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Local Authorities Record Deficit

Local Authority Statistics - March 1999 quarter

Local authorities recorded a combined seasonally adjusted deficit from non-trading activities of $6.3 million in the March 1999 quarter. The deficit is a result of a decrease in income and an increase in expenditure, Deputy Government Statistician Ian Ewing said when releasing figures from the latest Quarterly Local Authority Survey.

Seasonally adjusted operating income, excluding gains from non-recurring items, was $861.2 million in the March 1999 quarter, a decrease of $68.6 million or 7.4 per cent compared with the December 1998 quarter. The decrease in operating revenue was largely a result of a fall in investment income. Investment income is the combination of dividends received and interest revenue. Dividends received have been at historically high levels over the past three quarters with a number of special dividends and capital repayments from investment companies and trading enterprises owned by councils. Dividends were $16.1 million in the March 1999 quarter compared with $79.3 million in the December 1998 quarter and $22.0 million in the March 1998 quarter. Interest revenue has continued to decline reaching $36.0 million in the March 1999 quarter, the lowest level since December 1994.

Seasonally adjusted operating expenditure, excluding losses from non-recurring items, was $867.5 million in the March 1999 quarter, up $7.1 million from the December 1998 quarter. Depreciation has continued to rise following increased capital expenditure necessitated by aging infrastructure in many territorial authorities. In the March 1999 quarter, depreciation was $116.6 million, the highest recorded since the series began in September 1992.

Although the local authorities recorded a deficit in the March 1999 quarter, the operating result for the nine months to March 1999 is up on the same period last year as a result of greater revenue in the September and December 1998 quarters. Revenue has increased by 5.9 per cent to $2,703.5 million while spending was $2,487.8 million, 5.2 per cent or $127.6 million more than in the nine months to March 1998. After three-quarters of the financial year, the local authorities recorded a combined surplus of $115.7 million compared with $93.2 million in the nine months to March 1998.

In the year to June 1998, the 86 local authorities recorded a combined operating surplus of $148.0 million, an increase of $88.2 million from the operating result for June 1997. The improvement is a result of an increase in revenue greater than the increase in expenses: income rose by $183.5 million while expenditure rose by $95.3 million.

In the June 1998 year the local authorities recorded current expenditure of $3,317.3 million, up from $3,222.0 million in the previous year. Purchases and other expenses were 4.0 per cent higher reflecting higher costs of operating and maintaining aging local infrastructure. In addition, the development of urban areas and facilities such as swimming pools, parks and libraries along with economic development and preparation for local body elections in October 1998 have been the focus of increased spending for some councils.

Operating revenue for the year ended June 1998 was $3,465.3 million, up by 5.6 per cent from June 1997. Increases were recorded in all components of revenue, the largest being: rates, up $72.4 million; investment income, up $57.2 million; and grants, subsidies and levies, up $39.5 million.

Ian Ewing

DEPUTY GOVERNMENT STATISTICIAN

17 June 1999

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