Investment income reduces local authorities' operating deficit

Local authorities recorded a seasonally adjusted operating deficit of $20 million in the June 2010 quarter, Statistics New Zealand said today.

"The deficit this quarter is $81 million smaller than the March quarter deficit of $101 million," acting national accounts manager Jason Attewell said. "This is the smallest quarterly deficit since the March 2008 quarter."

The reduced deficit in the June 2010 quarter was largely driven by an increase in investment income (up $85 million). Councils receive this income from investments, ownership, and council services providers such as airport, port, and water care services. It is not unusual for dividend payments to be irregular in both size and frequency.

Seasonally adjusted operating income for local authorities increased $97 million to $1.8 billion in the June 2010 quarter. The main contributions to the increase came from investment income (up $85 million) and rates (up $21 million). Lesser increases were recorded for regulatory income and petrol tax (up $2.5 million) and interest income (up $1.8 million). Partly offsetting these rises were falls in sales and other operating income (down $10 million) and current grants, subsidies, and donations income (down $1.6 million).

Seasonally adjusted operating expenditure increased $17 million in the June 2010 quarter to $1.8 billion. The main contributions to the increase came from employee costs (up $6.6 million) and interest expenditure (up $5.4 million). Lesser increases were recorded for depreciation and amortisation (up $2.3 million) and purchases and other operating expenditure (up $2.0 million).

Quarterly, seasonally adjusted operating deficits have now occurred for the last two and a half years.