Budget 2011/12

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Section 4: Financial Statements

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In the years where no Community Plan is produced a local authority is required to produce forecast financial statements for the forthcoming financial year’s plan. This annual statement or programme of work explains what and why activities are engaged in, the net cost of each activity, sources of funds to cover the estimated expenses, together with financial statements. Its aim is to ensure that adequate planning is undertaken to meet infrastructural demands, whether arising from growth and development, or to maintain existing investment adequately. The nature of the forecast financial statements is to formulate a blueprint for the future in financial terms of the plan – it reflects both financial and strategic input.

This section includes the following:

• Financial assumptions.
• Balancing the Budget.
• Prospective Financial Plan (prospective financial statements).
• Statement of Accounting Policies.
• Funding Impact Statement.
• Rating System and Impact on 2011/12 Overall Funding Levels.

The Council’s prospective financial statements explain to the community the intended strategy for the 2011/12 year based on current information, policies, strategic direction and the assumptions on which it was prepared.

The current strategy was adopted concurrently with the Community Plan 2009-2019 (Community Plan). For 2011/12, this is reflected in the rating requirement on page 107.

There is a clear intention under the Local Government Act 2002 that the prospective financial statements will reflect the assumptions, objectives and anticipated outcomes set down in the other policies (Revenue and Financing Policy, Liability Management Policy, Investment Policy, Policy on Development Contributions or Financial Contributions, Policy on Partnerships between the Local Authority and the Private Sector, Policy on the Remission and Postponement of Rates on Mãori Freehold Land, and rating policies) and with consistency between policy documents.

Budget 2011/12, and a significant portion of its content, is derived from the forecast financial statements, and a variety of other plans, significant reports and documents in the Community Plan 2009-2019.

Prospective financial statements

The following pages present the financial budgets of the Council for the 2011/12 financial year. In particular, the following information is presented:

• A summary of the practices and assumptions used in preparing the financial information.
• The sources of income and where it is planned to be spent.
• The effect of the planned income and expenditure on the overall net worth of the Council.
• What the Council owns and owes.
• The prospective cash payments and receipts.
• Additional supporting information.

The prospective financial statements are based upon best-estimate assumptions and information available to New Plymouth District Council as at March 2011. While every care has been taken in the preparation of these prospective financial statements, the actual results are likely to differ. These differences may be material.

This information has been prepared for the Council’s budgeting and financial planning purposes. It may therefore not be appropriate to be used for any other purpose.

The prospective financial statements comply with the requirements of FRS-42 issued by the
New Zealand Institute of Chartered Accountants.Return to top

Financial Assumptions

The budgets for future years may be changed by appropriate Council resolution.

This section outlines the key financial assumptions used in this document. Refer to Section 4 ‘Our Future Challenges’, page 27 in Volume 1 of the Community Plan 2009-2019.

Levels of service

Unless otherwise stated in the activity sections, service levels are generally assumed to remain the same. Changes in service levels are shown in the individual activity sections as operating programmes and new capital programmes. Customer expectations regarding levels of service may change.

Level of uncertainty - Low.

Rating base

It is assumed that expansion of the rating base due to new subdivisions will be $0.12 million per year. This is based on past experience and anticipated population growth.

Level of uncertainty - Low.

Interest rates

Interest on cash investments and borrowing has been estimated at 3.00 per cent and 6.50 per cent respectively. Loan terms are assumed at 25 years unless otherwise indicated.

Level of uncertainty - Medium.

New Zealand Transport Agency subsidy rates

New Zealand Transport Agency subsidy rates are assumed to continue at existing rates - operating expenditure 51 to 100 per cent, improvements 61 to 100 per cent.

Level of uncertainty - Low.

Development Contributions and Borrowing

Given the current economic uncertainties the funding anticipated from development contributions has not been budgeted for in the prospective financial statements and has been covered by additional borrowing as the relevant expenditure occurs. As development contributions are actually received they will be netted off any borrowing made for that purpose.

Level of uncertainty - Medium.

Inflation

All amounts include, where applicable, inflation based on the Council’s own knowledge of its business base and on Business and Economic Research Limited (BERL) predictions (October 2010 release) for the 10 years in accordance with the table below. The rates applied below are midpoint average indices between years.

Level of uncertainty - Low.Return to top

	Balance Sheet assets
Year	Road	Property	Pipeline	Other
LTCCP 2009/10	4.10%	2.47%	6.22%	2.60%
LTCCP 2010/11	3.09%	2.90%	3.33%	3.33%
LTCCP 2011/12	2.91%	2.91%	2.96%	2.78%
Budget 2011/12	3.05%	3.34%	4.59%	3.50%

 

	All costs and revenues
Year	Energy	Staff	Other	Contractors	Professional services	First year	NZTA Escalator 1
LTCCP 2009/10	10.00%	4.00%	2.60%	0.00%	2.60%	10.00%	New category for 2010/11
LTCCP 2010/11	2.15%	2.59%	3.33%	3.33%	3.33%	3.33%
LTCCP 2011/12	2.47%	2.71%	2.78%	2.78%	2.78%	2.78%
Budget 2011/12	3.00%	3.50%	3.50%	3.50%	3.50%	0.00%	0.00%

Council’s key financial strategies

The Council’s key financial strategies are based on affordability of service improvements, sustainable borrowing and rate increases over the term of the Community Plan. Apart from unfunded depreciation, operating costs are to be met from operating revenues and rates.

The Council maintains funding for the replacement of significant assets from operating revenues and rates. Refer to the Council’s Revenue and Financing Policy in Volume 2 of the Community Plan 2009-2019.

Cash and borrowings have not been offset in the prospective financial statements. The Council will manage cash and borrowings in accordance with the Liability Management Policy and forecast requirements.

The Council funded a reduced level of loan principal repayments on wastewater and solid waste loans for the two years from 2009/10. Principal repayments will recommence in 2011/12 and from 2012/13 at a higher level to maintain the 25 year loan terms.

The plan has been prepared on a basis consistent with current key financial strategies.

Level of uncertainty - Low.

Rates remissions

The Council allows for rates remissions in terms of the Council’s rate remission policy in Volume 2 of the Community Plan 2009-2019. Remissions have been estimated at $1.1 million.

Level of uncertainty - Low.

Asset sales

Other than for some surplus properties, no major or surplus asset sales have been allowed for in the plan, but the Council will keep this option under continual review.

Level of uncertainty - Low.

Investments

The Council is able to sell or convert any of its investments in accordance with its Investment Policy. Listed equity and security investments are re-valued at the conclusion of each financial year using fair value based on the NZDX values.

Foreign currencies vary in value, over time, against the NZ$ and the variations impact on the value of the investments concerned and their returns. Foreign currency exposure will be monitored by Taranaki Investment Management Limited (TIML) in line with its investment policies for the Perpetual Investment Fund (PIF).

The investment fund is expected to earn 9.5 per cent per annum on average over the 10 years. The Council and TIML have agreed on a sustainable release rule that results in a release for 2011/12 of $19.5 million plus attributed costs funded from the investment fund.

Level of uncertainty - Medium.Return to top

Perpetual Investment Fund

The release rule for the PIF is a formula that determines the annual release to be made from the PIF ahead of the year it will apply to. It has two components:

• Eighty per cent of the previous year’s release, inflation adjusted for the year prior to that to be budgeted for; plus
• Twenty per cent of a 5.6 per cent portion of the year-end audited capital value of the PIF, inflation adjusted for the year prior to that to be budgeted for.

The 5.6 per cent is a long-term release target that strikes a balance between the sustainability of the annual release and the real capital value of the PIF.

The release rule smoothes the potential annual fluctuations that would otherwise occur if a straight percentage of annual value was used. As such it provides greater certainty for the Council on annual release levels for budgeting purposes.

Level of uncertainty - Medium.

Revaluation of non-current assets

Non-current assets are periodically revalued (refer to the Statement of Accounting Policies). The most recent revaluation was June 2008 and the next programmed revaluation will be June 2011.

It is assumed that significant PPE assets will achieve the useful lives outlined in the Statement of Accounting Policies.

Level of uncertainty - Low.

Depreciation on asset acquisitions

The depreciation rate used for asset acquisitions is based on the asset class into which the asset falls in accordance with asset management plans. The actual rate of depreciation applied to acquisitions will differ if assets are reclassified.

Level of uncertainty - Low.

Adoption of Council policies

Council policies may change at any time during the period covered by the prospective financial statements. The prospective financial statements are based on existing policies.

Level of uncertainty - Low.

Capital structure

The Council’s capital structure will not change significantly over the period of the Community Plan except for an increase in public debt commensurate with the acquisition of PPE assets. There is no intention on the part of Council to realise investments to repay public debt.

Level of uncertainty - Low.

Significant contingencies/commitments

The Council has undertaken an investment and management review of its camping grounds. Key issues considered included increased investment by the Council and operators, and potential redevelopment and/or closure of some camp grounds. The impacts of that review were included in the final Community Plan.

Level of uncertainty - Medium.

An Emissions Trading Scheme (ETS) was passed into law by Parliament on 26 September 2008 and amended by the government in late 2009. The ETS creates obligations to limit greenhouse gas emissions for a wide range of activities in New Zealand including some activities undertaken by local government.

An ETS is likely to have financial implications for future Council budgets. Other than for known price increases (e.g. energy) a contingency figure has not been included in the Council’s forecasts at this stage because of the level of uncertainty. However the Council has included an estimated cost for ETS for solid waste of $0.75 to $1.89 million per annum from 2012/13.

Level of uncertainty - Medium.Return to top

The Council resolved on 30 March 2004 to offer the ‘Waitara Leasehold Land’ (as defined in the resolution) to the Crown, subject to certain conditions. Some of those conditions are that:

• The Waitara Leasehold Land be included in the Crown’s offer to settle historical Treaty claims.
• The Council receive a fair market value for the Waitara Leasehold Land.
• That the rights of leaseholders under existing leases are preserved.
• Settlement legislation be passed freeing the Waitara Leasehold Land from its statutory trusts and restrictions.
• The sale not take place until such legislation had passed.

Since the decision:

• Litigation by leaseholders seeking to have the Council’s decision overturned, has been unsuccessful.

• Protracted litigation continues with approximately 10% of leaseholders seeking damages as a result of the Council’s decision. A recent High Court decision in the Council’s favour has been appealed. It is anticipated that the appeal will be heard in 2011.
• A sale and purchase agreement, which incorporates the conditions set out above, was entered into with the Crown in September 2010.

Level of uncertainity - Medium.

The Council has resolved to sell its fee simple interest in any part of the Junction Rd endowment land, subject to:

• Compliance with any statutory requirements (and in particular, but not limited to, section 141 of the Local Government Act 2002 and section 40 of the Public Works Act 1981).
• Compliance with the Council’s Approval of Properties for Sale Policy (P05-019), where appllicable.
• Agreement being reached on terms acceptable to the Council’s Chief Executive (including an acceptable purchase price).

The proceeds of any sale of any part of the Junction Rd endowment land will be used by the Council for the purposes specified in section 4 of the Taranaki County Reserves Act 1966.

Level of uncertainty - Medium

The Council raised loan finance during 2008/09 of
$3.4 million for the New Plymouth Airport Joint Venture for the purposes of runway refurbishment. This loan will be repaid from operating cashflows from the New Plymouth Airport Joint Venture.

Level of uncertainty - Low.

Although insurance cover is arranged where appropriate and possible, to mitigate the potential costs of major adverse events, the Council has arranged credit lines with its bankers and is a member of the Local Authorities Protection Plan (LAPP).

Level of uncertainty - Low.

The Council is not aware of any other additional contingencies or commitments not already covered by the prospective financial statements and/or asset management plans.

Risks

The following are the key risks underlying the forecast financial statements:

• Interest rates, credit exposure and renewability of external borrowings.
  The Council manages these risks in accordance with the Liability Management Policy and maintains an annually reviewed rating from Standard and Poors. The level of uncertainty is considered to be low.
• Unforeseen event causing major budget disruption and/or impact on borrowing requirements. The Council has certain strategies in place to manage these risks (insurance cover, credit lines etc). The level of uncertainty is considered to be low.
• PPE assets do not achieve their economic lives.
  The Council has, and continues to develop, appropriate asset management plans together with regular inspection and other management practices to manage these risks. The level of uncertainty is considered to be low.
• Investment income and values.
  The Council manages these risks in accordance with the Investment Policy. The PIF and the ‘release rule’ are governed under contract with TIML. The Council will respond appropriately at the time. The level of uncertainty is considered to be medium.
• Additional import of responsibilities from central government.
  This may occur through changing legislation or service delivery. The level of uncertainty is considered to be medium.
• Population factors.
  These may impact the significant activities through growth, lifestyles and population movement. The level of uncertainty is considered to be medium.
• Technology risks/opportunities.
  These have the potential to influence the useful life of assets. However as most of the value of the Council’s PPE assets is in infrastructural assets the level of uncertainty is considered to be low. Return to top

Balancing the Budget

The Local Government Act 2002 requires that where the Council has resolved, under Section 100(2), not to balance its operating budget in any year covered by the plan, the Council must include a statement of the reasons for the resolution and any other matters taken into account and the implications of the decision. Over the 2009-2019 Community Plan period the budgets have been balanced, but depreciation is not fully funded on the following assets. Details are:

• Depreciation on long-life assets

The fundamental purpose of accounting for depreciation is to reflect the cost of use of fixed assets in each financial year, measured by the amount of economic benefit consumed. Historically, depreciation has been used as a means by which funding is provided for the replacement of depreciating assets and, where fiscally possible, the repayment of intergenerational debt.

Depreciation charges do not always provide a reasonable model for funding asset renewal. This is particularly relevant to assets which have long useful lives and are intergenerational in nature. Infrastructure assets with long lives (greater than 50 years and up to 200 years lifespan) make up 70 to 95 per cent of total asset replacement cost values across the range of Council activities. A ‘whole-of-life’ (or life-cycle) approach to asset appraisal, intergenerational benefit and funding perspectives has been adopted to support fiscal policy and enable the achievement of sustainable asset investments. Infrastructure assets with useful economic lives of greater than 50 years have been considered for delayed cash funding (i.e. unfunded depreciation in earlier years) in order to better match the funding of renewal to the beneficiaries of the renewal. Delayed cash funding has been adopted for those long life assets that are up to and no more than 40 per cent through their life-cycle. Risks associated with this approach are considered to be low due to a combination of mitigations, namely:

• A small but positive net cash position has been adopted and maintained to ensure that sufficient resources are available for renewals over the plan period.
• No significant ‘humps’ of renewal expenditure are projected over the next 20 years.
• The furtherance of asset inspection and ongoing maintenance programmes will enable the update and review of asset life-cycle perspectives, which in turn will help to improve and support management strategies and practices associated with planning for renewals.
• While it is accepted that such forecasts have a degree of uncertainty, assumptions and analysis are based upon the best information currently available to the Council. As ongoing monitoring and asset assessments progress, it is expected that the Council will improve its practice further moving forward.

• Depreciation on roading assets is further unfunded by $4.37 million. This unfunded amount is the estimated financial assistance that is expected to be received from the New Zealand Transport Agency as contribution towards renewal of assets when those assets are renewed.
• Depreciation on Puke Ariki fitout is unfunded by $0.36 million. These assets were funded by external parties and it is anticipated a significant contribution will continue to be provided from external parties for funding replacement.

The level of unfunded/deferred depreciation is shown in the financial statements of each affected Council activity.Return to top

Prospective Financial Plan

Prospective Financial Plan (based on the 2011/12 budgets)

	LTCCP 2010/11 ($m)	LTCCP 2011/12 ($m)	Budget 2011/12 ($m)
Operations
Activity expenditure
Cultural Services	13.84	14.35	14.90
Community Development	6.64	6.76	6.50
Recreation and Events	9.04	9.33	11.97
Parks	15.49	16.20	16.51
Roads	23.50	24.75	22.10
Solid Waste and Refuse Collection	4.01	4.11	4.07
Stormwater	2.78	3.07	2.85
Water	10.55	10.99	10.74
Wastewater	12.93	13.47	13.73
Regulatory Services	9.81	10.37	10.01
Emergency Management & Business Continuance	0.39	0.40	0.39
Economic Growth	2.73	2.81	2.87
Civic and Democracy Services	6.32	6.27	5.60
Management of Investments:
- External operating costs	3.43	4.02	2.43
- Net internal operating costs	0.57	(0.09)	0.01
Total activity expenditure	122.03	126.81	124.68
Activity revenue
Cultural Services	(2.05)	(3.08)	(3.94)
Community Development	(1.26)	(1.29)	(1.12)
Recreation and Events	(3.06)	(3.10)	(4.85)
Parks	(2.35)	(2.35)	(2.86)
Roads	(10.11)	(10.39)	(11.21)
Solid Waste and Refuse Collection	(3.90)	(3.98)	(4.44)
Stormwater	(0.02)	(0.03)	(0.03)
Water	(4.29)	(4.56)	(4.25)
Wastewater	(1.42)	(1.48)	(1.81)
Regulatory Services	(7.14)	(7.29)	(7.83)
Civic and Democracy Services	(0.16)	(0.04)	0.00
Management of Investments:
- External operating revenues	(26.20)	(26.30)	(24.78)
- Net internal operating revenues	(0.34)	(0.34)	(0.37)
Total activity revenue	(62.30)	(64.23)	(67.49)
Appropriations and reserves
Capital contributions	5.26	5.34	6.62
Depreciation unfunded/deferred	(8.03)	(8.41)	(11.17)
Transfer to reserves	3.49	4.72	6.51
Transfer from reserves	(0.53)	(0.15)	(0.43)
Total appropriations and reserves	0.19	1.50	1.53
Rates requirement for operations	59.92	64.08	58.72
Capital Expenditure
Renewals
Cultural Services	1.29	1.00	1.01
Community Development	0.07	0.08	0.08
Recreation and Events	0.84	1.15	1.12
Parks	3.24	5.73	2.80
Roads	8.87	9.11	8.15
Solid Waste and Refuse Collection	0.02	0.02	0.01
Stormwater	2.37	1.97	1.52
Water	2.23	1.96	2.12
Wastewater	4.01	3.88	5.25
Regulatory Services	0.06	0.06	0.06
Internal services	2.70	3.01	2.43
Total renewals	25.70	27.97	24.55
Improvements
Cultural Services	0.16	0.17	0.17
Recreation and Events	0.07	0.07	0.04
Parks	1.71	1.55	0.58
Roads	3.08	3.16	5.26
Solid Waste and Refuse Collection	0.60	0.34	0.32
Stormwater	1.96	1.89	1.43
Water	0.79	0.37	0.53
Wastewater	2.64	7.97	13.69
Regulatory Services	0.04	0.44	0.44
Internal services	0.56	0.40	1.49
Total improvements	11.61	16.36	23.95
Total loan repayments	3.52	3.10	4.52
Total capital expenditure	40.83	47.43	53.02
Capital funding
Capital contributions	(5.26)	(5.34)	(6.62)
Corporate loan	(9.50)	(14.47)	(17.99)
Other	(0.30)	(0.46)	(2.76)
Total capital funding	(15.06)	(20.27)	(27.37)
Net cost of capital activities	25.77	27.16	25.65
Appropriations and reserves
Transfer to reserves	0.00	0.29	0.29
Transfer from depreciation reserves	(21.74)	(23.18)	(20.21)
Transfer from other reserves	(0.69)	(0.64)	(0.69)
Total appropriations and reserves	(22.43)	(23.53)	(20.61)
Rates requirement for capital	3.34	3.63	5.04
RATES and funding REQUIREMENT
Rates requirement for operations	59.92	64.08	58.72
Rates requirement for capital	3.34	3.63	5.04
Total rates and funding requirement	63.26	67.71	63.76

Prospective Statement of Comprehensive Income

	LTCCP 2010/11 ($m)	LTCCP 2011/12 ($m)	Budget 2011/12 ($m)
Revenue
Rates	63.26	67.71	63.75
Dividends/realised gains	21.60	21.70	19.50
Interest income	3.12	3.04	4.03
Income for capital purposes	5.26	5.34	6.62
Other income	32.32	34.15	37.36
Revenue and rates per Prospective Financial Plan	125.56	131.94	131.26
Vested assets	1.48	1.53	1.45
Total revenue	127.04	133.47	132.71
Expenditure
Depreciation	29.63	31.33	29.61
Interest expense	8.10	9.34	9.64
Other operating expenditure	84.30	86.14	85.42
Provision for taxation	0.00	0.00	0.00
Expenditure per Prospective Financial Plan	122.03	126.81	124.76
Loss on forestry revaluation	0.05	0.05	0.05
Total expenditure	122.08	126.86	124.72
Surplus/(deficit)	4.96	6.61	7.99
Other Comprehensive Income
Gains on infrastructure assets revaluation	156.12	0.00	0.00
Gains on PIF investments	4.14	4.50	3.02
Total other comprehensive income	160.26	4.50	3.02
Total comprehensive income	165.22	11.11	11.01

 

Prospective Statement of Changes in Equity

	LTCCP 2010/11 ($m)	LTCCP 2011/12 ($m)	Budget 2011/12 ($m)
Equity at start of period	2,095.86	2,261.08	2,211.42
Total comprehensive income	165.22	11.11	11.01
	2,261.08	2,272.19	2,222.43

Note: The Prospective Statement of Changes in Equity has been adjusted to reflect the actual opening position at 1 July 2010, external loans recalibration and carry forwards to 2010/11.Return to top

Prospective Statement of Financial Position

	LTCCP 2010/11 ($m)	LTCCP 2011/12 ($m)	Budget 2011/12 ($m)
Current assets
Cash and cash equivalents	15.02	20.09	28.64
Trade and other receivables	9.39	9.85	10.26
Other financial assets	1.06	1.06	4.68
Other current assets	0.65	0.65	1.50
Total current assets	26.12	31.65	45.08
Non-current assets
Other financial assets	304.10	308.60	262.47
Intangible assets	1.57	1.59	3.51
Biological assets	2.51	2.46	2.58
Property, plant and equipment	2,087.16	2,101.20	2,075.41
Total non-current assets	2,395.34	2,413.85	2,343.97
Total assets	2,421.46	2,445.50	2,389.05
Current liabilities
Trade and other payables	20.25	21.31	23.16
Other current liabilities	0.01	0.01	0.00
Public debt and other loans	3.10	4.28	54.22
Total current liabilities	23.36	25.60	77.38
Non-current liabilities
Public debt (net)	133.60	144.29	85.85
Other non-current liabilities	3.42	3.42	3.39
Total non-current liabilities	137.02	147.71	89.24
Public equity
Special funds/reserves	24.61	28.57	35.83
Asset revaluation reserves	664.17	668.67	668.44
Retained earnings	1,572.30	1,574.95	1,518.16
Total public equity	2,261.08	2,272.19	2,222.43
Total equity and liabilities	2,421.46	2,445.50	2,389.05

Note: The Prospective Statement of Financial Position for Budget 2011/12 has been adjusted to reflect the actual opening position at 1 July 2010, external loans recalibration and carry forwards to 2010/11.

TET Funding Applications
The Council has allocated the following budget to allow application for TET funds:
1. Lighting from Urenui Domain to Yandel Park $60,000.
2. Windsor Walkway, Inglewood Stage 3 $60,000.
Return to top

Prospective Statement of Cashflow

	LTCCP 2010/11 ($m)	LTCCP 2011/12 ($m)	Budget 2011/12 ($m)
Operating activities
Cash provided from:
- Rates	63.12	67.60	63.67
- Investment income	24.72	24.74	23.53
- Other income	37.39	39.25	43.44
	125.23	131.59	130.64
Cash applied to operating costs	88.33	95.16	91.12
Net cash from operating activities	36.90	36.43	39.52
Investing activities
Cash provided from sales of assets/investments	4.60	4.76	6.86
Cash applied to purchases of assets/investments	41.31	47.99	51.43
Net cash from investing activities	(36.71)	(43.23)	(44.57)
Financing activities
Cash provided from loans	9.50	14.47	17.70
Cash applied to loans repaid (net)	3.02	2.60	3.65
Net cash from financing activities	6.48	11.87	14.05
Overall increase/(decrease) in cash held	6.67	5.07	9.00
Add opening balance	8.35	15.02	19.64
	15.02	20.09	28.64

Note: The opening balance for Budget 2011/12 has been adjusted to reflect the actual opening position at 1 July 2010.

Statement of Accounting Policies

Reporting entity

1. New Plymouth District Council (the Council) is a territorial local authority governed by the Local Government Act 2002.
2. The primary objective of the Council is to provide goods or services for the community or social benefit rather than making a financial return.
3. For the purposes of the plan, the prospective financial statements (financial statements) cover all the activities of the Council as a separate entity. A consolidation including the Council’s beneficial interest in its Council-controlled organisations, joint ventures and associated entities is not provided.
4. The financial statements have been prepared in accordance with the requirements of the Local Government Act 2002 and New Zealand Generally Accepted Accounting Practice (NZ GAAP).
   The Council is applying NZ IFRS. The Council is a public benefit entity (PBE) and has applied the PBE exemptions available under NZ IFRS.
5. The prospective financial statements include Activity Cost of Service Statements, Financial Plan, Comprehensive Income Statement (Income Statement), Statement of Movement in Equity, Statement of Financial Position (Balance Sheet) and Cashflow Statement.
6. The prospective financial statements of the Council are for the year ending 30 June 2012.
7. The accounting policies set out below have been applied consistently to all periods presented in these prospective financial statements.
8. There are no standards, interpretations, and amendments that have been issued, but are not yet effective, that the Council has not yet applied. Return to top

Measurement base

The prospective financial statements have been prepared on a historical cost basis, modified by revaluation of certain assets and liabilities. The prospective financial statements are presented in New Zealand dollars and all values are rounded to the nearest million dollars. The functional currency of the Council is in New Zealand dollars.

Accounting policies

The following accounting policies which materially affect the measurement of results and financial position have been applied.

1. Goods and Services Tax
   
   The prospective financial statements have been prepared exclusive of Goods and Services Tax, with the exception of receivables and payables which are stated inclusive of the Goods and Services Tax at current rates in the Balance Sheet.
    
2. Allocation of overheads
   
   All overhead expenses have been allocated to significant activities. A variety of methods have been used appropriate to the overhead concerned. Examples include space utilised, staff numbers, transaction numbers, estimate of time and expenditure and funds required from rates.
    
3. Operating lease payments
   
   Operating lease payments, where the lessors effectively retain substantially all the risk and benefits of ownership of the leased item, have been charged as expenses in the periods in which they are incurred.
    
4. Revenue
    
   • Revenue is measured at the fair value of consideration received.
   • General revenue is recognised at the time of invoicing, performance of service or receipt of application of service or licence and by reference to the stage of completion of the transaction at balance date, based on the actual service provided as a percentage of the total services to be provided.
   • Rating income is recognised when assessments are issued or penalties incurred.
   • Levies are recognised when assessments are issued.
   • Government grants are recognised when eligibility has been established by the granting agency.
   • Interest earned is recognised on an accrual basis.
   • Dividends are recognised when received or accrued if the record date is 30 June or prior.
   • Vested assets are recognised at fair value on the vesting of the assets.
   • Financial contributions (other than those in the Policy on Development Contributions) are recognised when the service is provided.
   • Water billing revenue is recognised on an accrual basis. Unbilled sales, as a result of unread meters at year end, are accrued on an average usage basis.
   • New Zealand Transport Agency roading subsidies are recognised as revenue upon entitlement, which is when conditions pertaining to eligible expenditure have been fulfilled.
      
5. Financial assets
   The Council classifies its financial assets into the following two categories:
   
   
   • Financial assets at fair value through profit or loss; and
   • Held-to-maturity investments.
     
     The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date.
     
   Return to top
   
   The two categories of financial assets are:
   
   
   • Financial assets at fair value through profit or loss
     
     A financial asset is classified in this category if acquired principally for the purpose of inclusion in the Council’s Perpetual Investment Fund or if so designated by management. Assets in this category are classified as non current assets as there is no plan to dispose of them within 12 months of balance sheet date unless market conditions make it profitable, or prudent, to do so.
     
     After initial recognition they are measured at their fair values. Gains or losses on re-measurement are recognised in the Income Statement. Financial assets in this category include quoted shares, bonds, private equity funds and share options. The Perpetual Investment Fund is independently valued annually. The most recent revaluation was undertaken by TA Group Private Banking Services Limited, Auckland as at 30 June 2010.
      
     
   • Held to maturity investments
     
     Held to maturity investments are assets with fixed or determinable payments and fixed maturities that the Council has the positive intention and ability to hold to maturity.
     After initial recognition they are measured at historic cost. Gains and losses when the asset is impaired or de-recognised are recognised in the Income Statement.
     Investments in this category include local authority stock and interest bearing bonds.
     
     
6. Impairment of financial assets
   
   At each balance date the Council assesses whether there is any objective evidence that a financial asset or group of financial assets is impaired. Any impairment losses are recognised in the Income Statement.
    
7. Financial instruments
   
   Revenue and expenditure in relation to all financial instruments are recognised in the Income Statement. All financial instruments are recognised in the Balance Sheet. The Council and its subsidiaries are risk averse and seek to minimise exposure arising from its Treasury activity. Except for those items covered by a separate accounting policy, all financial instruments are shown at their fair value.
    
8. Inventory
   
   Inventories are valued on the basis of the lower of cost, determined on a weighted average cost basis, and current replacement cost. This valuation includes allowances for slow moving and obsolete inventories.
    
9. Trade and other receivables
   
   Accounts receivable are valued at expected fair value. All known bad debts have been written off during the period under review. As there are statutory remedies to recover unpaid rates, penalties and water meter charges, no provision has been made for impairment in respect of rates receivables
    
10. Properties intended for sale
    
    Properties no longer required in the Council’s operations and therefore intended for sale, have been valued at the lower of carrying amount and fair value less selling costs. These are tested for impairment on an annual basis.
     
11. Property, Plant and Equipment (PPE)
    
    Property, Plant and Equipment are included at their valuation as at 30 June 2008 with subsequent additions recorded at cost. All PPE were valued by Council staff except where specifically identified. Independent reviews were carried out as at 30 June 2008, to confirm that the methodology used is in accordance with NZ IAS 16, and conforms to accepted valuation methods.
    
    All PPE (other than operational plant, vehicles, work-in-progress, furniture and fittings which are not re-valued) are re-valued at fair value by reference to their depreciated replacement cost or market value on a class basis at least every three years. The carrying value of revalued assets are reviewed at each balance date to ensure that these are not materially different to fair value. Any surplus arising on revaluation is credited to a revaluation reserve for that class. Any deficit is charged against the revaluation reserve, or if not available, expensed in the Income Statement
    
    
    • Infrastructural assets are fixed utility systems providing continuing service to the community, e.g. roads, water or sewerage systems. The infrastructural assets are valued at Depreciated Replacement Cost (DRC) as at 30 June 2008 and will be revalued on the same basis three yearly thereafter. Additions in the intervening years are included at cost.
      
      Independent valuations were carried out as follows:
      John Freeman, FPINZ, TechRICS, MACostE,
      Registered Plant and Machinery Valuer CB Richard Ellis Ltd
      
      : Water treatment plants
      : Water reservoirs
      : Water pumping stations
      : Wastewater treatment plants
      : Wastewater pump stations
      : Roading network
      : Reticulation network
      OCEL
      : Coastal structures
      : Stormwater diversion tunnel
      : Stormwater detention dams
      
      Roads include derived values for land not held on title (road reserve). The average value of the road reserve is the current average land value calculated for each government roll number. The following factors have been applied:
      
          Unformed roads 50% of average value
          Formed roads (urban) 80% of average value
          Formed roads (rural) 60% of average valueReturn to top
      
       
    • Operational assets are tangible assets that are used as part of the normal operations of the Council.
    • Plant, vehicles, furniture and fittings were re-valued as at 30 June 1999 at fair value. The Council has, in terms of NZ IAS 16, ceased to revalue these assets for cost-benefit reasons. Additions to these assets since 30 June 1999 are disclosed at depreciated cost.
    • Land and uncomponentised buildings have been valued at fair value as at 30 June 2008 by Ian Baker FNZIV, FPINZ, Registered Valuer, Telfer Young Ltd and will be revalued on the same basis three yearly thereafter by a registered valuer.
    • Restricted assets are assets which cannot be disposed of due to legal or other restrictions, and that provide a benefit or service to the community.
    • The Puke Ariki museum collection and the Govett-Brewster Art Gallery collection have been valued at fair value as at 30 June 2008 by Dr Robin Watt MA (Hons) Ph.D, R J Watt and Associates (Puke Ariki) and Sophie Coupland, Emma Fox, Jessica Pearless, Erika Chamberlain, Peter Webb Galleries Limited (Govett-Brewster Art Gallery) and will be valued by suitably qualified experts on a three yearly basis thereafter.
    • The Puke Ariki book collection has been valued as at 30 June 2008 by Dr Robin Watt MA (Hons) Ph.D, R J Watt and Associates and will be valued by a suitable expert on a three yearly basis thereafter. The heritage book collection has been valued at replacement cost and the general in use collection has been valued at depreciated replacement cost.
    • Restricted land has been valued at fair value as at 30 June 2008 by Ian Baker FNZIV, FPINZ, Registered Valuer, Telfer Young Ltd and will be valued on the same basis three yearly thereafter by a registered valuer.
    • Work in progress has been valued at lower of net realisable value or cost.
    
     
12. Additions
    
    The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits or service potential associated with the item will flow to the Council and the cost of the item can be measured reliably
    
    In most instances, an item of property, plant and equipment is recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition.
     
13. Disposals
    
    Gains and losses on disposal are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are included in the Income Statement. When revalued assets are sold, the amounts included in asset revaluation reserves in respect of those assets are transferred to retained earnings.
     
14. Subsequent costs
    
    Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to the Council and the cost of the item can be measured reliably
     
15. Depreciation
    
    
    • Operational assets are depreciated on a straight line basis on the following rates:
       

      Buildings	1% or 5%	20 to 100 years
      Plant and vehicles	5% to 33%	3 to 20 years
      Furniture, fittings and equipment	10% to 33%	3 to 10 years

      
      The Puke Ariki library heritage collection is not depreciated as it is Council policy to maintain the collection in its current state. The general in use collection is depreciated on a straight line basis over 2-15 years.
      
      The museum/art gallery collections are heritage assets and are not depreciated as it is Council policy to maintain the collections in their current state.
      
      Land is not depreciated.Return to top
       
    • Infrastructural assets are depreciated on a straight-line basis. The useful lives are as follows:
       

      	(years)
      Roads
      : Top surface	5-25
      : Water channel	40-80
      : Culverts	40-80
      : Footpaths/crossings	10-100
      : Kerbs	40-80
      : Signs	5-10
      : Traffic signals	10-30
      : Streetlights	30-40
      : Road structures	40-100
      Water
      : Pipes	50-120
      : Pump stations	30-80
      : Reservoirs	30-100
      : Treatment plants - civil	30-100
      : Treatment plants - mechanical	10-40
      Sewerage
      : Pipes	50-140
      : Manholes	60-80
      : Treatment plants - civil	30-100
      : Treatment plants - mechanical	10-40
      : Pumping stations - civil	30-80
      : Pumping stations - mechanical	10-40
      : Outfalls	60-100
      Stormwater Systems
      : Pipes	50-140
      : Manholes	60-80
      Flood Control Systems
      : Dams	100-200
      : Tunnels	100-200
      : Channels	50-100
      Landfill and Transfer Stations
      : Operating landfill sites	10-20
      : Closed landfill sites	25-50
      : Transfer stations	50-75
      Foreshore Protection	30-100

     
16. Intangible assets
    
    Any research or development costs are expensed.
    
    Computer systems where capitalised are amortised over their useful lives, generally between three to eight years on a straight line basis.
    
    Easements are recognised at cost. They are regarded as having an indefinite useful life and are not amortised but tested annually for impairment.Return to top
     
17. Biological assets
    
    Forestry is valued annually by an external forestry consultant, Theo Vos, PF Olsen Ltd at fair value less estimated point of sale costs in accordance with NZ IAS 41. Fair value is determined by reference to market value, primarily determined by export prices. Any gains or losses on revaluation, including impairment, are taken direct to the Income Statement.
    
    Harvested logs are treated as revenue when invoiced at contracted prices. The portion of asset value harvested is charged as a cost of sale in the Income Statement and reduction in carrying value in the Balance Sheet.
     
18. Impairment of Property, Plant and Equipment and intangibles
    
    The carrying values of all classes of PPE are reviewed annually for impairment by reference to internal and external factors which may indicate the carrying value exceeds depreciated replacement cost. Any significant impairment is recognised by writing the assets down to their depreciated replacement cost and charging the impairment to the relevant revaluation reserve or Income Statement where there is no relevant revaluation reserve.
     
19. Accounting for revaluations
    
    The Council accounts for revaluations of property, plant and equipment on a class of asset basis
    
    The results of revaluing are credited or debited to an asset revaluation reserve for that class of asset. Where this results in a debit balance in the asset revaluation reserve, this balance is expensed in the Income Statement. Any subsequent increase on revaluation that off-sets a previous decrease in value recognised in the Income Statement will be recognised first in the Income Statement up to the amount previously expensed, and then credited to the revaluation reserve for that class of asset.
     
20. Income tax
    
    Income tax expense in relation to the surplus or deficit for the period comprises current tax and deferred tax.
    
    Current tax is the amount of income tax payable based on the taxable profit for the current year, plus any adjustments to income tax payable in respect of prior years. Current tax is calculated using rates that have been enacted or substantively enacted by balance date.
    
    Deferred tax is the amount of income tax payable or recoverable in future periods in respect of temporary differences and unused tax losses. Temporary differences are difference between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
    
    Deferred tax liabilities are generally recognised for all temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences or tax losses can be utilised
    
    Deferred tax is not recognised if the temporary differences arise from the initial recognition of goodwill or from the initial recognition of an asset and liability in a transaction that is not a business combination, and at the time of the transaction, affects neither accounting profit nor taxable profit.
    
    Deferred tax is recognised on taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures except where the joint venture can control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
    
    Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, using tax rates that have been enacted or substantively enacted by balance date.
    
    Current and deferred tax is charged or credited to the Income Statement, except when it relates to items charged or credited directly to equity, in which case the tax is dealt with in equity Return to top
     
21. Trade and other payables
    
    Loans are valued at fair value with annual adjustments through the Income Statement. Payables are valued at fair value
     
22. Employee benefits
    
    Provision is made in respect of the Council’s liability for annual leave which has been calculated on an actual entitlement basis at current rates of pay. Long service leave and retirement gratuities have been calculated on present value at current rates of pay. Accumulated sick leave carried forward, which is anticipated to be taken in future periods, is not considered material for inclusion.
     
23. Borrowing costs
    
    Borrowing costs are recognised as an expense in the period in which they are incurred.
     
24. Landfill post-closure provision.
    
    The landfill post-closure provision is measured based on the best estimate at a discount rate in accordance with financial reporting standard NZ IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
    
    The ongoing annual charge to the Income Statement arising from the landfill will now comprise depreciation of the landfill asset, and amortisation of the post-closure liability.
     
25. Equity
    
    Equity is the community’s interest measured as the difference between total assets and total liabilities. Public equity is disaggregated and classified into a number of components to enable clearer identification of the specified uses that the Council makes of its accumulated surpluses:
     
    • Restricted reserves:
      : Trust and bequests.
      : Special Funds
      
    • Council-created reserves.
    • Asset revaluation reserves.
    • Retained Earnings.
       
26. Reserves
    
    Reserves are a component of equity generally representing a particular use to which various parts of equity have been assigned. Reserves may be legally restricted or created by the Council.
    
    Restricted reserves are those reserves subject to specific conditions accepted as binding by the Council and which may not be revised by the Council without reference to the courts or third party. Transfers from these reserves may be made only for certain specified purposes or when certain specified conditions are met.
    
    Council-created reserves are reserves established by Council decision. The Council may alter them without reference to any third party or the courts. Transfers to and from these reserves are at the discretion of the Council.
     
27. Cash and cash equivalents
    
    Cash and cash equivalents means cash balances on hand, held in bank accounts, demand deposits and other highly liquid investments with maturities of three months and less in which the Council invests as part of its day-to-day cash managementReturn to top
     
28. Development contributions
    
    The revenue recognition point for development and financial contributions is at the later of the point where the Council is ready to provide the service for which the contribution was levied, or the event that will give rise to a requirement for a development or financial contribution under the legislation.
     
29. Budget figures
    
    The budget figures are those approved by the Council when adopting the Annual Plan (Budget) for that particular year. The budget figures have been prepared in accordance with NZ GAAP, using accounting policies that are consistent with those adopted by the Council for the preparation of the Annual Report.
     
30. Superannuation schemes
    
    Defined contribution schemes – Obligations for contributions to defined contribution superannuation schemes are recognised as an expense in the statement of financial performance as incurred.
    
    Defined benefit schemes – The Council belongs to the Defined Benefit Plan Contributors Scheme, which is managed by the Board of Trustees of the National Provident Fund. The scheme is a multi-employer defined benefit scheme. Insufficient information is available to use defined benefit accounting, as it is not possible to determine from the terms of the scheme, the extent to which the surplus/deficit will affect future contributions by individual employers, as there is no prescribed basis for allocation. The scheme is therefore accounted for as a defined contribution scheme.
     
31. Basis of consolidation
    
    The Council’s investment in its subsidiaries are carried at cost in the Council’s own “District” financial statements.
     
32. Critical accounting estimates and assumptions
    
    In preparing these Prospective Financial Statements, the Council has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations or future events that are believed to be reasonable under the circumstances.
    
    Landfill aftercare provision – The Annual Report 2009/10 Note 19 discloses an analysis of the exposure of the Council in relation to the estimates and uncertainties surrounding the landfill aftercare provision.
    
    Infrastructural Assets – There are a number of assumptions and estimates used when performing DRC valuations over infrastructural assets. These include:
    
    
    • The physical deterioration and condition of an asset, for example the Council could be carrying an asset at an amount that does not reflect its actual condition. This is particularly so for those assets which are not visible, for example stormwater, wastewater and water supply pipes which are underground. This risk is minimised by Council performing a combination of physical inspections and condition modelling assessments of underground assets.
    • Estimating any obsolescence or surplus capacity of an asset.
    • Estimates are made when determining the remaining useful lives over which the assets will be depreciated. These estimates can be impacted by the local conditions, for example weather patterns and traffic growth. If useful lives do not reflect the actual consumption of the benefits of the asset, then the Council could be over or under estimating the annual depreciation charge recognised as an expense in the Income Statement. To minimise this risk the Council’s infrastructural asset useful lives have been determined with reference to the NZ Infrastructural Asset Valuation and Depreciation Guidelines published by the National Asset Management Steering Group, and have been adjusted to local conditions based on past experience. Asset inspections, deterioration and condition modelling are also carried out regularly as part of the Council’s asset management planning activities, which gives the Council further assurance over its useful life estimates. Return to top
     
33. Foreign currency
    
    The Council undertakes transactions in foreign currencies. These are transacted at our bank’s applicable foreign currency buy or sell rates on the day the transaction is settled.
    
    At balance date the Council converts any balances or investments denominated in foreign currency at the closing rate quoted by Reuters on that date.
     
34. Derivative financial instruments
    
    The Council uses derivative financial instruments (interest rate swaps) to hedge its risk associated with interest rate fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which the derivative contract is entered into and subsequently re-measured to fair value. Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative.
    
    Swaps are entered into with the objective of reducing the risk of rising interest rates. Any gains or losses arising from the changes in fair value of derivatives are taken directly to profit or loss for the year. The fair value of interest rate swaps is determined by reference to market values for similar instruments.
    The net differential paid or received on interest rate swaps is recognised as a component of interest expense or interest revenue over the period of the agreement.

Changes in accounting policies

There has been no change in accounting policies.

Funding Impact Statements

Section 13 of Part 1 of the 10th Schedule of the Local Government Act 2002 requires that the plan includes a Funding Impact Statement which includes:

A. Information that discloses the revenue and financing mechanisms to be used by the Council.

B. An indication of the level or amount of funds to be produced by each mechanism.

C. Information about general rates.

D. Information about targeted rates.

E. For each mechanism used, a statement of the estimated revenue levels, other sources of funds and rationale for their selection in relation to each group of activities.

If the same mechanism is to be used in more than one year of the years covered by the Community Plan the information required for C, D and E need only be given for one of those years.Return to top

A and B

As indicated in the Revenue and Financing Policy in Volume 2 of the Community Plan 2009-2019 the mechanisms to be used are as listed below. In addition, it is anticipated that each of these mechanisms will be used in most of the years covered by the Community Plan.

	LTCCP 2011/12 ($m)	Budget 2011/12 ($m)
General rates	45.10	41.04
Uniform annual charges	22.61	22.72
Fees and charges	26.76	29.69
Interest and dividends	24.74	23.53
Borrowings	14.47	17.99
Grants and subsidies	12.73	14.27
Reserve funds and accounts (incl asset sales)	24.43	24.09
	170.84	173.33

 

C and D

The information required in the Funding Impact Statement in regards to general rates and targeted rates is contained in the Rating System and Impact on 2011/12 Overall Funding Levels section.

E (Funding mechanisms by group activities for 2011/12 year)

Council activities	General rates ($m)	Uniform annual charges ($m)	Fees and charges ($m)	Interest and dividends ($m)	Borrowing ($m)	Grants and subsidies ($m)	Reserve funds and accounts (incl asset sales) ($m)
Cultural Services	12.67	0.00	0.82	0.00	0.00	3.12	1.03
Community Development	5.19	0.00	1.07	0.00	0.00	0.05	0.13
Recreation and Events	6.58	0.00	4.51	0.00	0.00	0.34	1.28
Parks	13.69	0.00	2.86	0.00	0.00	0.00	2.80
Roads	11.33	3.31	0.45	0.00	0.00	10.76	4.24
Solid Waste and Refuse Collection	0.00	1.18	4.44	0.00	0.00	0.00	0.39
Stormwater	3.33	0.00	0.03	0.00	0.00	0.00	1.52
Water	0.00	6.58	4.25	0.00	0.53	0.00	2.12
Wastewater	0.00	11.65	1.81	0.00	13.68	0.00	5.25
Regulatory Services	2.64	0.00	7.83	0.00	0.00	0.00	0.06
Emergency Management and Business Continuance	0.39	0.00	0.00	0.00	0.00	0.00	0.00
Economic Growth	2.87	0.00	0.00	0.00	0.00	0.00	0.00
Civic and Democracy Services	5.64	0.00	0.00	0.00	0.00	0.00	0.00
Management of Investments and Funding	(23.29)	0.00	1.62	23.53	3.78	0.00	5.27
	41.04	22.72	29.69	23.53	17.99	14.27	24.09

Rating System and Impact on 2011/12 Overall Funding Levels

Rating policies, system and indicative rates

This rating policy summary should be read in conjunction with the Council’s Revenue and Financing Policy in Volume 2 of the Community Plan 2009-2019.

All figures in this policy summary do not include GST. GST will be added at applicable rates. Return to top

1. General rates

The Council has set a general rate based on the land value of each rating unit in the district together with a uniform annual general charge applied to all separately used or inhabited parts of a rating unit.

1.1 Uniform annual general charge portion

The uniform annual general charge (UAGC) is a fixed amount payable for every separately used or inhabited rating unit in the district. It is calculated according to the judgement of the Council on what is the proper balance between the fixed and variable parts of the general rate, and on any consequential impacts on individual and groups of ratepayer.

Separately used or inhabited - for a commercial rating unit. Means a building or part of a building that is, or intended to be, or is able to be, separately tenanted, leased or subleased for commercial purposes.

Separately used or inhabited - for a residential rating unit. Includes a building or part of a building that is, or intended to be used as, or is able to be used as, an independent residence, including apartments, semi-detached or detached houses, units, town houses and baches.

Both the general rate and the uniform annual general charge will be used to fund, or assist with funding, all Council activities other than those funded by way of targeted rates for water supply, sewage disposal, roading and refuse collection and kerbside recycling.

1.2 Differential land value portion and categories

The Council differentiates this portion of the general rate based on land use (Schedule 2 Local Government (Rating) Act 2002).

The differential categories and percentages applied to each group are:

- Group 1: Commercial/Industrial. All rating units that are used primarily for any commercial or industrial purpose.	27.2%
- Group 2: Residential. All rating units with a land area of one hectare or less, not being rating units in Group 1, used for residential and related purposes.	54.0%
- Group 3: Small Holdings. All rating units, not being rating units included in Groups 1 or 2, having a land area of more than one hectare but no greater than four hectares.	3.0%
- Group 4: Farmland. All rating units, not being rating units included in Group 1, 2 or 3, having a land area in excess of four hectares.	15.8%
Total	100.0%

2. Targeted roading rate

The targeted roading rate is an annual charge payable for every separately used or inhabited rating unit in the district. It is calculated according to the judgement of the Council on what is the proper balance between the fixed and variable parts of the rates funding for the roading activity, and on any consequential impacts on individual and groups of ratepayers.

Separately used or inhabited - for a commercial rating unit. Means a building or part of a building that is, or intended to be, or is able to be, separately tenanted, leased or subleased for commercial purposes.

Separately used or inhabited - for a residential rating unit. Includes a building or part of a building that is, or intended to be used as, or is able to be used as, an independent residence, including apartments, semi-detached or detached houses, units, town houses and baches.

3. Targeted service charges

The Council levies targeted ‘service charges’ for:

• Water supply.
• Sewage treatment and disposal.
• Refuse collection and disposal.
  
  Only those properties that actually receive the service are liable for these charges, irrespective of differential category. The Council calculates and levies these charges separately from rates. This is because rates apply to all properties in the district to pay for services that are available to the community as a whole, whereas the individual service charges only apply to properties which receive the specific service covered by the charge. Return to top
   
• Water supply (non metered and metered)
  
  The Council has three mechanisms of payment for water supply. All are deemed to be rates in the Local Government Rating Act 2002. These are:
  
  
  1. A uniform targeted rate for each separately used or inhabited part of a rating unit, which is not metered and is connected to an urban water supply.
  2. A rate per cubic metre of water supplied for each separately used or inhabited part of a rating unit which is metered and connected to an urban or rural water supply
  3. A restricted flow rate determined by the (user-nominated) volume of water able to be supplied within a fixed time period to a separately used or inhabited part of a rating unit for properties that are not metered and are connected to a rural water supply
  
  For properties that are not connected to an urban or rural water supply, a charge is not levied.  
   
• Sewage disposal
   
  The Council has set a targeted rate for sewage disposal based on a uniform targeted rate per separately used or inhabited part of a rating unit in respect of each water closet or urinal connected either directly or through a private drain to a public sewerage drain provided that:
  
  
  1. Every separately used or inhabited part of a rating unit used exclusively or principally as the residence of not more than one household shall be deemed to have not more than one water closet or urinal.
  2. Where a separately used or inhabited part of a rating unit, not being used as a residential property as in (a) above, has two or more water closets or urinals, the targeted rate per water closet or urinal will be set as per the scale shown at the end of this section.
  
  Rating units which are neither connected to the sewerage system or are not serviceable are not liable for this rate.
  
  The Council may use lump sum contributions, in lieu of part of the targeted rate for sewage disposal, for the purpose of contributing to the capital costs of new sewerage connections
   
• Refuse collection and kerbside recycling
  
  The Council has set a targeted rate for refuse collection and kerbside recycling based on a uniform targeted rate per separately used inhabited part of a rating unit used as a household unit situated in defined areas of the district in which the Council is prepared to provide the service for which the charge is made.
  
  

4. Due Dates and Penalties

The Council’s rates for the 2011/12 year (1 July 2011 to 30 June 2012) will become due and payable by four equal instalments on the following dates:

Instalment 1 31 August 2011

Instalment 2 30 November 2011

Instalment 3 29 February 2012

Instalment 4 30 May 2012

The Council will charge a penalty of 10 per cent on any part of each respective instalment that remains unpaid after the due dates listed above.

In addition, the Council will charge a penalty of 10 per cent on any rates that were assessed or levied in any previous financial years and which remain unpaid on
30 September 2011 and a further additional penalty of 10 per cent on any rates that were assessed or levied in any previous financial years and which remain unpaid on 31 March 2012.Return to top

Overall funding levels

	LTCCP 2010/11 ($)	LTCCP 2011/12 ($)	Budget 2011/12 ($)
Uniform annual general charge (UAGC)	10,828,100	10,978,100	10,942,300
General rate	30,318,600	34,112,100	30,057,300
Sub total (general rates)	41,146,700	45,090,200	40,999,600
Uniform annual roading charge (UARC)	3,313,900	3,313,900	3,343,000
Uniform annual drainage charge (UADC)	10,890,200	11,389,000	11,654,000
Uniform annual water charge (UAWC)	6,773,400	6,773,400	6,578,800
Uniform annual refuse charge (UARC)	1,108,600	1,143,300	1,176,100
Sub total (targeted rates/charges)	22,086,100	22,619,600	22,751,900
Water by meter charges	3,884,600	4,146,800	3,743,600
Total	67,117,400	71,856,600	67,495,100

The figures above do not include GST. GST will be added at applicable rates.

Rates and charges (GST will be added at applicable rates)

	2010/11 ($)	2011/12 ($)
General rates
Uniform annual general charge	322.22	322.22
Differential rates (cents per $ of rateable value):
- Group 1 (Commercial/Industrial)	1.3160c	1.3326c
- Group 2 (Residential)	0.3168c	0.3296c
- Group 3 (Small Holdings)	0.1638c	0.1766c
- Group 4 (Farmland)	0.1619c	0.1765c
Targeted rates/charges
Uniform annual roading charge	100.55	100.00
Uniform annual refuse charge per serviced household	43.72	46.09
Uniform annual drainage charge (scale of charges per water closet or urinal):
- One to two	385.57	416.52
- Three	300.77	326.09
- Four	262.30	284.35
- Five	222.95	241.74
- Six to 10	200.22	217.39
- 11 to 15	183.61	200.00
- 16 to 20	175.74	191.30
- 21 or more	167.87	182.61
Oakura part charge		208.26
Uniform annual water charge	249.18	256.52
Water by meter (WBM)
- On demand supplies:
: Supply charge (for all metered customers)	118.22	122.36
: Standard rate for consumption up to 50,000m3 (cents per cubic metre)	1.00	1.04
: Industrial rate for consumption in excess of 50,000m3 per annum (cents per cubic metre)	1.00*	1.04*
- Waitara industrial - untreated supply (cents per cubic metre)	0.73	0.76
- Restricted flow connections (per water unit as defined by Water Supply Bylaw (Part 15))	164.44	170.20
- Water filling points consumption	1.05	1.07
- Water filling points supply charge	88.89	95.65

* large users are charged the standard WBM rate to 50,000m3 and the industrial rate for amounts in excess of 50,000m3

Note: For sewerage disposal, water supply and refuse collection services, 1/12th of the applicable targeted rate/s for that service willl be charged for every complete month from the proposed date of connection until 30 June of the following year. The Manager Financial Services is authorised to waive the total part charges if the total amount for any year is under $50.00.

Impact of Revaluations on Rates

The impact of the 2010 property revaluation on rates for 2011/12.

The Council’s rating system provides that a portion of the general rates be determined based on land value. The land values are determined independently for the Council by Quotable Value (QV) every three years based on applicable market information. The latest revaluation carried out in late September 2010 will apply to the portion of the general rates based on property land value from the 2011/12 year.

One of the first questions which arises following the release of a property revaluation is the impact the revaluation will have on a property’s total rates. This portion of the general rates is less than half of the total rates the Council collects so ratepayers are advised to contact the Council to gauge the impact of both the proposed overall rate increase and also what if any impact the revaluation may have caused to the rates on their property. One thing to bear in mind though is that the revaluation does not in itself increase the total rates the Council receives. For example, if the existing 2010/11 rates were reset based on the new values, the same level of rates would still be collected.

For general rating purposes, properties are classified into four rating groups – Residential, Industrial/Commercial, Farmland and Small Holdings. This classification appears on your rating account or we can advise you which group your property is in. As a result of the revaluation the overall land value of each group has changed from 2007 as follows:

Residential:	3.7%
Commercial/Industrial:	2.2%
Farmland:	-3.3%
Small Holdings:	-2.6%

Individual properties which have increases/decreases similar to that of their respective rating group, will not experience any significant change in rating as a result of the revaluation. However, those properties which have increases/decreases significantly different to that of their respective rating group, will experience some change in rating as a result – the amount will depend upon how much more or less they change as compared to the average change for the rating group. This is a normal feature of the revaluation process.

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