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Local Authority Financial Statistics: Year ended June 2012
Embargoed until 10:45am  –  24 July 2013
Commentary

Overview for the year

Local authorities increased both their operating income and spending in the year ended June 2012, with spending increasing more than income. Their operating balance worsened, from $0.6 billion in 2011 to $0.7 billion in 2012. The deficit increase over this period was $98 million.

Once all transactions (eg valuation changes and capital transactions) are considered, local authorities ran a surplus of $1.1 billion. This was $2.4 billion less than the surplus in 2011.

These statistics include some earthquake-related spending in Canterbury, though this expenditure is not separately identifiable. We will include further spending in Canterbury when this information becomes available. 

All figures are compared with the year ended June 2011.

Income and spending both up

Operating income (funding earned to provide core services) increased $438 million in the year ended June 2012. This increase was due to:

  • rates increasing $161.2 million
  • sales and other operating income increasing $155.3 million
  • current grants, subsidies, and donations received increasing $100.7 million 
  • dividend income rising $28.7 million
  • regulatory income and petrol tax collected rising $8.1 million.

These increases were partly offset by a $16.1 million decrease in interest income.

Local authorities earned $7.8 billion in the year ended June 2012. The top contributing regions were:

  • Auckland (32.5 percent of total)
  • Canterbury (13.8 percent)
  • Wellington (11.6 percent). 

Map, Percentage change in income from rates, year ended June 2012.  

Operating expenditure (spending on core services) increased $535 million in the year ended June 2012. These components of spending rose: 

  • purchases and other expenditure, up $241.1 million
  • current grants, subsidies, and donations paid, up $222.8 million
  • employee costs, up $51.0 million
  • depreciation and amortisation, up $32.6 million. 

These increases were partly offset by a $11.9 million decrease in interest payments.

Local authorities spent $8.4 billion in the year ended June 2012; 75 percent was spent by North Island local authorities.

 

 Map, Percentage change in operating expenditure, year ended June 2012.

Operating deficit worsens

The total operating deficit (when operating spending exceeds operating income) worsened to $0.7 billion in the year ended June 2012 (from $0.6 billion in 2011). This is the largest operating deficit for local authorities since 1993, when we first recorded figures. Before June 2008, local authorities had successive operating surpluses (when operating income exceeded spending).

Auckland Transport had the largest operating deficit ($217 million), followed by Auckland Council ($114 million) and Christchurch City Council ($108 million).

One quarter of local authorities had an operating surplus in the year ended June 2012. Tauranga City Council had the largest operating surplus ($18.3 million), followed by Otago Regional Council ($9.7 million) and Western Bay of Plenty ($6.7 million).

Graph, Operating surplus/deficit, 2003 to 2012.  

Non-operating income decreases while spending increases

Non-operating (eg valuation changes) and capital (eg vested assets) transactions also provide income to local authorities. Vested assets occur when ownership or control is passed to a council from a private party (eg a property developer transfers land to create a community park).

Income

Valuation changes contribute most to non-operating income. Local authorities earned $2.0 billion from valuation changes in the year ended June 2012, down 52.4 percent. Auckland Transport had the biggest decrease – down to $0.2 billion in 2012, from $1.0 billion.

Income from vested assets was down $40.5 million, mainly due to Tauranga City Council, Auckland Transport, and Tasman District Council.

For the year ended June 2012, the total value of local authorities’ income from capital transactions increased $271.3 million. The most-significant contribution came from capital grants, subsidies, and donations income (up 44.0 percent), with Christchurch City Council being the main contributor (up $340.8 million).

Spending

Spending on non-operating transactions increased 42.7 percent. Expenditure on valuation changes, provisions, and write-offs was up $503.2 million. Large contributions came from:

  • Hamilton City Council (up $365 million)
  • Tauranga City Council (up $227 million)
  • Christchurch City Council (up $170 million).

Expenditure on capital transactions increased 8.6 percent in the year ended June 2012, to $0.2 billion. Capital transactions include capital grants, subsidies, and donations made by local authorities. 

 Graph, Non-operating and capital transactions, year ended June 2011 and 2012.  

Balance

When all income and spending is considered (non-operating and capital transactions and the operational budget), local authorities had a $1.1 billion surplus in the year ended June 2012. This was $2.4 billion lower than the surplus in 2011, and the lowest surplus in five years. 

In 2012, 72 percent of local authorities had a surplus (81 percent in 2011). The largest were for: 

  • Christchurch City Council ($188.3 million – due to more capital grants, subsidies, and donations income)
  • Auckland Council ($123.0 million – due to more income from valuation changes)
  • Wellington City Council ($110.1 million – due to more operating income).

Hamilton City Council and Tauranga City Council had the biggest deficits – $372.2 million and $231.3 million, respectively. Both had big increases in their expenditure on valuation changes, provisions, and write-offs.

Financial position improves

Local authorities’ total equity (assets minus liabilities) improved in 2012, although at a much slower pace than in 2011.

Assets

Local authorities held assets worth $124.2 billion at 30 June 2012 (up $3.2 billion). 

Current (short-term) assets made up 2.8 percent of total assets. Their value was up 20.4 percent (to $3.4 billion) due to:

  • cash and bank deposits rising 28.5 percent, to $0.9 billion
  • other current assets (eg government stock and investments) rising 17.9 percent, to $2.6 billion.

The value of non-current (long-term and fixed) assets at 30 June 2012 was up 2.2 percent. Their total value was $120.7 billion at June 2012. The increase was due to:

  • fixed assets (eg infrastructure, land, buildings) rising $1.9 billion
  • investment assets rising $0.7 billion
  • other non-current assets (eg loans to related parties) rising $0.1 billion.

Liabilities

The value of accumulated total liabilities (obligations for payment) was $12.3 billion at 30 June 2012, up 16.0 percent since June 2011.

The value of current (short-term) liabilities fell 0.9 percent, to $3.8 billion.

The value of non-current (long-term) liabilities rose 25.7 percent, to $8.5 billion:

  • term debt (due in more than 12 months) rose $1.4 billion
  • other non-current liabilities rose $0.4 billion.

Term debt makes up 83.6 percent of total non-current liabilities.

Map, Percentage change in total debt, year ended June 2012.

Total equity is the difference between the value of all assets and liabilities. At 30 June 2012, local authorities had total equity of $111.9 billion, up 1.4 percent from June 2011.

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

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