The Dunedin City Council looks set to reach the summit of
its debt mountain and start paying it down over the other side.
However, Dunedin Mayor Dave Cull and council chief executive
Dr Sue Bidrose have cautioned now was not the time for
profligate council spending, and discipline would be needed
for years to come.
Councillors considering the council's 2014-15 budget later
this week would face a possible 2.5% rates rise, and a host
of competing options vying for the $633,000 in unallocated
funds created in the budget.
They would also face a situation unique in the council's
recent history, as the organisation was forecast to begin
repaying more debt than it borrowed for the first time in a
decade, Dr Bidrose said.
The council's consolidated debt - spread across the council
and its companies - stood at about $612 million.
However, the council's share of that, excluding companies,
was forecast to drop from about $264 million in 2013-14 to
$258 million in the coming financial year, Dr Bidrose said.
That reflected a push during the last council term to cut
costs and accelerate debt repayments where possible, even
while still borrowing to complete projects - such as the town
hall upgrade - begun in previous council terms.
The results were beginning to flow through into the council's
budgets, with forecasts showing a steady decline in core
council debt - to $187 million in the 2021-22 year - was to
That would see the council meeting its self-imposed goal of
reducing core council debt below $200 million, but only if
spending discipline was maintained.
Dr Bidrose said the forecasts showed the council was heading
into ''clear water'' financially, but only just.
''The tide is flowing in our direction ... We've only just
turned the ship around, but we're no longer [just] promising
that we're going to turn the ship around.''
Mr Cull agreed, cautioning a ''spending spree'' that consumed
the debt to be repaid would be ''basically throwing away''
the possibility of reaching the council's $200 million debt
goal in 2021.
It could also have a negative influence on international
credit agency Standard and Poor's view of the council's
financial recovery, having only just lifted its negative
watch on the council, he said.
While this council would have their own views on some of the
previous council's commitments, Mr Cull hoped the $200
million target would stay.
''I would hope that the rationale that underpins that ...
would continue to be respected. I don't think [changing the
target] would go down very well with our community.''
However, councillors would have to juggle the pressure of
continued financial discipline with the need to invest in the
city's development, Mr Cull believed.
''We can't stand still ... but we have to be doing it in a
very constrained spending environment.''
The council had previously expected to begin repaying more
than it borrowed in the 2013-14 year, which ends on June 30.
Dr Bidrose said that remained a possibility, but the result
was now going to be ''close'' after some earlier planned
capital expenditure was delayed, pushing the associated
borrowing into the 2013-14 year.
DCC core debt forecast*
• 2013-14 $264.7 million
• 2014-15 $258.4 million
• 2015-16 $249.1 million
• 2016-17 $238.5 million
• 2017-18 $233.8 million
• 2018-19 $226.6 million
• 2019-20 $217.5 million
• 2020-21 $202.6 million
• 2021-22 $187.9 million
* Gross debt, excluding DCC companies.