DCC financial position | DCC reply: “$20M cash on hand” #LGOIMA

### dunedintv.co.nz May 5, 2015 – 12:27pm
DCC’s financial position better than expected
The Dunedin City Council is finishing the financial year on a high, with an operating surplus of almost $8m. Its finance committee has just analysed the latest accounts, which show the council’s in a better position than expected. It’s received more money through its invested Waipori Fund, and saved on asset maintenance. The council’s got less debt to pay than what was initially budgeted for, and has deferred some work. But it’s received less than expected from the New Zealand Transport Agency for roading projects, and it’s lost some money on the sale of a Dukes Road property. The financial year ends in June.
Ch39 Link

As tabled at the DCC Finance Committee meeting on 4 May 2015:

Report – FC – 04/05/2015 (PDF, 1.2 MB)
Financial Result – Nine Months to 31 March 2015

Report – FC – 04/05/2015 (PDF, 1.2 MB)
Financial Result – Eight Months to 28 February 2015

****

WHERE DID DCC’S $20M “CASH ON HAND” DEMATERIALISE TO ?????

From: Elizabeth Kerr
Sent: Tuesday, 23 September 2014 11:13 p.m.
To: Sandy Graham [DCC Group Manager Corporate Services]
Subject: LGOIMA request

Dear Sandy

Re: Cull warns debt still hurdle for council (ODT 15.9.14)
http://www.odt.co.nz/news/dunedin/315949/cull-warns-debt-still-hurdle-council

Within the news item it says:

“The forecast had included about $22 million in “cash on hand”, but, since Mr McKenzie’s arrival, the decision had been made to slash the amount to about $2 million, he said.

“The cash was instead used to pay for capital projects, avoiding the expected need to borrow for the work, which reduced the council’s need to borrow by $20 million, he said.”

6.5.15 This paragraph goes unexplained in Ms Graham’s reply below;
a further clarification has been sought on WHICH CAPITAL PROJECTS

I would like the DCC to precisely itemise the way(s) in which the city council has spent this $20 million of “cash on hand”, to include the capital projects by name or other reference; the name(s) of the relevant council department(s) and or committee(s) that incurred this expenditure; the dates of expenditure; the spending delegations attributable to which, by name, formal signatories on account; and any other information in legible form that would assist the city council to meet my request in a forthright, full and transparent manner.

I look forward to reply.

Thanks, kind regards

Elizabeth Kerr

* My LGOIMA request was made on 23 September 2014.
** Dunedin City Council was legally required to reply within 20 working days.
*** Dunedin City Council finally replied on 29 April 2015.

—————————————

From: Sandy Graham
Sent: ‎Wednesday‎, ‎29‎ ‎April‎ ‎2015 ‎1‎:‎36‎ ‎p.m.
To: Elizabeth Kerr
Subject: RE: LGOIMA request [DCC expenditure of $20M cash on hand]

Dear EJK

I do appear to have sent this on Friday. I’m resending. Can you confirm receipt?

Regards
Sandy

From: Sandy Graham
Sent: Friday, 24 April 2015 1:40 p.m.
To: Elizabeth Kerr
Cc: Carolyn Allan; Grant McKenzie
Subject: RE: LGOIMA request [DCC expenditure of $20M cash on hand]

Dear Elizabeth

We have considered your questions and now provide the following response which we hope finally answers your enquiry. Apologies for the delay in providing this clarification.

First I want to background a couple of things to give context to both the question and our response. In our budget (the Annual Plan), the Council ensures that there is enough money to meet its financial obligations. This means that the Council has budgeted money in order to pay for a liability if and when it falls due over the course of the financial year.

While the budget provides for the necessary money to meet the various financial obligations that fall due over the course of the financial year, it is not financial best practice to have large sums of money sitting in the bank at the same time as the Council has debt. This is because the cost of borrowing is generally at a higher rate than the return on money invested in the bank.

With that background I want to deal with the specific situation referenced in the ODT on 15 September 2014 which forms the basis of your enquiry. For clarification, the article in the ODT on 15 September 2014 referred to a decision to “slash” the amount of cash on hand from $22 million to $2 million. To clarify, the $22 million was a budgeted amount of cash based on the Annual Plan for 2014/15. It was never physically in the bank – it was simply a budgeted figure.

The reference to “slash the amount” to about $2 million simply means that the Council (which had intended to borrow this money following the completion of certain capital expenditure projects) did not borrow it. It wasn’t spent on anything – the debt wasn’t raised. If it did borrow the money, then the Council would’ve had the money sitting in the bank. As outlined above, the current practice is to have a minimal amount of money in the bank but access to money if and when required.

The Council is currently consulting on a draft Financial Strategy which formalises this approach and incorporates it into the budget from 1 July 2015 onwards. I have attached a copy of the draft Financial Strategy for your information.

Regards
Sandy

Attachment: Finance-Strategy

—————————————

From: Elizabeth Kerr
Sent: Friday, 24 April 2015 1:56 a.m.
To: Sandy Graham
Cc: Carolyn Allan
Subject: Re: LGOIMA request [DCC expenditure of $20M cash on hand]

Dear Sandy

Please can you have the information requested since 23 September 2014 to me within 5 working days. Appreciated.

Regards, Elizabeth

Sent from Windows Mail

—————————————

From: Elizabeth Kerr
Sent: Thursday, 9 April 2015 11:49 a.m.
To: Sandy Graham
Cc: Carolyn Allan; Elizabeth Kerr
Subject: Re:RE: LGOIMA request [DCC expenditure of $20M cash on hand]

Dear Sandy and Carolyn

The draft LTP has recently been signed off by the Council and is now available for public consultation.

Further to your last email, Sandy, if you can, please provide timeline for delivery of the information promised to me regarding DCC’s use of the $20M cash on hand, as referred to in the Otago Daily Times on 15 September 2014 (refer correspondence below).

I look forward to your update and following, prompt receipt of the information kindly requested last year.

Best regards, Elizabeth

█ The rest of the oh so tiresome email trail can be found at this thread:
3.11.14 DCC: What happened to $20 million cash on hand? #LGOIMA

Posted by Elizabeth Kerr

15 Comments

Filed under Business, Citifleet, Cycle network, DCC, Democracy, Economics, Media, Name, New Zealand, NZTA, OAG, People, Police, Politics, Project management, Property, SFO, Site, Sport, Stadiums, Town planning, Urban design

15 responses to “DCC financial position | DCC reply: “$20M cash on hand” #LGOIMA

  1. Anonymous

    Let me see if I follow this.

    The cash on hand, which didn’t physically exist, was both simultaneously spent and not spent on capital projects at the same time it was used to offset a debt that wasn’t raised.

    No wonder it took 6 months to get your reply. Can you imagine that reason being constructed.

    “Run it past me again. I think I’ve got it this time.”
    “Now, the cash on hand that we don’t have…”
    “Yeees…”
    “We’re going to spend it…”
    “No. we’re not going to spend it, I thought…?”
    “Not quite. We’re not going to raise a debt. And if we offset that debt that wasn’t raised, we won’t have spent the money”
    “Right! So, where’s the money again?”
    “There IS no money!”

    “non est pecunia”, a Dunedin City motto for the 21st century.

    • Elizabeth

      Earlier I sent another query, back to Ms Graham —copied to Grant and Carolyn. Blind copied to others.

      From: Elizabeth Kerr
      Sent: ‎Wednesday‎, ‎6‎ ‎May‎ ‎2015 ‎12‎:‎14‎ ‎a.m.
      To: Sandy Graham
      Cc: Grant McKenzie, Carolyn Allan
      Subject: LGOIMA request [DCC expenditure of $20M cash on hand]

      Dear Sandy

      Re: Cull warns debt still hurdle for council (ODT 15.9.14)
      http://www.odt.co.nz/news/dunedin/315949/cull-warns-debt-still-hurdle-council

      The paragraph in the ODT item (15.9.14) that I specifically referred to in my LGOIMA request of 23 September 2014 says:

      “The cash was instead used to pay for capital projects, avoiding the expected need to borrow for the work, which reduced the council’s need to borrow by $20 million, he said.”

      How does your reply answer this:
      What capital projects? as asked on 23.9.14 .

      Or should I take it Dunedin City Council won’t answer accountably and transparently ?

      Regards

      Elizabeth Kerr

  2. Hype O'Thermia

    I know, it’s my tiresome natural pessimism – “…and saved on asset maintenance” doesn’t give me a warm feeling the way it ought to.

    What it conjures in my glass-half-empty mind is something like this.
    Willy: I’ve saved a heap of money this year. Didn’t think I would but then my car squeaked through its w.o.f. inspection, the guy musta been off his face.
    Milly: I noticed your tyres didn’t have much tread, and you keep getting a brick out of the boot for when we park on a slope.”
    Willy: Told you I’d saved plenty. Brilliant eh!

  3. Peter

    This sounds plain weird. I have no real cash in hand (savings)…. say $20,000…. to spend on an overseas trip. But I could have if I borrowed that $20k. I decide not to borrow that $20,000. I have then ‘saved’ that $20k. I put that $20k, that I didn’t really save, into paying off the mortgage/assets.
    Have I got this right? Fuck me.

  4. Will

    If they can’t say which capital projects, then it is a lie. The Audit Office should be alerted as this would surely be a red flag.

  5. Cars

    No, no, this window into the DCC financing and all government departments modus operandi needs further plucking and pulling. Budgets are generally created in these and corporates by evaluating previous expenditure, adding a COL increase (generally for a wage increase) and then setting the rate or capital required increase to suit the new budget. This is why it never costs less to administer the public service because they never consider a reduction/ saving – you gets what you plan for.

    What should happen is that a department that should be closed (like the traffic light department as there are no street corners left) should be disbanded, and the budget cut accordingly. There has to be an argument that the purchasing of cars department should be eradicated on two grounds, all staff and councillors should use the cycleways philosophically supporting their fellows’ actions, and the opportunity to steal $1.5 million plus needs a different method of management than currently utilised.

    Now we have started to make some savings. No doubt other whatiffers will have other less useful departments to reduce/ eliminate. Once you go down the reduction in budget path, the way towards reducing gross DCC debt is possible, even a certainty. The real benefit, the $15,000 plus (per house) debt the council have incurred on your behalf is reduced.

    • Mick

      @Cars
      May 6, 2015 at 9:24 am

      What should happen is that a department that should be closed (like the traffic light department as there are no street corners left) should be disbanded, and the budget cut accordingly.

      But but but Cars … the traffic department is busy installing traffic lights IN BETWEEN street corners now eg Highgate where for the fist time today I say one pedestrian using it. Yup we actually got a RED for traffic. Wonderful – justified its existence and the whole department can continue now into infinity – just like its companion department that places those wonderful concrete raised dividers (hazards) in the roads to replace the painted lines – latest one Drivers Road, Highgate. Ever so effective – as a potential hazard. Ve Vill control zis traffic unt make it safe votever you say.

      • Hype O'Thermia

        Mick, you’re on your way to being an anorak. The first pedestrian on the mid-block Highgate crossing, wow! You’ll have some competition from the other Dunedin anoraks, the ones who specialise in cyclists on cycle lanes. It takes patience but the reward is great when they can report sighting one long before the other spotters. I’ve heard that competition on some streets, where none has been seen yet, has heated up to such an extent that spotters who are unavoidably absent from the area for a few hours put out road cones and “cycle detour” signs to prevent their rivals claiming first sighting. Please note, I do not condone this travesty of competition, and I hope no pedestrian-spotter attempts similar cheating at traffic lights now they are being deposited as randomly as seagull poop even in seldom-walked environs.

        • Mick

          Hype O’Thermia
          Sorry to disappoint you old chap but I was the driver. The pedestrian was an ancient womble like creature who ambled across the road and almost – but not quite qualified for anorak quality road material. I will take your advice though and keep my eye open for a chance to bag a potential anorak. I will even traverse the one way street system at great personal risk I might add, to see if I can increase my chances of bagging a couple or three. And even though I appreciate your concern about such uneven competition I do thank you for your warning about the traffic light cheat spotters and will select only between light spotter locations for my activities along the One Way Pair.
          Gratefully
          Mick

  6. Hype O'Thermia

    The Audit Office collects red flags, they come in handy for decorating the cafeteria at Christmas or when it’s someone’s birthday. They’ve had so many from Dunedin it takes 2 people to put up the festive bunting now. Perhaps that’s why they don’t have time to investigate naughty rorts and nimble fingered fiddlers and massed malfeasers. Priorities, Will, priorities.

  7. Calvin Oaten

    Anon, A much simpler city ‘motto’ with a rather lovely ring to it would be “Ex Nihilo”. It’s a Latin quote meaning in effect ‘out of nothing’, or created by God. I can see it now on the mayoral crest above his head on the Mayoral chair. It is short and concise, suitable for the back of buses, on the monthly ‘FYI Dunedin’ flyers, All correspondence letterheads, official stamps sealing all documents, in fact a large flag to fly over the Town Hall when council is in session. Any thoughts?

  8. Anonymous

    If the Editor of the Otago Daily Times still has that instinctive desire for newsworthiness, that natural quality that makes a reporter respect him or her, then it must be an interesting dilemma ignoring so much of it coming from an organisation that affects the welfare of its entire readership.

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