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Local Authority Operating Costs Continue to Rise

Local Authority Operating Costs Continue to Rise

Local authorities' seasonally adjusted operating costs increased 4.1 percent in the three months to September 2002, according to Statistics New Zealand. The latest quarterly local authority survey reported an increase of $39.8 million in total expenditure, when compared with the June 2002 quarter, with total expenditure reaching $1,008.6 million, the highest level in the series to date.

The rise was due to a 3.9 percent increase in purchases and all other expenditure, a 3.4 percent increase in employee costs, a 7.8 percent rise in interest paid, and a 4.7 percent increase in depreciation. Total operating costs for the September 2002 quarter were 6.5 percent higher than the same quarter a year earlier, and 15.1 percent higher than the September 2000 quarter.

Local authority operating revenue fell $14.4 million to reach $1,016.8 million in the September 2002 quarter, compared with the June 2002 quarter. The 1.4 percent decrease was the result of a decline in investment income, as revenue from dividends fell. Lower dividend income in the September quarter has been typical over the last three years. The fall was partly offset by a 2.3 percent increase in sales of goods and services and all other income, a 4.0 percent increase in rates, petrol tax, licence fees and fines, and an 18.9 percent increase in government grants and subsidies.

As a result of expenses rising and income falling, local authorities recorded an $8.2 million surplus of current revenue over current expenditure in the September 2002 quarter. This was down $54.2 million compared with the June 2002 quarter surplus of $62.4 million. The September 2002 quarter operating result was the lowest surplus since the September 1999 quarter.

Brian Pink

Government Statistician

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