Bond bank for local councils

## stuff.co.nz Last updated 05:00 10/10/2010
Councils prepare to flex borrowing muscle
By Rob Stock – Sunday Star Times
A bond bank to give local councils access to cheaper borrowing and offering local authority debt for ordinary mum-and-dad investors could be in place as early as August next year. The bond bank, which had its genesis in a brainwave by prime minister John Key when he was in opposition, is being backed by all major councils with the exception of Dunedin City, which came under fire last week from an election candidate over its borrowing process.
The bond bank would enable local authorities to combine their borrowing power. It would manage a portfolio of council debt, and issue liquid securities with high credit ratings secured against it. The securities would be marketed not just here, but overseas where yields are low, driving council borrowing costs down.
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Posted by Elizabeth Kerr

9 Comments

Filed under Economics, Politics, Stadiums

9 responses to “Bond bank for local councils

  1. Peter

    Meanwhile….. as we follow the rise and fall of election candidates there is another developing story going on. It might be the hurly burly of the election, but so far the local media have ignored the DCC bonds issue that has surfaced in the latest Deadline, ‘Citizens locked out from financial opportunity’, written by Bev Butler, and the latest Sunday Star Times (10.10.10), ‘Local bodies prepare to flex borrowing muscle’ (Business Section – a report written by Rob Stock).

    Rob Stock has found the DCC is the only council in the country that has opposed a Bond Bank, proposed by John Key, that would save local councils (ratepayers) money when raising bonds. Interesting. Why? This issue has been developing with Bev corresponding with the Ombudsman, for the DCC to release details of the identity of those ‘habitual investors’ who have been lucky to secure DCC bonds, totalling $285m over the last five years or so, at a generous interest rate, of at times up to 9.62%. It would seem possible that this group is rather small and ‘exclusive’. Who are they? The DCC really doesn’t want you, the citizens, to know.

    I hope the ODT and D Scene pick up on this story. If they don’t you’d have to ask yourself the question….Why? It is very frustrating here in Dunedin to get the real stories out there especially if they have a potential whiff about them. (We suspect the reason why, don’t we). We desperately need a gutsy, investigative local newspaper that really lifts the lid on ‘touchy’ local issues that goes beyond tittle tattle and easy stories that cause no discomfort.

  2. Peter

    You will notice in today’s ODT (16.10.10) there is a response to last week’s Sunday Star Times (SST) article and the Deadline article on the stadium bonds issue.
    The story is in the Business Section titled, ‘Stadium bond chance missed’ page 25. There are glaring omissions and lack of investigative skills and it read as a rather apologetic piece that doesn’t tell the full story. It goes without saying that this story would not have even happened without Bev approaching the SST. We have consistently found that the real dirt on the shabby stadium process is only possible when you go to media outside this town, or to the Ombudsman, to get information out there that should be in the public domain. The ODT response is at best muted and/or defensive.

    Bev has produced a critique of this article with the necessary insertions in the body of the article to point out its omissions in revealing the full story. This will be circulated widely and I urge people to send it on to their contacts as we can’t rely on the local media to help the city know the real truth about how things are run here.

  3. Phil

    Objective reporting of DCC activities by the ODT has always been an issue. Certainly during the previous administration. Favours and preferential treatment were frequently thrown around in both directions. I lost count of the number of times that FORMER Mayor Chin would turn up to public speaking events, unveilings etc, in a Rolls Royce car belonging to the editor of the ODT. Usually with a DCC senior manager or two in tow. The re-opening of the Regent Theatre comes to mind as one recent example. Highly inappropriate, but there you go. I have high hopes that the incoming administration will display a far more professional approach to their positions.

    I had posted from time to time on the ODT website over the years. However, I discovered a couple of months before election time, that my user account had been locked out. Not just for one post, but completely. I must have REALLY annoyed someone, or maybe gotten a little too close to something. Surprising, considering the latitude given to some posters. I could have simply invented a new name, but that would mean playing someone else’s game. So, I simply say what I need to say on other forums outside of the ODT’s control. Which I hope will annoy whomever it needs to. Sorry folks, but you get to wear it here.

    {What if? welcomes contributions. -Eds}

  4. Peter

    Yes, the ODT only goes so far in doing investigative work in order to maintain some semblance of credibility as the so called ‘Independent Voice of the South’. This is not necessarily the fault of its journalists most of whom are pretty good. Its the editors and sub editors who control them who in turn are controlled by others. This is the beauty of the internet and news websites as information can get out beyond the control of Pravda orientated media.

    • Elizabeth

      ### ODT Online Sat, 16 Oct 2010
      Stadium bond chance missed
      By Dene Mackenzie
      The issuing of a stadium investment bond to allow Otago investors a chance to support the building of the new Forsyth Barr Stadium would have made sense, financial industry insiders say. Criticism has been levelled at the Dunedin City Council for approaching a reasonably exclusive group of “habitual investors”, when some local authorities go to the public and institutions for their funding requirements.
      Read more

      • Elizabeth

        ### ODT Online Tue, 19 Oct 2010
        DCC bonds: most likely holders
        By Dene Mackenzie
        Confusion and misunderstanding remains in the community about how the Dunedin City Council raises money from bonds and who buys those bonds. Business editor Dene Mackenzie unravels the issue with Craigs Investment Partners broker Chris Timms. Community trusts, universities, charitable trusts, financial institutions like ACC, AXA, AMP, Tower and major banks are the most likely holders of Dunedin City Council bonds, investigations by the Otago Daily Times show.
        Read more

  5. Peter

    One of the most significant omissions in the article is the failure to mention how the DCC is the only major council in the country that is against the proposed bond bank which would help reduce the cost of borrowing on bonds for the council. Why did the ODT not ask the DCC why they opposed this?

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