2014 NZ Council Financial Sustainability League Table

May 20th, 2014 at 12:00 pm by David Farrar

has published his 2014 Council Financial Sustainability  League Table. The key summary from his analysis is:

Best in Class
Clutha District Council
Southland District Council and
Rangitikei District Council

Worst in Class
Kaipara District Council
Kawerau District Council
Horowhenua District Council

Highly Commended
Stratford District Council
Selwyn District Council
Wellington City Council
Marlborough (Unitary) District Council

The number of Councils in each category are:

  • 5/5 – 7
  • 4/5 – 18
  • 3/5 – 19
  • 2/5 – 15
  • 1/5 – 8

Ratepayers who fund one of the Councils at the bottom of the table should be asking hard questions to their elected representatives.

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9 Responses to “2014 NZ Council Financial Sustainability League Table”

  1. peterwn (3,238 comments) says:

    Kaipara ratepayers already have. They are effectively asking the court to block rates money being used to repay sewage works loans on the grounds there was a technical illegality with the loans. In other words, they are asking mum and dad investors to stump up, when the mum and dad investors (indirectly) thought the loans were secured by the ability to ‘raise’ rates on the land in the council’s area (quite usual for councils and the former electric power boards).

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  2. thor42 (971 comments) says:

    *Auckland* gets *three stars*??? How could ANY council be worse than Auckland?
    They are *massively bloated* management-wise (with 1510 staff earning over $100,000 and 113 earning over $200,000.)

    Surprised to see Wellington get a “highly commended” too.
    Anyway – anything that exposes councils and local government in general is very welcome. It’s an area that has far too little sunlight applied to it.

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  3. Michael (903 comments) says:

    Larry Mitchell’s analysis is always flawed as it counts all assets by book value when calculating equity by ratepayer, rather than by market value. So Councils who invest in big white elephant schemes and raise rates significantly to repay them move up his table. But prudent Councils who spend wisely get pushed down the table.

    If you want to rate financial performance, there are two important measures. 1. Debt per ratepayer is moderate and trending down over the long term. 2. Rates increases measured against inflation.

    On that basis, Wellington is a poor performer, Auckland is worse, Dunedin is worst of all.

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  4. berend (1,699 comments) says:

    What does “Average Wage per Employee” mean?

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  5. lazza (380 comments) says:

    Council assets are at book value … there is no “publicly” available alternative market or any other asset valuation data that we could use. Note that equity measures are just one of a number of metrics/judgements used in the ratings.

    Average wage per employee is just that, Council payroll costs divided by full time equivilent staff numbers. A caution on this data is always relevant as FTE numbers are often variable and payroll $$$’s (the group consolidated number) often skews the results. Again … it is just one “indicator” warts and all.

    As for Auckland/Wellington … remember the League Table only measures financial sustainability. Even the slackest most inefficient Council could, thanks to its asset/reserves base be “sustainable” in these terms.

    It is about time that every Council was mandated to produce an independent wide-ranging public satisfaction survey to assess cost effectivemness, efficiencies, timeliness, consents performance and so on.

    This together with a League Table of the statutory financial benchmarks (due out October 2014) would then “start” to look like a comprehensive performance framework … Agree?

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  6. JeffW (324 comments) says:

    “Ratepayers who fund one of the Councils at the bottom of the table should be asking hard questions to their elected representatives.”

    Given the NZ political and media environment, it is much more probable that councils at the top will take this to mean they spend more. We won’t be happy until we’re bankrupt.

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  7. unaha-closp (1,155 comments) says:

    Worthless ranking.

    It uses the same traditions of financial ineptitude that allowed the US rating agencies to rank any CDO pre-2008 as AAA. It assumes current trends will sustain and anticipates no risk

    As for Auckland/Wellington … remember the League Table only measures financial sustainability. Even the slackest most inefficient Council could, thanks to its asset/reserves base be “sustainable” in these terms.

    Kawerau with a debt/equity ratio of 3%, Queenstown with a debt/equity ratio of 16.6%.

    The downside risk of the property markets are vastly different – Queenstown has a high degree of risk and Kawerau has little risk.

    Yet here they rank Queenstown 9th and Kawerau 2nd to bottom.

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  8. Odakyu-sen (565 comments) says:

    “It’s an area that has far too little sunlight applied to it.”

    Ah, sunlight. The best disinfectant…

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  9. lazza (380 comments) says:

    “Larry Mitchell’s analysis is always flawed” …

    “Worthless ranking”.

    “It uses the same traditions of financial ineptitude” …

    “We won ’t be happy until we’re bankrupt”.

    Geez what a bunch of “Trolls”. See comment below (again)…

    “It is about time that every Council was mandated to produce an independent wide-ranging public satisfaction survey to assess cost effectiveness, efficiencies, timeliness, consents performance and so on.

    This together with a League Table of the statutory financial benchmarks (due out October 2014) would then “start” to look like a comprehensive performance framework … Agree?”

    If our public watchdogs and elected members did their jobs (insisted on proper Council performance management) … then perhaps we might expect the improvements that would satisfy the Trolls.

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