Media Release

26 April 2012

Council pleased with excellent credit rating

International Credit Rating Agency Standard and Poors has given Whangarei District Council an excellent credit rating, AA-.

The rating is the same as that of New Zealand’s major banks, one step lower than that of the New Zealand government, and in the top tier of New Zealand’s local government sector.

Finance and Support Committee Chairman Warwick Syers said the rating was an excellent result, and confirmation of Council’s robust financial management practices.

“It means anyone can see that when judged against a wide range of internationally benchmarked criteria, our practices make us a safe, secure and well managed organisation," he said. “This reinforces our advantages when seeking low-interest borrowing from the recently formed Local Government Funding agency (set up to enable councils to use their combined asset bases and credit ratings to borrow at much lower interest rates). The Standard and Poors rating allows us to secure very low interest rates.

“For ratepayers it is further confirmation, on top of Audit New Zealand’s annual inspection of our financial management, that WDC's finances are being managed to a very high standard.

Council Group Manager Alan Adcock said Standard and Poors evaluated Council's financial policies and practices, budgetary performance, liquidity, debt burden and revenue drivers against local government peers, both domestically and internationally.

“Like all honest report cards the assessment provides an objective description of our strengths as well as some areas we can keep improving.

“New Zealand has one of the strongest regulatory, disclosure and financial planning frameworks for local government in the world, which automatically ensures we are in a good position, and this independent review confirms that we operate well within the boundaries of that framework,” Mr Adcock said.

“The agency said WDC’s key strength is our financial management, and that we often exceed legislative requirements. It made particular note of Sustainable Futures 30/50, our plan for the future direction of development in the District for the next 30 to 50 years.

“It said budgetary flexibility is high, which means we can adjust our spending when there are changes in our income, and noted that we restrict rates rises to the Local Government Cost Index, a conservative policy, and that we have a and reliable income base.

“The agency did comment on debt, particularly noting an increase next year to accommodate the Lower Hatea River Crossing and the Ruakaka South Sewerage Extension projects, however this debt is to secure valuable assets and it is expected to level off.

“The agency also commented on our budgetary performance. The background to this is that we receive income from Central Government for specific capital projects which cannot be used to off-set debt, and it is also difficult to predict with certainty income from development contributions. That said, our strengths off-set these weaknesses sufficiently for us to be allocated a AA- rating.

“All in all, the result confirms that council has a clear financial strategy, that is an appropriate strategy given the resources of the District, and that we are sticking to it.”

ends

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