### ODT Online Mon, 5 Oct 2009
Local government expansion could be over
By Dene Mackenzie
The strong expansion in New Zealand’s local government sector looks to be over, according to BNZ Capital senior economist Craig Ebert. “Despite sustained strong growth in revenue, local councils have run themselves into sizeable deficits as expenditure has ballooned that much faster.”
Mr Ebert says that unless there are some major revisions to the various statistics, he’ll be left with the impression New Zealand’s local councils had, despite the broader recession, expanded themselves into a jam.
The article discusses Dunedin City Treasury having reported its annual results on Friday. The notes to the accounts showed short-term borrowing had fallen to $6.6 million this year from $13.7 million last year. However, long-term borrowing had increased 23% in the June year to $361.9 million from $292.7 million.
• Total borrowing increased 20% in the period to $368.5 million.
• Dunedin City Holdings reported a profit before tax of $13.9 million in the period from revenue of $214.4 million, a 6.5% return.
Dunedin City Holdings Ltd: “19.8 million reasons to smile”
According to the half-pager (ODT 3.10.09, page 15), “Each year the results have been consistently spectacular, and this year – despite the doom and gloom of recession – the good news continues with the best ever company revenues and a group payment of $19.8 million to Dunedin City Council.”
Really? The following ODT news item rallies the same spin.
### ODT Online Sat, 3 Oct 2009
DCC firms report 7% revenue rise
By David Loughrey
Dunedin City Council-owned trading companies have emerged from a tough year of recession with a 7.6% increase in revenue, and a modest increase in profit.
• Aurora Energy’s $15.4 million profit made it the leading money-maker of the group.
• Delta made the most of opportunities to expand business in the Wakatipu Basin.
• Dunedin International Airport Ltd struggled with a decrease in international passengers.
• The languishing export sector created a less than ideal environment for City Forests.
• Citibus improved its fleet, and the Taieri Gorge Railway invested heavily in its future.
### ODT Online Tue, 6 Oct 2009
Airport revenue down nearly $900,000
By Dene Mackenzie
Dunedin International Airport yesterday reported a more than $900,000 loss for the year ended June, but chairman Richard Walls is optimistic the worst is behind the company.
• Revenue: $7.55 million, down 1.4%
• Loss: $907,842 ($324,236 previous corresponding period)
• Domestic passenger numbers: Up 12.8%
• International passenger numbers: Down 28.3%
Correction: (ODT 7.10.09, page 3) The headline of the report should have read that the loss was more than $900,000, rather than revenue down nearly $900,000. Revenue fell 1.4%, or nearly $105,000, and the after-tax loss was $907,842 compared with a loss of $324,236 for 2008.
The sobering figures and the management behind them receive harsh criticism from Ian Pillans, of Dunedin, in a letter to the editor (ODT 9.10.09, page 10) – available in print and digital editions of the newspaper:
Unbelievable nonsense from council
“The contempt with which the Dunedin City Council treats the intelligence of its citizens really beggars belief. This almost unbelievable nonsense describes the latest $19.8 million group payment to the DCC by its subsidiary, Dunedin City Holdings Ltd, following consistently spectacular results and best-ever revenues, as though the latter had anything to do with profit.
The problem is that DCHL made only $8.7 million for the year and so we are absurdly entreated to smile at borrowing $11 million to satisfy the DCC dividend requirement. This is like being asked to cheer when someone adds $11 million to your mortgage. DCHL companies are clearly unable, now and in the future, to satisfy the voracious spending machine that is the council. Last year, they borrowed $9 million to satisfy the demand and next year’s bill has already been quantified at $23 million, so on current performance trends DCHL (read ratepayers) will have to borrow a further $14 million to settle the account. Hardly a spectacular result.”
Published the same day, a letter (ODT, page 10) by Lindsay Smith, of Challis, also voices concern saying the figures given in the DCHL half-page advertisement do not add up:
“If you total the results of the individual companies, they do not add up to the group results. The individual results show a combined profit of over $18.7 million but the group’s results show a profit of $8.7 million. Losing an unexplained $10 million somewhere does not make me smile.”
Post by Elizabeth Kerr