The Debt Mess

A good number of questions and discussions here revolve around the debt mess the new Council will inevitably inherit. It’s actually worse than that, because until the new Council gets to “open the books” we won’t really know what we have to contend with. It’s not like the real situation is ever broadcast, even to Councillors. For example what extra funding demands might appear for the stadium? I’ll address the specifics of that later since the possibilities range from “absolutely essential if the stadium is to operate” to “let’s spend a squillion bringing U2 and the Stones out to promote it!”. Just as important in the long run is whether Council owned companies are being pressured to take on more debt to cover those costs. Ultimately the issues of debt and Council cashflow merge into one toxic brew. Debt, once has been taken on, has to be serviced and repaid. Not something that can be done in a hurry. Even then, if $1 million is retired, the saving to the ratepayer is only some 10% of the principle sum per annum. Reduced operating costs on the other hand, produce immediate relief. Cut a dollar and that’s a full dollar the ratepayer does not have to pay. So a hard look at operating costs will be task number one for the new Council. The trick will be to get the savings from efficiencies and not from cutting services. Providing services is what Council does (or ought to). Cutting services to save the ratepayer money is denying them what they pay rates for. That is not acceptable. We will need to be innovative and it we will need to do it transparently. Fancy that for a change.