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Friday
Mar292013

Bollocks on Borrowing

The Peninsula Post contains a front page story this week on comparative borrowing levels of TCDC and HDC.

It is a load a bollocks of course - the writer being new to the District is clearly unaware of some of the tricks that have been used by TCDC in the past to disguise its true borrowing picture. The truth of the matter is that debt is debt no matter how you choose to characterise it. TCDC has chosen to disguise its true position by ignoring 'internal' debt (borowing against reserves) that amounts to some $51m at the present time - it is fully borrowed against this source while external (bank) debt rises and falls as needs dictate.

The figure of $47.3m represents external debt alone. The total total current debt is therefore around the $97m mark - vastly different to that claimed in the article - the information for which I am told was supplied direct by Financial Controller Steve Baker. Perhaps Steve misunderstood the question. Whatever the explanation, it is time that TCDC climbed from behind this little barrier that it has created for itself and admitted that borrowing is running at over $3,600 per rating unit, compared with the $2,112 claimed for HDC. 

Following strong intervention by Cr McLean, the current Council established the the self imposed external borrowing limit at 150% of rates revenue ($84m). Add the internal debt of $51m to the $84m to arrive at a total borrowing capacity of $135m. The previous Council ceiling was set at 150% of total revenue. Theoretically, this would have established an all-up borrowing limit of $108m based on the 31 December 2012 Financial Statements. So that change constitutes an increase in borrowing capacity of $28m, or 26%. Note that the internal debt simply rises along with reserves currently at around $51m.

I trust that the Peninsula Press will correct this totally erroneous story in due course. Perhaps they should check with the Auditor General who is surely aware of the level of debt at TCDC.

 

 

 

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