Council has biggest surplus

By John Cousins


An $18.3 million operating surplus notched up by Tauranga City Council last year pushed it into the top spot among the country's local authorities.

The surplus was highlighted in Statistics New Zealand's latest report on the financial performances of the local authority sector, with the Western Bay taking third spot with a surplus of $6.7 million.

The report was an indication of how well councils were meeting the day-to-day costs of running their core services, with Auckland Transport having the biggest deficit of $217 million, followed by Auckland Council's $114 million and Christchurch on $108 million.

But when all income and spending was considered, encompassing operational budgets, capital transactions and non-operational budgets, Tauranga was second only to Hamilton for having the biggest deficit - $231 million.

Tauranga council's financial controller, Paul Davidson, said $228 million of the $231 million deficit was generated through the movement in revaluations.

He said he had not seen the basis on which Statistics New Zealand arrived at the $18.3 million operating surplus for the year ending June 30, 2012.

He assumed it included the $3.7 million rates surplus and the debt retirement levy introduced in response to the council compounding too much debt. The council had also achieved favourable interest rate savings on its loans.

Another statistic saw Tauranga ranked near the top for non-operating income and spending, with changes in city valuations the biggest driver to non-operating income.

Statistics New Zealand said income from vested assets for all of New Zealand was down $40.5 million, mainly due to Tauranga, Auckland Transport and the Tasman District Council.

It said spending on non-operating transactions increased by 43 per cent, with expenditure on valuation changes, write-offs and other provisions up $503 million across New Zealand. Hamilton was up $365 million, Tauranga $227 million and Christchurch was up $170 million.

Mr Davidson said the report recognised that Tauranga's assets were not worth as much as they had been because of the global economic downturn and effect on New Zealand's economy.

"When the economy picks up, the valuations will go the other way," he said.

He was cautious about the numbers because they reflected the value of the council's assets at a point in time following the city's three-yearly revaluation. It could go the other way at the next revaluation.

He questioned the terminology in which Statistics New Zealand called it non-operational "spending", saying it was a revaluation movement.

Mr Davidson said the cyclical nature of how revaluations worked could significantly distort the results.

Where Tauranga City Council ranks in New Zealand for financial performance

  • 1st place: Operating surplus for core community services, $18.3 million.

  • 2nd place: Deficit taking account of all income and spending $231 million.

  • Highly placed: Drop in income on vested assets.

  • Highly placed: Increase in spending on non-operational transactions $227 million.

- Bay of Plenty Times

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