Tauranga city has been compared to other NZ councils, prompting concerns from the Taxpayers' Union. Photo / Tauranga City Council
Tauranga city has been compared to other NZ councils, prompting concerns from the Taxpayers' Union. Photo / Tauranga City Council
Tauranga City Council ranks as New Zealand’s second-most indebted council when measured against rates, a report comparing the performance and finances of local government authorities shows.
The council, however, has hit back at the New Zealand Taxpayers’ Union Ratepayers’ Report, refuting its “significantly astray” findings and comments.
The union released the report this month comparing the performance and financial positions of most councils for 2021/22.
The report ranked Tauranga City Council second to Auckland City for the highest net debt as a percentage of annual rates income, with 321 per cent compared to Auckland’s 525 per cent. It meant that the debt was equivalent to more than three and five years, respectively, of each council’s annual rates income.
The report found the share of the debt for each Tauranga rating unit was $12,494.
On average, Tauranga residential ratepayers paid $3481.76 in rates and non-residential ratepayers paid $13,119.52. The previous year’s report found residential ratepayers paid $2963 and non-residential ratepayers paid $10,074.
Taxpayer Union national campaigns manager Callum Purves told the Bay of Plenty Times he believed councils reaching a net debt percentage of rates income of 300 per cent or higher was concerning.
In his view: “While borrowing is an absolutely appropriate means of funding projects, often councils seem to use borrowing to fund vanity projects that may not be supported by local ratepayers,” Purves said.
“When you start seeing levels of net debt percentage rates reaching over 300 per cent, which seems to be the second-highest in the country, that’s very concerning because the cost to service the debt, the interest payments are going to be very large and could result in rates hikes and cuts to core services.”
Purves said the figures related to the 2021/22 year. The city has been governed by a government-appointed commission since February 2021.
He described the city’s rates as “punishingly high”.
In his opinion: “What’s particularly concerning in Tauranga City Council’s situation is local residents don’t have any means to hold the decision-makers to account for these decisions and for the infrastructure spending decisions they are making,” he said.
The commission’s term is due to end in July, with an election to take place.
Purves said he believed the report provided transparency for ratepayers by giving them an “essential tool” to better scrutinise the decisions and spending of councils.
Callum Purves is the national campaign manager for the Taxpayers’ Union.
Tauranga commission chairwoman Anne Tolley said the union’s analysis of the council’s debt ratio was “significantly overstated, largely because they have assumed that all debt is rates-funded when that’s not actually the case”.
Tolley said that as of the end of June 2022, the council’s total net debt was $703m, of which rate-funded debt was $402m. The rest was growth debt funded over time by development contributions, meaning it was not funded by rates. The council’s net debt-to-revenue ratio at that time was 204 per cent; or if calculated against rates revenue alone, 263 per cent. Both figures were well below the union’s calculation of 321 per cent, she said.
“Other calculations are also significantly astray. For example, interest per rating unit for rates-funded debt was $181 for the 2022 financial year, compared to the union’s claim of $355; while ratepayer-funded debt per rating unit was $6569, well short of the $12,494 claimed in the report.
“Tauranga residents can be assured that council borrowing is and will continue to be, managed prudently.
“Community facilities are not ‘vanity projects’, they are the placemaking amenities we need to honour our past and present, recognise our culture and heritage and create a city people will want to live, work, learn and play in. And, a city people will want to visit. In other words, they are an investment in our future, just as improvements to our transport and water services infrastructure are.”
The report stated the council covered 135sq km and served 155,200 people from 56,472 households. It had a total full-time equivalent [FTE] staff of 1118.85.
Tauranga City Council commission chairwoman Anne Tolley. Photo / Alex Cairns
The council used 246 consultants and contractors and spent about $15m. It had the second-highest number of performance-related dismissals with three, tied with Ashburton District Council. Christchurch had eight.
Western Bay of Plenty District Council served 59,700 people from 23,890 households over a 1915sq km area, with ratepayers paying $3431 a year. The average non-residential rates were $3,527.49.
The report found its net debt as a percentage of rates income was 72.8 per cent or $3299.24 per rating unit.
It spent under $2.54m on 125 contractors and consultants and had no performance-related dismissals.
