Chief executive Paddy Clifford welcomed the result which he put
down to a number of factors including Council officers continued
focus on reducing costs and withdrawal of some projects.
During the year Council reduced existing debt by $5.6 million
which was over $3.4 million more than budgeted for.
"Like home owners across the country, Council has heard the
comments from both economists and Central Government calling on New
Zealanders to reduce debt. I'm very pleased to report that Council
has done this with respect to existing debt."
Chief financial officer Grant Elliott said the surplus is an
achievement in what is now the new economic norm - A prolonged
period of subdued economic growth.
"The operating budget is the money the City Council uses to
conduct its day-to-day business and is the only budget Council has
complete control over. Council staff are to be applauded for their
prudence in conducting work within overall budget while managing
falling revenue and withdrawal of projects."
In presenting the Council's 12 month performance review to the
Finance and Performance Committee, financial accountant Keith Allan
said while Council has stayed within operating budget, the effects
of the subdued economic climate, and capital project deferments
meant revenue shortfalls.
"Building development contribution activity in the private
sector has been on a par with what we've anticipated," said Mr
Allan. "However subdivision activity has been reduced with minimal
infrastructure transfers to Council as non-cash vested assets.
Capital subsidies from NZTA were also lower than expected due to
the lower capital expenditure with projects not approved or
withdrawn. This has resulted in lower non-operating revenue for the
Council of around $7.9 million."
Council manages interest rates over the long-term with amounts
incurred allowed in the 10 Year Plan. Accounting standards require
these be valued against market rates. The significant movement in
interest rates has seen a non-cash valuation write-down of
This lower non-operating revenue and valuation adjustment, both
primarily non-cash, has largely resulted in Council recording a Net
Result of a $10.7 million loss against a budgeted surplus of $1.9
"With the deferral and withdrawal of some capital projects, such
as the second bridge, velodrome and bus terminal and others, a $26
million under-spend resulted in the capital programme. This means
that the current level of debt is well below that budgeted.
It's important to note that essential maintenance and renewal
capital was only just below what was budgeted," said Mr Allan.
"And, that work on half of the deferred capital projects is planned
in the first year of the 2012 - 2022 Ten Year Plan."