LETTER: Ratepayers pick up financial slack of "forgiven” debt
IN YOUR recent story (QT 9/12) on Ipswich City Properties, Ipswich City Council's CEO Jim Lindsay skated quickly over the $34m of ICP debt "forgiven” by council with the comment "Council wrote off the debt to better reflect the value of the asset in accordance with sound accounting and asset valuations principles”.
The practical effect of the "forgiven” debt is that ratepayers are now subsidising the operations of ICP by covering its accumulated operating losses. The financial statements show these losses are increasing.
Without the "forgiven” debt there would have been a $5.6m operating loss this year up from $5.4m last year.
This makes Mr Lindsay's view that "it is forecast over the 15-year development horizon that the council loan will be fully repaid” doubtful particularly when freehold land owned by ICP is valued at $30.9m
The other effect of the "forgiven” debt is that it prevented ICP becoming technically insolvent since its assets only total $31.2m.