Auckland Council debt rises 4.1% to $7.6 billion   29 Aug 2016

Article - BusinessDesk

Monday 29 August 2016 03:47 PM

Auckland Council debt rises 4.1% to $7.6 billion on infrastructure spending

By Edwin Mitson

Aug. 29 (BusinessDesk) - Auckland Council's debt rose 4.1% to $7.6 billion in the year ended June 30, as New Zealand's biggest city steps up investment to try to manage the rapid rise in its population.

The city's unaudited financial statements show $1.4 billion was invested in the latest year on renewing and expanding assets such as public transport interchanges, public parks, and the City Rail link project. That includes $349 million spent on roads and footpaths, $202 million on public transport improvements and $111 million on parks and sporting facilities.

Auckland Council chief financial officer Sue Tindal said debt would continue to rise over coming years, "Our financial strategy sets limits on the council's borrowing, to maintain debt at a sustainable level. While total group debt is projected to reach $11.6 billion by 2025, it will still remain at a prudent level relative to our income."

Debt after available cash was included was $7.48 billion, $324 million lower than forecast.

On a day-to-day basis, the local authority posted an operating surplus before gains and losses of $250 million for the year ended June 30, up 212 percent on the previous year's $80 million.

The increase was largely due to rising revenue from both rates and fees/user charges as well as a decline in weather tightness costs and lower interest rates, which meant debt could be refinanced at a lower cost.

Total revenue rose by $147 million or 4.1 percent to $3.7 billion. Of that, rates income rose 7.3 percent to $1.56 billion, fees and user charges rose 5.1 percent to $1.08 billion, which the council said was due to growth in people using public transport, consenting revenue and water charges.

Contributions from new home building meant development and financial contributions rose 22 percent to $131 million.

Total expenditure fell by $23 million or 0.6 percent to $3.45 billion. Finance costs fell by $4 million, reflecting the fall in interest rates.

The authority also recorded a loss of $552 million on the movement of financial instruments relating to changes in interest rates.

Auckland International Airport's recent success also assisted the council's financial performance. The local authority benefited from income of $62 million from the airport, a rise of 21% from the previous year.

In July, Auckland Council raised $180 million in a ten-year bond issue paying interest of 3.33 percent, after cancelling a planned June issue because of the disruption caused by Britain's vote to leave the European Union. A four-year bond was issued in March, paying 3.04 percent.

The local authority has a rating of AA with a stable outlook from Standard and Poor's and Aa2 from Moody's.

(BusinessDesk)

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