Council Finances

City councils across New Zealand are deep in debt. Rates increases are also expected in most of New Zealand’s cities.

Have councils been failing to invest in maintaining infrastructure for core services?

Are councils mismanaging both the assets and liabilities on their books?

Are councils being transparent with the public about their financial situations and what caused those financial situations to develop?

According to an Infometrics article in 2019,

 “Gross debt levels in councils continues to increase as population pressures, tourism growth, and aging infrastructure come together to form a perfect storm.”

A council’s debt is often expressed as Gross debt ratio based on debt/revenue or total liabilities as a percentage of operating income.

According to Newsroom, the Local Government Funding Agency (LGFA) voted in 2020 to “temporary increase of council debt caps” to 300% of revenue; an increase from the earlier debt cap set at 250% of revenue.

“High growth councils like Auckland, Hamilton, and Tauranga were already within spitting distance of debt limits before Covid-19 as runaway population growth required them to make major upfront investments in infrastructure.”

Dileepa Fonseka,  Newsroom

[Last updated 25/11/2023]

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