It’s often said that we live in the misinformation age, and I’m not here to argue that at all.

One of the latest pieces of nonsense that is being spread around is to do with councils’ (in general and Central Otago District Council in particular) involvement with the Local Government Funding Agency (LGFA).

The LGFA was set up in 2011 and it specialises in financing the New Zealand local government sector, the primary purpose being to provide more efficient financing costs to councils by raising debt on behalf of local authorities on terms that are more favourable to them than if they raised the debt directly.

In 2020, CODC consulted as part of the Annual Plan process as to whether we joined the LGFA. We had not had debt before then but knowing we were heading into a debt situation to finance significant infrastructure projects, we thought it was a good idea to find the most affordable finance. Over 80 per cent of people who responded agreed with us.

Disappointingly, a flyer has been placed in people’s letterboxes around Roxburgh claiming that council joining the LGFA will “use your private property as collateral against council debt”. This is simply not true and if you don’t believe me, ask your bank. 

I did a bit of digging around on this and found a video clip put out by former journalist Liz Gunn pushing this idea. If you don’t know, Liz Gunn is the leader of the NZ Loyal Party, an anti-vaccination activist and, according to Wikipedia: “When an earthquake struck the North Island in October 2021, Gunn called it Mother Nature's response to vaccination targets (which she described as "jab rape") and other covid-related policies”. I hope this gives some context to anyone worried by those flyers.

While we are on the subject of council debt, another couple of thoughts. First, some people don’t like the idea of council having debt at all, and at a simple level, I get that. Having money in the bank is better than owing the bank money, right? Well yes, at a personal level I agree, but council debt is different. By way of example, take the Lake Dunstan Water Treatment plant that we opened earlier this year. It should last, I’m guessing here, 50 years or so. If we had money in our bank to pay for it, that means yesterday’s people paid for the plant for today’s and tomorrow’s people to use. If we all paid for it now, then today’s people are paying for tomorrow’s people to use it. If we borrow and pay it back over the years, then today (as today moves along) and tomorrow’s people are paying for it as they use it by paying the debt back. That seems the fairest way to my mind. There’s a fair bit of over-simplifying things there, but do you get my point?

The Taxpayers Union Ratepayer report came out last week and it shows councils debt as a percentage of its rates income. There is a legal limit of 300 per cent, meaning a council can carry debt equivalent to three times its annual rates revenue. Some councils in New Zealand are at that ceiling already. CODC’s debt is - at 14 per cent - amongst the lowest in the country.