Raising of DCC debt ceiling sparks debate about value

Aaron Hawkins
Aaron Hawkins
The Dunedin City Council’s appetite for debt has been both derided as reckless and defended as necessary for much-needed investment.

Councillors this week signed off on allowing group debt for the council and its companies to be raised as high as $1.2 billion, if needed, but not before debate about the "value" of council spending.

Moving the debt ceiling - up by $225 million - was needed to finance work already approved by the council, Dunedin Mayor Aaron Hawkins said.

Benefits from the council’s capital programme would last for decades and it was equitable for the cost of servicing the debt to be paid over decades, he said.

Almost two-thirds of the council’s $1.5 billion 10-year capital programme was to renew ageing infrastructure.

Group debt, including company debt, was forecast to be about $1.15 billion by July 2024, which would have breached the previous cap.

Cr Lee Vandervis said the council should not have earlier approved some of its spending.

"When you look at the debt graph that we are now about to tick off, it is the steepest, most massive increase in our history — and we’re not even building anything with it.

"We’re getting nothing for this debt.

"We are funding pet projects for which there is no real value.

"We have failed to look at our council companies and take control of them."

Cr Vandervis said repaying the debt at a $1 a minute would take close to 2000 years.

Cr Mike Lord said spending a councillor disagreed with was not the same thing as spending of no value. The council had to invest in a huge number of assets and rebuild roads, he said.

"You can’t say those things are valued at nothing."

Spending needed by council company Aurora Energy to make its network safer and more reliable and by the council to improve infrastructure were identified as the main drivers of a forecast increase in group debt.

The council’s spending had already been approved, but council borrowing arrangements require uncalled share capital from its companies to be greater than group debt.

Cr Sophie Barker said raising the ceiling enabled approved capital expenditure to happen.

Cr Chris Staynes said angst about rising debt should be offset by remembering to account for inflation.

Cr Jim O’Malley said the city had a strong asset base.

Cr Andrew Whiley said lifting the ceiling created room and it was "not about spending all the money".

Crs Vandervis, Carmen Houlahan and Jules Radich voted against raising the debt ceiling.

They also voted earlier this year against adopting the council’s 10-year plan that pushed up projected debt.

Cr Houlahan had voted for approving the plan, but against adopting it.


Quite happy to borrow for necessary works but the amount of friverlous spending on nonsense needs to be voted out

The problem with DCC is that it run and managed by inexperienced amateurs. People whose vision goes no further than painting dots on the road, or buying subjective art work. DCC is a billion dollar business but run by people who I wouldn’t trust to manage my kids piggy bank.

Aurora Energy has been paying DCC dividends and not reinvesting profits into maintaining the company. Now DCC is going to borrow money and pay interest to bail Aurora out. It seems to me that both DCC and Aurora need to do some Busines 101 training because they do not appear to understand the basic concepts of financial management. Never mind though we can always increase rates and paint some feel good dots on the road or a pretty rainbow crossing!! What a joke!!!

This exactly. And as interest rates are on a rising curve the DCC should really be trying to reduce debt at every opportunity.



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