Hamilton joins the billion-dollar debt club

Friday, 15 May 2026

Hamilton City Council’s rising debt has exploded past $1 billion, making the city one of the nation’s most indebted.

As of March 31, the council’s external debt now sits at $1.088 billion and is expected to reach $1.134 billion by the end of June.

On Thursday, a meeting of HCC’s Finance and Assurance committee was told that figure was $7m higher than expected.

Although its debt-to-revenue ratio remains below forecast at 231%, compared with the budgeted 241%, net external debt will climb rapidly over the next three months, eclipsing last year’s total debt of $992m by a substantial $142m.

However, HCC’s debt, which works out at around $18,000 per household, is still a way from the peak of New Zealand’s local authority billion-dollar debt club.

Tauranga ($1.3 billion), Wellington ($1.8 billion), Christchurch ($2.6 billion) and Auckland ($12.7 billion) are all deeper in the red.

Despite the headline debt number, the council remains on track to finish the financial year ahead of budget, despite ongoing pressure from interest costs and the transition of water services to the new regional entity, IAWAI.

For the Quarter ending March 31, the council’s net everyday costs were $18.9m under budget year-to-date, helped by $6.5m in additional revenue and $11.4m in lower-than-expected direct expenses.

However, those gains were partly offset by financing costs running $8.9m above budget and depreciation costs sitting $1.4 million higher than forecast.

Despite that, the council is forecasting it will finish the financial year with its “balance in the books” $2.7m ahead of budget and an accounting surplus $17.5m above expectations.

Capital spending for the year is now forecast at $273 million, reflecting project timing changes and savings identified through the capital programme review process.

HCC chief financial officer Gary Connolly pointed out that while direct expenses were 7.3% higher than the previous year, much of that increase related to one-off costs associated with establishing IAWAI.

“If you adjust for those, we are about 3% year on year up, which is in line with inflation,” he said.

On top of that, the $7.5m IAWAI establishment costs front-loaded by the council to establish the new water company would be recovered through revenue streams.

Following criticism in the public forum section of the meeting some councillors questioned whether the current reporting format risked presenting an overly rosy picture of the council’s financial health.

Council staff rejected that suggestion, saying the council traditionally focused on performance against budget because annual plans already factor in expected year-on-year cost increases.

The criticism was levelled by former HCC candidate Stuart Aitken who said that with personnel costs up by $10 million (10%), professional costs up by $3 million (38%), there appeared to be a lack of strategic plan to reduce expenditure.

“Our poor are going without, our most vulnerable are suffering, our businesses are tightening their belts. Council needs to do the same, and urgently.’’

Although councillors failed to directly address the $1b -sized elephant in the room, Mesh Macdonald said while the updated report provided more clarity around savings and project phasing, she remained concerned about underlying financial pressures.

“The key question for me is how much of this reflects an ongoing and improving structurally stronger position because if the underlying pressures are still there or increasing, then these are going to tend to show up over time.”

Councillors Andrew Bydder and Emma Pike both praised the increased level of transparency in the reporting.

Councillor Emma Pike said she was “perversely pleased” to see several negative variances highlighted in red throughout the report because it showed the council was being open about areas needing attention.

The meeting also touched on slower-than-budgeted development contributions revenue, with staff saying Hamilton’s performance was broadly consistent with trends being experienced by other metro councils and heavily influenced by the timing of infrastructure investment projects.