Plenty of questions but financial reports accepted

Lee Vandervis
Lee Vandervis
Presenters were peppered with questions from one councillor yesterday as Dunedin city councillors otherwise whipped through a series of regular financial reports indicating general improvements in council and council-owned company performance.

Included on the agenda of the finance, strategy and development committee's meeting were generally favourable half-year reports from council-owned companies, including a significant cut in losses by stadium operator Dunedin Venues Management Ltd and reports showing an increase in the value of the council's main investment fund, the Waipori Fund, and the council's financial position so far this year still within council policy limits.

Audit New Zealand's report on the council's 2011-12 financial year, which conveyed an overall view that the council appeared to be aware of any issues and was dealing with them, was also considered.

Cr Lee Vandervis was told by DVML chief executive Darren Burden it was the way things had always been done, when the councillor questioned DVML using profit before rent (it must pay $4 million a year rent to parent company Dunedin Venues Ltd) as the main measure of success in its half-year report, when after-tax profit or loss, which would account for any rental costs, would normally be the measure.

Cr Vandervis also had questions about the governance of DVL, to which council holding company Dunedin City Holdings Ltd director Graham Crombie confirmed DVL and DVML had their own boards, but ultimate governance responsibilities now lay with DCHL.

To queries about why DVL's loan interest rates seemed to be lower than the council's, council finance and resources general manager Athol Stephens said when DVL took on stadium debt it benefited from some interest rate swaps and low floating rates that resulted in fairly low interest rates on its loans. That was compared with the council, which drew down loans earlier, at higher rates, although with some careful management those interest rates should gradually fall over time.

''Until they play out, that is the difficulty we have to live with.''

Cr Vandervis also highlighted the issue of forecast reduction in cash and subvention payments from council-owned companies over the next few years over and above the loss of the $5 million subvention payment now directly made to DVL, which he said provided a ''reality check'' on where the council was at.

Mr Crombie agreed it would be an issue the council would have to come to grips with.

Cr Vandervis was also reassured by council chief executive Paul Orders that a register of interest had been introduced for council staff dealing with contracts, something the auditor had noted had not been done by the end of the last financial year.

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