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Rodney District's
debt is manageable..'Yeah Right'.
A recent
Rodney Times headline quoted the Council's Finance Manager, Mr Kevin
Ramsay as stating "that the Council's debt was manageable". Indications
gained from a credible New Zealand Local Government survey/assessment,
(see www.kauriglen.co.nz ) would seem to confirm the views of Mr
Ramsay.
But here are the facts.
The total gross debt of the Council, its current and term liabilities
are now at a five year high.. at around the $1,700 per ratepayer
level. There will be variations of this calculation but on a basis
consistent with other Council measurements the figure of $1,700
per ratepayer is:
- below that of the whole of the local government sector (District
Councils only).. currently at $1,900 ,
- but is above that of the Council's "more comparable" peer's
whose debt averages around the $1,400 mark..
Absolute dollar levels of debt are not very meaningful without relating
them to the issue of sustainability, that is to use Kevin's term whether
or not the higher existing levels of debt are manageable because debt
related "servicing" costs can be readily met from normal income received.
Even more meaningful to the issue of manageability is an assessment
of the ability of the District's residents to pay for Council rates
and services. The Rodney District is well placed in this respect according
to the survey. The Council's present "Income" related factors give
it a "Very High" relative ability to pay, its "Economic" factors rate
a "High". In other words the debt level is "manageable" if ability
to pay is to be the guide.
A word of caution is warranted however that ratepayers of the District
need to bear in mind.
For whilst current debt levels are "manageable" the future projected
borrowings of the Council will demand standards of financial stewardship
..in a word "management" that will be extremely demanding. For debt
is scheduled over the next five years to more than double from a reported
2003 position of $71.1 M to a whopping $147.5 M in 2008. How manageable
will that be?
And can the Council given its recent track record cope with these
demands? Time will tell, but unless both elected members and Council
management begin to place proper and increased emphasis on sound financial
management practices (and on accountability too) the prospect is to
say the least .."challenging".
Footnote: The new CEO of the Council has advised that the answers
to my questions posed in a recent "Coaster" series concerning PENLINK
will be contained in a review at present underway expected some time
in June. We await the answers with interest. |
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