Whangārei mayoral candidates, Sheryl Mai, Alex Wright and Tony Savage.
The Northern Advocate has asked Whangārei's mayoral candidates, Sheryl Mai, Alex Wright and Tony Savage to answer a series of questions as part of its 2019 local body election coverage. We gave them 200 words to answer each question.
Today they answer the question: What do you think is an acceptable debt level for council?
On Monday they will answer the question: Given that any promise you make will need to get the backing of at least half of the other councillors to pass, how confident are you that you can get majority support and why?
Council should always borrow prudently to build assets that meet the community's current and future infrastructure needs.
Council's debt level should be dependent on those needs with an eye to the future – interest rates will not always be this low. It is fair for future ratepayers to contribute to the assets they use that were acquired by today's ratepayers.
Other factors to consider include council's role in stimulating the local economy for the wider good of the community. This is a position to be taken with the greatest care because it is NOT council's role to cherry-pick businesses or projects – there has to be a great case made for that project fitting into the community's needs, through Long Term Plan and Asset Management Plans.
Previous councils sold property to pay for assets. I prefer getting returns on our property portfolio. Debt must never be used for operating expenses.
In 2013 council's debt was $156 million, now it's $142m, saving ratepayers millions in interest every year.
Our Annual Report 2018-19 shows we met all our financial targets including debt affordability benchmarks. With a Standard and Poor's rating of AA+ council is in great shape to borrow more if necessary.
The truth is that debt is another name for "delayed rate increase". An acceptable level of debt is what ratepayers can afford.
Up until 2012 council kept its borrowings that it spent on operating in check.
Total debt has now ballooned out to $216m.
In the next five years, council debt is planned to skyrocket a great deal more. Some people think that is "very affordable". That's easy to say when it is not your money.
Others reply "but, we are within council's debt limits". You know though when the limits are breached, they simply change the policy. Problem solved.
Instead I say first get some discipline into your spending. The acceptable level of debt depends on whether the money is put into income earning assets and community investments or whether it is borrowed just to cover poor operating expense management.
Council can borrow at very low interest rates. So, investing in good assets that bring in income or are growing in value makes sense.
The problem with debt is that you must pay it back. And by that, I mean you, the ratepayer pays it back. An acceptable level of debt is what ratepayers can really afford.
People should get smart on debt. Reducing debt has always been a ploy used by politicians to gain votes from a public who seem to fall for that every time.
Debt is part of life for individuals, families, farms, enterprises, councils and governments.
An acceptable debt level is really a matter of perception and what the industry standards are.
With an expanding population we can afford and eventually pay back more long-term debt.
The first process is to open up the books and see what our present council has got us in to.
There is too much talk among councillors about hidden debt.
Once we see the full level of debt we can see how we compare with other councils across the country. For example, Dunedin has many times the level of debt that Whangārei has.
Our credit rating is good. We will have to borrow money as everyone does if we want to have a dynamic and forward-moving city and district.
Our satellite towns are also important and should be entitled to fair funding by borrowing if necessary. We should not go in for grandiose projects while basic needs and infrastructure are not being catered for across the Whangārei District.
For example, Hikurangi needs a facelift to make it a good place to live and this should be a priority before a new council building.
■ More than 100,000 voting packs for this year's Northland Regional Council, Whangārei, Far North and Kaipara district councils, community board and Northland District Health Board elections have been sent out for the election.
If you are not enrolled or have not receive your voting papers, you will need to check or update your details and enrol to vote, then contact the electoral officer to arrange a special vote.
To enrol to vote, freetext your name and address to 3676, phone 0800 36 76 56 or pick up an enrolment form from your local council or New Zealand Post Shop. You can also visit the vote.nz website and enrol to vote online.
Votes must be posted back by Tuesday, October 8 to ensure they are received before the elections close at noon on Saturday, October 12.
More information at www.localelections.co.nz, Election Services at info@electionservices.co.nz or 0800 922 822.