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+
Local Authority Financial Statistics: Year ended June 2010
Embargoed until 10:45am  –  27 July 2011
Commentary

Local authorities increased their operating income and expenditure in 2010. Income increased more than expenditure. Local authorities' operating balance improved in 2010, even though it remained a deficit. Once all transactions (such as valuation changes and capital transactions) are taken into consideration, local authorities were running a surplus. However, the 2010 surplus was smaller than the surplus in 2009.

The data presented in this release are available for each local authority in New Zealand. The statistics are based on their financial accounts. The latest figures are available for the year ended June 2010, which is before the merger of the previous Auckland councils on 1 November 2010. No attempt has been made to show an aggregate response for what is now one Auckland council.

Statistics New Zealand also released Government Finance Statistics (Local Government): Year ended June 2010 today. The release provides an economic analysis of local government financial activity. Government Finance Statistics (GFS) enable easy analysis of the collective activity of local government and comparison between a variety of other economic indicators such as gross domestic product.

Local authorities' income and expenditure up

Local authorities’ operating income (funding earned to provide core services) increased 7.5 percent in the year ended June 2010, compared with the year ended June 2009. This increase is due to (in order of the effect that these changes had on operating income):

  • rates increasing 6.2 percent
  • dividend income rising 64.3 percent
  • sales and other operating income increasing 7.2 percent
  • current grants, subsidies, and donations received increasing 8.6 percent 
  • regulatory income and petrol tax collected rising 6.1 percent.

These increases were partly offset by a decrease in interest income earned on deposits and other interest bearing investments, which were down 5.9 percent.

Operating income earned by local authorities in the year ended June 2010 was $6.9 billion.

Graph, Income from current operations, selected items, year ended June, 2005–10.

Operating expenditure (spending on core services) by local authorities increased 5.6 percent in the year ended June 2010 compared with the previous year ended June. All components of operating expenditure rose (in order of the effect that these changes had on the rise in total spending):

  • purchases and other expenditure, up 4.2 percent
  • depreciation and amortisation, up 6.5 percent 
  • employee costs, up 4.9 percent 
  • current grants, subsidies, and donations paid, up 8.5 percent
  • interest payments, up 13.5 percent. 

Operating expenditure for local authorities in the year ended June 2010 was $7.1 billion.

Graph, Expenditure on current operations, selected items, year ended June, 2005–10.  

Local authorities reduce operating deficit

Local authorities reduced their total operating deficit (which occurs as a result of operating expenditure exceeding income) from $0.4 billion to $0.3 billion in the year ended June 2010. Before June 2008, local authorities had successive operating surpluses (where their operating income exceeded their expenditure). The first operating deficit was recorded in the year ended June 2008.

Graph, Operating surplus/deficit, year ended June, 1993–2010.

Local authorities receive more income from capital transactions

In addition to income from current operations, local authorities earn income from non-operating transactions (such as valuation changes) and capital transactions (capital grants and vested assets). Vested assets occur when ownership or control of assets is passed to a council from a private party, such as a property developer. For example, land transferred to a council to create a community park.

Valuation changes are the largest contributor to non-operating income (other income received that is not used to provide core services). Local authorities earned $1.8 billion from valuation changes in the year ended June 2010. This is a fall of 34.4 percent compared with the year ended June 2009.

For the year ended June 2010, the total value of local authorities’ income from capital transactions increased 7.5 percent, compared with the year ended June 2009. The contributions by component were (in order of the effect they had on the total increase):

  • vested assets, up 16.6 percent
  • capital grants, subsidies, and donations, up 7.8 percent.

These increases were partly offset by a drop in development and financial contributions of 9.4 percent. Development contributions are fees that developers are charged for building subdivisions and other new buildings. Financial contributions are charges that fund local authorities’ management of natural and physical resources.

Expenditure on non-operating transactions (mainly losses on revaluations or losses on sale of assets) decreased 37.6 percent in the year ended June 2010, compared with the previous year. This was due to:

  • valuation changes, and provisions and write-offs falling 38.8 percent
  • other non-operating expenditure falling 27.3 percent.

Expenditure on capital transactions includes capital grants, subsidies, and donations made by local authorities. This item increased 84.5 percent in the year ended June 2010, to $0.2 billion.

Graph, Non-operating and capital transactions, year ended June, 2009 and 2010.

When all income and expenditure is taken into account (non-operating and capital transactions as well the operational budget), local authorities were in surplus in the year ended June 2010. The surplus was $2.1 billion, which was 19.2 percent less than in the year ended June 2009 when local authorities had a surplus of $2.6 billion.

Graph, Surplus/deficit including non-operating and capital transactions, year ended June, 1993–2010.

Majority of local authority spending on council support services

Council support services (running the operations of a local authority) are the main activity of local authorities. In 2010, local authorities budgeted 26 percent of total operating income to provide these services and spent 19 percent of their total operating expenditure on this activity. Table 2 (included in this information release) provides figures for the individual components of council support services.

The majority of council support services are funded through rates. In 2010, 29 percent of total rates raised were allocated to these services. Employee costs (gross earnings of all employees) are the most significant expenditure item within council support services.

Local authorities record their operating income and expenditure by activity. The following breakdown for each individual local authority is available in the time-series tables included in this information release:

  • roading
  • transportation 
  • water supply 
  • wastewater 
  • solid waste/refuse 
  • environmental protection
  • culture 
  • recreation and sport
  • property 
  • emergency management
  • planning and regulation
  • community development 
  • economic development 
  • governance 
  • council support services 
  • other activities 
     

Financial position improves

When compared with 2009, local authorities’ equity position (the difference between assets held and liabilities outstanding) improved in 2010. This is mainly due to the value of fixed assets, such as infrastructure, increasing more than liabilities.

Assets increase in value

Local authorities held assets worth $102.9 billion at June 2010. This is an increase of 4.2 percent compared with June 2009.

Current (short-term) assets made up 2.5 percent of total assets. Current assets increased 19.9 percent compared with the June 2009 position. The increase is due to (in order of effect that these changes had on the value of total current assets):

  • other current assets rising 19.7 percent
  • cash and bank deposits rising 20.3 percent.

The value of non-current (long-term and fixed) assets held by local authorities at June 2010 was up 3.9 percent. The total value of non-current assets listed on local authorities’ balance sheets was $100.4 billion at June 2010. The change between June 2009 and June 2010 is due to (in order of the effect they had on the rise in value):

  • fixed assets (infrastructure, land, buildings, etc) rising 3.7 percent
  • investment assets increasing 7.9 percent.

These increases were partly offset by a decrease of 3.3 percent in other non-current assets in June 2010.

Value of liabilities increases

Local authorities accumulated total liabilities (obligations for payments) of $9.6 billion by June 2010. This is an increase of 27.8 percent since June 2009.

The value of current (short-term) liabilities rose from $2.9 billion at June 2009 to $3.4 billion at June 2010. The increases were due to:

  • current debt rising 24.5 percent
  • other current liabilities rising 11.0 percent.

Non-current (long-term) liabilities increased 34.8 percent between June 2009 and June 2010. The value of term debt increased 37.3 percent between June 2009 and June 2010, while other non-current liabilities rose 19.6 percent. Term debt (debt due in more than twelve months) makes up 87.4 percent of total non-current liabilities.

Graph, Value of assets and liabilities, year ended June, 2005–10.

Total equity is the difference between all assets and liabilities. At the end of June 2010 local authorities had a net equity position of $93.3 billion, up 2.3 percent from June 2009.

  • 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+