[As published in July/August BayBuzz magazine.]

July begins a new fiscal and political year for our councils. Taking stock of the current local government landscape in Hawke’s Bay takes in our new rates, the prospects of any further funding support from the Government, recovery efforts (including civil defence improvements) and planning for the region’s longer term. 

Rates 

With the dust barely settled on dramatic rate increases decided by all Hawke’s Bay councils for the next three years, ratepayers will be feeling the aftershock in July, when they actually begin receiving their first rates invoices for 2024/25! 

The bill due will be for one-fourth the total owed, but staring in our faces will be the total amount as well. And of course we’ll get a bill from each of the two councils that serve us. 

Here’s where the rates landed: 

Averages like those above by definition hide all sorts of heavier hits on some individual ratepayers and councils might find themselves facing an unusual number of hardship cases seeking rates remissions. Tensions likely requiring caring management. 

A year from now, candidates for our various councils will declare, and it will be fascinating to see how much unhappiness with incumbent councillors lingers and what challengers choose to say about rates decision-making. 

But staying in the present … 

With LTPs and rates decided, our councils are now in full spending mode. Given the sheer volume of dollars committed to restoring the local roading network, drivers anywhere in the region should not go far without encountering road repairs. 

Probably the next biggest spend to get underway will be flood protection, but as I write, beyond plans for risk mitigation for remaining Category 2 homes, that overall strategy has not yet materialized (due in July). 

Down in the weeds, councils will be implementing the cuts, efficiency measures and deferrals they have promised to ‘business-as-usual’ practices and programmes. ‘Levels of service’ will be reduced, from refurbishments delayed in Hastings (e.g. Splash Planet, Tomoana Showgrounds) to fresh assessment of council funding support for ‘commercial’ enterprises in the case of Napier (e.g., Ocean Spa, Napier Conferences and Events and Kennedy Park Resort) and review of other subsidised operations (e.g., the aquarium, Faraday Centre). 

One critical cross-council initiative to get underway is urgent and substantial improvement to Hawke’s Bay’s civil defence structure and readiness. The exhaustive review with 75 recommendations prepared for our councils by former Police Commissioner Mike Bush and released in March was compelling and detailed. 

A statement by our CDEM Joint Committee (our mayors, Regional Council chair and Iwi leaders) delivered all the expected rhetoric. 

“What is clear is that as a region we need to be prepared to undertake a complete overhaul of our approach to civil defence to ensure that our communities are better prepared to manage or mitigate the devastating impacts of an event like Cyclone Gabrielle.

“To be clear, this is not about incremental change – we see this as a complete overhaul of how we approach emergency management in Hawke’s Bay, and we intend to establish a dedicated workstream to ensure this important mahi is fully resourced with the support and expertise needed to deliver meaningful change for all of our communities for the future.”

So now it’s time to deliver the goods.

The mayors were emphatic that the overhaul would be directed by an independent and highly qualified leader. That has morphed (reduced?!) into recruiting an independent member to sit on the Joint Committee. The recruitment process has yielded a short list awaiting interviews. Meantime, HBRC’s LTP will add $661k to bolster capability and capacity in the CDEM Group.

But other than ‘community hubs’ being established in a few dozen locations, implementation of ‘transformational’ change appears to await adoption of an overall operational workplan at the Joint Committee’s next meeting … July 29th. Sound like ‘urgent’ to you?

Meantime, the resilience work residents and land-based businesses probably most care about – future flood protection – awaits a series of scheme reviews also due in July.

Such business aside, our councils will also continue their advocacy for additional funding support from the Government. But that doesn’t look promising in 2024/25.

Government support

More central government funds will certainly flow into Hawke’s Bay as ministries begin to allocate their new budgets, announced May 30, to specific local projects and programmes.

Only some of this – chiefly roading, possibly flood protection, housing – will directly provide financial relief to our councils. More of it will be spent on and through the region’s health, education and social welfare facilities and services.

When it comes to major infrastructure projects, the Government has clearly signaled an approach that will disfavour outright grant funding. Infrastructure Minister Chris Bishop recently admonished Local Government NZ: “You as councils spend a lot of time lobbying your local MPs and Ministers about ever increasing buckets of Crown money. This avoids the real issues.”

He added: “Decades of underinvestment in maintenance, poor use of pricing, an unwillingness to use private capital, and lack of desire to use new tools has really caught up with us.” His alternative: “Rather than defaulting to the use of grants, our expectation is that every significant infrastructure project that seeks support from the Crown will consider opportunities for user-pays funding and private financing.” His Cabinet paper on this subject also indicates a belief that councils have been too reluctant to utilise greater levels of sustainable debt.

Bishop gave two examples of relevance to Hawke’s Bay, both aimed at both reducing demand for services and installing a user-pays approach – water metering (think residential) and road tolls (think HB Expressway).

This stance will presumably affect how our region pursues Crown funding for some of its recovery and growth objectives, particularly with respect to water security, housing, transport and adaptation to climate change.

As expected, no funding support is coming for ‘3 Waters’ – local drinking water, stormwater, wastewater – infrastructure. Instead, the Government has introduced legislation that would enable our local councils to shift their direct responsibility for water services to new separate entities, getting the funding problem off the councils’ balance sheets. 

The Bill would require territorial authorities to submit water services delivery plans. The plans would set out a strategy for delivering financially sustainable water services and meeting regulatory standards. The expectation is that a region like ours will create a new councils-controlled water services organisation, as our four mayors have advocated.

This arrangement is designed to give councils more headroom to borrow for things like roading, flood protection, facilities and other infrastructure. At some point in the future here in Hawke’s Bay we will get three rates bills instead of two, from:

1. Your friendly Hastings, Napier, Wairoa or CHB Council

2. Your friendly Regional Council

3. Your friendly new Water Services Provider

Any Government money in other areas will not flow quickly. While the ‘signals’ are clear, the detail work required to develop guidance and criteria for applying for these major funding supports will not be available until after September. 

Housing might be the exception as the Government is quite bullish about this sector. Bishop says “we are looking at direct financial incentives for councils who facilitate housing growth. We have a coalition commitment to look at ACT’s idea of GST sharing.” This involves consideration of sharing with councils a portion of GST collected on residential builds.

The same schedule applies to installing the ‘Fast Track’ scheme for approving major projects “with significant regional or national benefits”. The Select Committee preparing this controversial legislation isn’t due to report until September.

Arguably the big payday for our local councils involves ‘City and Regional Deals’ (CRDs). Although these are under the purview of Local Government Minister Simeon Brown, Minister Bishop described the thinking to Local Government NZ as follows: “I view City and Regional Deals as about the Crown and councils sharing their aspirations, agreeing on shared objectives, and looking at long-term funding and financing arrangements centred on economic growth, productivity and housing. We can build on some of the existing urban growth and spatial planning partnerships already in existence.”

Preparations for this innovative approach seem slow. Bishop’s Cabinet paper indicates that the Crown’s plans for CRDs will be set out by Brown and Bishop in a Cabinet paper in late July 2024 “seeking endorsement of framework, governance of CRDs, and next steps. Report back to Cabinet by end of 2024 to seek agreement to initiate negotiations. First CRDs to be formalised in 2025.” Another waiting game.

It’s not clear how environmental and rural land use aspirations might fit into CRDs, if at all. Some would say that how land is used will be a rather critical factor in Hawke’s Bay’s economic future.

Land use

This issue has been examined recently in depth in a report by Simon Upton, the Parliamentary Commissioner for the Environment – Going with the grain: Changing land uses to fit a changing landscape. 

While Upton addresses future land use as a national challenge, his analysis nails the situation faced by our region’s primary production-based economy. Our land use must be both environmentally and economically sustainable and resilient. As he puts it:

“Contaminants to water, biogenic greenhouse gases, and biodiversity loss (probably in that order) are the biggest pressures land-based industries currently place on the environment. They also pose risks to continued market access and consumer acceptance as international awareness of the true cost of food production grows.” And Hawke’s Bay’s economy today is utterly dependent upon food exporting.

On the environmental side, Upton is concerned about methane from agriculture (sheep and cattle) and loss of indigenous species. Methane accounts for twice as much of New Zealand’s total contribution to warming as fossil fuels. And more than 75% of indigenous species are threatened with extinction or are at risk of becoming threatened. They include 94% of reptiles, 82% of birds, 80% of bats and 76% of freshwater fish.

So, if only to remain viable food exporters, we need to clean up our act. But Upton notes our predicament: 

“As a country we have few tools for improving the environment where environmental goals impose a cost that landowners are unable to bear. The implementation of environmental policies is often pushed onto regional councils, which are left to confront landowners, who in some cases – but not all – lack the resources to deliver what is expected of them. In cases where landowners do lack resources, their precarious position might be further compromised by increased pressures from global food companies and banks that will increasingly require them to measure and reduce emissions as well as make biodiversity improvements.”

Upton argues for a price being set on methane emissions (National and Labour agree on this, but disagree on timing), the revenue from which would be retained within the catchment or region where it is collected. Farmers could choose between a menu of options, including on-farm mitigation, using afforestation as an offset, simply paying the price or destocking.

Upton is a strong champion of catchment groups as the best vehicles for customising to local circumstances and driving peer-to-peer the land uses changes that must be made, reinforcing a direction Hawke’s Bay is already taking. Abetted by HBRC, our region has 38 of these farmer-led planning and educational groups now, with 5 more in formation. Their benefits, as Upton sees them:

• improve community understanding of the problem

• build a common understanding of and buy-in to the potential solutions (which will often require collective action)

• share good practice across peer groups@

• engage with hapū and support them to act as empowered kaitiaki

• help balance cultural, social, environmental and economic impacts to prioritise the most

• effective actions in the catchment

• inspire action.

Upton is a supporter of water storage “in principle, but there need to be strong environmental limits in place within a catchment before investment in water infrastructure occurs. Ideally, water storage should be used to provide security of supply to high-value uses, rather than to increase water use per se.” He continues, “we lack the tools to enforce such [environmental] limits effectively at the farm scale, and therefore great caution is needed when considering the use of public money for water storage schemes.”

Controversially, he supports water pricing. “A price on water would act as a resource rental, recognising both the damage to the environment of taking water and its value as an input into a commercial undertaking (residential use could be exempt). This would provide an incentive to ensure that water is allocated to its highest value use. A charge could also provide revenue to safeguard the future of that resource. In terms of Te Mana o te Wai, this is making sure that we look after the river first.”

Upton’s report is provocative, but fair to both environmental and economic aspirations. Policy conflict over these has generated major political and legal battle in Hawke’s Bay … and this will re-surface in the months ahead. It might help if all protagonists gave an ear to Going with the grain.

Regional Economic Development Agency (REDA)

Finally, looking further ahead at future resilience, our new Regional Economic Development Agency is gaining traction as its work programme unfolds. 

REDA is jointly funded by our five councils to the tune of about $1.7m per year. Whereas the Crown-funded Regional Recovery Agency is (currently) supposed to focus narrowly on near-term recovery matters, REDA is charged with taking a longer view, providing the necessary regional economic data and analysis to shape longer term decision-making.

Reporting to the Matariki Governance Group, REDA is expected to be “a voice of authority on our local economy, supporting the region’s vision for every whānau and every household being actively engaged in and benefiting from a thriving economy. This may involve the identification of gaps and barriers to sustainable growth, advocacy for particular regional priorities, investments and initiatives, or challenges to current thinking.”

For example, elsewhere in BayBuzz REDA Chair Alasdair MacLeod has addressed the water security issue. Hmmm … I sense an ensuing debate over investing in dams versus agritech in HB.

The latest ‘Letter of Expectations’ from Matariki identifies several near-term projects which should provoke thinking regarding the future direction of Hawke’s Bay:

• A foundational analysis of the HB economy – “This piece of research will provide an overview of Hawke’s Bay’s economy with a particular focus on performance of each sector within the wider national and international context. This will give us a view on the strengths and weaknesses of our economy at sector level and the types and levels of investment or interventions that are required to maximise sustainable growth.”

• A factual, quantitative analysis of the Māori economy in Hawke’s Bay.

• Analysis of what sectors are missing in Hawke’s Bay – “This piece of research will explore opportunities to grow industries in Hawke’s Bay or attract industries to HB that are currently not present or strong – what are the industries, what are the barriers to investment in HB, what could the potential economic benefit be, and what could be done to attract or grow them?

One can only be perplexed that such “foundational” work has not been completed by any of REDA’s several predecessors. Reflecting the fresh vigour and ambition of all involved this time around, the Matariki Group expects each of these pieces of analysis to be completed by year’s end.

What great debates this work should stimulate!