Stats NZ has a new website.

For new releases go to

www.stats.govt.nz

As we transition to our new site, you'll still find some Stats NZ information here on this archive site.

  • Share this page to Facebook
  • Share this page to Twitter
  • Share this page to Google+
Government Finance Statistics (Local Government): Year ended June 2014
Embargoed until 10:45am  –  26 June 2015
Commentary

This release analyses local government finance in New Zealand, using government finance statistics (GFS) concepts and principles.

See Introducing government finance statistics for more GFS information.

Surplus drops slightly due to flat growth in revenue and a small increase in expenses

GFS net operating balance for local government was a surplus of $0.9 billion for the year ended June 2014. The surplus was relatively consistent with 2013, showing a slight $0.1 billion decrease. The decrease was driven by a small increase in expenses and flat growth in revenue.

Total operating income increased less than 0.6 percent, to $9.1 billion for the year ended June 2014. The relatively flat growth in revenue was primarily due to a reduction in capital transfers offsetting an increase in taxation revenue.

Taxation revenue was $5.1 billion for the year ended June 2014, up $0.3 billion (6.2 percent) from 2013. The annual increase is the largest since the start of the local government GFS time series in 2009. The majority of taxation revenue is from property rates, more than 92 percent annually. Auckland Council and Christchurch City Council made up close to half the growth in revenue from property rates.

Graph, Taxation revenue of local government, year ended June 2009 to 2014.

The increase in taxation revenue was consistent with a 4.1 percent price increase for residential local authority rates, and a 1.1 percent increase in the number of estimated private dwellings in the June 2014 year.

See: Consumers Price Index: June 2014 quarter – Table 8.02

Offsetting the increase in taxation revenue was a reduction in other capital transfers to $0.3 billion, down $0.3 billion from 2013. The decrease represents other capital transfers returning to a lower level after a large one-off transfer of several state highways from the New Zealand Transport Authority (NZTA) to Auckland Transport in 2013.

Total operating expenses increased 2.0 percent, to $8.2 billion for the year ended June 2014. The small increase in expenses is largely due to no significant changes in operating expenditure from 2013. Employee expenses and depreciation had a combined increase of $0.1 billion in 2014, which was consistent with previous years.

Graph, Operating balance of local government, year ended June 2009 to 2014.

Net borrowing decreases from 2013

Net borrowing was $0.7 billion for the year ended June 2014, down $0.5 billion from 2013. This showed the operating surplus was not enough to finance the net acquisition of non-financial assets, mainly additional infrastructure work (see 'net acquisition of fixed assets' in table 1 and 'additions in buildings and structures' in table 5). One way of financing large additions to assets is to borrow, which was reflected in increased loans on the balance sheet in 2014 (see table 2). 

Graph, Net borrowing of local government, year ended June 2009 to 2014.

The net acquisition of non-financial assets totalled $1.6 billion for the year ended June 2014, down $0.6 billion from 2013. The reduction was primarily driven by a $0.4 billion decrease in the net acquisition of land (under roads) for Auckland Transport. In the year ended June 2013, Auckland Transport's net acquisition of land was significantly higher, due to receiving a large transfer of state highways from NZTA.

Assets increase net worth 

As total assets grew more than liabilities in the year ended June 2014, the net worth of local government increased 5.5 percent, to $106.8 billion. Taking only liabilities and financial assets into account, local government's financial net worth was $2.5 billion at 30 June 2014, down from $2.9 billion at June 2013.

Total assets increased $6.3 billion (5.5 percent), to $120.4 billion in the year ended June 2014 – mainly due to a $6.0 billion increase in non-financial assets.

Non-financial assets can largely be broken down to increases in:

  • buildings and structures – up $3.7 billion. Christchurch City Council was a big contributor, with a $0.9 billion increase from a large revaluation of their water supply system and a large investment in infrastructural work. Auckland Transport was the other main contributor, with a $0.9 billion increase to complete significant transport infrastructure and a large revaluation of existing roads. Most councils had increases in buildings and structures.
  • land – up $1.9 billion. This can be largely attributed to a $1.0 billion increase in the revaluation of parks, reserves, and operational land for Auckland Council. The remainder is mostly due to revaluing land under roads, for both Auckland Transport and the Kapiti Coast District Council.
  • machinery and equipment – up $0.3 billion.

Graph, Contributions to change in non-financial assets of local government, year ended June 2009 to 2014.

Financial assets increased by $0.3 billion, from increases in:

  • loans – up $0.3 billion. Auckland Council was the main driver, with a $0.3 billion increase in loans to subsidiaries.
  • shares and other equity – up $0.2 billion. Most councils reported increases for investment in subsidiaries, with Christchurch City Council as the largest contributor.
  • securities – up $0.1 billion.

Partly offsetting the increases in financial assets were reductions in:

  • other non-equity assets – down $0.2 billion. Christchurch City Council was the main driver, with a $0.2 billion drop in insurance receivables relating to the 2010/11 Canterbury earthquakes.
  • cash and deposits – down $0.1 billion.

Total liabilities increased $0.7 billion (5.5 percent) to $13.6 billion in the year ended June 2014. This reflected an increase in loans raised, which has been increasing since 2009. More than half the local authorities reduced their loans in 2014, but total loans were mostly driven by a $0.7 billion increase for Auckland Council.

Graph, Assets and liabilities of local government, year ended June 2009 to 2014.

For more detailed data, see the Excel tables in the 'Downloads' box.

  • Share this page to Facebook
  • Share this page to Twitter
  • Share this page to Google+
Top
  • Share this page to Facebook
  • Share this page to Twitter
  • Share this page to Google+