Financial Sustainability of Local Authorities in New Zealand: Performance Analysis and Coping Strategies

Murugesh Arunachalam, The University of Waikato
Chen Chen, The University of Waikato
Howard Davey, The University of Waikato

Abstract: This paper presents a nationwide analysis of the financial sustainability of New Zealand local authorities. Benchmarks for a set of financial and non-financial ratios were established as a basis for measuring, scoring and ranking the financial sustainability and conducting trend analyses for the period 2001 - 2010. The findings indicate that 8 to 35 percent of local councils in New Zealand were confronted with unfavourable financial sustainability challenges in 2010. Liquidity and a high level of debt were major problems causing unfavourable financial sustainability. The coping strategies recommended in this study aim to assist local government officials to streamline operations, set budgeting priorities and negotiate for central government financial assistance.