Warning over Council surplus

Hamilton City Council’s return to surplus is commendable but development contributions should not be overly relied upon as a revenue stream to help with balancing the books, according to Property Council Waikato Branch.

Provisional end-of-year results show a surplus of $5 million – which is $8m better than what the Council forecast in its annual plan, thanks to factors including higher interest revenue from cash investments and efficiency savings.

But development contributions of $16.069m are the highest contributor to the favourable result.

Property Council Waikato Branch President Rob Dol says that as a growth charge, development contributions are charged on capital projects. But the timing and number of those projects are often misaligned with Council projections.

“It wasn’t very long ago, after being warned about its unsustainable revenue projections derived from development contributions, that Hamilton City Council was caught short in the Global Financial Crisis when development slowed. Ratepayers were forced to pay interest on a wall of debt.

“Development contributions should not be a performance indicator for the success of the Council’s book-balancing.”

Mr Dol says despite this, Hamilton City Council should be congratulated for its focus on better financial management.

“There has been a massive improvement over the past few years but there are challenges ahead – not just in improving its development contributions policy but about how new infrastructure is funded and whether the city can attract investment and rejuvenate the city centre.”

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