By Luke Voogt
Geelong’s “urban growth success” is partly responsible for a forecast blowout in City Hall loans to $125 million, according to council administrators.
Administrators chair Kathy Alexander this week attributed $10 million of the extra debt to sharing the increased costs of new estates with developers.
Earlier this month the Indy revealed that the administrators had adopted a budget forecasting loans to triple from $45 million at the end of last financial year to $125 million four years later.
Dr Alexander said the $10 million hit would arrive in 2020.
“Total debt to 2020 is higher than predicted 12 months ago due to the City’s commitment to development contribution plans,” she said.
“The borrowing component for land acquisitions in particular has increased more than expected as a result of greater Geelong’s urban growth success.”
Dr Alexander also defended the administrators “prudent” deferral of $36 million in loans, which helped produce the reduced figure of $45 million at the end of last financial year.
Shadow local government minister David Davis slammed the deferral in last week’s Indy, accusing the administrators of “kicking the can down the track” to next month’s incoming council.
But Dr Alexander said the loans were deferred because they were not needed until 2017/2018.
“It makes no sense to borrow $36 million in 2017/2018 if we don’t yet need all of this money to fund projects the City considers essential to cater for Geelong’s future growth and development.”
Dr Alexander said staging council loans created “savings by not paying interest on money we don’t yet need”.
The administrators deferred $28.9 million to 2017/2018 and $7.1 million to 2018/2019, she said.
“As a result of not taking out any borrowings in 2016/2017 the City saved $1.269 million of interest and $2.845 million of loan principle repayments.”
In June 2016 Dr Alexander was reported to have described the previous council’s budget plan for loans of $93 million as “not good financial management”.
