The University of Otago's position as the ''biggest
business in town'' has been highlighted by a report showing it
has $1.66 billion in assets.
Its financial statements for last year, tabled at the latest
university council meeting, showed the university group,
which includes subsidiary companies and controlled trusts,
had set aside $277 million worth of ''other financial
assets'', which included cash, short-term deposits and
This was in part set aside for the university's unprecedented
building programme worth ''more than $600 million''.
Otago University accounting professor David Lont told the
Otago Daily Times the university's strong financial
position was hugely positive for Dunedin and testament to
''very solid'' management.
However, having the university as the ''biggest business in
town'' was a ''double-edged sword'' for the city, because it
did not pay full commercial rates and paid only for water,
drainage and other services.
''If we keep growing our footprint that means the city has to
bear greater cost,'' he said.
There was a need for a conversation about whether it was
appropriate government organisations did not pay full rates,
but ultimately that was a decision for Parliament.
On the flip-side, the Government and research providers were
''essentially pouring in hundreds of millions of dollars''
into Dunedin through the university.
''It's a wonderful thing for the city to have a financially
strong university, which students from outside the city want
to come to.''
Given times were tight at present, the university could
have been faced with having to cut courses and slash budgets if
it had run up large amounts of debt in the ''good times''.
Instead, it was looking to spend more than $600 million on
new buildings, most of which would be in Dunedin.
''It really is pretty remarkable that a university of our
size has largely almost always been debt free and that we
have been able to finance expansion from our operating
''It could have been a hell of a lot worse if we weren't well
There was nothing untoward about $277 million of the
university group's assets of $1.66 billion being made up of
''other financial assets'', including cash, shares, bonds and
short-term deposits, Prof Lont said.
''I don't think it's out of kilter. We are a big
organisation. If you think of Air New Zealand, they have
about a billion sitting there in cash.''
Chief operating officer John Patrick, speaking at the council
meeting, said the university's accumulation of cash had been
a ''deliberate strategy'' so it could fund its construction
The programme, which included replacing the university's
dental school, its ''largest construction project'', would
have a huge impact on the university.
''I think over the next 10 years, the face of this campus is
going to change quite dramatically.''
In another financial report tabled at the meeting, acting
director of financial services Gavin Logie said construction
would begin on priority development projects ''later this
year and in 2015''.