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Council debt `very high'

ROSE STIRLING
Last updated 09:35 27/07/2011

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Dargaville & Districts

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A report on the financial health of the Kaipara District Council has shown it's not looking good.

The Financial Health and Sustainability Audit report by PJ & Associates, requested by the council to look into the state of its finances, says the overall financial position of the council is not positive.

The report says current council debt, while not reaching the council's limit under its borrowing policy, is considered very high and poses future risks for the organisation.

"The current financial position is largely caused by two significant contributors: the funding of the Mangawhai wastewater scheme and the costs of the district plan review," the report says. "In addition, future expenditure for the improvement of infrastructure assets will require additional loan funding as council has no cash reserves."

The report also attacked the council's financial reporting saying that information such as balance sheets and cash flow is provided in the annual report, but because it's yearly, it's too late to be an effective management tool.

However, it also says the council is in a unique position to influence the future outcome because of the development of the next 2012-22 Long Term Plan.

Kaipara District Council spokeswoman Barbara Ware says there are no financial problems.

"Council is not facing financial problems," Ms Ware says.

"Council's finances are in a very manageable position. Council has in recent times incurred additional debt due to the Mangawhai Community Wastewater Scheme which Council needs to actively manage."

Ms Ware says the report mentioned no financial problems either.

"The report does not say council is facing financial problems.

"It does say there will need to be careful management of the current debt and this management process is being established by council."

However, councillors Andrew Wade and Jonathan Larsen have spoken out against the council saying there are financial problems that need to come out into the open.

Mr Wade says: "Yes, the financial situation is serious, yes, there are issues facing this council. However, this council is engaging in outside qualified, independent advice to form the best possible decisions."

Mr Wade says the council has held workshops with councillors to explain the financial issues.

Fellow councillor Jonathan Larsen has taken his concerns over the council's finances to the auditor-general.

In the letter he says: "We have incomplete and out-of-date financial statements. We have a very high level of debt and I fear, on the numbers given to us, that we will default within one or two years."

The Dargaville & Districts News asked all three Northland-based councils to provide their financial figures.

After having figures professionally checked, the newspaper found that the Kaipara District Council, despite having the lowest amount of debt, had nearly double the amount of debt per rateable household.

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- Dargaville News

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