Dunedin city councillors burst into applause as it was
confirmed yesterday international credit agency Standard and
Poor's had lifted its negative outlook for the Dunedin City
The news - delivered part-way through yesterday's full
council meeting - also left Mayor Dave Cull claiming
vindication despite his critics.
''I think what this does is vindicate the last council's
resolution and determination and the effectiveness of what we
set out to do,'' he told the Otago Daily Times.
His comments came after S&P, in a statement yesterday,
announced it had lifted its rating outlook for the council -
as well as subsidiary company Dunedin City Treasury Ltd -
from negative to stable.
Both entities retained their ''AA'' long-term, and ''A-1+''
short-term, credit ratings.
The news was hand-delivered to Mr Cull part-way through
yesterday's full council meeting by a smiling council chief
executive Dr Sue Bidrose, prompting Mr Cull to interrupt the
meeting to make the announcement.
Councillors responded with quiet whoops of delight and
applause as Cr Richard Thomson, the council's finance
committee chairman, praised staff for the ''extraordinary
S&P credit analyst Anthony Walker said in the statement
the decision reflected the council's ''significantly''
improved budget performance and liquidity over the past year.
''We expect these improvements to be sustained, allowing
Dunedin to reduce its debt burden,'' he said.
Mr Cull, speaking after the meeting, told the ODT the change
was a ''testament'' to the good work of the previous council
and council staff under former chief executive Paul Orders.
''I think he [Mr Orders] can take a fair bit of credit, but
he was working under the direction of the last council, who
not only reformed DCHL governance, but set quite tough
targets for rates rises, debt containment and acceleration
It was also a vote of confidence in the new council and its
new chief executive, as S&P staff - who visited the city
late last month - had to be convinced the turnaround could be
sustained, he said.
''I think that they have expressed confidence that this
council is resolute and on target.''
He expected the change would result in savings for the
council when it came to rolling over existing loans.
''If you're upgraded, you're a better risk for people lending
you money, so it must be an advantage.
''We're not looking for new debt now, but we do have to roll
over existing debt from time to time, and as we come off one
interest rate, the new interest rate you achieve will be
determined by the risk that you present.''
The change came just over a year after the agency shifted the
council to a negative outlook, saying there was a
one-in-three chance of a credit downgrade within the next two
That was based on S&P's view Dunedin might not achieve
its financial targets, outlined in its long-term plan, and
had ''limited room to manoeuvre'' within budgets.
Yesterday's statement acknowledged the council's work to
restructure its senior management and company boards while
focusing on finding efficiencies and reducing non-essential
The work had resulted in ''substantial turnaround'' for the
council this year, and the likelihood of ''significant
adverse findings'' from the Auditor-general's inquiry into
land purchases by Delta was also considered low, S&P
However, the council's strengths were still partially offset
by its high debt ''relative to international peers'',
moderate budget flexibility and S&P's ''neutral view'' of
the city's economy, it said.
The rating could also be lowered again with any future change
in policy direction, operating or capital expenditure, or if
debt levels approached 180% of operating revenues, S&P
A copy of S&P's full report is expected to be released in
about a week.