Infrastructure, Inflation And Freshwater Quality Drive Up Long Term Plan Costs
Marlborough District Council’s Long Term Plan 2021-2031 priorities will be discussed at the Council Budget meeting this Thursday 25 February from 10.30am. The Mayor and Councillors will discuss the overall budget and a number of items requesting increased levels of service that combined will set the course for the Council’s programme of investment over the next decade.
Mayor John Leggett says this year’s rates rise is likely to be higher than what Marlburians have become used to.
“Last year we kept the rates increase to only 1.88% because of the impact of Covid and lockdowns on our economy, which impacted heavily on our tourism, retail and hospitality sectors. However, like many councils around the country we are now playing catch up because we could only hold down that increase last year by deferring expenditure which is still needed for Marlborough to progress.”
“Overall our economy has bounced back quite well, but as the main infrastructure provider in a growing region, we can’t afford to take our foot off the pedal.”
“Like every sector of the economy we also face inflationary pressures which we must plan for in our budget – the Local Government Cost Index is forecast to be about 2.4% per year for the next few years.”
“So currently we’re looking at a rates increase for the 2021/2022 financial year of close to 6%. The figure is not set in stone but I’m sure it is going to be a challenge to get it much lower. We also expect to receive funding requests from the Marlborough community through the LTP public consultation process during April and May.”
“In addition, we have inherited new costs imposed on councils by the Government’s freshwater regulations. Whilst we support improving freshwater quality, there are significant new monitoring, training and reporting costs that regional and unitary councils will have to pick up, which for this Council could amount to $2m each year.”
“Another cost driver is the Government’s wish to enforce the NZ Drinking Water Standards much more strictly through its new water services regulator Taumata Arowai, whose mandate also includes wastewater and stormwater. Whilst we have has already delivered some major water treatment upgrades, we need to progressively build a number of other new drinking water treatment plants to fully comply.”
“Our capital expenditure programme for core infrastructure is a significant contributor with a record $74 million budgeted for 2021/2022, and an average of $70m in each of the following ten years. Marlborough’s level of growth, which has also increased the pressure on housing, is higher now than in the past, and is contributing to that infrastructure need.”
As a result of this Long Term Plan’s proposed capital expenditure budget of $705m, which is $180m higher than the $525m budgeted in the 2018-28 LTP, the Council’s net debt is projected to increase and peak at $225m in 2029.
“While this amount is above the Council’s self-imposed debt ‘cap’ we set ourselves as part of the 2018-28 LTP, it is well within the Local Government Funding Agency’s maximum debt levels.”
“Borrowing is affordable at present and it spreads the cost of infrastructure improvements across the generations, rather than imposing it on today’s ratepayers. This is known as intergenerational equity and is a common funding principle applied by local governments.”
The Mayor also noted growth pressures were creating more road congestion and there was increased maintenance and capital spend required to keep local roads up to the public’s desired standards.
He said the Council also faced uncertainties with the Government’s review of the Resource Management Act and its desire to reform the ‘3 Waters’, which may result in councils losing their central role in the ownership, management and delivery of drinking water, sewerage and stormwater, and new larger regional entities taking up that role.
The LTP 2021-2031 Consultation Document will be adopted by the Council for consultation on Thursday 1 April. Public submissions will be open from 1 April until 6 May. For those wishing to speak to their submission, hearings in front of Councillors will take place from 1 to 3 June.
Council will make its final deliberations on public submissions on 8 June and adopt the Long Term Plan 2021-2031 on 24 June. New rates will become effective on 1 July.
Notes for editors
The Council Budget agenda is available at https://www.marlborough.govt.nz/your-council/meetings?item=id:2c04tpv0s17q9skkg275
A number of agenda items cover requests for increases in levels of service for a wide variety of items, ranging from upgraded community facilities, managing the Marlborough Convention Centre, earthquake strengthening the Renwick Museum and setting up a Screen Marlborough office to attract more filmmaking to the region.