2017/18 Annual Plan Adopted Today
Hurunui District Council officially adopted its Annual Plan today, and struck the rates for the next financial year, approving a 6.0 per cent increase. The Annual Plan highlights the financial impact of the council’s plans; changes from the 2015/25 Long Term Plan, and its plans to manage this.
The 2017/18 Annual Plan includes changes made by councillors from the 2015/25 Long Term Plan because of the unforeseeable damage and the associated costs that resulted from the November 2016’s earthquakes.
The council’s debt has risen significantly due to funding the response and recovery phases of the earthquakes. Government agencies will refund some of these costs, and the council has already received financial assistance from various funding agencies - however, there will still be an anticipated shortfall to be met by the district. This unplanned increase in debt caused the council to re-evaluate the timing of planned projects, and although it intends to still undertake the work planned for the district, some projects have been delayed where practicable to do so.
Mayor Winton Dalley said that in carrying out the budget deliberations, the council was particularly concerned with those who are suffering hardship due to the long term financial effects of the drought, business downturn, and loss through the earthquake, and the ongoing business uncertainty for those affected by State Highway 1 closures.
“We appreciate that paying rates will be difficult for some and I urge you to contact us to discuss any difficulties you are having sooner rather than later. You may be eligible for a rates remission / rates relief, or other assistance through our earthquake recovery plan.”
In summing up the adoption of the annual plan today, Mayor Winton Dalley said that the earthquake had definitely complicated matters, but that the Annual Plan 2017/18 is still on track in the main and that the anticipated rates increase had not been exceeded.
“The council has tried to balance its continued focus on affordability and sustainability of services while also understanding the importance in carrying on and ensuring the community’s expectations continue to be met.”
Mayor Dalley also noted that the council had invested considerable time in encouraging the public to get involved and have their say and that this had been very successful with 13 briefing sessions held in different towns across the district. Extensive advertising of the annual plan’s proposals and briefing sessions were included in local papers, libraries and social media and as a result, over 100 submissions were received. These submissions were all considered at a special council hearing.
“A huge thank you to all of you who did submit on our proposals” said Mayor Dalley, “And especially to those of you who took the time out of your day to come in and speak to your submission. We appreciate the time and effort this takes.”
Key issues in the Annual Plan include:
Hanmer Springs kerbside glass collection
Currently, the only township in the Hurunui district that has a roadside glass collection is Hanmer Springs. Residents enjoyed this service at no additional charge until a $15 charge per property was introduced in 2016. However, this is still not sufficient to cover the cost of this service, and the council is therefore increasing the rate for glass collection in Hanmer Springs to $20 per property per year from July 2017.
Waste kerbside collection rate
In 2015, the council reduced rates for kerbside waste and recycling collection instead of supplying each household with 52 rubbish bags and 52 recycling bags. A user pay system was introduced so that residents only paid for the service they used. For example, not all residents used 52 bags per year but under the old system, that is what they paid for.
The introduction of this system has been more successful than anticipated in diverting waste to recycling and has substantially increased the volumes of waste being handled by our transfer stations. A consequence of this is that fewer rubbish bags are being purchased than was expected and the council is therefore not covering the costs of the household collections. In the 2017/18 Annual Plan the price of the household waste charge will be increasing to meet this shortfall. The refuse collection rate will increase to $90 per property per year for those in the collection areas (from $44). This will take effect from July 2017.
Rating for rural fire services will cease at the end of June 2017. This is due to the government overhaul of all fire services in New Zealand and the creation of a new government department, Fire and Emergency New Zealand (FENZ). Historically, rural fire services have been managed through the local authorities, and paid for by rural ratepayers. The transition of rural fire services into the FENZ on 1 July 2017 means that these services will no longer be managed or rated for by the council. Instead, they will be funded through insurance levies and taxes. Therefore, the council will no longer rate for this service from 1 July 2017. (Previously, the council had budgeted to receive a total of $333,470 in rates.)
The Annual Plan has provision for funding a full time employee for Civil Defence. The council currently employ a half time position. To boost the preparedness of the district to get ready for a disaster, the council considered a half position to be too light in the present climate and forecasted risks. The Annual Plan includes an increase to the general rate for Civil Defence from $24.68 to $31.62 per property per year. (this covers all of the civil defence function costs – not just the employee.)
Earthquake recovery and debt
The November 2016 earthquake caused widespread damage throughout the district to private and council owned property and infrastructure. Much of the damage to Council owned infrastructure has been repaired but there is still much to be done.
Our debt has risen significantly as a result of the earthquakes. The known cost for the initial response to the disaster and subsequent repair has been estimated at $23 million. Much of this will be refunded through a mix of government subsidies, insurance and other funding agencies. Based on the assumed level of assistance from other agencies, it is forecast that the internal debt relating to the earthquake response and recovery will be $6.5 million as at 30 June 2017 but will reduce to $3.5 million by 30 June 2018. Despite the subsidies, there will still be a substantial shortfall for the Council to fund through rates.
This unplanned increase in debt has been offset, in part, through some of our planned capital works programme not being done in the 2016/17 year. There are various reasons for the delay in completing these projects, but they have been reprogrammed for the 2017/18 year instead. These include :
• Amberley Water – new deep well water source; $250,000
• Amberley Sewer – network modelling; $61,711
• Cheviot Water – main intake upgrade; $395,527
• Hanmer Springs Sewer – disposal project; $3,632,596
• Hanmer Springs Sewer – network modelling; $61,711
• Waikari Sewer – upgrades to meet new resource consent requirements; $604,369
Hurunui Water Project
The 2017/18 Annual Plan includes a budget provision of $500,000 for the possible purchase of shares in the Hurunui Water Project while further due diligence is undertaken. The council considered many submissions both in support of and opposed to the proposed share purchase, before deciding that the prudent course was to leave its options open.
In making their decision to keep this funding provision in the budget, the councillors considered that investment in irrigation infrastructure is essentially a risky business and any possible investment in HWP carries significant risks. For example:
• The proposed investment will be unsecured and if HWP does not proceed, the investment would be lost.
• The shares are not expected to pay a dividend and therefore, unlikely to generate any income.
The councillors decided that despite the risks, the shares are potentially an investment in economic development and water security, both of which would benefit the district at large. Once the due diligence has been completed, further consultation will be undertaken before entering into any commitment to purchase. At any point, the council is entitled to opt out of this proposal and will do so if the benefits do not outweigh the risks.
Chief Executive Officer, Hamish Dobbie said that both Mayor Dalley and Deputy Mayor, Marie Black both declared a conflict of interest due to being existing shareholders in the Hurunui Water Project. “Because of this”, he confirmed “Neither participated in any debate, deliberations or the decision making to do with this project.
“Both physically removed themselves from the room when the Hurunui Water Project subject has been discussed, and they will continue to abstain from future discussions and decision making on this subject.”