Balancing the council books

ANDREA VANCE
Last updated 05:00 11/06/2014

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Local government debt levels continue to be substantial, with liabilities in Auckland equivalent to more than $15,000 per ratepayer, according to figures.

Data provided by the Taxpayers' Union, a lobby group, has been turned into an online tool, Ratepayers' Report, to allow residents to compare their local council with 67 territorial authorities across the country. This data was checked by Fairfax Media and supplied to councils for them to review prior to publication.

The figures reveal that for every ratepayer local authorities owe an average $4261. 

Auckland ($15,858), and the metropolitan cities of Hamilton ($9177) and Dunedin ($15,093), each figure in the top 10 for debt per ratepayer, although all have considerable assets. Auckland has $71,427 worth of assets per ratepayer, Dunedin $70,405 and Hamilton $59,307.

Earthquakes have driven the figure up to more than $13,000 in Christchurch, which is currently wrestling with a debt blow-out. It has $57,766 worth of assets per ratepayer.

Of the rural councils, Waitomo District has the highest liabilities per ratepayer, at just over $10,000. In eighth place is Western Bay of Plenty District Council, where ratepayers pay the highest annual residential rates. 

There is no good news on the horizon for Kaipara District, where spending on a botched sewage and wastewater scheme in Mangawhai spiralled. Government-appointed commissioners took over the debt-laden council in 2012. It has debts of $6505 per ratepayer.

The figures come after a Government package in 2012 focused on local government debt.

Local Government Minister Paula Bennett said most councils had prudent debt levels. 

"As would be expected, councils in high growth areas have borrowed to provide the infrastructure and services their communities need.  

"However there are cases where high debt levels are a concern [although] keeping rates and debt levels low is not always an indicator of good financial management by a council.

"Councils need to invest to maintain core infrastructure which delivers critical services to their communities. Low rates and debt may indicate that core infrastructure is being neglected."

Green Party local government spokeswoman Eugenie Sage said National's earlier moves were based on a misguided obsession with "core services" without clearly defining what these were. 

"In 2012, the Auditor General's office scrutinised all of local government's long term plans (LTPs) and financial strategies. The LTPs give an insight into the position and future intentions of local government.

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"Rather than finding a problem with financial management the Office found that councils overall were responding to their communities' needs in a responsible manner."

Labour spokesman Su'a William Sio said councils needed to be prudent but it shouldn't be used as an excuse to cut services.

"Local governments are uniquely placed to understand the social, economic, environmental and cultural needs of their communities, what were known as the four well-beings. National has scrapped these four priorities and in doing so has ridden rough-shod over the powers of local communities." 

Christchurch City chief financial officer Peter Gudsell said the figures required context. 

''Following the series of earthquakes in Christchurch, a greater level of rebuild has been required than would be expected based on population growth and the previous condition of the city's assets,'' he said.

Dunedin City chief financial officer Grant McKenzie pointed out that the city had considerable assets - more $70,000 per ratepayer.

''Dunedin City Council group has higher assets and liabilities than a number of other councils as we own a significant number of entities. In addition the council is also looking at reducing debt which will continue to strengthen the council's balance sheet.

"According to our figures, Dunedin's debt is tracking down," he said. 

Last month it emerged the council is considering a one-off $2.27 million payment to bail out the loss-making Forsyth Barr Stadium. It would be funded from operational savings.

Waitomo District Mayor Brian Hanna said that in the early 2000s, the council chose to use debt to fund projects rather than lifting rates. 

''It was a policy that unfortunately resulted in an acceleration of debt. They did a lot of capital roading over two years that was a major contributor. Since I've been involved in 2007 we've looked at controlling our costs.''

LIABILITIES (DEBT) PER RATEPAYER

Auckland Council $15,858

Dunedin City $15,093

Christchurch City $13,606

Waitomo District $10,771 

Tauranga City $9971

Hamilton City $9177

Taupo District $8753 

Western Bay of Plenty District $8745

Tasman District $7729

New Plymouth District $7607

ASSETS PER RATEPAYER

Auckland $71,427

Dunedin $70,405

Christchurch $57,666

Waitomo $57,909

Tauranga $67,416

Hamilton  $59,307

Taupo District $56,743

Western BoP $52,498

Tasman $59,461

New Plymouth $69,117

- Stuff

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