Unpaid Fringe Benefit Tax along with High Risk IT Systems have caught up with the NPDC – as well as a big chunk of new debt for the Airport.

Remember when the GST was missing off the rates in the last council term ? Well from that same timeframe a whole lot of Fringe Benefit Tax wasn’t paid either – to the tune of almost $407k, which now has to be paid to the IRD.

We put the good news out over the long weekend and saved the bad news till this week. (We didn't want to mess with people's blood pressure over the long weekend break).

We want to be very clear, this is not a mistake this term with the new Finance people on board at the NPDC.

This goes back to the financial quarters from 30^th September 2022 to the quarter ending 31 March 2026. This started under the timeframe of the last Mayor and CEO of the NPDC, and the errors have been picked up by the new people in the Finance team.

The Finance team found the under reporting of FBT and the incorrect recording of FBT use with the fleet. A review of what actual fleet is needed has been done, there is less use of vehicles for personal use where it is not required – so less FBT to be paid going forward - and how vehicle use is recorded has been fixed, so this does not happen again.

This under reported FBT was not accounted for with some vehicles which were taken home by employees. As soon as the new Finance team became aware of the issue they voluntarily reported this to the IRD – so the IRD fine for not having paid this when it was due would be avoided.

• So…..
• $335k of under reported FBT was due from September 2022 to 31 March 2026, and
• $71k of Use of Money Interest has to be paid to the IRD – due to the late payment.
• A total of just under $407K.

This error will now need to be absorbed by ratepayers.

A decision has not yet been made, but it may be in a new line added to the rates bill with a new targeted rate to cover this cost. Whether the amount is collected in one year, or over 5 years, is also to be considered.

Another issue that came up last week with the Finance Audit and Risk meeting was major issues with outdated IT systems.

An audit has been done of the NPDC IT systems by the Association of Local Government Information Management (ALGIM) and it has been found there are significant weaknesses across a number of IT systems and records.

The legacy of our previous elected officials who loved to spend on nice to have projects, now shows some of the very basics for running the Council have not been prioritised, to the point the NPDC is at a high level of risk with IT systems.

An estimated $4.188 million (with a 20% contingency included) has been estimated to address the weaknesses in the IT systems.

We understand this will need to be built in to the next Long Term Plan expenditure. The worry with IT projects is so often the true costs are not known until a new system starts to be built, so we hope the $4.188 M doesn’t blow out to a much higher figure.

We noted in the agenda for this meeting that the NPDC’s external debt for the year to June 2026 is $429M which is a nett increase of $45 M for the last year.

$35M of this has gone to the Airport CCO (PRIP). This debt is being repaid to the NPDC by the Airport CCO with 4 quarterly principal payments a year of $500k each. Payments have started recently with 2 having been paid this year, but this is going to be a long process, expecting to take around 15 years to repay the debt.

• We’re not sure if the $35M is for the solar farm and we are looking in to this so we can clarify.

The flow on effect from the debt is that the net interest costs for the Council to June 2026 was $12.8M. This is the amount paid in interest to the finance companies for all the loans (or NZ Government for LGFA loans) . This amount was better than expected at $2.3M under budget.

We have quite a few big decisions coming up for the city of New Plymouth from the legacy of the Councillors who loved to spend. The 2027 Long Term Plan is going to be very challenging when we have a high number of ratepayers struggling with rates increases and all the other cost of living increases in recent years.

We will update soon on how the LTP is progressing and we are very pleased we have a new finance team in place making sure all the systems are working as they should be.

You may want to share this story, as all these extra costs that are turning up are all going to head into the Long Term Plan, or your rates bill, or rent, in 2027.

We’ve attached some pages from the Audit Risk and Finance meeting with more detail about some of these numbers and discussions in the meeting, for people who like more detail.