Local Govt | National News Video | Parliament Headlines | Politics Headlines | Search

 

Temporary freeze on capital, discretionary spend

MEDIA RELEASE

11 December 2008

EW puts temporary freeze on capital and discretionary spending

Environment Waikato has announced new measures to help the council manage through the current difficult economic times.

As volatility on the financial markets continues, the council is carefully monitoring the performance of its multi-million dollar investment fund and adjusting its strategy, budgets and forecasts accordingly.

Chief executive Bob Laing said today there would be no new capital expenditure or discretionary spending until after February 2009.

“As these difficult market conditions continue, the council is not going to achieve the budgeted returns from its investment fund this year, returns which subsidise the general rate,” he said.

“In light of this, Environment Waikato will put a freeze on certain types of expenditure until February 2009, at which time the council will review and adjust its budgets.”

This freeze includes deferring the $830,000 cost of replacing the council’s barge used for river maintenance works and discretionary items including grants to schools and environmental groups.

The curb on spending is one of a range of measures the council has taken to mitigate and manage the effects of the international financial turmoil.

Also at today’s meeting, the council approved further steps to strengthen the operation of the investment fund.

Finance and audit committee chairman John Fisher said the council had effectively decided to stick with its current investment approach, and its advisers Russell Investments, but that new measures would help bolster council oversight of the fund.

Russell’s gives the council investment advice and oversees the placement of funds into managed accounts.

“We have agreed to have Russell’s decisions independently audited on a periodic basis to demonstrate regularly the soundness of our governance arrangements,” said Mr Fisher.

The council opted to stick with the current ratios used when deciding how much of the investment fund will go into which investment area. “Our review has found that having 65 per cent of our fund in fixed interest and 35 per cent in equities is appropriate for the type of fund EW operates. This asset mix provides a diversified portfolio that aims to provide increased returns and less volatility over the medium term.”

This 65/35 percentage split will now be reviewed on an annual rather than a three-yearly basis.

Mr Fisher said another measure to be implemented, due to the volatility of share prices in the current environment, is for the time being to only budget returns from the fixed interest portion of our investments.

It was generally accepted that to sell council’s equity investments now to avoid risk in this area would result in realised losses, and a real reduction in the value of investments held. As such, it is recommended that the current level of investment in equities be maintained.

The effect of not budgeting a return from equities will reduce, in the short-term, the amount available to help keep rates down.

“But, when markets eventually settle and share price growth resumes, we can expect income again from this area,” Mr Fisher said.

Mr Fisher said there would also be a full review of all EW’s Treasury policies carried out by an external agency to ensure they comply with best practice. Results of that review are expected by February.

“Such measures demonstrate comprehensively that EW is managing the investment fund wisely in difficult times,” Mr Fisher said.

ENDS

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On Budget 2022


At base, the political biffo back and forth on the merits of Budget 2022 comes down to only one thing. Who is the better manager of the economy and better steward of social wellbeing – National or Labour? In its own quiet way, the Treasury has buried a fascinating answer to the “who’s best at running an economy during a crisis?” question, at page 57 of the Fiscal Strategy section...
More>>



 
 

Government: Helps Supermarket Shoppers Get A Fair Deal
Urgent Budget night legislation to stop major supermarkets blocking competitors from accessing land for new stores has been introduced today, Minister of Commerce and Consumer Affairs Dr David Clark said... More>>


Budget 2022: A Secure Future In Difficult Times
Budget 2022 will help build a high wage, low emissions economy that provides greater economic security, while providing support to households affected by cost of living pressures... More>>

ALSO:

Budget: Climate Investments Provide Path To Economic Security
The Government is investing in New Zealand’s economic security by ensuring climate change funding moves away from short-term piecemeal responses and towards smart, long-term investment... More>>

ALSO:



National: Jacqui Dean To Retire From Parliament In 2023

Waitaki MP Jacqui Dean has announced that she will not be seeking re-election at the 2023 election. “I have advised the President and Leader of the National Party that I have decided not to put my name forward... More>>

Classification Office: Following Decision To Ban Manifesto The Buffalo Mass Shooting Livestream Is Now Banned
The livestream video of yesterday’s mass shooting in the United States has now been banned, Acting Chief Censor Rupert Ablett-Hampson announced this morning. The decision follows on from his decision yesterday to call in and ban the ‘manifesto... More>>

Borders: New Zealand Poised To Welcome International Students Back
New Zealand is fully reopening to international students and the Government is committed to help reinvigorate and strengthen the sector, Education Minister Chris Hipkins said today... More>>

 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels