Speaker 1: You're listening to the Weekend Collective podcast from News Talks be.
Speaker 2: The Local Government Funding Authority has allowed high growth counsels
Speaker 2: I put high growth and quotation marks to borrow more
Speaker 2: the movies and hopes that council will be able the
Speaker 2: councilors will be able to deliver projects more efficiently spread
Speaker 2: the cost. Auckland, Tyrang and Hamilton are just a few
Speaker 2: of the councils thought to be eligible for the increase
Speaker 2: and newly minted I'm not sure we can still say
Speaker 2: that newly minted tyrag Amya Mahi Drysdale is with me now, Mahi, good, good.
Speaker 3: Afternoon, good after knowing, good to talk to you.
Speaker 2: Yes, actually we first spoke when you just won the
Speaker 2: election and you were about to be the new mayor.
Speaker 2: How's how's it going getting your feet under the table?
Speaker 3: Oh pretty good. Yeah, we've had a lot to deal
Speaker 3: with and yeah, a few few sort of challenges as
Speaker 3: we've started, but no, it's it's going well and got
Speaker 3: a good team around the table and starting to make
Speaker 3: some make some good decisions, you know, really really trying
Speaker 3: to look up to the finances, which is a challenge
Speaker 3: for all the councils.
Speaker 2: Any surprises for you when you got on, like, oh,
Speaker 2: didn't realize this was going to happen or whatever.
Speaker 3: Not really, I guess, yeah, it's just trying to get
Speaker 3: up to speed. I think you're a bit more reactionary
Speaker 3: than i'd like to be. And that's sort of where
Speaker 3: we're getting to now that we're starting to be a
Speaker 3: bit more proactive and making future decisions rather than dealing
Speaker 3: with the past.
Speaker 2: So right, let's get onto this announcement of increased borrowing
Speaker 2: capacity for high growth councils. I guess the first thing is,
Speaker 2: are you a high growth counsel.
Speaker 3: Yes we are. We've been one of the fastest growing
Speaker 3: regions in the country the last twenty years, so yeah,
Speaker 3: we're certainly feeling the effects of that and welcome the
Speaker 3: announcement of higher higher debt limits.
Speaker 2: What was the problem that needed addressing from your angle?
Speaker 3: So basically, you know, there's this arbitrary figure that they've
Speaker 3: put on. As you know, I guess times your revenue,
Speaker 3: So at the moment, it's too eighty five about to
Speaker 3: drop down to too eighty And what this does is
Speaker 3: it says it's up to three fifty So what.
Speaker 2: Three fifty three fifty one per.
Speaker 3: Sorry, it's three fifty times your income. So if you
Speaker 3: if you think about we've we've heard a lot about
Speaker 3: debt to income ratios and the reserve banks talking you
Speaker 3: know six to seven which is six hundred to seven
Speaker 3: hundred percent, and councils are limited to to eighty and
Speaker 3: now the High Growth Council is up to three fifty.
Speaker 3: So it's three fifty percent of your income.
Speaker 2: Oh good. Sorry for a minute there, I thought you
Speaker 2: meant three hundred and fifty dollars for every dollar, which
Speaker 2: would have been that was righten the horses a bit, hey,
Speaker 2: So what does it change for you?
Speaker 3: It just gives us a bit more headroom. And you know,
Speaker 3: I guess what I found is going into local politics
Speaker 3: is is you know there's there's just ways around that.
Speaker 3: And you know, there's this thing called the i f F,
Speaker 3: which is the Infrastructure Financing and Funding Act, which has
Speaker 3: has a way of borrowing which doesn't count on your
Speaker 3: balance sheet, but it's more expensive and you know, really
Speaker 3: you'd be better to have, you know, us to be
Speaker 3: able to borrow through ol GFA, which is the Local
Speaker 3: Government Funding Agency, which is cheaper debt. It's on your
Speaker 3: balance sheet. It's visible to everyone. But you know, so
Speaker 3: they sort of put this arbitrary figure in the place
Speaker 3: and then they give you ways around it, and this
Speaker 3: just just brings it much more transparent to everyone can
Speaker 3: see what's happening.
Speaker 2: So, is there something that is on your horizon that
Speaker 2: you're going to be able to fund that you might
Speaker 2: have been under in doubt now that you're going to
Speaker 2: be able to get the sextra funding?
Speaker 3: Not really, Like, we want to be prudent with our spending,
Speaker 3: so we're going to try to stay inside our limit.
Speaker 3: But what this gives us is it gives us some flexibility.
Speaker 3: And you know, we are able to not watch every
Speaker 3: single dollar. You know, at the moment, every single dollar
Speaker 3: we spend we have to to take out somewhere else.
Speaker 3: And this just gives us a little bit more flexibility.
Speaker 3: You know, if we had a disaster, it would give
Speaker 3: us some headroom. Right now, we've got about twenty five
Speaker 3: million dollars that we can borrow, so obviously, as a counsel,
Speaker 3: you know that's that's not a lot of a lot
Speaker 3: of headroom if if something goes wrong.
Speaker 2: What do you say to for people who want reassurance
Speaker 2: Obviously with central government, there's always arguments about how much
Speaker 2: indebtedness we've got. Would there be some you can understand
Speaker 2: there be some ratepayers who be nervous about the license
Speaker 2: for some counsels to borrow more. What would you say
Speaker 2: to those rate payers?
Speaker 3: Absolutely, we have to be prudent with spending. And you know,
Speaker 3: I think it's it's about what this does and if
Speaker 3: you use it for the right things, I think there's
Speaker 3: going to be some govenance on on that money that
Speaker 3: it's it's being spent on the right things, and you know,
Speaker 3: that's that sort of growth and things like that. And
Speaker 3: what debt does is it spreads the the assets that
Speaker 3: you're purchasing or you know, creating over the lifetime that
Speaker 3: they're used. So it's sort of it's much fairer way
Speaker 3: to to then make the rate payers of today pay
Speaker 3: for all the infrastructure, et cetera that you're building today.
Speaker 3: So that's that's what debt does, and you know, it
Speaker 3: just just makes it a lot fairer. So so that's
Speaker 3: very much. I guess what we're trying to do is
Speaker 3: be prudent. But if we are building for the future,
Speaker 3: that will be spread on the on the rate payer
Speaker 3: of the next thirty odd years.
Speaker 2: What about rates? Will it have any effect on pushing
Speaker 2: the rates up?
Speaker 3: Obviously, if you if you borrow, you have to service
Speaker 3: that debt. It's like a mortgage, you know, the more
Speaker 3: you borrow, the bigger the interest bill. So that's why
Speaker 3: I say it's it's got to You've got to be
Speaker 3: careful where you spend that. And you know, you don't
Speaker 3: want to be borrowing for your everyday living. You want
Speaker 3: to be borrowing for creating something, you know, and obviously
Speaker 3: with growth, you know the the idea of that, if
Speaker 3: you're building infrastructure for growth, you're going to have more
Speaker 3: people to pay in the future, and so so that
Speaker 3: sort of spreads that burden. So yes, you do have
Speaker 3: to be very careful because the more you borrow, the
Speaker 3: more you have to pay, so you have to ensure
Speaker 3: that that is enabling more people to help pay in future.
Speaker 2: It's a little bit of talk from time to time
Speaker 2: about capping rights. What's your response to that.
Speaker 3: I think it's a terrible idea. You know, we've heard,
Speaker 3: we've heard the you know how it works in Australia
Speaker 3: and all it does is both basically drive councils into
Speaker 3: the ground. It doesn't, it doesn't help anyone. You're much
Speaker 3: better to elect people that are financially savvy and and
Speaker 3: you know, don't don't spend your money willy nilly, make
Speaker 3: good financial decisions. That's that's a much better way than
Speaker 3: than capping rates. I think you'll all you'll see is
Speaker 3: counsels effectively go bust if they do it.
Speaker 2: How soon is it's going to make a difference to
Speaker 2: those councils who are desperate to get more funding.
Speaker 3: Well, for us, it's it's huge. But again, you know,
Speaker 3: we've we've got to assess every single dollar we spend,
Speaker 3: you know, to to ensure that we're getting good value
Speaker 3: for money and that you know, it's making sense to
Speaker 3: to our rate payers. So you know, we're not We're
Speaker 3: not going to go on a spending spree, I can
Speaker 3: tell you that much.
Speaker 2: Sorry, I mean how soon, how soonders are all kick and.
Speaker 3: Well how soon? I think, yeah, Like so basically we're
Speaker 3: we're just waiting now on the covenants and and figuring
Speaker 3: out what that what we can spend it on. But
Speaker 3: I would expect that this is sort of in play
Speaker 3: in the next next couple of.
Speaker 2: Months just just on other I don't know how much
Speaker 2: you talk to other mayors and other counsels, but they're
Speaker 2: probably the big thing is demonstrate your high growth council.
Speaker 2: Are the sort of records around council's growth rates and
Speaker 2: all that? Is it going to be accurate? Are there
Speaker 2: going to be some councils who deserve it who might
Speaker 2: miss out any Have you got any insight into that?
Speaker 1: Not?
Speaker 3: Yeah, again, haven't seen the detail, but it's it's pretty
Speaker 3: clear you know who is growing and who is not.
Speaker 3: Yet all those figures are available. I think you know
Speaker 3: people like Selwyn and Queenstown and Hamilton and Auckland and
Speaker 3: towering Are and Wiper you know that those are the
Speaker 3: there's there's a whole lot more, but you know that's
Speaker 3: that's the sort of the highest highest growth councils. And
Speaker 3: it'll be interesting to see where they where they cap that,
Speaker 3: and you know there might be you've got to you've
Speaker 3: got to show an x amount of growth rate or
Speaker 3: whether it's historic. I'm not sure what they'll they'll do
Speaker 3: for that, but yeah, I suspect it will be on
Speaker 3: on what you're actually using them. The extra money for
Speaker 3: is where the covenants will come in.
Speaker 2: Yeah, good stuff. Hey Mahia, I really appreciate your time
Speaker 2: this afternoon.
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