Canterbury earthquakes continue to affect local authorities' operating deficit

Local authorities recorded a seasonally adjusted operating deficit of $127 million in the March 2011
quarter, Statistics New Zealand said today. This is $50 million larger than in the December 2011 quarter,
when a deficit of $77 million was recorded.

The increased deficit reflects continuing higher expenditure after the September 2010 and February
2011 earthquakes in Canterbury, and from the new Auckland Council.

"February's devastating earthquake in Canterbury has compounded the effects of last year's earthquake.
The March quarter operating deficit is consequently larger than it would have been otherwise," national
accounts manager Rachael Milicich said.

The deficit in the March 2011 quarter was the result of total operating income of $1.8 billion and total
operating expenditure of $1.9 billion.

Seasonally adjusted operating income for local authorities increased $15 million in the March 2011
quarter. The main contributions to the increase came from current grants, subsidies, and donations (up
$39 million), regulatory income and petrol tax (up $24 million), and rates (up $22 million). Partly offsetting
these rises were falls in investment income (down $62 million), and sales and other operating income
(down $8 million).

In the same quarter, seasonally adjusted operating expenditure increased $66 million. Contributions to
the increase came from purchases and other operating expenditure (up $61 million), employee costs
(up $5 million), and interest expenditure (up $4 million). Partly offsetting these rises was a fall in
depreciation and amortisation (down $4 million).