Councils are continually being asked to cut costs but keep delivering the same services, and that’s simply not possible.
Whakatāne District Council Chief Financial Officer and GM Business Partnering Gary Connolly says that the funding demands on local government are exceeding what it’s capable of achieving, and Whakatāne District Council is not exempt.
“Two key factors are having a massive impact on Council’s long term budgeting process; significant inflationary increases and the recent repeal of the Water Services Reform Programme which has reintroduced the need for our Council to fund three waters infrastructure in the future.
“Recent cost escalations across the board have put the average rates increase at a starting point of around 11.5%. That is our ground zero, before any line items have been factored into our budget. This is simply for making good on our current financial commitments.”
Mr Connolly notes that Council’s funding model is not comparable to a household or a business budgeting process.
“The constraints of the council funding system are both complex and rigid. We rely almost entirely on ratepayers to finance us, so we keep tapping into the same pool of people and businesses for funding. It’s simply not sustainable in its current format.”
Mr Connolly explains that to maintain current levels of service, Council needs to increase its spending each year.
“This is to maintain assets and to meet inflationary increases. Materials such as concrete have seen an increase of 100% in the past two years.
“We can’t maintain our debt borrowing levels, improve and build the infrastructure we need, provide the levels of service people expect and reduce our spending all at the same time. It’s simply not possible.”
The government’s recent decision to scrap the three waters services reforms has put the burden back on to councils. Work that has been carried out as part of the three waters reforms process has identified the necessary investment for maintaining and upgrading the district’s water infrastructure and delivery.
"We can only factor minimal maintenance and compliance costs into the budget for the next 10 years, meaning that important upgrades will not be able to happen unless something significant changes," Mr Connolly says.
Council staff and elected members have spent several months working through the budgeting process, however the late addition of three waters back into the process has meant going back to the drawing board.
Council will continue to work on the draft proposed Long Term Plan 2024-34 and will seek feedback on this through a formal consultation process beginning in March 2024. Several opportunities will be available for people to have their say, and for Council elected members to consider as they work to finalise the plan by 30 June 2024.