Closing accounts a big money-saver

HELEN MURDOCH
Last updated 13:00 31/01/2014

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Closing a handful of individual reserve bank accounts will save Tasman council about $100,000 in borrowing costs.

Tasman district councillors attending their first meeting of the year yesterday agreed a number of specific accounts would be managed within the council's consolidated accounting system.

Corporate services manager Mike Drummond said some of the about $5.4 million in funds from the accounts would be used to pay off debt or in lieu of further borrowing.

However the accounts would not disappear in-house and continue to be managed within the council's accounting system, he said.

"In effect the borrowing will be spread across the balance sheet as a whole."

The move would see the council would retain sufficient banking capacity to draw down funds when needed but lower its borrowing cost, he said.

"At the moment we are paying more on borrowing than on cash deposits," he said.

The affected accounts include the Pinegrove Trust, the Port Dividend Trust, the General Disaster Relief Fund, the Classified Rivers Protection Fund and the Self Insurance Fund.

Mr Drummond said a more substantial rewrite of the council's treasury policy would take place as part of the 2015-25 draft long term plan.

Meanwhile the council has cancelled $25m in bank facilities and plans to cancel a further $10m next month as it moves to spread more of its financing to the cheaper Local Government Funding Agency.

The council would retain some of its bank financing and make sure it avoided concentrating debt in the agency around one maturity date, he said.

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