Marlborough Debt – It’s NOT Okay

Marlborough Debt

It’s interesting that the Mayor and Councillors have chosen to use the media to discuss the “Nothing out of the ordinary Council debt” rather than front a meeting with the Chamber as offered at submission time, accepted then by Chamber and yet to eventuate some weeks later.

We were assured only two years ago that debt was to max out at $41m in 2018-19, reduction would then take place and all was well.

How come that has now blown out by double with no debt reduction strategy in sight? Wild variations of this nature are a concern despite an assurance from Mayor Sowman “MDC does not have a debt problem. In fact we are very comfortable with our potential debt levels going forward”.

Chamber President Nikki de Reeper said, “Is this really the response our business community accepts from our elected Councillors who are supposed to be the leaders in our community?  It’s unprofessional”

It may very well be that Councillors are comfortable with the debt levels but at no point have ratepayers heard or been told as a community how that debt level will be repaid. You may note here that rates are projected to increase by over 50% in the next ten years.

We point out that since 2006/07 financial year, MDC borrowings have increased every year.

Of the $1.4b worth of assets Mayor Sowman states that Council owns, this is mostly infrastructure, which can’t be sold.

In our submission 2015 among other things we recommended that the Council reduce debt through the strategic sale of selected Council owned assets such as the Kathmandu building and that now was not the right time to spend borrowed money. $23m on a public library and $30m on the Flaxbourne Irrigation Scheme.

In addition to this the Council guaranteed the loans for the Theatre.  We don’t see this contingent liability recorded in the annual accounts or in the LTP. This raises another question, yes it may only be a few million dollars but if this has not been disclosed to the community, what else hasn’t?

With Marlborough recognised as a low income town and Statistics NZ showing a decline in paid employees by 5% and only 1% growth in business locations from 2006-2013, what is actually in place to recover the level of debt that not only has occurred but what is projected for the future?

  • There has been no growth in cash reserves from 2013-2014
  • Council needs to concentrate on core infrastructure and consolidate
  • Sell assets that are not Council business.
  • Stop being property developers
  • Stop being in competition with Marlborough business people
  • Buy and support locals
  • Is the new library warranted given that MDC is now advertising that you can download eBooks from home just by using your library card?
  • Is the art gallery or cultural centre warranted? Once again this is going into competition with business, examples being the Gillian Art Gallery and Rangitane Cultural Centre.

Our future should start now. 

Look at other successful Councils around the county that live within their means while still maintaining their core responsibilities.

Consideration must also be given to our older generation whose pensions don’t increase at anything like the rise in rates year on year and our young homeowners with young families who are building the future of the Marlborough community.

Our Council has not managed to pay its way since 2006/07 financial year – so what has changed from 2006/07 to get the debt level to where it is now?

The Council’s own 10 year plan projects it won’t be able to pay its own way for many years to come.

Do remember that rates are projected to increase by over 50% in the next ten years.

Councillors, now is the time to face up to facts and issues.


4 thoughts on “Marlborough Debt – It’s NOT Okay

  1. It is not just MDC, but the National government as well that has increased debt with amazing confidence that repayment will be possible. Just as possible is that NZ, a primary producer fast flogging off its means of production to overseas buyers, will share the fate of Ukraine and Greece. A perfect storm looks in the offing and present policies have left us naked in its face. Can we have some serious thoughts other than TINA – ‘there is no alternative?’

  2. Councils “assets” are largely infrastructure, that cannot be sold to service the debt. Port Marlborough (owned by the Council) also has debt, and expected to take on much more debt to develop Picton Harbour. Council needs to sell non strategic assets such as the old theater site, Kathmandu building and land currently being developed up Taylor Pass Rd, and its Forestry. These sales will offset the debt and reduce the need to borrow. Council also needs to encourage more subdivision as rates are their main income, more sections means more rates.

  3. It’s appalling that the Council is allowed to spend money that we don’t have. They don’t mind taking rates off people that don’t have the money to pay though do they!!! We need someone in there that will say NO it’s not okay to spend money we don’t have. Why can’t they save for what they want and stop putting up money for non essentials. If we can’t afford new buildings why buy them. Sell off what they own instead of being property developers. Why would you keep a building like Katmandu. Normal people struggle to even have enough food to eat. Get your priorities right Council. Save money and get rid of the debt first. Get money in the bank and be in credit then look at what you want to purchase. Just far too much extravagance…

  4. There’s a few factors at play here. Firstly, the MDC has developed a predatory attitude toward the community in terms of debt. They are increasingly looking for opportunities to create infrastructure projects and they load the community with repayments with interest. They secure funds at a rate of 3-5% and charge the ratepayers 7%> and they profit the change. And when you’re talking significant infrastructure projects this isn’t small change. A real concern is that it raises the question, if the return to the MDC is increased as the cost of a project is increased then what is their motivation to earnestly pursue the lowest cost option to deliver a project? This may be a factor in the case of the Seddon water scheme. The MDC initially announced a costing of $5.5 MIL, but after coming under intense pressure to justify their costings they have dropped the proposed costings by $2 MIL and counting. It makes you wonder what they were thinking when they came up with their initial costings, and perhaps lends support to the view that they had their eyes on the prize rather than the project.

    It’s apparent that the scope and magnitude of council operations has increased however scrutiny over their operations hasn’t. There’s clearly a need for the Government to implement stricter controls to ensure that councils stick to their core business. If/when that happens Marlborough will be a better place for it.

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