Read pages 20–31 in our consultation document, Securing our future[PDF 8.41 MB], to learn more about Investing for resilience and growth.
A big part of this long-term plan is our proposed investment in our district’s infrastructure and facilities.
We plan to substantially increase our capital work programme. We propose this for several reasons.
The most significant way we can help our community recover and rebuild from the impacts of the COVID-19 pandemic – and to mitigate against any future impacts – is to increase our work programme and spending in the district. Nationally, this is the approach that the Government is taking, and they have asked councils to ‘do their bit’. Our plan to increase investment in infrastructure is similar to what many other councils are doing.
Our district is growing. We know our community wants to see us grow well and sustainably and to ensure that we protect our environment as our population expands. Where we can, we want ‘growth to pay for growth’ and our development contributions policy provides for us to recoup costs for new infrastructure from developers. However, the overall infrastructure network and facilities in our district are Council’s responsibility and we want to be proactive about meeting our growing district’s needs. As we respond to climate change, we need to increase our investment in protection for our district’s infrastructure and try to future-proof our assets.
We already have some big projects under way and planned such as our comprehensive stormwater upgrade programme and our ongoing improvements to our drinking water safety and resilience through investment in our water treatment plants. We also want to take the opportunity to think creatively and optimise our investment in key community facilities such as the Waikanae Library and service centre, and the replacement for the community centre in Paraparaumu now that we can no longer continue to use that building.
Financially, we are in a sound position to undertake increased investment. Over recent years, we have been managing our finances very closely so that we were in a strong position to increase borrowing for infrastructure we knew we would need in the future. We had restricted capital spending to required work and stabilised our debt. Our prudent financial management has been recognised with our credit rating increasing two grades to AA in 2019 and Council maintaining this rating again in 2020. The current financial environment makes it a good time to invest in development as rates for borrowing are very reasonable.
Our two main strategies – our financial strategy and our infrastructure strategy feed into our long-term plan and we have reviewed and redeveloped them for our new conditions alongside the draft long-term plan.
Our infrastructure strategy spans 30 years to give us a long view of our district’s infrastructure needs. We have good information about the condition of our assets and the infrastructure strategy gives us a clear picture of the investment we need to make in our district. It reflects increasing climate change impacts, new requirements from the Government such as for drinking water standards and the effects of growth on our network of infrastructure.
Our financial strategy enables us to achieve our district’s goals for ongoing service delivery and development. The financial strategy includes the limits we set to ensure we can manage an increased work programme. For this long-term plan we are proposing to increase the limits for each of the main elements of our finances – our capital spending, our borrowings and our rates income.
Increasing our investment does mean that we will borrow more, but as our borrowing will be for assets and facilities our district will use for a long time we see this as ‘good debt’. As noted, the rates for borrowing are currently very low. We will keep borrowing through the safest source – the Local Government Funding Agency (LGFA) – and we also propose that we set out limit for borrowing lower than the LGFA considers reasonable.
It will be a challenge to manage a much larger work programme so we are gearing up to do that. We have set up a project management office within Council to oversee work and we will use different approaches to procure and contract work, for example, setting up contracts with suppliers over several years so that work on big programmes can be done most efficiently. If we find we can’t get all the planned work completed we will prioritise to make sure the most critical work is progressed. We will also only borrow funds when we actually need them.
There are impacts on the rates income we need to help fund our services. However, we are also needing more rates income just to pay for increased costs such as inflation and depreciation. Other councils have assets that provide income, such as ports, which we do not. One of the things Council wants to do in this long-term plan is look at other ways we can generate revenue.