Auckland Council’s forecasted level of capital spend between 2015 and 2025 is $19 billion.
Over this period, debt levels are predicted to increase from $7.2 billion to $11.6 billion.
These are big numbers, reflecting Auckland Council’s size and the significant population growth across the city.
In comparison, the former North Shore City total debt was $422 million at 31 October 2010. Council debt is closely monitored, internally and externally. Our internal measure is net interest as a percentage of total revenue, with a target of 12 per cent in the 10-year budget.
Credit rating agencies focus on our total group debt as a percentage of our total revenue, with an upper limit of 270 per cent. Our current level of debt is managed within these limits, but our projected debt to revenue ratio is 265 per cent in 2016/2017; this is close to the limit.
Exceeding that level by taking on unbudgeted debt could impact the council’s international AA credit rating.