NZ local authorities post biggest quarterly deficit in September

Friday 12th December 2014

New Zealand's local authorities posted their biggest quarterly deficit as record spending and falling income pushed councils deeper into the red.

The country's 79 local authorities reported a seasonally adjusted operating deficit of $214.1 million in the three months ended Sept. 30 from the June quarter, and have collectively been in the red since September 2010. On an unadjusted basis, the deficit was $222.6 million, the biggest since Statistics New Zealand started compiling the figures in 1993.

Seasonally adjusted expenditure rose 4.3 percent to a record $2.24 billion in the quarter, the fastest quarterly spending increase since June 2012. That was driven by a 5.5 percent lift in purchases and other operating expenditure to $1.15 billion, while interest costs climbed 5.3 percent to $151.7 million and employee costs increased 2.4 percent to $485.3 million.

Income shrank 3.2 percent to $2.03 billion, with a 68 percent slump in investment income to $72.9 million, which is often lumpy due to the timing of dividends, and a 0.8 percent decline in sales and other operating income to $348.5 million, something a 6.3 percent lift in rates to $1.22 billion wasn't able to make up for.

Total expenditure was up 6.5 percent from the same period a year earlier, with interest costs rising 11 percent on an annual basis, outpacing the 6.1 percent lift in staff costs and a 6.5 percent increase in purchases and other operating expenses. Total income was up 0.1 percent from a year earlier, with a 2.5 percent lift in rates unable to offset a 27 percent drop in investment income and a 5 percent fall in sales and other operating income.

Local authorities are coming under increased scrutiny to get their books in order, and the deemed success of the creation of the enlarged Auckland council has prompted other local authorities to look at the central government's favoured route for amalgamation.

BusinessDesk.co.nz

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