S&P cuts Tauranga's credit rating

Following serious governance issues at Tauranga City Council and the appointment of Crown commissioners, S&P have cut their credit rating by one notch

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Following serious governance issues at Tauranga City Council and the appointment of Crown commissioners, S&P have cut their credit rating by one notch

15th Jan 21, 4:55pm by admin

Standard & Poors have lowered the Tauranga City Council's credit rating.

Declining confidence in the Council after its well-publicised governance issues is behind the move.

The rating has been lowered one notch from AA- to A+.

This is what Standard & Poors said:

Tauranga City Council's (Tauranga) financial management has weakened, in our view. Political and governance issues have beset the council recently and have resulted in the central government (the Crown) deciding to appoint commissioners in February 2021.

Tauranga's large capital program and lower-than-previously budgeted rate increases will lead to very large deficits and rising debt levels. This partially reflects the council's response to the COVID-19 pandemic.

We are lowering our issuer credit ratings on Tauranga to 'A+/A-1' from 'AA-/A-1+'.

The outlook is stable. Though Tauranga's budgetary performance will remain weak, we expect the crown commissioners to stabilise the council's credit metrics.

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15 Comments

by Fritz | 15th Jan 21, 7:11pm 1610691105

I reckon Tauranga serves as a neat example of everything that is fucked up in this country in 2021.

by Larry76 | 16th Jan 21, 1:23pm 1610756607

Just in 2021? This country has had underinvestment in infrastructure, industry and productivity since the 1990s and yet we delude ourselves into thinking we pay huge amounts of tax.

Maybe we proportionally do now since wages and tax brackets have remained stagnant, but in reality the current tax take is now insufficient to maintain assets built 50 years ago and but enough to pay for the boomers’ healthcare & national super.

Using our capital to invest in productive industries instead of selling houses to each other would also help.

by Westminster | 15th Jan 21, 7:20pm 1610691613

‘’Tauranga's large capital program and lower-than-previously budgeted rate increases will lead to very large deficits and rising debt levels.’’
This is just appallingly governance, née caping income at the same time on a going on a capital spending spree.
Councillors get elected by saying they are going to hold rate increases and send the council to the wall. Hope commissioner stay in place for a very long time, fellow rate payers be prepared for significance rate increases and don’t moan about.

by linklater01 | 16th Jan 21, 11:51am 1610751113

Westminster,

i am intrigued. What is nee caping? My best guess is that you meant kneecapping as in cutting off income. Correct?

by Westminster | 18th Jan 21, 5:58am 1610902685

Correct
Spell checking was required before posting !

by Chris-M | 15th Jan 21, 8:45pm 1610696750

The trouble with the Tauranga council is that the way they manage the city is unbelievably incompetent. The money that they do spend, they spend very foolishly. The raft of obvious and very public stuff ups are just the tip of the iceberg.

by nigelh | 16th Jan 21, 7:19am 1610734743

Not uncommon with many Councils

by KH | 16th Jan 21, 8:18am 1610738291

Government does not suceed by competence but by control.
Council offices are stacked with staff who's job is to make sure the council is doing well for itself.
Sadly it works.

by Foxglove. | 16th Jan 21, 11:40am 1610750442

Doing well for themselves too! That is indeed, the first priority.

by waymad | 16th Jan 21, 1:53pm 1610758411

Well, we could always unelect the staff at the next round.

Oh, wait....

by Pusheen | 16th Jan 21, 2:31am 1610717509

Plenty of NZ govt partly subsidies entities, such as local councils, universities usually rampant with incompetent practices, after working awhile inside - we realized those incompetent's was on purpose.. for preferential misappropriation of funds, collective/personal/mutual beneficial 'share cut' of activities project funding etc.
The most effective deterrent? usually an annual/regular/random, independent audit say by Audit NZ.
Most of those that often arguing with the regular audit prepositions.. usually have a vested interest in place.

by waymad | 16th Jan 21, 1:56pm 1610758562

Dominoes starting to topple... Tauranga today, who's next? Invercargill? Awkland? Wanganui?

by Foxglove. | 16th Jan 21, 4:45pm 1610768743

Christchurch? Nothing could possibly make it worse. Present lot could all retire to Tarras. There you go, might have been worthwhile after all!

by Dave Moderato | 18th Jan 21, 2:50pm 1610934608

Kapiti Coast District Council.

by Final Account | 17th Jan 21, 9:18pm 1610871504

The cashflow from the current building booms development levies, consent fees etc must help surely, if a council can't spin a profit in a construction boom when else can they? Once the assets are in place and don't need any attention perhaps?

The cities layout around a harbour and tributaries does however present a high overhead with sprawling, low density suburbs all needing bridges and interchanges, not to mention power and water connections, pump stations etc