Council's debt ceiling soars

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PHOTO: ODT FILES
The level of Dunedin City Council’s debt could climb appreciably after councillors decided a debt ceiling of $350 million would be far too limiting.

Councillors have given themselves more room to raise a lot more debt to provide them with the power and necessary flexibility to get through the next decade of capital spending.

The council has yet to work out how much might be spent and which projects could be favoured, but councillors signalled yesterday they at least wanted a broad scope of options to consider.

Ahead of development of the 2021-31 10-year plan, they chose to approve a debt limit to be calculated as a percentage of revenue and then opted for that figure to be 250%.

Projected revenue for 2020-21 is $279 million, which would result in a debt limit of $698 million.

The actual level of debt at the end of June this year was $243 million and had previously been forecast to reach $346 million by 2027-28, but that was when the planned capital budget for 2018-28 totalled just $878 million.

Preliminary capital budgets developed for the draft 2021-31 plan indicated spending of between $1.3 billion and $1.5 billion would be needed across the 10 years.

Sticking with a debt cap of $350 million would have resulted in programme cuts.

About $900 million of the 10-year capital programme is considered necessary just for maintaining and fixing infrastructure, rather than new capital projects.

Dunedin Mayor Aaron Hawkins said the city had been out of step with other metropolitan councils and constraining itself with an arbitrary debt limit no longer made sense.

"Giving ourselves as broad a scope as possible is the most sensible option at this point," he said.

Deputy mayor Christine Garey said projects such as replacing the Mosgiel swimming pool and creating a South Dunedin library reflected the aspirations of communities.

Cr Sophie Barker said there had been an under-investment for many years.

"Debt is not a dirty four-letter word," she said.

"Investment in our future is vital.

"Our aspirations should be high."

However, Cr Jules Radich said the community wanted councillors to show restraint.

A conservative mindset on debt had served the city well and changing that risked "placing ourselves in jeopardy".

Cr Lee Vandervis lamented what he described as his colleagues’ failure to understand the situation.

The level of debt the council could look to raise was incredible and the city could struggle to bear such a burden, he said.

Compared with their peers in other metropolitan centres, Dunedin residents had a low disposable income, Cr Vandervis said.

Cr Vandervis, who several times asked Mr Hawkins — the meeting’s chairman — not to interrupt him and Cr Radich were the only councillors to vote against the change in approach on debt.

Chief executive Sandy Graham indicated some work needed to be done to sort out the timing of some projects, which could make it easier to deliver the desired programme.

Councillors will consider preliminary capital budgets in December.

grant.miller@odt.co.nz

 

Comments

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There are sooooo many pet projects that could be cut.
But hey, raise debt, raise rates to pay for it.
What do councilors care, the ratepayers pay their salary and also their rates bill.
Disgraceful

Would you not work out what was necessary and what was not, before deciding lets go and blow a lot of money we don't have????

Were rates mentioned...even once?

The city is crumbling and they want to borrow more? Have these people driven our streets lately? Gone down Princes Street and side streets? The last time the DCC 'invested' $300m was in a stadium that is empty and massively loss making in during the good times. Let the ratepayers vote on increasing the debt limit which we have to pay for in the end. Poorly supported/used services that the DCC provides need to be axed/curtailed. If users want a service, let them pay for it each time they use it- that is fair.

The city was crumbling a long time ago.

Correct, over the last 10 years when $300m was spent on the stadium, everything else (including roads) was put on the back burner. Debt gives you less choice, not more. It boxes you in and encumbers the future. The decline started under Turner, and carried on through Chin, Cull and now, no worries Hawkins.

You are right there OtagoIdeas, driving down my street is like driving the death road in Bolivia pot holes you could loose your car in, this council must be stopped and removed from office.

This was was published in the ODT less than 12 months ago,
"The Dunedin City Council wants to increase the amount of money it and its companies can borrow - if needed - to almost $1 billion.
But it also insists the extra budget headroom created by the move will not result in the council, or ratepayers, taking on extra debt beyond what it has already committed to."

Madness. But you get what you vote for.

Exactly

Only about 400 Dunedin residents have watched the meeting video. Anyone who wants to be a well-informed and so responsible voter really should. https://youtu.be/fnQOps_GOcw
If you have’t got a lot of time to spare, start from Time Stamp 2:51:49
( The link above should start from that point.)
It’s extremely bizarre that a Councillor should repeatedly demand not to be interrupted by a Chair. The Chair has the RIGHT to interrupt. Standing Orders require Councillors to be silent when the Chair, usually the Mayor, speaks.

I don't quite understand your statement, Ms Yeldon.

Are you saying that the Chair can simply bulldoze dissenting opinion? Because that's what seems to have happened. There are exactly two councillors --Vandervis and Radich-- who oppose this further exponential increase in debt, to be funded out of our pockets. And we all should know, by now, that exponential increase is exactly the opposite of sustainability, and sustainability is one of the catch-words of this Council. The rest of the Council are neoliberals who think that debt is, in their words, "not a four-letter word." It is exactly municipal debt that is drowning us, debt which is unwanted, unwarranted, and has been vocally refused. Yet the totalitarians in charge, disguised as smiley liberals, clearly benefit from this stealing from our pocketbooks, all while spouting on about sustainability.

This would be a farce, if it weren't true.

If, however, I have interpreted your comment incorrectly, then I will gladly listen.

Theophrastus: There are rules of debate in Standing Orders. If a Councillor is not complying with the rules of debate, then a Chair wouldn’t be doing their job properly if they didn’t intervene and correct the speaker. Mayor Hawkins interrupted Cr Vandervis twice. The first time was when Cr Vandervis referred to something Cr Lord had said when earlier asking a question. But Cr Lord had not yet spoken in debate. Councillors can only debate what’s been said in debate. The second time Cr Vandervis incorrectly referred to a staff member as ‘Councillor Logie’ instead of ‘Mr Logie’ and Mayor Hawkins corrected him. Both of these interventions were about the proper conduct of the meeting. Cr Vandervis got the full five minutes allowed by Standing Orders to fully express his point of view.

Ms Yeldon: Arguing the minutiae of Council debate rules is not really the point. I refer you to the comments by Buzz down below, which are clearly factual and reasoned. Increasing debt while in the grips of the most uncertain future since the 30s is madness, but this is labelled as overly "emotive" by cold-blooded creatures. Vandervis and Radich are right; the rest of the council wrong; being fiscally conservative in troubled times is wisdom; spending madly is lunacy.

So you can no longer speak your mind, the Mayor says sit, you sit

I di admire your determination in trying to educate people on this forum as to the ways of council, from an objective and factual perspective rather than an emotive one.

I do fear your efforts are wasted for the most part, but I enjoy the balance you bring to these "discussions"

It’s extremely bizarre that a mayor should repeatedly cry down a certain councilor almost as soon as they speak but not repeatedly do so to other councilor's, yes I watch the interactions on the dcc livestreams.

Debt is a great evil in our modern society. It will destroy us all. Seven years was the ancient limit, Deuteronomy. The Medici’s (Italian) and Fugger’s (German) cranked up debt until it destroyed them. Later the Rothschilds took it up to a whole new level, and we are now waiting for their empire to collapse. Dunedin will not be safe. Arbitrarily winding us up to Weimar level debts shows an incredible blindness to history.

Never a truer word said PB. Sadly, they're so busy looking to the future, at the expense of our bank accounts, they totally neglect the lessons of history.
The so-called 'broken rules' of speaking at a council meeting pale in comparison to the 'broken rules' of fiscal responsibility that have been allowed to continue for far too long. This cannot continue, the debt will eventually consume all of us. The system is profoundly broken.

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