Kapiti Mayor K Gurunathan says the recent war of words over Council creating investment funds with ratepayer and borrowed money, is a “storm in a teacup”.
Speaking on Beach FM yesterday, Mayor Guru says that the Kapiti Coast District Council has a history of seeking expert advice over a number of financial products, and managed investment funds are no different.
Last week Paraparaumu-Raumati Community Board Deputy Chair Guy Burns, claimed that “loans of up to $30 million dollars will be used to invest in financial markets in the optimistic hope of some return” with the establishment of the Kāpiti Resilience Fund and a Kāpiti Growth Fund.
Mr Burns says the funds would be initially funded by borrowings and was slipped into the recently approved Long Term Plan (LTP), without public consultation and with very little background briefing information being provided to Councillors.
Mayor Guru says it was good Mr Burns had raised the issue as “the council has already decided we need to have a long conversation with the community on this”.
But he rejected any suggestion that the Council would be speculating on the financial markets, comparing the managed funds approach to having a KiwiSaver account.
He says there are numerous ways of managing and minimising debt while trying to maximise returns.
Mayor Guru says the Council is able to borrow money through the Local Government Funding Agency - a scheme most local authorities belong to - at a lower interest rate than mainstream banks.
Council then invests those borrowings, pays down debt when due, funds projects and still make a return.
He says local government throughout New Zealand is facing significant financial challenges in the coming years concerning climate change, disaster preparedness and mitigation, and insurance costs.
Mayor Guru conceded that the detail of the investment funds is hard to find on the Council website and more community conversation may be required to explain the process to ratepayers.
The interview was conducted by Martin Wilson on the Breakfast Show, 6am-10am Weekdays. This interview will be replayed on the Beach FM 'Week That Was' programme this Saturday from 10am-3pm. And the interview will be uploaded to the Interviews & Podcasts page in due course. Beach FM has provided links to the most up to date documents and webpages available at the time of publication.