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Financial Summary (Interim) 2010/2011

Bring up this link - TCDC Financials (Interim) 2010/2011 to get a full picture of TCDC's 2010/11 interim financial report that is to be presented to the Council meeting on 10 August.

The summary provides a very good picture of what occurred during the year, and just how our Council ended up with an $10m. surplus.

Significant contributors to this result included Development Contribution Revenue, again - 12%, or $335,000 under budget. Though for some reason some $800,000 is brought into the forecast that  shows late items expected to be brought to account after balance date. The notes indicate that this is "mainly in Whitianga", though the source of this windfall remains unexplained.

Presumably it is something to do with the settlement of amounts that have been disputed by Hopper interests over the years. There is nothing else going on over there that I am aware of - if anyone else can enlighten me, please do. I have in any case always regarded money allegedly owed by Whitianga Waterways as ephemeral until it actually arrives in the TCDC bank account.

Indeed, the abiding optimism of those who set the budget year after year defies belief. They seem to live in different world to the rest of us - they have been consistently under on development contributions month after month for nearly four years. Either they are starry eyed, or incompetent, or both. Or they continue to rely too heavily on the projections provided by the good people from Berl. On the other hand the sudden arrival of $800,000 may serve to prove me wrong on this occasion. Let us hope that is the case.

Assets vested and introduced were down $2.6m under budget - explained as "reflecting the lower level of development as the result of the recession" - yeah, right! No year to date variation % is shown,  though 50% seems to be indicated. The forecast variation is shown as negative 37%.

On the expense side, depreciation is significantly down (10%, or $1.8m) on budget, and remember that these budgets were revised in March.  What this reflects is the dramatic shutdown of capital expenditure that the new Council instructed staff to undertake in order to fulfill the election promises on rates.

Roading was up by $1.6m mainly due to storm damage, but otherwise water, stormwater, wastewater, and solid waste were down by some $10.8m in all, including $2.6m on stormwater. Herein lies the explanation for the $10m surplus - just as I have been saying all along. Anyone who bought the Mayor's spin on savings on operational costs and efficiencies need only dwell on these facts. 

The chickens will eventually come home to roost of course, and the Mayor and Councillors will find, just as many other councils have found, that postponing essential works can be counter productive, though it certainly does make them look good in the interim.  

Finance costs were also up 19%, or $2.9m, though only 11% on forecast. Again they should have been able to do better than that in March. Direct operating expenses are 7% or $3.7m over budget, but only 3% on forecast.

Note also that the Derivative Financial Instruments that I endeavoured to explain in my post of 23 June have ended the year carrying a book loss of $1.158m. It is not explained why this loss was not brought into the March budget revision - it was well telegraphed at the time. As I indicated earlier, this is simply a book loss at this point, and it will go up and down - the trick is to ensure that the ups exceed the downs, and like all gambles, eventually it must be recognised as a charge against ratepayer equity. One can only hope that our Council follows 'best practice', is in receipt of best professional advice, and thereby at all times takes steps to protect ratepayer interests.

It will be interesting to see on Wednesday whether any of these matters attract the interest of Councillors, or whether the accounts are simply adopted without question in the usual manner.




TCDC Financials (interim) 2010/2011

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