Council debt tipped to peak at $70 million

WANGANUI District Council debt is projected to reach just over $70 million in the next decade before tracking downward.
That financial picture came yesterday from Mayor Michael Laws, who said an updated tally on council indebtedness would be outlined next month if an "open books" policy was adopted.
Mr Laws will be asking the council's financial and administration committee to endorse a "fiscal responsibility regime" which would open the council's books three months prior to the local body elections in October.
This would show the latest debt projections, forward debt projections for the next 10 years and any financial information that differed from the Annual Plan or 10-year plan.
"Inaccurate financial information and projections directly affect the quality of debate and policy leading up to local elections. Every political aspirant should have access to the latest information to help them determine what can and can't be afforded," Mr Laws said.
"So around July 31 the whole of Wanganui will know what the projected debt for council will be for the next 10 years."
He said while there had not been any significant changes, there had been some change since the Long Term Council Community Plan (2006-16) was released last year and the council's latest Annual Plan round earlier this month.
He said there were three reasons why council debt had increased "and none of them have to do with spending money but a lot to do with the previous council not calculating its debt properly".
"The discrepancies occurred because the previous council got it wrong in costing forestry dividends, did not include inflation, and also didn't prepare an asset register.
"People are being confused because they believed the Long-term Council Community Plan of 2003-13 was accurate. It was not."
Mr Laws said the previous council had costed in forestry dividends based on 2002 figures. These figures were outlined in a confidential paper of March 29, 2004 and sent to the forestry management board, including Mayor Chas Poynter, Crs Pat Bullock, Stephen Palmer and Ray Stevens, the then CEO and the finance manager.
"It showed that council's projected dividends had dropped from $18 million to $4 million but that paper was never publicly released."
Mr Laws said his administration has not been able to show that this information was passed on to any other councillors at the time either.
"They went to the election of 2004 with the maximum debt projection shown in their 2003-13 LTCCP at $45 million. And that's what the argument's all about, that this council has increased the debt from $45 million."
But he said that was without the knowledge that $14 million could be added to it immediately based on those forestry receipts.
Mr Laws said most councils were "having at stab" at long term planning in 2003 because the Local Government Act required them to do so.
"They were doing it for the first time and didn't include inflation in their figures. The 2006 LTCCP that we've done required us to cost inflation in, which we have done."
Council's financial problems were compounded with the previous council not including a proper asset register in their first LTCCP.
"Our 10-year plan now must include all our assets and this included sewerage and water pipes but also berms and even trees.
"That's why the debt has gone from the $43 million in the 2003-13 LTCCP to a maximum of $72 million in the 2006-16 plan. It's nothing to do with this council spending more but a lot to do with serious mistakes made by the previous council."
Mr Laws said also understated had been the inflation index for construction projects and contract renewals but that was unforeseen and no one could be blamed for that.
"We're not just talking 3 percent inflation. The construction index has risen 20 percent in the last year alone."