District council's ‘It’s time, Southland' theme has its challenges
"Cost increases have also been reflected in our roading network and pretty much across the board for all the projects identified in our works programme for the year.”
The Southland District Council expenditure was $21m more than budgeted in what Mayor Rob Scott has described as a challenging 2022-23 financial year.
Although he points out that the council’s annual report highlights that its cashflow is good.
The Southland District Council has adopted its Annual Report for 2022/2023 which details the performance of the organisation against targets specified in the Long Term Plan 2021-2031.
Scott acknowledged the challenges the council has faced.
“When the 2021-2031 Long Term Plan was inalised, we were operating in a very low inflationary environment combined with equally low-interest rates.
“The theme of ‘It’s time, Southland’ was all about investing in our infrastructure, with a strong focus on our ageing bridges.”
However, Scott pointed out that at a recent conference in Christchurch, the CEO of the Infrastructure Commission talked about the cost of building a bridge going up over 38% in the past 18 months.
“These kinds of cost increases have also been reflected in our roading network and pretty much across the board for all the projects identified in our works programme for the year.”
There had also been a significant increase in the revaluation of Southland District Council assets, climbing from around $1.6 billion to around $2 billion.
Scott said it did not have a day-to-day cash impact on the council (except for insurance premium increases), from a surplus/deficit point of view but it has put pressure on of running a balanced budget.
“The report highlights that our cashflow is good. However, from a revenue and expenditure point of view we are challenged.
“This is not helped with what we refer to as ‘unfunded mandate’, with a large volume of work coming from central government and no funding to cover it.”
At $105.5 million, total revenue for 2022/2023 was $16 million higher than budgeted as a result of $14.5 million of assets transferred to the council from developers, additional government grants for projects in Manapouri and Te Anau, and increased forestry income as a result of additional harvesting.
Total expenditure was $114.3 million, $21.2 million over budget, primarily due to that higher depreciation costs resulting from the revaluation of roading and three water assets, additional forestry harvesting costs and an updated landfill provision.
Finance costs were less than expected as the council has not begun its investment and borrowing strategy, which will be started in 2023/2024.
The Annual Report includes information about projects, their completion status and actual cost versus budget. The projects include those programmed in the 2022/2023 Annual Plan plus any projects carried forward from previous years or any new projects.
This project information excludes the roading programme.
Of the 2023 projects, overall, 81 (40%) were completed, 7 (3%) were deleted, 18 (9%) were not started, and 97 (48%) were in progress.
Of the 58 service performance targets, 45 (78%) were achieved and 13 (22%) were not achieved.
The Annual Report and accompanying Summary Report can be viewed on SDC’s website here: southlanddc.govt.nz/council/annual-and-long-term-plans/annual-report/