Council identifies six-point plan to respond to cost pressures
Published on 05 December 2023
Whanganui District Council’s elected members explored budget options for the Long-term Plan 2024-34 and discussed a six-point plan to lower rates increases in a livestreamed long-term plan workshop on Tuesday, 5 December.
Whanganui Mayor Andrew Tripe says, “Looking over budgets in recent weeks, we’ve been very aware that cost of living pressures are still affecting many households. As you’ll know this situation is not unique to Whanganui – the economic pain is being felt across the country due primarily to what I refer to as the three I’s – high inflation, interest costs, and insurance.”
He says, “I am writing to the new government ministers responsible for local government, infrastructure, regional development and tertiary education to advocate for pressures on local councils and ratepayers to be addressed. I support localism, which means councils need to be strengthened, not weakened, by government policies and decisions.
“Working through the forecasting process for our ten-year plan has really brought home the reality of how sharply costs have risen for councils as well, whether it’s for fuel, concrete, insurance, interest, or other things we need to purchase to deliver services and facilities. You’ll see in the news many councils are having to increase rates significantly in response.
Mayor Andrew says like households, councils are having to look at ways to tighten the belt.
“If a household is having a tough time, what do you do? Maybe you cancel subscriptions, eat out less, and pay your credit card bill to keep it down since interest is expensive. As a council, we’re also looking at ways to tighten the belt which we are undertaking through a six-point plan because we know our community wants us to be fiscally responsible and responsive to the situation we’re in. This plan will position us for the future and our growth aspirations.”
He says compared with councils across the country, Whanganui District Council is in a very good position.
“Next year, many councils across the country will be grappling with issuing rates increases of over twenty percent. Our council has comparatively low debt and over the years we’ve put the proper level of investment into maintaining assets, including our water infrastructure. This means we have a great foundation to build on to see our district prosper in coming years. We’re in good shape economically, particularly in domestic tourism, and our population is growing as people realise this is an incredible place to live. So Whanganui’s future is looking bright – we just have to get through this tough economic time together.
“As always, the rates-setting process will need to be about striking a balance – making sure we can keep rates affordable while investing in our people and district to keep the momentum going into the future.”
Whanganui District Council chief executive, David Langford, says the Long-Term Plan 2024-34 will provide a roadmap for Whanganui for the next decade. It will set out where we aim to be by 2034, what we will need to do to get there and how much it will cost, giving a full picture of how all council activities are managed, delivered and funded.
“A huge amount of work has gone into building this draft ten-year plan. We have applied the kind of commercial thinking you would normally see in the private sector, but without taking the social good out of the council,” David Langford says.
“Whanganui is a growing city with big aspirations for the future. Our six-point plan identifies what we can to do to keep costs increases down in the short term, while also positioning the district for a bright future in the medium to long term. We can think of each of the six points as a lever – projected rates increases will change depending on how hard we pull each lever.”
The six points are:
- population growth
- improving efficiency
- exploring alternative funding for projects
- cutting council services
- selling assets to repay debt
- identifying sources of non-rates revenue.
David Langford says the rates rise was initially estimated at close to 24 percent, but “after a lot of hard work and deferrals wherever possible, we are now down to three rates scenarios for consultation – high (14.8 percent), medium (9.5 percent) and low (5.8 percent).”
“When we consult with the community, the council has to state what its preferred option is. This is just the starting point. We want the community to tell us how hard to pull each lever and what services they are prepared to trade-off in order to keep rates increases low.”
Each rates scenario lists the six points, with targets next to each one.
“For example, to achieve the medium scenario, we’d need to find $1M of efficiency savings, 16M of alternative funding for projects, $2M of savings from service cuts, $16M from selling assets to repay debt, $1.2M of additional non-rates income and our population needs to grow so that our rating base increases by $0.6M per year.
“Although these figures sound very specific, we’re still at an early stage of the process and haven’t looked at details around which services could potentially be cut or which assets could be sold. The dollar figures were arrived at by estimating a realistic savings target for each of the six points.”
He says the council team has been through a process of looking closely at all council projects to identify alternative sources of funding.
“For example, we may be able to access central government funding towards the cost to upgrade the Royal Whanganui Opera House – the medium rates scenario reflects that.”
Mayor Andrew says there are many more discussions to be had between now and the consultation to work out specifics.
“No formal decisions will be made until we’ve heard from the community. During consultation we’ll present details around each scenario and ask what people prioritise keeping. There will be plenty of opportunities for everyone to have their say and we’re looking forward to hearing people’s thoughts.”
Consultation on the long-term plan will run from 2 April to 2 May 2024, with deliberations on 28 and 29 May.