Monday, 15th May, 2017
By Daniel Stringer
A Broken Hill councillor has hit back at City Council’s ‘worst case scenario’ regarding the proposed $10 million loan, saying the real worst case scenario is the end of Broken Hill.
Councillor Tom Kennedy has been outspoken on his views regarding council’s decision to borrow $10 million, saying he is concerned by the lack of planning.
At its budget briefing, council outlined its worst case scenario in terms of borrowing the money, saying at worst they would break even.
Clr Kennedy however has a different view on what the worst case scenario could be for Broken Hill, as he says it could put council in a financial hole.
“The worst case scenario for the town is that in 10 years’ time they will be paying back $12.8 million and the community doesn’t have the ability to repay that money and we start seeing a cycle of people leaving town because we can no longer provide services,” Clr Tom Kennedy said.
“So the worst case scenario is that it causes the end of Broken Hill,” Clr Kennedy said.
Clr Kennedy has compiled his own figures of the interest council will both pay and receive on the loan, based on the current interest rates.
According to his calculations, over the course of the 10 years, council will accrue $1,760,000 in interest, however at the fixed interest of 2.8% they will be required to pay $2,800,000.
While Clr Kennedy agrees there will be a benefit to the current council by having an extra $10m to spend, he says that it will be future councils who will suffer from the current council’s decision.
“It is just rubbish, this council is making the decision to borrow $10 million and this council will be better off because they have that money to spend.
“Future councils have to pay it off and they will be worse off because of it.”
As Clr Kennedy is only one vote on a 10-member council, his vote alone will not be able to overturn council’s decision to borrow the $10m. At the next council meeting however he will be putting a motion before council that the money is put in reserves.
“I will be putting a motion before council that if we do borrow the money then it is put in reserves for the simple fact that the money will result in extra money in the community.
“If there is ever a situation where we have to borrow from that, then we take it out and repay it immediately.
“This way the current council will still receive the benefits and there is less risk of putting future councils in financial jeopardy.”
There is no doubt that the decision to borrow $10m is a financial risk, regardless of the interest rate situation. How the decision will impact the Broken Hill community however is something that only time will tell.