Guy Burns, Deputy Chair of the Raumati Paraparaumu Community Board, is concerned that the Kapiti Coast District Council is planning to use borrowing to pursue investments in the open financial marketplace.
“I’m concerned loans of up to $30 million dollars will be used to invest in financial markets in the optimistic hope of some return. With KCDC debt levels running at record highs, such investment has the potential to create further debt for ratepayers and higher costs in the long-run.
“Approval for the establishment of two investment funds, to be initially funded by borrowing, was slipped into the recently approved Long Term Plan without public consultation and with very little background briefing information being provided to Councillors.
“I asked Councillors at the Operations and Finance Committee of 16 August 2018 [where a 32-page document advocating this was presented by council staff], if they have fully considered the risk to ratepayers if financial markets crashed. I hope Council will not proceed further with the establishment of the two investment funds.
“At a time when ratepayers are tightening their belts to meet skyrocketing rates bills and increasing living costs, it is disturbing Council is proposing to take risks on the financial market, by borrowing even more money on behalf of ratepayers. It is like a debt-ridden household increasing its mortgage to gamble on speculative markets.
“Back in the mid-1980s, many New Zealanders borrowed to invest in financial markets only to be badly burned by the 1987 share market crash. The world economy is facing uncertain times, domestic business confidence is faltering, and all investments carry risk. I would hate to see the KCDC going down a similar path”.
“KCDC should stick to the provision of core services and reject using further borrowing to carry out risky investments.”
Hear, hear. According to Cr Michael Scott, council has a surplus of $1M this year. Why, then, were our rates increases so high?
Something doesn’t sound right about all this.
It’s possible that some creative accounting by staff has produced such a “surplus” for the year ended 30 June; the annual report should be made public about the first week of October and its statements will be given rigorous scrutiny.
Yes, most Waikanae people have had rates increases of at least 5 times inflation this year; and what gets done with the money?
This seems to be based on a long held dogma that being in debt is a sign of economic health. I seem to recall Guru at a meeting during the last election campaign stating something of the kind. How much interest is going to accrue on this debt and what are the other conditions? It is an outrage that Kapiti ratepayers will be the guarantors of financial roulette. It seems predictable that Michael Scott apparently felt compelled to reply to Guy Burns in an arrogant, piggish manner. That seems to be an increasing trend among both Councillors and senior staff. Now that David Scott has been eliminated from council – perhaps the only Councillor who spent the time to consistently scrutinize all documents in detail – it is not surprising that important issues will slip by unnoticed.
Get Out Of Debt = GOOD.
The objective for any organisation should the same as for a household — pay debt off quickly; the sooner you do so, the more dollars will stay in your wallet. Some councilors are clearly incapable understanding that. They think there’s nothing wrong with borrowing to pay for all manner of unnecessary and extravagant activities. It’s like a household borrowing to pay for luxurious groceries.
It is not the function of a council to either run or fund businesses and certainly not with borrowed money.
If it were not for Mr Burns this matter would no doubt never see the light of day.
I listened to M Scott’s arrogant chat on the radio and then looked for the offending item that he said had not been slipped into the annual plan, without success.
I wonder if the the council will/has made the 32 page document available to the public to peruse?
That aside, this shows once again that the mayor and council are completely out of control.
Whatever buying into financial markets means, now that the sharemarket is at the top of its game, seems like folly, unwise and unthought-out. It isn’t the sort of thing that this council should even be considering – unless the perpetrator of the scheme is prepared to underwrite any losses from his own purse.
Now may also time to find out if the mayor has a discretionary fund like Horowhenua’s mayor which appears to have been abused.
You can read the pdf on this URL : https://drive.google.com/file/d/1CVFFoCKoxgDuCsQgpPl0x5NsCer0ouh2/view
A lot of the pages have been written by some outfit called My Fiduciary Ltd which seems to be based in Tauranga. What was the size of the fee the KCDC paid them for that and what commissions will they receive if the council proceeds with this irresponsible notion? We’ll ask.
Have any of the contributors above read my article in the Kapiti News ‘ Highs and lows of 2018’ In which I remind the readers I made my opposition to this borrowing public in August 2018 due to the incomplete information on it being available through the 2018 annual plan consultation. And I remain unconvinced this borrowing is a prudent or responsible move for council to make. I will not be supporting it at the table. So it would just be nice if your contributors would acknowledge there is still one councilor at the KCDC table who is keen to apply common sense and make her own conclusions based on analysis of the papers before us. Once again, the Mayor has swapped sides of the fence to my position. I am relieved, now just to get the other 8 members of council to see sense.
Great news Jackie. Good luck with your efforts. You have my support.