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Local Government operating deficit unexplained

Media Release 20/1/2000

Local Government operating deficit remains unexplained

The Northern Employers and Manufacturers Association says it was surprised at the defensive responses to their expression of concern over local governments’ finances.

“I would have thought the sudden $100 million turnaround from operating surpluses to deficits would alarm local authorities as it does every other business organisation,” said the chief executive of the EMA, Alasdair Thompson.

“Neither Local Government New Zealand President Louise Rosson, nor ARC Chairman Phillip Warren explained why local authorities have seen their operating surpluses of $54 million evaporate into a combined deficit of $47.2 million in the September 1999 quarter.

“We were not taking a ‘potshot’ at local government and neither is this a mere “blip” as Ms Rosson suggests.

“According to the Statistics New Zealand figures it is part of a trend which has suddenly worsened, giving the largest September quarter deficit since 1992.

“The operating deficit follows an earlier one for the March quarter, 1999,
compared to a $50 million surplus in March ‘98. Likewise, the operating surplus for the June 1999 quarter was very small compared to the same quarter the year before.

“Neither is it correct to claim these deficits were caused by central government requiring local government to book an extra $38 million for depreciation in the September 1999 quarter; they were required to fund this by increasing rates and charges during last year, and did so.

“We are seeking answers from Local Government New Zealand, as business is deeply concerned about the increasing cost of rates and charges.

“We are even more concerned that business differential rating mainly by city councils continues to be used to make business pay a greater proportion of the cost of public goods supplied by councils. Business is subsidising other ratepayers.

“Consequently we are also requesting the review of local government funding commenced by Internal Affairs over a year ago be completed and enacted with urgency.”

Further comments:
Alasdair Thompson
Telephone Bus 09 367 0911
Home 09 303 3951
Mobile 025 982 024

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