Happy New Year to you all. I hope you have had the opportunity to enjoy the fabulous summer we have been having and explore the many wonderful places this district has to offer.
Counci’ls focus towards the end of 2023 and now into 2024 is our Long-Term Plan and preparing a consultation document that will soon illustrate the challenges that we face as a community.
There has been much talk in the media over many months about the local government funding model that is “broken” and how nationwide, councils are being forced to look at the balance between significant rates increases and cuts to essential services.
Here in the Horowhenua it is no different, with council after months of workshops and briefings, exploring different options, endorsing a draft Long-Term Plan budget that proposes an average increase in rates of 17.4 per cent. To put that in perspective, the increase in costs around interest, depreciation, insurance and utilities account for 14 per cent of that proposed increase.
The decision to propose such a significant rates revenue increase is not lost on councillors who are aware that the district has a disproportionately lower than average household income compared to the rest of NZ and the impact of the cost of living increases in recent times that have affected everyone.
...for years, council has not been charging sufficient rates to pay for our capital and operational costs and it has caught up with us.
The reality though, is that that for years, council has not been charging sufficient rates to pay for our capital and operational costs and it has caught up with us. When faced with rates increases in the past, council has debt-funded depreciation as a way of minimising the impact on rates. While this has made rates increases more palatable in the past, it has meant that over time, council has not been able to reduce the level of debt to have room for the renewal of capital assets. This approach is not sustainable.
When you also factor in the cost of the many central government policies and strategies that we have had to implement over the years, without funding support, it makes it even harder. To illustrate this, figures I have seen recently show that local government contributes 44 per cent of the GDP in this country but only receives 12 per cent of the total tax revenue. It is no wonder we say that the funding model is “broken”.
Council will need to have some really hard conversations with our community, as we grapple with these challenges. Councillors debated and discussed various saving options but ultimately a consensus was reached that would see a higher rates revenue increase with small impacts to service levels.
It is vital that we hear from our community on what levels of service they are prepared to accept.
Council is committed to being upfront about the challenges we are facing in regards to rates. The LTP consultation document will be printed early March and the consultation period will officially start on March 15.
We are encouraging all residents to participate in the LTP consultation process, so that they share in the shaping of the future of this district.
