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OAG report contrasts with justifications for new law

OAG report's findings contrast starkly with justifications for newly enacted local government reform legislation


Facts in OAG report good news for ratepayers and communities

6 December 2012

A report tabled in Parliament today by the Office of the Auditor-General states that local authorities are managing their debt effectively and investing in activities that will result in only modest rates rises.

The report, Matters Arising from the 2012 to 2022 Local Authority Long-Term Plans, states that councils’ “direction of travel is positive.”

It notes councils’ financial strategies in their Long Term Plans (LTPs) are characterised by:

• reducing or deferring spending
• stabilising or reducing overall debt.

Regarding rates, it is noted that “the year-on-year movement is on average five per cent (for Auckland Council the average is 6.1 per cent and for all other local authorities the combined average is 4.3 per cent).

“The findings are in stark contrast to the justification for the recent Local Government Act 2002 Amendment Bill, which has just received the Royal Assent. The Bill was introduced in response to a perceived crisis in the way councils manage their finances,” says LGNZ President, Lawrence Yule.

“The sector continually seeks efficiencies and savings and the audit process will always focus a Council’s attention on this approach. This report shows that these improvements are being made.”

Although the report also highlights the challenges facing councils in funding infrastructure, it states “overall, local authorities are planning to live within their means.”

Debt when used wisely can be a way of spreading the costs of infrastructure over a period of time.

“A recent factual report from the economics consultancy, NZIER, stated that local government debt is well below internationally benchmarked maximum levels. This OAG report reinforces the views of economic studies,” Mr Yule says.

“We are pleased that the OAG stated local authorities are preparing financially prudent Long Term Plans. This is evidence that councils are responding to their communities’ needs in a responsible manner.”


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