Council 'in denial' over debt

Tauranga City Council has been ranked in the bottom quarter of New Zealand's councils by an independent expert. Photo / File

Tauranga has been ranked in the bottom quarter of New Zealand's councils for its economic performance, with an independent expert accusing the council of being "in denial" over its debt.

Local government finance and policy analyst Larry N Mitchell last night delivered his verdict on the Tauranga City Council's financial situation.

He told an election meeting attended by about 130 people last night that the council had slipped to 48th out of the 67 councils on the table which he compiles every year to compare the performances of New Zealand's councils - down from last year's 32nd place.

"I don't believe it is being too alarmist to state that I have seldom seen such challenging financial data ... the balance sheet is over-optimistic and unrealistic."

Mayor Stuart Crosby responded by taking issue with Mr Mitchell's figures, saying the city's debt was sustainable and affordable.

Mr Mitchell used the council's 2011-12 financial year figures to conclude that there had been a "marked drop" in the financial performance, saying the city had ultra high debt of more than $10,000 per ratepayer.

On a more positive note, he said the council had high net equity and the community's ability to pay was "pretty good".

He scored the council at 11 out of 25 for financial sustainability, saying the council would need to overhaul its culture and long-term plan to meet the Government's new demand for councils to be cost-effective.

Using figures since Mr Crosby was elected mayor in 2004, he showed that debt had soared from $125 million to reach $460 million in 2012 while council revenue from all sources had increased by 76 per cent over the same period to reach $168 million.

Mr Mitchell said Tauranga's rates had nearly doubled from $50 million in 2004 to reach $99.7 million in 2012. Rate increases over the five years to 2012 has risen by 37 per cent in Tauranga compared with the 23 per cent average across New Zealand's 10 regional cities.

He said that Mr Crosby had rejected his table as inaccurate - a comment that Mr Crosby readily agreed with when contacted by the Bay of Plenty Times.

Mr Crosby said Mr Mitchell pulled out certain indicators and built a story around them, but it was not the full story and he was being selective. While high growth meant Tauranga had higher debt than what he would like, Mr Crosby took issue with Mr Mitchell's debt figures and the amount per ratepayer.

He said the net external debt at June 30 this year was nearly $379 million which, when divided by the city's 52,000 rateable properties, was $7288 per ratepayer.

"That is the trouble when you start bandying figures around."

Income from building consents and development fees were climbing out of the recessionary trough and the city was now well set up with infrastructure to take it into the future.

Mr Crosby said the council used debt as a "smoothing instrument" to spread the costs of infrastructure.

In tomorrow's Bay of Plenty Times we will canvass the other mayoral candidates' views on the city's debt.