Several factors behind GDC's $5.1 million deficit
A “perfect storm” lies behind Gisborne District Council having a $5.1 million deficit in its 2016/17 annual report, says Mayor Meng Foon.
The council adopted the report, which said spending was up $10m on budget, thanks to roading expenditure being $6.3m over budget and additional matters, including landfill aftercare of $3.7m.
The “perfect storm” arose from a number of factors including high log prices and one of the wettest winters for some time affecting roading costs.
Other than that, the council had made a lot of progress during the year, said Mr Foon.
Shannon Dowsing said the council had a “year of challenges”.
The part he saw that underlined their problem was that the council had increasing debt but decreasing capital project expenditure.
If it had its work programme up-to-date and achieved what it set out to achieve in its budget, it would be in a much worse financial position. The council was $10m behind on capital expenditure — that spending would have brought in a small amount of associated capital grants, but would not have put the council in a better position.
“That is highlighted throughout our agenda in many places today, where it says delay in major projects contributed significantly to the deficit where, in effect, if we had completed the projects we would have had a negative effect.
“We would be in much more deficit if our projects had been completed,” he said.
The true position was that the council had pushed $10m of capital expenditure into its next financial year and that would have an impact on what it could achieve.
“The true sign of this report to me is that we have a lot to do over the next two years and over the long term.”
The council should realise its capacity for capital projects and stay within what was obviously a $24m to $30m range for its annual spend, and not try to over-achieve.
Resources spread thinIf it tried to over-achieve it would lose efficiency in all aspects of its business because it was committing too many resources too thinly, he said.
“I don’t mind if we spend more money on roading because if that is an option, then we have to do that.”
But it should achieve what it set out to do.
Mr Foon said the capital works programme used to be $40m, which had never been achieved.
Meredith Akuhata-Brown said some of the highlights in the report for her were the collaborative approaches with iwi and other groups in the community.
“I see that as part of our vision as a region.”
Pat Seymour said there had been over- expenditure on employees and consultants. That was an area that could easily grow and the council had to be aware of it.
While the council had achieved some good things, it had to be vigilant about where the spend was or it would end up finding it had overspent substantially. It was potentially trending that way next year.
It would require substantial thinking by all councillors when they came to prioritisation workshops.
Chief executive Nedine Thatcher Swann said since the council set its 2015 long-term plan budget, it had overspent on salaries by $1m and had also overspent the budget on consultants.
“We are very aware that needs to be brought back into a realistic budget, that enables us to deliver on the services you want through the long-term plan,” she said.
After the meeting, Ms Thatcher Swann said “given the historical spend, it may just cost more to run the business and the long-term plan is an opportunity to reset this.”
Rehette Stoltz said the report was looking back into the past but there was now a new council and a new chief executive. She was heartened by what had been done and was optimistic that this new group of people would work to take Tairawhiti from good to great.
The council had the tools and the people and she looked forward to a better report next year.