Annual Plan 2023-2024

Introduction

Our annual plan sets out our planned work program for the up-coming 2023-24 rating year and how we plan to fund it.

In the current environment Council is facing a wide range of pressures on our finances including rampant inflation, increases in interest, depreciation and supplier costs amongst other things.

These pressures have challenged Council to maintain our levels of service while keeping rate and fees and charges costs affordable for communities.

In setting rates and fees and charges for 2023/24 Council has been very mindful of the cost of living issues confronting our communities and has worked hard to find spending reductions.

For the 2023/24 rating year Council is proposing an average 8% rate increase and increases in fees and charges mostly inline with the Consumer Price Index (CPI) rate of inflation and a debt limit of $60.5m.

Council is seeking community feedback (from Mon 27 March to Wed 26 April) on our Annual Plan proposals before they make a final decision.

8% minimum to maintain current services

Unfortunately, many of the cost increases Council is facing are significantly above the CPI and we have very little influence over them or they are beyond our control.

This includes such things as labour market pressures, increases in interest payments, depreciation and supplier charges. The impact of these inflationary pressures is that we are needing to spend significantly more just to stand still and maintain existing levels of service.

Increases in interest payments alone are demanding a 6% rate rise before we even start to factor in supplier contract commitments and other factors. Many of our major contracts for maintaining critical infrastructure or services are linked to a relevant inflation index.

This means the contracts adjust in response to inflation pressures and we have no choice but to absorb and then pass on the increase. By way of example the waste management contract has increased by 18% while inflation in the infrastructure area is 15%.

Another impact of high inflation is that it pushes up asset valuations and with it depreciation costs. In some areas we can help manage rate increases by decreasing the funding of depreciation but in others such as roading which is a significant driver of rural rates this is not advisable.

Decreasing local road expenditure would mean we miss out on Waka Kotahi NZTA's 74% funding contribution while exacerbating the existing challenges of maintaining the network in good condition.

With general CPI inflation above 7% combined with Council specific cost pressures an 8% average rate rise was considered the absolute bare minimum without needing to significantly reduce levels of service.

Debt position temporary due to three waters

The forecasted debt level of $60.5m exceeds Council’s self-imposed limit of two times rates revenue ($57.715m), however, when three waters debt is transferred to the new water entity our debt limit will not be breached and we will be comfortably within the limit.

Council is still in discussion with Government on the total amount of three waters debt that will be taken off our books on 1 July 2024. At this stage the starting position is $16m.

Council's borrowing associated with the $16m and any three waters capital works being undertaken this financial year and next will remain on Council's books until it matures at which time it will transfer to the new entity. In the interim the interest will be paid by Government.

Key points

• Proposed 8% average rate increase and debt of $60.5m to maintain levels of service and fiscal responsibility.
• Proposed increases to fees and charges required due to inflation and to maintain cost recovery.
• Operational spending of $51m and $21.2m on capital investment.
• Debt of $60.5m exceeds self-imposed 2x rates revenue limit but under Local Government Funding Agency prudent debt level of $68.9m.
• When new multi-regional water entities take over water services and associated debt from 1 July 2024 Council debt will be within self-imposed debt limit.
• The high inflationary environment with market pressures and rising interest rates are the underlying story to the Annual Plan budget.

Proposals we would like feedback on

1. Proposed 8% average rate increase.
2. Proposed increases in Council’s fees and charges.
3. Council exceeding our self-imposed debt limit of 2x rates revenue.
4. Anything else relating to the Annual Plan.

More information and having your say

Consultation Document and Feedback Form

A Consultation Document with Feedback Form is available here or from the Document Links panel below.

Online

An online Feedback Form is available here or from the Quick Links panel below.

Social Media

You can also have your say via Council's Facebook and Instagram pages. Council will be posting regularly on these pages.

Consultation period

Monday 27 March to Wednesday 26 April 2023

Community hui

There are also a series of community hui where you will be able to hear from the Mayor and Council staff.

Note: Meetings will be live-streamed via Council's Facebook page.