Financial surplus to help South Taranaki District Council weather economic downturn

Mayor Phil Nixon says South Taranaki District Council is fiscally "very sound". Photo / Bevan Conley

South Taranaki District Council is well-placed to weather any Covid-19 related economic downturn after recording a healthy surplus last financial year, mayor Phil Nixon says.

The council has adopted its annual report which shows a $26.5 million surplus, due in large part to strong market conditions resulting in the council's Long Term Investment Fund (LTIF) earning almost $20m in the 2020/21 financial year.

"The fund's performance gives council options as we continue to look at ways to minimise the impact of Covid-19 on our community while also undertaking projects that will stimulate sustainable economic growth such as the town centre upgrades and district business park," Nixon said.

"It's a very strong result. The report shows we are fiscally very sound, we've upgraded much of our key infrastructure, have high levels of community satisfaction, and have a clear direction for the future."

Chief executive Waid Crockett said the fund's strong performance was the key driver of the $26.5m surplus.

"The LTIF returned $19.96m which was $11.5m more than we budgeted. As at June 30, 2021, and after taking out the annual $5.8m rate subsidy, the value of the fund increased to $159m – up from $144.65m the year before."

Each year the council drew on average $5.8m from the LTIF, which provided $3.87m to subsidise general rates and a further $1.93m to service loans for specific community projects, Crockett said.

"In this way, the LITF has returned more than $112m back to the South Taranaki community since it was started in 1997.

"All revenue over and above the annual drawdown of $5.8m is returned to the fund to build it up for those years when it doesn't perform so well."

The remaining $15.8m of the surplus was revenue received from central government or other organisations for projects that were just starting or about to start, such as Te Ramanui o Ruapūtahanga - the district's new library, culture and arts centre, or for interest rate swaps which were purely an accounting entry and had no impact on rates.

Total debt decreased from $133.99m to $129.11m, including $16.91m of internal borrowing.