Figures released by Statistics New Zealand show that local authorities generated a seasonally adjusted deficit of $47.2 million from their non-trading activities for the September 1999 quarter.

The latest Quarterly Local Authority Survey result represents an increase in expenditure of 3.8 per cent and a decrease in revenue of 2.6 per cent from the June 1999 quarter.

In the September 1999 quarter, current expenditure for the 86 local authorities was $925.4 million. Increases were recorded in depreciation and employee costs. Purchases of goods and services fell by $6.9 million while interest payments were unchanged.

The increase in expenditure is driven by a number of councils meeting the deadline for compliance with the legal requirement to fully account for depreciation as an expense. This change in accounting for depreciation is also likely to affect the timing of revenue flows, as councils seek to cover new depreciation charges with income from rates, interest and other sources.

The revenue required to match the rise in expenditure may not be generated in the same quarter as the expense was recorded. For instance, while depreciation has risen by 29.5 per cent or $38.0 million, rates, petrol tax and licence fees and fines have increased by 1.8 per cent or $10.2 million between the June and September 1999 quarters.

The decrease in operating revenue resulted from falls in: investment income, down $22.1 million; government grants and subsidies, down $8.4 million; and sales of goods and services and all other income, down $2.7 million. Dividends received fell by $20.1 million to $8.5 million, the lowest level recorded since the series began in September 1992. This follows quarters where record levels of dividend income were received, as trading enterprises and investment companies returned profits to shareholders, including the councils.

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