Interest earnt by council exceeds $4M

Press, 12 November 1985, Page 9

Interest earnt by council exceeds $4M

Only eight months into the financial year, the Christchurch City Council has eamt 5350,000 more in interest than it budgeted for.

The council’s income from interest passed $4 million this month, through investments totalling SIOM at rates ranging from 2725 per cent to 2120 per cent. At that rate, said Cr Vicki Buck yesterday, the council would be able to sustain an increase in rating requirement next year without having to collect more money from ratepayers. Crs Buck and Rex Lester, who strongly argued to increase the estimated income from interest at budget time because of high interest rates, wasted no time yesterday in telling the council’s policy and finance

committee that interest earned had overtaken that estimated.

Cr Buck asked if the extra interest would mean a holding of rates next year. She estimated that the interest would cover an 8 per cent increase

Cr Matthew Glubb, the committee’s chairman, assured Cr Buck that any surplus, or deficit, would be taken into account when next year’s rates were set

He defended the conservative estimate of $3.6 million interest It would have been irresponsible to overestimate income from that source. Advice at budget time was that interest rates would drop. “So you would defend taking money off people when we don’t need it?” Cr Buck said.

Sir Hamish Hay disputed that interpretation. It was not a matter of taking money from people when it was not wanted '— it was a matter of budgeting on the advice of qualified staff. There would be additional interest income for the next budget, but there would also be additional costs to balance that, Cr Glubb said.

If the council is doing well in earning interest from its own investments, it is having a little more trouble persuading people to invest with it

A loan issue of $2256,000 was opened for public subscription on October 25 at interest rates of 19.5 per cent for three years and 19 per cent for four.

Yesterday, $269,000 had been raised.