Local Govt | National News Video | Parliament Headlines | Politics Headlines | Search

 


New Zealand’s councils in sound financial health

MEDIA RELEASE
11 June 2014
For immediate release

New Zealand’s councils in sound financial health

A newly released independent report from Grant Thornton shows councils are in a sound overall financial position.

Local Government New Zealand (LGNZ) commissioned analysts Grant Thornton to review key financial factors for councils across the country to produce an accurate overall picture of local government financial health.

The report, Local Government: A Financial Snapshot, shows that the vast majority of councils scored well in metrics relating to their balance sheets, such as debt levels relative to their asset base, debt levels relative to their population, ability to repay debt and ability to cover interest (finance cost) obligations.

The report’s “Ability to Service Debt” measure looks at the soundness of a council’s ability to service both its debt principal and interest costs, using an equivalence of operating cash. It shows that, in relation to their ability to service debt costs, all metropolitan and regional councils are sound; and the large majority of rural and provincial councils are all sound or very sound.

LGNZ President Lawrence Yule says the report provides conclusive evidence that the overwhelming majority of councils are in good financial health and are using best-practice financial management.

“The local government ratio of debt to assets is at a prudent 9 per cent. This is the equivalent of a $36,000 mortgage on a $400,000 home,” Mr Yule says.

“Accordingly, the local government sector continues to have the lowest debt of any sector in New Zealand.”

As at 30 June 2012 local government collectively owned $121 billion of infrastructure, investments and other assets against $11 billion debt. In comparison central government owns $241 billion of assets $181 billion debt, while the business sector has assets of about $1,233 billion with liabilities in excess of $800 billion. (See attached infographic from the February 2013 Government report Building Capital Markets.)

Mr Yule stated that it is vital to understand the appropriate context when analysing the financial situation of any local authority. The analysis needs to account for for the different pressures faced by individual councils, for example, whether they are planning for an increasing or decreasing population base.

“Debt per se is not bad. On the contrary it is an appropriate funding tool for intergenerational assets such as roading and water infrastructure,” Mr Yule says.

Any council debt needs to be considered alongside the council’s asset base and it is necessary to look at what specific intergenerational projects the debt is being used to fund, the services councils provide and population change. Local Government: A Financial Snapshot applies appropriate metrics for sector analysis.


“This report sets the record straight about the current council financial position,” Mr Yule says.

“Overall, New Zealand’s councils are in overwhelmingly sound financial health.”

*Ends*

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Labour's 'Future Of Work': Major Reform Of Careers And Apprenticeships

The next Labour Government will transform careers advice in high schools to ensure every student has a personalised career plan, Leader of the Opposition Andrew Little says. More>>

ALSO:

State Investments Management: Treasury Likes IRD, Not Education Or Corrections

The Inland Revenue Department has scored an 'A' in the first tranche of the Treasury's investor confidence rating for state agencies that manage significant Crown investments and assets, gaining greater autonomy as a result, while the Corrections and Education ministries gained a 'C' rating. More>>

ALSO:

Govt Goal: NZ To Be "Predator Free" By 2050

Prime Minister John Key has today announced the Government has adopted the goal of New Zealand becoming Predator Free by 2050... “That’s why we have adopted this goal. Our ambition is that by 2050 every single part of New Zealand will be completely free of rats, stoats and possums." More>>

ALSO:

Gordon Campbell: On The IOC’s Treatment Of Russian Sport, And Lone Wolf Terrorism

A blanket ban on Russian athletes would also have exposed the IOC to criticism that its treatment of Russia would have been marked contrast to its treatment say, of the track and field team from Kenya – a country about which the IOC has very similar doping concerns. More>>

ALSO:

Sounds Like A Plan: Auckland Council Receives Unitary Plan Recommendations

A key milestone in New Zealand planning history was reached today when the Independent Hearings Panel delivered the reports containing its recommendations on the Proposed Auckland Unitary Plan. More>>

ALSO:

National Park Expansion: Forests And Coast Of Kahurangi Protected

Five parcels of high value land totalling more than 890 hectares have been formally gazetted as part of the National Park. More>>

ALSO:

PPP Go-Ahead: SkyPath Gets Unanimous Support

Auckland’s SkyPath project has been given the go-ahead to be delivered through a public private partnership, after a unanimous decision at today’s Finance and Performance Committee. More>>

ALSO:

Gordon Campbell: On The Reserve Bank, The UN Shortlist, And Trump

Can there really be there any link between the US presidential elections and yesterday’s RBNZ signals on interest rates and the NZ dollar? Well, maybe. And it would be this: the improving US economy is reportedly putting a tailwind behind the US dollar, and rendering the actions of our Reserve Bank virtually irrelevant. More>>

ALSO:

Gordon Campbell: On What John Key Should Be Asking Joe Biden

No doubt, US Vice-President Joe Biden will be updating Prime Minister John Key on the chances of a TPP vote taking place in the ‘ lame duck’ session of Congress that’s held between the November’s election and the inauguration of a new President in January. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Regional
Search Scoop  
 
 
Powered by Vodafone
NZ independent news