QLDC debt forecast to cut

The Queenstown Lakes District Council will be asked to consider a programme that is forecast to reduce Council debt levels by $125.7 million on Wednesday (6 October), finance manager and deputy chief executive Stewart Burns said.

“A great deal of work has gone into addressing the affordability issue that the Council chose to address in its 2009 10-Year Plan,” Mr Burns said.

Since July 2009 a Council steering group comprising Mr Burns, chief executive Debra Lawson and the Mayor and four Councillors had been guiding a review of the current capital programme.

“The goal was to focus on issues like project justification, meaningful prioritisation, understanding costs, community expectations around service and to deliver an affordable 10-Year-Plan in 2012 (the 10-Year Plan must be reviewed every three years),” Mr Burns said.

A detailed progress report would be presented to the full Council on 6 October 2010.

“What that report says is that good progress has been made and that several areas have been identified which present excellent opportunities for large savings to be made,” Mr Burns said.

In particular savings are recommended to be made in the following areas:

• Water demand management ($72.4m)
• Revised cost estimate methodology ($65.8m)
• Annual Plan 2010/11 changes ($6.9m)
• Community Services revised programme ($22.7m)

“The significant savings to be found in water demand management ($72.4 million) can only be achieved if targets for leakage and consumption reductions are met, which will be a challenge for the Council and the community,’ Mr Burns said.

The next most significant savings ($65.8m), came from the work stream looking at reviewing cost estimates for infrastructure services projects.

The proposed $167.8m in savings showed forecast Council peak debt levels were reduced by $125.7m from $392.5m to $266.9m.

“If all of these savings were taken, this represents a 20% reduction to the future capex programme and around a 32% reduction in debt. These are significant potential budget reductions and represent excellent progress in the first 14 months of the review,” Mr Burns said.

Further work was needed.

“In order to deliver an affordable 10-Year Plan, at least another $21m of debt needs to be removed from Council’s expenditure. This means reducing the capital programme by around another $28m,” he said.

There were further opportunities to achieve this as the re-prioritisation of infrastructure projects highlighted a further $55.4m of projects considered unlikely to proceed and $67.5m of projects requiring further scrutiny.

“Elimination of these projects could reduce debt levels by a further $90m. What this means is that Council is now relatively well placed to achieve this,’ he said.

Any future decisions about the composition of future capital programmes will need to be made by full Council in its consideration of both the 2011/12 Annual Plan and the 2012/22 10-Year Plan.