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Local Government Finances Plummet

Media release 17/1/2000

Local Government finances plummet in $100 million turnaround

Within the past year local authorities have seen their operating surpluses of $54 million evaporate into a combined deficit of $47.2 million, a turnaround of over $100 million. The figures refer to the September Quarter 1999 compared to September 1998.

“The sharp turnaround from a record surplus to a deficit of this magnitude is causing business deep concern,” said the chief executive of the Employers and Manufacturers Association (Northern), Alasdair Thompson.

“In the one year and despite an annual rate increase overall of 4.3 per cent, local government has gone from record operating surpluses to the largest deficit Statistics New Zealand has ever recorded for them since it began publishing the data in 1992.

“The main concern is that their spending has kept on rising. Ratepayers should be alarmed.

“The biggest increase in local government expenditure was $38 million for depreciation which councils were required to fully fund by increasing rates and charges. To go into such a steep deficit on top of increased rates and charges makes the result more perplexing.

“Operating revenue also suffered from lower investment income and lower grants and subsidies mainly from Transfund for roading, but these do not account for the extreme volatility evident.

“Business is concerned about both the direct extra costs as well as how local government costs are spread amongst the various groups since business subsidises residential ratepayers. These latest figures have galvanised us to request that the review of local government by Internal Affairs commenced over a year ago be completed with urgency.”


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