Low debt, high rates

How GDC stacks up in the Ratepayers’ Report.

How GDC stacks up in the Ratepayers’ Report.

Gisborne District Council has the least debt on a per-ratepayer basis among unitary authorities in New Zealand, says the Ratepayers’ Report — the Taxpayers’ Union’s 2018 local government league tables.

However, it has the third-highest average residential rates of any local authority, and the council is planning to double its external debt from about $50 million now to just over $100m by 2023.

At $3498 per ratepayer now, the council’s debt is below both the average for unitary authorities and the average for all councils.

But the average residential rates of $3096 is a figure exceeded only by Western Bay of Plenty’s $3193 (whose ratepayers also pay regional council rates, as in most local authority areas) and Auckland’s $3136 (like Gisborne, one of five unitary authorities in the country).

Jordan Williams, executive director of the Taxpayers’ Union, said the combination of Gisborne District Council’s low debt and high assets per ratepayer suggested the council was managing its finances prudently, with a good balance sheet.

“Because of its comparably low debt per ratepayer, Gisborne District Council spends less on interest than the majority of councils ($83 per ratepayer, per year) and has the second-lowest operating expenses of any unitary authority ($4708 per ratepayer).

“However, while the council’s relatively low debt suggests a lower burden on future ratepayers, the council’s high average residential rates bill means that ratepayers are being hit harder in the pocket today.”

“The council must ensure that the burden of projects is spread fairly over the generations that will benefit from each project,” he said.

“One concern for Gisborne District ratepayers is the lack of both a lawyer and accountant on the council’s audit and risk committee, and the lack of a code of conduct requiring political neutrality of council staff.

“Audit and risk committees provide ratepayers with improved assurance of value and financial risk management — having a lawyer and accountant present on such committees is best practice and standard for most councils.

“Gisborne District ratepayers will be pleased to know that their council excels at moving on underperforming staff.

“Over the financial year, Gisborne District Council dismissed four staff due to performance issues. No other unitary authority, including Auckland Council, dismissed as many on the basis of poor performance.”

Other findings related to Gisborne were that when compared to other unitary authorities, Gisborne District Council’s average residential rates bill of $3096 is second only to Auckland Council.

Gisborne District Council employs 15.5 staff members per 1000 — the second-highest ratio among unitary authorities. However, the council pays a lower proportion of its staff salaries in excess of $100,000 than any other unitary authority (8 percent v 14 percent average for unitary councils and 11 percent across all councils).

The country’s unitary councils considered for this comparison are Gisborne District Council, Auckland Council, Marlborough District Council, Nelson City Council and Tasman District Council.

Asked whether the Taxpayers’ Union would like to comment on Gisborne’s plan to lift its debt to over $100 million by 2023 as it funds new infrastructure, spokesman Louis Holbrooke said the report provided a snapshot of councils’ current finances, so they had not looked into the various long-term plans.

“Interestingly, while borrowing money is often framed as a way of easing pressure on current ratepayers, our report shows that councils with the highest debt often also have the highest rates,” he said.

“Debt can be a legitimate way of funding infrastructure that will benefit future ratepayers. However, the risk is that increased revenue streams will come to be seen as a ‘new norm’ by councillors, who will then be inclined to hike rates — not just to pay back the debt, but to continue spending at the rate they’ve become accustomed to.

“Gisborne District Council needs to ensure it is accountable to ratepayers by clearly communicating its debt targets now, and regularly updating ratepayers on its progress.”

Other statistics in the report relating to Gisborne District Council were:

Council type: Unitary.

Population served: 48,500.

Number of ratepayers: 22,214.

Area: 8386 square km.

Average residential rates:

Gisborne District Council $3096.

Average for unitary councils $2878.

National average $2304.

(Average residential rates include compulsory user charges, such as water)

Mayoral remuneration:

Gisborne District Council $138,780.

Average for unitary councils $161,044.

National average $108,072.

CEO Remuneration:

Gisborne District Council $281,972.

Average for unitary councils $387,500.

National average $298,149.

Average councillor remuneration:

Gisborne District Council $42,861.

Average of unitary councils $56,196.

National average $36,433.

Number of councillors (excluding the Mayor): 13.

Personnel (staff) costs per ratepayer - council:

Gisborne District Council $858.

Average for unitary councils $827.

National average $815.

Financing (borrowing) costs per ratepayer – council:

Gisborne District Council $82.

Average for unitary councils $265.

National average $153.

Total operating expenses per ratepayer – council:

Gisborne District Council $4335.

Average for unitary councils $4457.

National average $3776.

Revenue per ratepayer – group:

Gisborne District Council $4670.

Average for unitary councils $5560.

National average $4615.

Personnel (staff) costs per ratepayer – group:

Gisborne District Council $976.

Average for unitary councils $1157.

National average $995.

Financing (borrowing) costs per ratepayer – group:

Gisborne District Council $83.

Average for unitary councils $285.

National average $170.

Total operating expenses per ratepayer – group:

Gisborne District Council $4708.

Average for unitary councils $5094.

National average $4047.

Total assets per ratepayer – group:

Gisborne District Council $93,436.

Average of unitary councils $76,040.

National average $59,431.

Total liabilities per ratepayer – group:

Gisborne District Council $3498.

Average for unitary councils $7932.

National average $4876.

Total equity per ratepayer – group:

Gisborne District Council $89,938.

Average of unitary councils $68,108.

National average $54,555.

Staff:

Number of staff 345.

Staff earning over $100,000, 28.

Proportion of staff earning over $100,000:

Gisborne District Council 8 percent.

Average for unitary councils 14pc.

National average 11pc.

Performance-related dismissals in past 12 months, 4.

Total number of sick days 1496.

Average sick days per staff member 4.3.

Audit and Risk Oversight:

Number of members on the audit and risk committee 12.

Independent member of audit and risk committee - Yes.

Lawyer on audit and risk committee - No.

Accountant on audit and risk committee - No.

Independent chairman of audit and risk committee - No.

Code of conduct requiring political neutrality - No.

Gisborne District Council has the least debt on a per-ratepayer basis among unitary authorities in New Zealand, says the Ratepayers’ Report — the Taxpayers’ Union’s 2018 local government league tables.

However, it has the third-highest average residential rates of any local authority, and the council is planning to double its external debt from about $50 million now to just over $100m by 2023.

At $3498 per ratepayer now, the council’s debt is below both the average for unitary authorities and the average for all councils.

But the average residential rates of $3096 is a figure exceeded only by Western Bay of Plenty’s $3193 (whose ratepayers also pay regional council rates, as in most local authority areas) and Auckland’s $3136 (like Gisborne, one of five unitary authorities in the country).

Jordan Williams, executive director of the Taxpayers’ Union, said the combination of Gisborne District Council’s low debt and high assets per ratepayer suggested the council was managing its finances prudently, with a good balance sheet.

“Because of its comparably low debt per ratepayer, Gisborne District Council spends less on interest than the majority of councils ($83 per ratepayer, per year) and has the second-lowest operating expenses of any unitary authority ($4708 per ratepayer).

“However, while the council’s relatively low debt suggests a lower burden on future ratepayers, the council’s high average residential rates bill means that ratepayers are being hit harder in the pocket today.”

“The council must ensure that the burden of projects is spread fairly over the generations that will benefit from each project,” he said.

“One concern for Gisborne District ratepayers is the lack of both a lawyer and accountant on the council’s audit and risk committee, and the lack of a code of conduct requiring political neutrality of council staff.

“Audit and risk committees provide ratepayers with improved assurance of value and financial risk management — having a lawyer and accountant present on such committees is best practice and standard for most councils.

“Gisborne District ratepayers will be pleased to know that their council excels at moving on underperforming staff.

“Over the financial year, Gisborne District Council dismissed four staff due to performance issues. No other unitary authority, including Auckland Council, dismissed as many on the basis of poor performance.”

Other findings related to Gisborne were that when compared to other unitary authorities, Gisborne District Council’s average residential rates bill of $3096 is second only to Auckland Council.

Gisborne District Council employs 15.5 staff members per 1000 — the second-highest ratio among unitary authorities. However, the council pays a lower proportion of its staff salaries in excess of $100,000 than any other unitary authority (8 percent v 14 percent average for unitary councils and 11 percent across all councils).

The country’s unitary councils considered for this comparison are Gisborne District Council, Auckland Council, Marlborough District Council, Nelson City Council and Tasman District Council.

Asked whether the Taxpayers’ Union would like to comment on Gisborne’s plan to lift its debt to over $100 million by 2023 as it funds new infrastructure, spokesman Louis Holbrooke said the report provided a snapshot of councils’ current finances, so they had not looked into the various long-term plans.

“Interestingly, while borrowing money is often framed as a way of easing pressure on current ratepayers, our report shows that councils with the highest debt often also have the highest rates,” he said.

“Debt can be a legitimate way of funding infrastructure that will benefit future ratepayers. However, the risk is that increased revenue streams will come to be seen as a ‘new norm’ by councillors, who will then be inclined to hike rates — not just to pay back the debt, but to continue spending at the rate they’ve become accustomed to.

“Gisborne District Council needs to ensure it is accountable to ratepayers by clearly communicating its debt targets now, and regularly updating ratepayers on its progress.”

Other statistics in the report relating to Gisborne District Council were:

Council type: Unitary.

Population served: 48,500.

Number of ratepayers: 22,214.

Area: 8386 square km.

Average residential rates:

Gisborne District Council $3096.

Average for unitary councils $2878.

National average $2304.

(Average residential rates include compulsory user charges, such as water)

Mayoral remuneration:

Gisborne District Council $138,780.

Average for unitary councils $161,044.

National average $108,072.

CEO Remuneration:

Gisborne District Council $281,972.

Average for unitary councils $387,500.

National average $298,149.

Average councillor remuneration:

Gisborne District Council $42,861.

Average of unitary councils $56,196.

National average $36,433.

Number of councillors (excluding the Mayor): 13.

Personnel (staff) costs per ratepayer - council:

Gisborne District Council $858.

Average for unitary councils $827.

National average $815.

Financing (borrowing) costs per ratepayer – council:

Gisborne District Council $82.

Average for unitary councils $265.

National average $153.

Total operating expenses per ratepayer – council:

Gisborne District Council $4335.

Average for unitary councils $4457.

National average $3776.

Revenue per ratepayer – group:

Gisborne District Council $4670.

Average for unitary councils $5560.

National average $4615.

Personnel (staff) costs per ratepayer – group:

Gisborne District Council $976.

Average for unitary councils $1157.

National average $995.

Financing (borrowing) costs per ratepayer – group:

Gisborne District Council $83.

Average for unitary councils $285.

National average $170.

Total operating expenses per ratepayer – group:

Gisborne District Council $4708.

Average for unitary councils $5094.

National average $4047.

Total assets per ratepayer – group:

Gisborne District Council $93,436.

Average of unitary councils $76,040.

National average $59,431.

Total liabilities per ratepayer – group:

Gisborne District Council $3498.

Average for unitary councils $7932.

National average $4876.

Total equity per ratepayer – group:

Gisborne District Council $89,938.

Average of unitary councils $68,108.

National average $54,555.

Staff:

Number of staff 345.

Staff earning over $100,000, 28.

Proportion of staff earning over $100,000:

Gisborne District Council 8 percent.

Average for unitary councils 14pc.

National average 11pc.

Performance-related dismissals in past 12 months, 4.

Total number of sick days 1496.

Average sick days per staff member 4.3.

Audit and Risk Oversight:

Number of members on the audit and risk committee 12.

Independent member of audit and risk committee - Yes.

Lawyer on audit and risk committee - No.

Accountant on audit and risk committee - No.

Independent chairman of audit and risk committee - No.

Code of conduct requiring political neutrality - No.

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