ASSET sales could cover any problems servicing the council’s exploding debt, says outgoing Wellington City Council chief financial officer Andrew McKenzie.

McKenzie, who officially left the council two weeks ago, says the council has $750 million in assets it could realise easily, should that be required. This is why the high debt increases forecast this year are acceptable, McKenzie says.

"We currently have $4½ billion in assets – $750 million of which, if we chose to, we could realise easily," he says.

That $750 million in assets is largely housing stock and commercial property. Debt is forecast to rise by $72 million to $166 million in 2005/06. Rates and user charges are also rising as council increases spending on projects such as the Marine Education Centre and a tourist facility at the Karori Wildlife Sanctuary.

Mayor Kerry Prendergast says there are currently no plans to sell assets but confirms it is a possibility "if we need cash in a hurry". Last year the council sold parking buildings and commercial properties on Victoria Street to service debt.

Last week the council signed off the Annual Plan 2005-06 which forecasts debt to rise from its current level of $94 million to $361 million in the next eight years.

"We shouldn’t get too worked up over debt," says McKenzie. "The issue is the cost of servicing the debt."

Servicing the debt this year will cost $12 million, or 4.3% of total council income. That will rise to $27 million, or 8.5% of income, in 10 years.

This council takes the stance that new assets should be paid for by borrowing, which is repaid by future generations, who benefit from the assets.

"Moa Point is an example of why we have intergenerational debt. It’s a $150 million asset. The alternative to borrowing was to put up rates by $150 million for one year to pay for that asset," says McKenzie.

Councillor Bryan Pepperell predicts the debt level to blow out even further than council projections.

"It doesn’t take inflation into account and the possible increases in the cost of oil," says Pepperell.

He also disputes that the council can realise much of the $750 million in assets.

"That’s nonsense. We can’t sell the housing stock because we have a social contract with the poor of Wellington to provide for them. We could flog off the airport if there’s the political will but I don’t think that would make much of a dent in the debt.

"There has been talk about schemes to liquidate our infrastructure – selling off the pipes and roads to overseas businesses to use as tax write-offs, but that’s pretty dodgy stuff."