Editorial: Score one for the community trust
If the Invercargill City Council needed a reminder of the need to keep a big-picture perspective - and by golly it seems to - then Cr Ian Pottinger received a pretty good one on Thursday.
He had a few pointed questions for the Community Trust of Southland during its submissions to the council's draft annual plan on Thursday.
The city wouldn't mind it if the trust loosened its own pursestrings on issues like, let's say, the Rugby Park rescue package. Perhaps with this in mind, Cr Pottinger had a pointed query for the trust.
He drew confirmation that it was working to build up its investments by $40 million to what the councillor scornfully called a "magical figure" of about $230m.
Wowee. That's $40m that isn't going to be returned any time soon to the community. So, Cr Pottinger asked, why not just inflation-proof the existing $190m, content yourselves with that, and have a good deal more available for grants?
The answer from trust chief executive John Prendergast was not only a gently delivered rebuff, but a useful example of what the council itself professes to understand - the need to balance here-and-now pressures with a fully functioning sense of inter-generational fairness.
First, the trust isn't planning to cut back its annual grants, but to maintain them, in real terms, around the present rate of $7m annually, while very gradually building up reserves.
And that $230m target is hardly some fanciful amount.
The trust was set up with funds from the 1996 sale of the Southland component of the country's Trust Bank network to Westpac.
The first trustees made a sincere and sound commitment not to debase the real value of the financial asset being handed over.
In today's terms that means the trust should have a tad over $230m invested. The fact that it's less and in need of restoration over the next 15 or 20 years is not the result of mismanagement.
More than anything else, it reflects a hard decision made in 2009 when a rough year for investment returns coincided with a recession.
Other trusts throughout the country pulled their woolly heads in and cut back grants. But the Southland didn't. That wasn't indulgent. The trust realised that although it was a perpetual investor, many of the community organisations it served were at the time in a particularly fragile position, in many cases living on just a few months reserves. Take away an important chunk of their funding and by the time the global investment market had rallied and grants could return to previous levels, more than a few of the applicants spurned in the meantime would no longer be around. Or they'd be in a state of in rack and ruin.
Better, the trust reasoned, to compromise its own capital for the sake of survivable continuity out there. It was a big call but the trust explained its thinking, and the consequences as it saw them, clearly at the time.
This generation benefited. But the lost investment capital must gradually be returned to restore and maintain the debt equity we really do owe to future generations..
The annual grants from the community trust won't, in real terms, be shooting up pleasingly in the next decade or two. Less scope for crowd-pleasing rescue missions, maybe, but at this stage in proceedings this should be recognised for what it is. Principled discipline.
The Southland Times