access to council home loans, but could opt for 0.25%
off the "going rate" in a deal offered to the council's staff
by the National Bank.
Christchurch City Council staff were not aware of any similar
home loan scheme being offered, while Auckland Council staff
did not respond to questions.
Local Government New Zealand and Audit New Zealand staff had
no information on any similar loan schemes offered by other