Revenue modelling undertaken by Tauranga City Council signals that the ongoing effects of Covid-19 pandemic are likely to have a "severe impact" on the city's income streams.

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Mayor Tenby Powell said this modelling also potentially indicated a severe impact on the council's ability to carry out vital infrastructure investment projects.

Powell said this data showed that revenue for the 2020/21 year was likely to be between $53 million and $77m lower than originally budgeted in its draft annual plan.


"The best-case scenario is that a revenue reduction in that range would halve our capital works programme," he said.

"The worst-case is that our ability to deliver any of the vitally important capital projects on our books would be virtually non-existent, affecting our ability to renew our existing infrastructure, let alone invest in much-needed growth."

Powell said Auckland, Wellington and Queenstown were facing similar issues.

"Fast growth councils like ours have no choice but to carry significant levels of debt to fund essential growth infrastructure.

"Our draft 2020/21 annual plan, which was subject of community consultation, reflected the fact that the council urgently needs to increase revenue to avoid breaching its debt-to-revenue covenants.

"This, in turn, would impact on the council's ability to borrow through the Local Government Funding Agency at a low interest rate," he said.

Powell said the first draft of the plan was prepared prior to the level 4 alert lockdown and proposed a 12.6 per cent average rates increase, to allow the council to maintain a prudent debt-to-revenue ratio.

That was "pruned back" to 7.6 per cent in recognition of the likely effects of the lockdown.


"Now we'll need to look for new solutions, in collaboration with the Government, regional partners and the business community, so that we can play our role in the economic recovery and support local businesses and our residents, which will be so vital as we emerge from the pandemic."

Powell said his council acknowledged the "positive and ongoing conversations with Government ministers" around debt funding issues and the Government's planned economic stimulus package.

"The council also has strong construction industry support, and the backing of the wider business community," he said.

"The pandemic has had an enormous effect on us, as it has on communities around Aotearoa, but there are some significant opportunities open to us too.

"With Crown investment and support, there is a path that will help lift us out of recession and create the houses and jobs we will need to keep growing through the next decade and beyond."

The council's revenue forecasts predict significant reductions in all of its 2020/21 revenue streams, with the worst-case scenario involving a total revenue reduction of about 25 per cent.


Impacts included revenue from rates down by up to $13 million; user fee revenue down by $20m–$34m; Bay Venues Limited (which runs swimming pools and community halls) external revenue down by $10m–$16m; and development contributions and other capital contributions down by $10m–$14m.

Powell said the council recognised the need to support local businesses through the pandemic recovery period, but it must balance that with the ability to renew essential assets and invest in economic regeneration.

"Even while on a level 4 lockdown, we must lift our heads up and look to our post-Covid-19 future. Jobs and houses are key," he said.

"Tauranga's priorities post-lockdown are very much focused on the eastern and western corridors, together with residential intensification in existing urban areas, that will unlock thousands of houses and jobs and will enable the western Bay of Plenty to flourish over the next several decades.

"All of this has been in the planning for years, it's now time to act," he said.

"That will require investment in three waters infrastructure, transport networks and community facilities. Likewise, we see the state highway and rail routes to the port as critical to New Zealand's recovery," he said.


Powell said the council would now like to see an active partnership with the Government, Infrastructure NZ, NZ Transport Agency, Kiwirail and the private civil construction sector, to take hold of this issue and map out the infrastructure needed to support and manage future city development and access to the port.

"Small and medium-sized businesses will also be a particular focus and the council will be working with the Tauranga Chamber of Commerce and Priority One to develop and implement approaches which will support the sector's recovery," he said