Why does Council prefer Option B?
(move SWIF to an external organisation)
Due to the threat of amalgamation, Council has investigated how we can keep the SWIF
investment solely for the benefit of the current South Waikato community. We have concluded
that the only way to do this is to transfer the South Waikato Investment Fund (SWIF) to an
organisation which is completely separate from, and outside the control of, Council. The following
document outlines some important questions that were asked and why Council has come to
prefer option B - moving SWIF to an external organisation.
Is Council amalgamation likely?
It is likely that the amalgamation of councils in the Waikato
region (to some extent) will probably occur in the next few
years.
There are a number of regional amalgamation processes
underway throughout the country following on from
Auckland: Far North, Hawkes Bay and Wellington/Wairapapa.
The Local Government Commission has asked each of those
communities for alternative proposals on how amalgamation
could occur in these regions and is considering the
alternative proposals in each of these areas.
To date there have not been any reorganisation proposals
for the Waikato submitted to the Local Government
Commission. However, Council knows of two proposals that
are being prepared and these could be submitted at any
time. If a reorganisation proposal is submitted that affects
one or more districts within the Waikato Region, the South
Waikato District will be considerably affected and we will be
included into the process. The proposals being worked on
are being prepared by Thames Coromandel District Council
(TCDC) and the Property Council of New Zealand.
Wouldn’t the SWIF be used for the benefit of the South Waikato after amalgamation anyway?
If the South Waikato was amalgamated with other councils
it is likely that the new council would do its best to ensure
that the benefit of the SWIF stayed with South Waikato
community.
However, Council obtained external opinions on whether
the SWIF could or would stay for the sole benefit of South
Waikato residents. The conclusion was that in the short term
it is likely that the SWIF would be safe, but over time (with
only a small political representation from the South Waikato
District on the new amalgamated council), the risk that SWIF
money could be used by other communities and on things
other than economic and community development was not
insignificant.
The real question is this - is it worth the risk of potentially
losing this money from our community? Your councillors and
community feedback from the Annual Plan indicated that it
wasn’t worth this risk and Council should look at options to
secure the SWIF by transferring it outside Council.
Should the fund be moved to an external organisation now or later?
Once the Local Government Commission has announced
a proposal/option that it prefers, Council’s assets are
effectively ‘frozen’ and it would be too late to transfer the
fund to an external entity at that stage. Given that an
amalgamation proposal could come from the Property
Council on New Zealand, or any other group, at any time, it
would seem prudent to be ready to transfer the SWIF to an
external organisation to manage as soon as possible.
What type of organisation is proposed to manage the SWIF?
It is proposed that Council establish an incorporated
charitable trust under the Charitable Trusts Act 1957 to
manage the SWIF. It is envisaged that this trust would
work closely with the new Economic Development
Trust of business people, already in the process of being
established.
What is an incorporated trust?
An incorporated charitable trust can own property, raise
mortgages, have bank accounts and generally hold all types
of assets and investments as long as it operates within the
powers of its trust deed.
Will the trust be free from paying Income Tax?
No, but we are working with our legal and tax advisors to
ensure that it will be.
South
Waikato
District
Council
What other types of organisations were considered?
Several other organisational structures were investigated,
including:
• Company - discounted because they require
shareholders and it was deemed too complicated and
Council couldn’t be a shareholder or the funds would still
be ‘within Council’.
• Incorporated society - discounted because it requires
15 individual and five corporate members to operate;
retention and operation issues.
•
•
Charitable trust - discounted because economic
development (Council’s identified key goal for the
district) can’t be charitable.
Discretionary trust - discounted because funds need
to be distributed within 80 years, requires specific
beneficiaries and liability exposure issues.
What happened to the new economic development group proposed in the Annual Plan?
Council is in the process of setting this up. The group
will be made up of people who have demonstrated their
success already in their business lives and are able to
drive economic development in the district. As of yet we
don’t know who these people are, but the focus will be on
national, regional or locally recognised people who are
experienced, well-respected and effective business leaders,
and who have national industry contacts. The group,
without this monetary support, would be hamstrung to do
any development work so the $1 million that was approved
in the Annual Plan is important to get this going.
Will this affect my rates?
No. The rates subsidies from the SWIF investment proposed
in the Long Term Plan will continue; Council will retain
$1.2million for the rates subsidy (2013-14 - $600,000) (201415 - $400,000) and (2015-16 - $200,000).
Why not spend some of the SWIF investment before transferring it.
We did consider this but were mindful of ‘rushing’ into
projects without due consideration. Under the proposed
system, the opportunity for Council and the community to
apply for funds for projects is not lost, and that process can
then happen in a measured fashion.
Who will be the trustees on this trust and who appoints them?
•
•
•
Council will appoint the initial trustees. After the initial
Council appointments, new appointments will be
recruited by an independent selection panel.
The appointments panel will select trustees for both
the SWIF and economic development trusts.
The appointments panel will be appointed by
respected organisations, like Raukawa Charitable Trust,
Waikato Chamber of Commerce, University of Waikato,
Local Government New Zealand, Federated Farmers,
Institute of Directors.
•
•
•
•
Trustee selection will be based on skill, experience and
ability to achieve the objectives; they do not need to
live in the district.
Term length will be three years and trustees can be
re-elected.
A minimum of five and maximum of seven trustees on
each.
Re-election will be staggered to avoid major change at
one time.
Are there other trusts like this one?
There are several similar trusts throughout New Zealand
such as the Nelson Regional Economic Development Trust,
North Canterbury Economic Development Trust and Nelson
Regional Economic Development Agency. There is more
detail on these trusts in the full consultation document if
you are interested further.
What do you think? Have your say!
Consultation opens: Wednesday 25 September
Consultation closes: Friday 25 October, 4pm
Look out for the two page summary document in
the South Waikato News on 25 September.
You can obtain the full plan and LTP amendment:
visit www.southwaikato.govt.nz
call 07 885 1058 weekdays, 8am to 4.30pm
request a copy from the Council offices.
South
Waikato
District
Council