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Home / New Zealand

Hastings District Council promises prudency after $11.6 million deficit reveal; cyclone mainly to blame

Hawkes Bay Today
25 Sep, 2023 12:14 AM3 mins to read

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Hastings District Councillor Damon Harvey has promised the council will exercise prudency after an $11.6 million deficit was announced. Photo / Warren Buckland
Hastings District Councillor Damon Harvey has promised the council will exercise prudency after an $11.6 million deficit was announced. Photo / Warren Buckland

Hastings District Councillor Damon Harvey has promised the council will exercise prudency after an $11.6 million deficit was announced. Photo / Warren Buckland

The chair of Hastings District Council’s (HDC) performance and monitoring committee says it must respond to its $11.6 million deficit by being as prudent as possible, with the looming possibility of increased targeted rates on the horizon.

Hastings District Council recently revealed 65 per cent of the deficit is attributed to Cyclone Gabrielle-related costs, but the remaining 35 per cent highlighted increased ‘business as usual’ costs - in particular, water and wastewater services.

The council’s performance and monitoring committee considered a report on the deficit in a Draft Financial Year End Results paper at a meeting on Thursday.

HDC confirmed the General Rate deficit for the 2022/23 financial year was $7.6 million.

The committee went on to approve the council officers’ recommendation that the General Rate deficit be funded as much as possible from reserves ($5.5m), with the balance loan-funded.

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This funding was capital that was previously set aside for major projects and emergencies.

The Targeted Rate deficit is $4 million, almost all resulting from increased costs for normal business, particularly for the delivery of water and wastewater services.

Increased normal business costs were also said to relate to higher-than-forecast interest rates, insurance, IT and maintenance costs, planning and regulatory costs, and increased staff numbers.

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The council said this deficit would largely be managed through loan-funding (for water and wastewater) and potentially through increased targeted rates.

Decisions regarding these increases would be made during next year’s Long Term Plan process.

“Across [the] council, we have ensured that all teams have interrogated every project that was not undertaken in the last financial year, and those they were planning on undertaking in the current financial year,” said Damon Harvey, chairman of HDC’s performance and monitoring committee.

“We must take this approach to reduce, as much as possible, the impact on rates, while still ensuring that we maintain the level of service required by our residents.”

Hastings Mayor Sandra Hazlehurst said it was inevitable that Cyclone Gabrielle would impact costs.

“There is no doubt that the impacts of the cyclone are going to take a long time to recover from, both for our many residents who were dreadfully affected, and in terms of the impact on all of us via the costs to [the] council and therefore our residents,” she said.

The effects of the cyclone, particularly on the council’s finances and assets, will have a major impact on the Long Term Plan being prepared next year, Hazlehurst said.

It is expected the audited Annual Report, due in October, will also record a considerable drop in the value of infrastructure assets, likely in the “hundreds of millions of dollars”, given the damage the cyclone inflicted on HDC’s assets, particularly roads, bridges and parks.

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