Southland District Council. Pre-Election Report

Transcription

1 Southland District Council Pre-Election Report

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3 Chief Executive s Introduction Welcome to Southland District Council s first Pre-Election Report. The purpose of this report is to provide information to promote public discussion about the issues facing the local authority section 99A(4), Local Government Act This is the first year Council has been required to produce a Pre-Election report, which is politically independent and has been prepared by the Chief Executive and staff as per the legislation. The report focuses on what Council has achieved in the past three years in terms of financial sustainability, and also highlights the main projects it aims to complete and its funding projections in the next three years. This report contains funding impact statements for , and and a summary balance sheet for each of those years, as well as for the next three years , and , as taken from our Long Term Plan While historical information has been obtained from audited documents, it is important to note the information taken from the Annual Report has not been audited as that is taking place at the same time this document is being produced. Southland District Council s main challenge has been and will continue to be our roading network. We have nearly 5000km of roads and only a small population base to pay for the maintenance of them. The roading network is essential for the wellbeing of the district is and is subject to a lot of pressure from increasing vehicle use and the aging pavement. Government funding has been flatlined and the financial assistance rate is being reviewed so we are constantly looking for innovative ways to manage this challenge. The past three years have been busy for Council. The District Plan has been reviewed and a Proposed District Plan put out for submissions. We are now in the process of analysing those submissions and preparing reports for hearings in early As part of the review, Council worked together with Environment Southland, which was also reviewing its Regional Policy Statement. This co-operation with other councils and organisations is part of our focus on shared services. Many projects and plans have been worked on together and Southland as a region is leading the way in shared services, with examples like Venture Southland, Wastenet, Te Ao Marama, Emergency Management Southland and Southern Rural Fire Authority, to name just a few. Legislative changes have had a major impact on Council activities, and not just in roading. We are presently working on significant changes to liquor licensing, which again sees us working together with other councils. Amendments to the Local Government Act and Resource Management Act have been enacted and more changes are proposed. One of the key roles of Council is to ensure a Southland voice is heard at a national level on issues concerning the district. We have also just started the physical work on the Around the Mountains Cycle Trail, with initial funding of $4 million being provided by Central Government. This project will not only be a significant asset to the District but also hopefully be the catalyst for a growing network of trails which will reach our communities around the district. Council is working hard to stretch the Government funding as far as possible and also find both private and public partners in order to complete the second stage of the trail. We are always looking for ways of funding costs differently so that rates can be kept as low as possible. One such example is the Stewart Island Visitors Levy, which will start on October 1. This levy on visitors to the island will help pay for infrastructure and projects, which otherwise would fall on the small ratepayer base. You may be considering standing for Council or for one of our eight community boards. Council provides a wide range of services which add significantly to Southlanders quality of life. The role of councillor or community board member is demanding, challenging and rewarding and I encourage anyone who has an interest in their community and is a team player to get involved and stand for election. I hope you find this Pre-Election Report helpful. If you want any further information, please feel free to contact me or my team. David Adamson Chief Executive

4 An overview of southland district and its challenges Southland District Council looks after 30,198km2, 11% of New Zealand s land mass. Within the District are two National Parks Fiordland and Rakiura, the Catlins, farmland, river plains and hill country, and 28 different communities, from Milford Sound in the northwest to Stewart Island in the south. Each of these communities has its own community board, community development area subcommittee or trust, so they can have a say in what happens in their own area. This is one of the most devolved decision-making processes in local government in New Zealand and forms the mission of the District Council Working together for a better Southland. Southland District s population at the last Census in 2006 was 28,440, with a rating basis of 20,723 units (2013 Census figures are not yet available). The makeup of this population is becoming more and more diverse, as people of different ethnic groups make their home in Southland, often on dairy farms. Agriculture, forestry and fishing are the major employers in the District, with manufacturing coming in closely behind, with much of that stemming directly from agriculture such as milk, meat and timber processing. The main challenge for Southland District Council is the huge land area, with its corresponding roading network, and the small population. The difference in the cost of needed maintenance and rehabilitation of both the sealed and gravel roads and the funds we can generate to pay for this is growing bigger every year. Council has begun talking to Southland ratepayers and residents about this issue and that conversation will continue. The small number of ratepayers which is spread out over the 28 communities in Southland District also provides another challenge in ensuring water supply and sewerage schemes meet drinking water standards or the conditions of their resource consents, yet are as cost-effective as possible. Council has a major water and waste programme budgeted for in the next few years to do this. Water and sewerage costs are district funded, meaning ratepayers receiving this service pay the same, whether they live in Te Anau or Winton. Ratepayers and residents using the wheelie bin service also pay the same wherever they live. Further information Other Council documents that will provide additional information include: Long Term Plan Annual Report Annual Report Annual Plan Annual Report (due to be adopted on 9 October 2013) Local Governance Statement

5 Council Projects Council has several projects planned for the next three years. The table below sets out the major projects valued over $300,000 that are under way or are proposed within that timeframe. These include building work, records improvement, the Around the Mountains Cycle Trail, upgrades to sewerage schemes, stormwater systems and water supplies and public toilet upgrades. The table shows both the cost of the project in the three years and also the total project cost. This table is not a full list of Council s projects, activities or business as usual, which can be found in our Annual Plans, Annual Reports and the Long Term Plan. Project and Reason for project four-year cost Total project cost (including work outside highlighted years) Winton Memorial Hall renovation $300,000 ( ) $300,000 - To modernise and upgrade the hall Council Offices and Depots Seismic Upgrade $300,000 ( ) $300,000 - To meet earthquake building requirements Records Improvement Plan $300,000 ( ) $300,000 - To reduce risk and gain efficiencies in our record keeping Mossburn Toilet Upgrade $423,536 ( ) $423,536 - To modernise the toilets, subject to further consultation Around the Mountain Cycle Trail Stage 1 $3,890,891 ( ) $8,000,000 Stage 2 $1,052,055 ( ) - To construct a cycle trail $1,578,083 ( ) - $4 million funding received from Government $789,042 ( ) Sewerage schemes Stewart Island pump replacement $309,238 ( ) $309,238 - To progressively replace original sewer pumping stations pumps/motors following condition testing. Te Anau-Manapouri Treatment and Disposal $557,311 ( ) $9,000,000 Design & - For development of design and testing of C construction disposal at airport site including rising main survey. Te Anau Interim Upgrade of Oxy Pond $750,000 ( ) Included above - To enhance existing oxidation ponds and screening to comply with ES requirements in the short term and additionally refine sewage for future pumping to new site Ohai Treatment Upgrade $680,075 ( ) $680,075 - For possible upgrading of treatment system to ensure future consent requirements are achieved. Winton Upgrade of Oxy Pond $465,300 ( ) $465,300 - To carry out required desludging of oxidation ponds. Winton Treatment upgrade $858,840 ( ) $3,075,000 - For enhancements required to achieve ES $1,573,341 ( ) discharge requirements. This may be done in , subject to desludging.

6 Council Projects Continued Project and Reason for project four-year cost Total project cost (including work outside highlighted years) Stormwater Lumsden Reticulation Upgrade $413,651 ( ) $418,000 - To upgrade aged assets that will be monitored 1 to 2 years beforehand to establish actual replacement date. Te Anau Reticulation Upgrade $327,655 ( ) $3,168,000 - To upgrade aged assets that will be monitored 1 to 2 years beforehand to establish actual replacement date. Winton Reticulation Upgrade $302,729 ( ) $943,000 - To upgrade aged assets that will be monitored $506,201 ( ) 1 to 2 years beforehand to establish actual replacement date. water supply Eastern Bush Reticulation Upgrade $594,139 ( ) $1,129,000 - To upgrade aged assets that will be monitored 1 to 2 years beforehand to establish actual replacement date. (To be read in conjunction with Otahu Flat.) Otahu Reticulation Renewal $358,113 ( ) $894,000 - To upgrade aged assets that will be monitored 1 to 2 years beforehand to establish actual replacement date. (In conjunction with Eastern Bush.) Ohai-Nightcaps-Wairio Water Reticulation $2,618,211 ( ) $5,383,000 - To upgrade aged assets that will be monitored 1 to 2 years beforehand to establish actual replacement date. May be staged over several years. Te Anau Rural Water Supply $398,088 ( ) $398,088 Reticulation Renewal - To renew rising mains at Kakapo & Homestead. Tuatapere Reticulation Renewal $365,712 ( ) $637,000 - Ongoing lateral replacements. Winton Reticulation Renewal $2,971,100 ( ) $5,121,000 - Ongoing mains replacements subject to annual condition assessment. Riverton Scheme Improvements $1,095,215 ( ) $1,800,187 - To upgrade treatment plant to meet drinking water standards Otautau Treatment Upgrade $300,000 ( ) $375,000 - To upgrade treatment plant to meet drinking water standards

7 Council s Financial Report The following set of financial statements cover the past three years and the next four years. These show how Council is managing its finances compared to the Financial Strategy adopted as part of our Long Term Plan in In 2013 the fourth annual edition of the New Zealand local government financial sustainability and community affordability league table was published by finance and policy analyst Larry Mitchell. Council scored first equal on this table and was described by Mr Mitchell as best in show. Council s success was based on our local debt, high equity per ratepayer, appropriate funding for depreciation and the low level of rates compared to community wealth. Council is in a sound financial position and is constantly looking for efficiencies and innovative ways of saving money. The financial information brings together figures previously published in our Long Term Plan , Annual Plans and Annual Reports as well as updated financials, based on the latest budgeting information. While this is not an audited report, much of the information contained in this report has been audited. In particular, the and financial information has been audited via the respective Annual Reports and the , , and financial and major projects via the Long Term Plan Information from this year s Annual Plan is also included, but that document did not have to be audited. It should be noted that Council made changes in the Annual Plan, compared to the Long Term Plan forecast. The most significant change was not borrowing any funds because of deferred capital work on water and sewerage projects. Financial tables and numbers have been based off Council s audited Annual Reports numbers have been based off best estimates of 30 June 2013 financial year s figures numbers have been based off Council s Annual Plan , and figures have been based off the Long Term Plan with the following adjustments being made: Decreased borrowings of $21 million Decreased interest costs as an effect Funding Impact statement adjusted for Around the Mountain Cycle trail agreed contributions Decreased expenditure on Property Plant and Equipment

8 Summary of Cashflow 2011, 2012, 2013 The Summary of cashflow records the actual cash Council received in each financial year, and how the cash was applied. For example it shows that for 2011/12 financial year $37,044,859 was received in cash from rates revenue, and $21,724,929 was spent on purchase of property plant and equipment. Cashflow statement Actual Actual Estimate 2010/ / / 2013 Cash Flows from Operating Activities Cash was provided from Receipts from Rates Revenue 34,427,198 37,044,859 39,846,267 Receipts from NZ Transport Agency Funding 13,254,582 14,124,569 15,049,703 Interest and Dividends 225, , ,110 Contribution from Developers 259, , ,188 Receipts from Other Revenue 8,604,646 10,672,569 7,029,626 Income Tax GST (Net) 9, ,780,928 62,405,132 62,448,894 Cash was Disbursed to: Payments to Supplier and Employees (37,990,103) (39,727,553) (41,164,747) Interest Paid (30,830) (94,401) (46,178) GST (Net) - (343,301) (60,107) (38,020,933) (40,165,255) (41,271,032) Net Cash Inflow (Outflow) from Operating Activities 18,759,995 22,239,877 21,177,862 Cash Flows from Investing Activities Cash was Provided from: Sale of Property, Plant and Equipment 264, , ,413 Sale of Investments , , ,413 Cash was Disbursed to: Purchase of Property, Plant and Equipment (19,848,044) (21,724,929) (14,690,481) Purchase of Investments (13,933) (134,697) - Purchase of Intangible Assets (61,708) (63,085) (23,110) (19,923,685) (21,922,711) (14,713,591) Net Cash inflow (Outflow) from Investing Activities (19,658,891) (21,482,161) (14,498,178) Cash Flows from Financing Activities Cash was Provided from: Proceeds from Borrowings - - Proceeds from Finance Lease Liabilities 21,338 8,012-21,338 8,012 - Cash Was Disbursed to: Repayment of Borrowings - - Repayment from Finance Lease Liabilities (266,349) (227,999) - Net Cash Inflow (Outflow) from Financing Activities (245,011) (219,987) - Net Increase/(Decrease) in Cash and Cash Equivalents (1,143,907) 537,729 6,679,684 Cash and Cash Equivalents at the beginning of the year 2,490,416 1,346,509 1,884,238 Cash and Cash Equivalents at the end of the year 1,346,509 1,884,238 8,563,922 * Note /2013 Cash flow above has been prepared with draft Venture Southlands financial results. * Note /2013 Cash flow above has been prepared off estimated year end numbers * Note /2013 Cash flow above has been prepared before year end adjustments/procedures

9 Balance Sheet 2011, 2012, 2013, 2014, 2015, The Balance Sheet shows what assets Council owns and the value of those assets. It also shows how Council has funded the acquisition of those assets. Council can fund its assets either by borrowing or from equity Council has built up over the years. Council s main asset is its property plant and equipment, for example, roads, water and sewerage treatment plants. In the 2011/12 financial year property plant and equipment was recorded at $1,359,413,900. Balance sheet Actual Actual Estimate Annual Plan Forecast Forecast Forecast 2010/ / / / / / 2017 Equity Retained Earnings 720,311, ,429, ,802, ,520, ,157, ,938, ,299,545 Asset Revaluation Reserves 588,755, ,166, ,166, ,284, ,282, ,386, ,712,268 Fair Value Reserves 241, , , , , , ,990 Other Reserves 20,798,836 24,272,297 24,127,417 29,743,529 32,550,620 33,186,295 32,814,341 1,330,107,487 1,369,112,961 1,367,341,714 1,461,793,736 1,509,225,848 1,551,747,308 1,596,062,144 Current Assets Cash and Cash Equivalents 1,346,508 1,884,232 8,563,922 (1,318,738) 1,843, ,251 (719,808) Trade and Other Receivables 7,368,075 7,912,782 6,790,537 8,485,671 8,598,620 8,879,795 9,183,484 Inventories 125,027 90,826 88,871 94, , , ,214 Work in Progress 21, , , Other Financial Assets 997,053 2,135,626 5, , , , ,705 9,858,270 12,633,863 15,807,940 7,522,531 10,798,903 10,087,768 8,824,595 Non-Current Assets Property, Plant and Equipment 1,320,859,196 1,359,413,900 1,352,020,896 1,455,693,038 1,500,318,488 1,543,193,746 1,588,931,573 Intangible Assets 735, , , , , , ,332 Forestry Assets 8,776,890 7,588,890 7,668,750 9,021,430 10,559,460 10,800,250 11,136,550 Investments in Associates 5,529 5, Other Financial Assets 1,005,671 5, , , , , ,000 1,331,383,039 1,367,454,014 1,360,933,669 1,465,862,991 1,512,061,523 1,555,222,881 1,601,301,455 Total Assets 1,341,241,309 1,380,087,877 1,376,741,609 1,473,385,522 1,522,860,426 1,565,310,649 1,610,126,050 Current Liabilities Trade and Other Payables 5,673,190 6,318,013 4,685,007 6,759,120 6,620,672 6,837,168 7,070,999 Contract Retentions and Deposits 999,386 1,082, ,628 1,159,727 1,166,294 1,204,432 1,245,623 Employee Benefit Liabilities 1,666,871 1,031,379 1,009,694 1,135,773 1,925,157 1,974,704 2,026,165 Development and Financial Contributions 2,153,170 2,171,170 2,412,232 2,218,636 2,574,610 2,884,155 2,926,532 Provision for Decommissioning 14,000 14,000 14,000 14,000 7,000 7,000 7,000 Borrowings 226, , , , ,972 47, ,189 10,732,689 10,783,361 9,208,338 11,412,112 12,562,705 12,955,178 13,631,508 Non-Current Liabilities Employee Benefit Liabilities 165, , , , , , ,694 Provision for Decommissioning 74,561 64,289 64,289 42,178 37,287 32,151 26,759 Borrowings 160,738 2,663 2, , , , , , , ,674 1,071, , ,398 Total Liabilities 11,133,822 10,974,915 9,399,895 11,591,786 13,634,578 13,563,341 14,063,906 Net Assets 1,330,107,487 1,369,112,962 1,367,341,714 1,461,793,736 1,509,225,848 1,551,747,308 1,596,062,144 * Note /2013 Balance Sheet above has been prepared with draft Venture Southlands financial results. * Note /2013 Balance Sheet above has been prepared off estimated year end numbers * Note /2013 Balance Sheet above has been prepared before year end adjustments/procedures

10 Funding Impact Statement 2012, 2013, 2014, 2015, 2016 The Funding Impact Statement shows how Council intends to fund its activities, both operational and capital, in the future. In contrast the Summary of Cash Flows is an historical report which records where Council s money came from and how it was applied. Operating expenditure is day to day expenses, eg electricity, insurance costs, staff wages and fuel for motor vehicles. Capital funding is expenditure on major assets that will last for a long period of time, eg water treatment plants and roads. funding impact statment (000 s) Estimate Annual Plan Forecast Forecast Forecast 2012/ / / / / 2017 Sources of operating funding General rates, uniform annual general charges, rates penalties 26,674 27,097 28,747 29,897 31,093 Targeted rates (other than a targeted rate for water supply) 11,873 12,429 12,930 13,383 13,778 Subsidies and grants for operating purposes 6,008 6,310 6,311 6,733 6,928 Fees, charges, and targeted rates for water supply 2,329 2,490 2,701 2,780 2,863 Interest and dividends from investments Local authorities fuel tax, fines, infringements fees and other receipts 5,984 5,884 6,332 5,473 5,674 Total operating funding 53,076 54,232 57,096 58,373 60,425 Applications of operating funding Payments to staff and suppliers 36,579 39,580 40,322 41,549 43,753 Finance cost Other operating funding applications 3,591 3,685 3,477 3,565 3,574 Total applications of operating funding 40,318 43,426 44,011 45,207 47,356 Surplus (deficit) of operating funding 12,758 10,806 13,085 13,166 13,069 Sources of capital funding Subsidies and grants for capital purposes 6,450 9,488 7,811 9,315 9,579 Development and financial contributions Increase (decrease) in debt (1,433) 4,026 (430) (2,120) (854) Gross proceeds from sale of assets 2, , Lump sum contributions Total sources of capital funding 7,120 13,745 10,942 7,257 9,187 Applications of capital funding Capital expenditure - to meet additional demand to improve the level of service 4,176 10,353 4,906 2,700 3,294 - to replace existing assets 11,657 14,550 14,929 17,702 20,058 Increase (decrease) in reserves 5, , (2) Increase (decrease) in investments (1,271) (468) (1,890) (615) (1,363) Total applications of capital funding 19,878 24,551 24,027 20,423 22,256 Surplus (deficit) of capital funding (12,758) (10,806) (13,085) (13,166) (13,069) * Note /2013 Funding Impact Statement above has been prepared off estimated year end numbers * Note /2013 Funding Impact Statement above has been prepared before year end adjustments/procedures 10

11 Financial Strategy Councils Financial Strategy balances a requirement to maintain infrastructure to acceptable standards while recognising the burden that rate increases place on ratepayers. Council has a self-imposed limit on rates increases of the Local Government Cost Index (LGCI) plus 2.5%. Council has adopted strategies to spread the rates burden equitably across current and future ratepayers. These include a just in time approach to infrastructure provision, reflecting the benefits of inter-generational equity where the cost of infrastructure is borne by everyone who benefits from the use of assets, and a targeted rate structure where the user of the service or activity pays for this to the extent it is both possible and equitable. All of these are designed to ensure Council remains financially stable and manages its finances and assets prudently. Council debt at 30 June 2013 is estimated at $169,443 and the forecast for 30 June 2016 is $423,873. This is mostly to pay for capital works. Compliance with the Financial Strategy financial strategy Rate increases are to be no more than the LGCI + 2.5% Rates Increase Year Cpi LGCI LGIC + 2.5% Rates Increase Compliance 2013/ % Ok 2014/ % Ok 2015/ % Ok 2016/ % Ok Borrowings are to be limited to 150% of Councils total revenue Borrowings Cap Year Total Revenue (LTP or Actual) Total Borrowings Borrowing Limit Compliance 2013/ ,986, ,856 98,980,241 Ok 2014/ ,661,672 1,110, ,492,508 Ok 2015/ ,991, , ,987,330 Ok 2016/ ,432, , ,648,114 Ok Accounting method When preparing its financial information Council applies Generally Accepted Accounting Practice (GAAP). One of the key principles of GAAP is to record assets at a fair value. Fair value is either an estimation of market value of assets where it exists, eg forestry assets, or the cost in current dollar terms to replace certain assets where there is no readily available market value, eg roads. Some lesser value assets are valued at historical cost. 11

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