Porirua City Council

Auditing the Future: 2009

Porirua City Council (Porirua) is a moderate-sized city council located close to a large metropolitan centre. A major feature of Porirua city is its recent development. Therefore, it has fairly new infrastructure.

The most interesting feature of Porirua’s LTCCP is its forecast of successive deficits in the Statement of Financial Performance during the period of the LTCCP. Porirua asserts that fully funding all operational expenses (including depreciation) is not required. This is based on its asset planning and on recognising that most of its large infrastructure assets are relatively new. Therefore, Porirua will face little significant renewals or investment until about 2025.

This has been covered in paragraphs 7.55-7.62 of our report to Parliament Matters arising from the 2006-16 Long-Term Council Community Plans, published in June 2007.

Porirua’s LTCCP includes a substantial section that explains its approach to demonstrating financial prudence and its resolution not to meet the balance budget requirement of section 100 of the Act. Important features of their extensive disclosures include:

  • full disclosure and analysis of Porirua’s circumstances – including disclosure of asset information on renewals and investment profiles for major asset systems;
  • future impact on rates – in this case, when the proposed financial strategy will affect future generations; and
  • disclosure of indicators of prudence – such as solvency indicators over the life of the LTCCP.

The disclosures made about Porirua’s response to feedback on its draft Statement of Proposal are another good feature. The disclosures include an analysis of submissions and information about the resulting changes to the 2006-16 LTCCP. It also indicates other actions to be carried out by management. For example, Porirua and its management will continue to find ways of better presenting important financial data, including the effects of inflation.

In our view, Porirua’s LTCCP addresses the disclosure of strategic direction and intended priorities in response to expressed community outcomes effectively. Among its contents are two helpful examples:

  • Porirua used the LTCCP process to propose a new sports and event centre. The final adopted LTCCP described the proposal including the options considered. This provides useful information as Porirua proceeds with the project, with a record of intention and a financial projection.
  • The LTCCP includes a diagram outlining the major financial trends for rates revenue and expenditure, public debt, and capital expenditure. The information also shows the final impact on rates including the increase in rates during the previous year – starting with 2005/06 – and the forecast average effect on ratepayers. The difference in rate analysis and effects is briefly explained.
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