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Next Phase Of Development For Wellington City’s 2024-34 Long-term Plan

A proposal to deal with Wellington City Council’s significant external economic pressures while continuing to deliver for the capital city was today presented to elected members working on the 2024-34 Long-term Plan.

Options and costs will be further investigated over the next two months, with a draft budget presented in February for approval prior to community consultation on the Long-term Plan in April.

“We can continue to invest in making Wellington thrive but need to balance the pace of our investment with what we can afford,” says Mayor Tory Whanau.

“It’s up to us as a Council to consider the challenges, listen to feedback, then come together and decide how to best strike that balance. As a community, we need to make some tough decisions about what to prioritise.”

The initial starting point for next year’s rates increase following input from elected members was 26%. After a line-by-line review of operating costs conducted over the past month, cost reductions and funding adjustments of about $18 million were identified that do not impact levels of service, bringing the increase down to 21.7%.

With additional levers being pulled, today's budget proposes significant reductions in planned capital and operating expenditure and would result in a predicted rates increase of around 14-16% for the 2024/25 financial year. This excludes the levy being introduced to fund the Moa Point sludge minimisation facility, likely to be around 2%.

“Staff have worked around the clock to strike the balance of delivering for our city without imposing significant rates increases. However, like other councils around the motu, we are facing huge cost pressures. Escalating inflation, interest rates and insurance costs are hitting us hard. At the same time, we need to make critical investment in our infrastructure, resilience, and climate action and adaptation,” says Mayor Whanau.

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“Rates increases are really tough on our community, but as a council we have limited options. The Review into the Future for Local Government described the funding system as ‘over-burdened and constrained’ and we are seeing the impacts of that now.

“Once we have the full picture in February, it’ll be up to Councillors to collectively decide how we strike the balance between rates increases that aren’t too burdensome, while not imposing deep cuts that affect our ability to deliver for the city. This is a tough job, but I am committed to us landing in the right spot.”

The Council has undergone a comprehensive process to identify potential savings, resulting in a proposed reduction in annual operating expenditure, increased revenue from operating activities and funding adjustments of around $53 million. The proposed approach includes options that would bring the rates increase down further to a current estimate of 13.8% (factoring in growth in the number of ratepayers of 0.6%), includes:

· Further efficiencies through organisational change initiatives (approx. $5 million or 1% savings)

· Increasing fees and charges, new revenue sources (approx. $5 million or 1% savings)

· Sale of surplus non-strategic assets (approx. $8 million or 1.7% savings)

· Delaying return to fully funding depreciation of some assets (approx. $10 million, 2.1% savings)

· Decrease in levels of services (approx. $7 million or 1.5% savings).

Details about what the cost reductions in each category would entail are still being worked through and will be finalised in February. The numbers reflect information currently available and are likely to change between now and June 2024 when the Long-term Plan is adopted and rates are set for 2024/25.

“We’re committed to comprehensive engagement with the community throughout this process,” says Councillor Rebecca Matthews, chair of the Kōrau Tōtōpū Long-term Plan, Finance, and Performance Committee.

“Advice from the Citizens’ Assembly in October has shaped our approach, and I strongly encourage all Wellingtonians to get involved and have their say when we go out for formal consultation in April next year.”

Credit-rating agency Standard & Poor’s recently confirmed the City Council’s credit rating will remain at AA+/A-1+, which is the highest credit rating of any local authority in New Zealand. The credit outlook remains negative, and they have advised that decisions made in adopting the 2024-34 Long-term Plan will be closely monitored.

The Council’s financial strategy is to work towards a rates rise (after growth in the ratepayer base) on average across 10 years of between five and eight percent, with higher-than- average rates increases likely to be required in the first few years, and maintain a debt-to-revenue ratio within 225%.

2024-34 Long-term Plan key dates:

· 15 February: Deliberations on draft budget and plan for consultation

· 13 March: Agreed consultation document released to Audit

· 9 April: Adoption of audited consultation document

· 12 April – 12 May: Public consultation on draft Long-term Plan

· 30 May: Final deliberations based on community feedback

· 26 June: Adoption of Long-term Plan.

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