Auckland Council has retained its strong credit rating from international agency Standard & Poor’s.
The agency reaffirmed the council’s 'AA' long-term and 'A-1+' short-term issuer credit ratings. This follows Moody’s Investors Service, which affirmed the council’s Aa2 rating last month.
A growing city
Auckland Council Group Chief Financial Officer Sue Tindal says the rating reflects the work the council is doing to position for Auckland’s growth.
“In the last year alone, 45,000 more people decided to call Auckland home and, in response, we’ve seen demand for our services increase. Since the 2010 amalgamation, the city’s population has grown by 100,000 people,” she says.
“As a result, growing work volumes across Auckland have, in the last year, seen building consents go up 6 per cent, building inspections rise 5 per cent, and resource consents increase 5.5 per cent."
“We achieved $38 million in efficiency gains in 2014/2015 through better procurement and tendering processes, reducing the office buildings we occupy and by bringing some services, including animal management, in house."
Financial strategy
Ms Tindal also believes the council’s financial strategy strikes the right balance to manage the council’s debt levels.
“Our financial strategy sets limits on the council’s borrowing to maintain debt at a sustainable level,” she 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."
“We consider this increase in debt to be appropriate on the basis that it is primarily driven by investment in new assets. The benefit of the expenditure is also spread over time, thereby promoting inter-generational equity – costs are shared with those that benefit from the assets in the future.”
Future infrastructure
Standard & Poor’s also acknowledged that the council is facing growing infrastructure challenges, and recognised that Auckland is open to addressing the issues.
“Auckland will grow by more than 700,000 people in the next 30 years. Our biggest infrastructure project, the City Rail Link, coupled with bus improvements, is the only way to keep Auckland moving,” Ms Tindal says.
