Regional councillor Martin Williams (centre) says council has shouldered the Covid welfare response well. Photo / File
OPINION
Regional ratepayers read on. You have a choice to make. It's about when you next face a rates increase and by how much.
The regional council is releasing its Annual Plan this week for consultation enabling you to make that choice. Let me explain how this works and what's at stake.
Before the first Covid-19 case hit our shores on February 28, 2020, we were already facing some major challenges as a council. The council's 10-year plan contained an ambitious programme of funded work programmes aimed at reversing a long legacy of environmental issues affecting our region.
Erosion of sediment into our waterways and marine environment being one notable example, with $30 million of funding set aside to assist replanting the steepest highly erodible catchment areas.
And let's not forget the small matter of climate change. Huge investments will be needed in our river flood protection schemes and to respond to coastal hazards; water security is becoming paramount as heralded with this summer's terrible drought, and at the same time we need to reduce our carbon emissions footprint as a region, towards the planned "net zero" 2050 target.
On top of that, there is no let-up in the tendency of central government to load more and more responsibility on local authorities; the very significant reforms on freshwater management coming at us like a minor tsunami, being a case in point.
As it was, the council was already stretched in every direction. Then the world turned upside down. The Government moved quickly not just to deal with the virus but with a range of financial stimulus and support measures of previously unimaginable scale, designed to bolster the economy and help people through the Covid-19 shock, compared in severity to the Great Depression of the 1930s.
As a council, and while we don't have a Reserve Bank to back us, we were strongly motivated to do what we could to help our communities through this crisis, and beyond. Our Corporate Services team were charged with delivering options for a zero rate increase, in the knowledge that revenue from the council's investments and other assets had tanked, leaving an estimated $6.1m shortfall in projected revenue for the year ahead.
Fortunately, we have a strong balance sheet and so propose to borrow to offset that shortfall and repay it over a period of 10 years, otherwise a massive 25 per cent increase in rates would be needed.
On top of that, and as things were, the 10-year plan assumed a 7.3 per cent rates increase for 2020. A zero rates increase this year means a further $1.5m revenue shortfall for the coming financial year, which we would also have to borrow just to maintain the level of service planned pre-Covid, and tackle the issues that were already in front of us – ie, to "stand still" or at least not go backwards in the face of those challenges.
As well as providing rates relief, we are proposing to set up a $1m economic recovery fund in the Annual Plan, reallocated from part of a budget tagged for additional office space for field staff. Ideally this fund would be applied where we can leverage central government funding to create jobs through capital projects that would add value to the region, with one project my Napier colleagues have been working hard towards, being a new regional park alongside the Ahuriri Estuary.
But this is where you come in as ratepayers. An assumption in the Annual Plan is that 2020 will be the toughest year financially for our communities. In effect, what we are therefore proposing as the preferred option is postponing the planned 7.3 per cent rates increase for this year, until 2021. The catch is that a bigger increase in rates would be needed next year, in order to "catch up" on the planned level of rating revenue assumed in our 10-year plan.
However, a number of economic assessments suggest that actually 2021 could be just as tough, even tougher than the months ahead, as job losses and the effects of this year's drought begin to bite in earnest.
With that in mind, maybe we should keep the planned 7.3 per cent rates increase this year, meaning we are better placed to tackle whatever is coming our way in 2021, than by borrowing more now to get us through 2020?
This is one of the options you are being consulted about, as is a third "half-way house" option, splitting the 2020 rates increase over two years to soften the effect on ratepayers. There is probably no one right answer and at the end of the day, it is your opinion that counts.
What I can say is that as a councillor I am proud to be part of an organisation that not only shouldered much of the welfare response during the Covid-19 lockdown, but has such an ambitious programme of work in front of it; doing our job looking after the environment for its own sake, and for the people and economies of the region.
More important though, what do you think? As the one "paying the piper" for all of this, please have your say, and let us know.
• Martin Williams is a Hawke's Bay regional councillor