22 December 1999

The Council’s Director of Finance, Bob Lineham, says that for the same quarter the Council had a surplus of $1.2 million.

The latest Quarterly Local Authority Survey by Statistics New Zealand showed that there was an increase in expenditure of 3.8 per cent and a decrease in revenue of 2.6 per cent from the June 1999 quarter.

Expenditure for the 86 local authorities in the September quarter 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 was driven by a number of councils meeting the deadline for compliance with the legal requirement to fully account for depreciation as an expense.

Mr Lineham said the City Council recognised the importance to fund depreciation several years before it became a legal requirement and phased in changes over the 1994-1999 period so that its revenue flows now adequately cover this provision.

The cash generated by funded depreciation is a source of funding for the renewal portion of the capital expenditure programme of the council and relates principally to infrastructural assets.

Statistics New Zealand said local authority depreciation rose by 29.5 per cent or $38 million, rates, petrol tax and licence fees and fines had 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 follow quarters where record levels of dividend income were received, as trading enterprises and investment companies returned profits to shareholders, including the councils.

Further information: Bob Lineham: 941 8411