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Porirua City Council Considers Capital Spending Cuts And Rates Position

Porirua City Council’s Te Puna Korero committee met today to agree a rates starting point for discussion with the community ahead of its Long-term Plan (LTP), which sets the city budget for the next 10 years.

Mayor Anita Baker said the indicative 18 per cent rates increase, even after a major cut in capital spending, highlighted that the funding model for local government was fundamentally flawed.

"This is a signal to government that local government is not funded correctly and we’re all in major strife. Local government needs waters off its books - we are all broken".

Mayor Baker said like all other councils in the country, Porirua was facing cost increases across the board, and it cost more to provide the same core services.

"But that’s not our biggest challenge - we’re in this nightmare because of 3 waters.

"In the past we have invested heavily in water, to ensure that we continue to make gains in harbour health and to set the expectation that any new entity who takes over in the future must do the same. But with the future of water reform unclear, we can no longer afford that same heavy investment without significant rates rises. This is why we have no choice but to cut the amount of money we are spending on water services.

"Our 3 waters services (wastewater, stormwater, and drinking water) make up a huge proportion of our capital spend and have a significant impact on rates. This is why we as a Council are supportive of water reform as we can no longer afford to maintain these services without a fundamental impact on our ratepayers and residents".

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The report, presented to Te Puna Korero, outlined a range of fiscal issues facing Council, and three scenarios for Council to consider regarding its level of capital expenditure. The current capital programme is driving high rate increases and significantly increasing debt, and left unchanged would lead to likely rates increases of 24 per cent. The changes proposed to get this starting point down to 18 per cent include:

  • Reducing spending on our capital programme by $120m - $60m in the current financial year and a further $60m in the first year of the LTP. This means changes to projects, deferring some things, and reallocating resources.
  • Focusing on ways to manage our overall debt. This is important as it gives us more room to borrow for unseen emergencies like we’ve seen in the past. If we reach our debt limit we breach legislation and it leaves us vulnerable and exposed.
  • No new projects in the first few years of the plan, as we get back on track. However we do need to put aside some money for the future (i.e. recycling, climate, sustainability). We will ask our communities about what is important to them in the future but we are clear on our position for the next few years - which is a tight focus on affordability and the budget.

"We know this is a high number, and we aren’t comfortable with it. We’re doing everything we can do reduce it, and that means making some hard choices. Some of the costs, particularly in the first five years, are immoveable. These are things like contracts that are already committed and maintaining renewals in our core services," Mayor Baker said.

"Over the next few months as a Council we will continue to work towards how we balance our priorities into the future with affordability for both Council and our community in the short-term".

Community consultation on the Long-term Plan will start formally in March 2024 - with some key decisions (and proposed projects to consult on) coming through to Council in December.

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