Auckland Council Maintains a Strong Credit rating

Strong credit rating reaffirmed for Auckland Council

Despite some strong criticism in some quarters, Auckland Council has retained its strong credit rating from international agency Moody’s Investors Service.

The agency has this week reaffirmed council’s stable Aa2 credit rating. This reflects the council’s ability to service its debt obligations, Group Chief Financial Officer Sue Tindal says.

But the council is not without its challenges, which Ms Tindal acknowledges.

“Auckland is experiencing its biggest population boost in more than 12 years and as a council we need to grow too,” she says.

“In the last year alone, 43,000 people decided to call Auckland home and, in response, we’ve seen demand for our services increase.

“Moody’s reaffirming our credit rating of a stable Aa2 is good news for Auckland and Aucklanders, but our work does not stop here.”

The council has a busy year ahead, with consultation on the 2016/17 Annual Plan beginning in 2016. This will be guided by the council’s Long-term Plan, which allows the city to establish clear borrowing and investment policies and provides a clear strategy for the next 10 years, Ms Tindal says.

Since 2010, when the eight former councils were amalgamated into one, Auckland’s total population has increased by 132,000 people.

In the last year alone, increased work volumes in consenting areas saw building consents up 6 per cent, building inspections rise 5 per cent, and resource consents increase 5.5 per cent. Bringing services in-house has also resulted in savings, such as in animal management, which produced a net saving of about $800,000 a year.

“Our financial strategy sets limits on the council’s borrowing to maintain debt at a sustainable level,” Ms Tindal says. “While total group debt is projected to reach $11.6 billion by 2025, it will still remain at a prudent level in comparison to our annual income of $5.4 billion, by 2025.”

The council considers this increase in debt to be appropriate on the basis that it is primarily driven by investment in new assets and the benefit of the expenditure is spread over time, thereby promoting inter-generational equity – costs are shared with those that benefit from the assets, she says.

 

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