KEY POINTS:
Auckland Regional Council's annual report is written for accountants rather than most ratepayers, says a local government financial expert.
Larry Mitchell, who advises councils in New Zealand and overseas, said the council had much to explain about its ending last year with a $34 million surplus - after
lifting household rates by an average of 4.9 per cent.
He said that to most people, a surplus was cash in the bank. But, because of complex accounting procedures, this was not always the case.
"A surplus could be made up of all sorts of apples and lemons where no cash arises, such as when a developer transfers the reserves and streets of a subdivision to council ownership.
"But in this case, a substantial part of the surplus is a cash receipt and my point is that if it was not intended to be used as expenditure in the current year, then it should not be reported as revenue in the current year."
The ARC's annual plan showed it expected a deficit of $871,000 rather than a $34 million surplus.
ARC general manager Brian Monk explained yesterday that the gift in 2006 of Atiu Creek Farm to the council, valued at $7 million, was counted as income and therefore was part of the surplus.
Also included in the surplus was the Government's reimbursement of $21.3 million costs incurred in Project Boston - completing stage one of double tracking of the Western Line.
Mr Monk said the payment had been under negotiation when the council's budget and rates requirement were fixed and it was unclear whether it would be paid. However, the payment arrived just before the end of the financial year and so ended up in the council's books.
The reimbursed money was now drawing interest of about $1.3 million a year. The council has made no decision how it will be spent.
Chairman Mike Lee said the money was needed - along with a proposed regional fuel tax - to electrify the rail network and carry out public transport improvements.
But Auckland Mayor John Banks said the ARC's "surprising windfall" was an opportunity for it to fill a $20 million shortfall to upgrade Eden Park for the 2011 rugby World Cup.
Waitakere City Council finance chairman Ross Clow backs Mr Banks' challenge.
"That money has been taken from the ratepayers of the region so should be returned to major regional projects," said Mr Clow.
"People would not be happy if that surplus was frittered away and they were forced to stump up more, through their rates, for Eden Park."