Candidates critical of debt forecast

Queenstown's three mayoral candidates are unimpressed with the council's projected debt level of more than $400 million in the next nine years and say a harder line needs to be taken on spending.

Vanessa van Uden, Simon Hayes and Michael Scott were approached for their reaction to revelations in the Otago Daily Times yesterday the Queenstown Lakes District Council had received an audit qualification by the Office of the Auditor General on its long-term community plan, which showed the council's projected debt was about $400 million by 2019.

Departing Mayor Clive Geddes said the council had deliberately chosen not to review the projections so the community would understand the challenges faced by the district, although he was unsure of the council's current debt level.

But Cr van Uden said figures given to her in May showed an estimated level of debt for the financial year ended June 30, 2010 was $95 million.

For the financial year ended June 30, 2007 the council had just $14 million debt, which rose to $58 million within 12 months and to $90 million by the end of the 2008-09 financial year.

In explanation, Cr van Uden said one reason for the initial debt increase was the value of assets increased by about $110 million.

However, she disagreed with a decision to leave the 10-year financial projections reflecting a "$413 million" debt level, which attracted an audit qualification.

"I was opposed to the long term plan [and] I voted against it because I considered that the level of debt was not affordable," she said.

"The reality is we will never face, I would hope, a $400 million debt in 10 years time."

A working group comprising Mr Geddes, Crs van Uden, John Mann and John S. Wilson had been working for the past year to cut debt from the long-term plan.

Cr van Uden said the group had cut $150 million and there was another $150 million to go before it would be back "to an affordable level".

"Why was it there? We had been through a period of `think big, pay bigger' ... [we were] building huge estimates of projects that have huge amounts of contingency in them."

The future council needed to "take a hard line" with regard to its spending, she said.

Mr Hayes said while it was an "unacceptable level of debt", he was "delighted" to hear current councillors were already taking steps to remedy the situation, but questioned why steps were not taken to address the problem sooner.

"If it's that easy to identify it, how the hell did it get in there in the first place?"Nine years ago we [the council] had $31 million debt and that was a major issue.

"I'm happy that council have recognised it's unaffordable ...

"I see Clive's explanation ... but if you've identified or worked out that there were weaknesses in whatever your future plans are, why would you put it out there?"Surely you would review it."

Mr Scott said the council's 10-year-plan needed to be addressed, and projects needed to be deferred.

"It [the LTCCP] should have been looked at harder.

"The council needs to take a long, hard look - some of the projects are like the council building.

"It could be done a lot cheaper in Frankton. The public need to decide what they prefer first, it's up to the public."

Queenstown Chamber of Commerce chairman Alastair Porter said the QLDC had failed its residents by being the only district in the country with an audit qualification on its accounts.

He said the chamber "saw the problem coming" and asked the council to invest in an Economic Development Agency and an economic model for the district.

"Already there is a $10 million loan account for planning, which is already costing the ratepayers more than $600,000 per annum in interest.

"The prospect of getting to a future position where nearly 30% of rates being collected is going to be required to pay interest is unsustainable."