Below average and that’s good

by Mike Isle

Council debt is rising across New Zealand, and Selwyn is no exception — however, we are well below the national average.

The latest Infometrics’ monthly report says across the board councils’ debt to income ratio has now topped 200 per cent.

Christchurch has the highest debt ratio at 291.7 per cent, followed by Auckland at 285.0 per cent.

Infometrics’ 10-year prediction for 2019 to 2028 shows an average debt to income ratio of 215.9 per cent for the 77 councils surveyed, up from 188.1 from the previous 10 years.

Selwyn’s ratio is 114.2 per cent, up from 108.7 per cent, but still well below the national average and giving it a ranking of 42 out of the 77 councils.

Infometrics’ senior economist Brad Olsen said higher gross debt ratios do not necessarily show that councils are borrowing too much.

Instead, high gross debt ratios can sometimes more accurately highlight a lack of income needed to grow, even as the population has grown.

He said that the need to fund increasing capital investments in infrastructure means that different funding options are important going forward.

“Recent research shows that local government in New Zealand receives the smallest comparative share of total government funding in the developed world.

“The small share of funding illustrates the need for more funding from central government to local government, either as pure cash payments or as project-based subsidies.”

Mr Olsen said councils face a tough choice, with many competing issues and a small pool of money.

During the next decade, he said, councils are expected to replace rundown assets, ahead of projects, which would improve service levels or add more capacity to cope with growth.