Waipā mayor Susan O’Regan warns of double-digit rates rise due to economic pressures

Waipā District Mayor Susan O’Regan says economic headwinds the council faced earlier this year have turned into “a bit of a tornado”.

The economic headwinds the Waipā District Council faced in the development of its Enhanced Annual Plan earlier this year have turned into “a bit of a tornado”, Mayor Susan O’Regan says.

Her words come after a workshop in which elected members were asked to provide direction on the financial strategy for the council’s nine-year Long Term Plan, due for adoption next June.

Initial financial modelling shows a 16.73% average rate increase will be needed for the council to make its budget work in the next financial year, taking into account the expected level of growth in the rating database, and the need to plan for further growth.

This is despite $166.7 million of cuts being made to the proposed capital expenditure programme and a reduction of $26.9m in operating expenditure projects over the nine-year period.

The rate requirement would increase from $99.4m to $116.8m to fund the balance sheet. Net debt levels are forecast to reach $596.2m by 2030/31, with about $260m, or 62%, of that debt growth related.

“What we are seeing is symptomatic of being a tier-one growth council. Not only do people want to come and live in our communities, we are required by the Government to plan for the future, and that is really impacting our business,” O’Regan says.

The indicative increase in rates requirement is also based on an assumption the council’s borrowing limit will be increased from the current 2.8 times its revenue to 3.5 times.

A potential new tool is being considered for growth councils by its lenders, the Local Government Funding Agency, but the outcome will not be known until February.

“Although there are only a few levers we can pull, we are doing all we can to try and reduce the impact on our ratepayers, and the wider community, because we are acutely aware of the cost of living challenges some people are facing,” O’Regan says.

“It is fantastic to see consideration of a new financial tool being considered to alleviate the financial impact on high-growth councils like ours. While, it’s not a full solution, it will be helpful.”

The other conundrum was one all New Zealand councils were facing.

“We’ve been hit hard by high inflation, high interest rates, rapid growth, the effects of Covid-19 and its associated issues, plus the global economic downturn over successive years,” O’Regan says.

“However, I am confident that we are looking very hard at all of our expenditure, not just in the current year but across the next nine years and we will continue to do so. This is most definitely not a place where we want to be.”

The draft budgets had been based on the overarching principles of continuing to deliver value, ensuring a fair and equitable approach to the funding of services, and staying focused on the longer-term and bigger picture.

The aim was to produce one nine-year plan, not nine one-year plans in an attempt to provide ratepayers with some predictability of rates over time.

“Nobody wants a double-digit rates increase but we also have to be honest about the actual cost of what we provide to our communities, and we are a growing district,” O’Regan says.

Double-digit rate increases in Waipā had been somewhat ‘unchartered territory’.

“As elected members, we have all had a hand in getting here, and now we have to have a hand in charting our course out of here,” she says.

Further refinement of the plan will continue over the next few months. The community will have the chance to have their say on the draft Long Term Plan in March next year.