I don’t envy CHB Mayor Alex Walker.
Major legacy under (and mis)investment in infrastructure – what CHBDC’s current LTP refers to euphemistically as “Facing the Facts – Poor Historic Investment Decisions”.
Every bit of CHB’s water services in need of upgrade and modernisation.
Cyclone damage to roads that will cost another $129 million to fix; not doable if Kotahi pays only its customary 60% … “needs to be 95% to be sustainable” says the mayor.
Everything costs more, from bitumen to pipes to labour to interest rates.
‘Normal’ public expectations regarding trash pick-up and appealing main streets for businesses and shoppers.
And a relatively tiny ratepayer base to fund all this. CHB’s operating budget is about $40 million, with rates funding $27 million of that.
As CHB’s Council put its 2023/24 budget together just after the cyclone, the rate increase that had been anticipated in its Long-term Plan jumped to 10.88% from 8.98%, an increase of about $340 for the average urban CHB ratepayer.
And soon, taking into account needed recovery spending, the Council will announce consultation on a rate increase “in the 20’s” for 2024/25. And debt will rise to over $100 million in the decade ahead, exceeding the current ‘ceiling’ where external debt is limited to 150% of total council revenue.
With little expectation of windfall funding from the new Government.
So, would you envy her job?
Yet in my recent interview with Mayor Walker, she was full of enthusiasm and determination, which won’t surprise her constituents.
Clearly she is planning for CHB’s growth, not retrenchment, mentioning innovative businesses like Craigmore Sustainables’ Springhill Orchard (BayBuzz video here), Kanapu Hemp (BayBuzz reported here) and Kaikora Enterprises, a new seed growing/processing venture (BayBuzz reported here).
Her priorities for the year ahead start with following through on upgraded water services, repairing the district’s roading system, and attending to social infrastructure with projects like ‘Streets for People’ in Waipawa (enhancing the appeal and safety of the district’s ‘main streets’).
But a new Government brings uncertainty. Our region’s mayors have been especially vocal about challenging the Labour Government’s ‘3 Waters’ scheme, advocating instead a regional plan tailored for Hawke’s Bay. Like her colleague mayors, Walker expects the new Government to embrace the HB-grown plan, although with funding support unlikely.
So while CHB water modernisation has now been carefully and better planned, with impressive implementation progress being made, CHBDC simply cannot fund its plans on its own. Those plans involve upwards of $150 million in investment. Whatever regional entity is created to manage and fund Hawke’s Bay’s total water infrastructure investment, achieving the desired level and quality of service in CHB (and Wairoa) will require subsidisation by Hastings and Napier.
Does the political will across our four territorial councils exist for that? “Absolutely,” Mayor Walker insists. “A small bit from everyone in the region makes it work.” Stay tuned on that one.
However the water infrastructure issue plays out, Mayor Walker is emphatic that the local government funding model is broken for all of New Zealand. She sits on the Board of Local Government NZ and chairs its Rural Sector group, giving her additional perspective on the fiscal woes throughout the local government sector.
She properly notes the “disconnect” whereby responsibilities loaded on local councils by central government have steadily and substantially increased, while the local government ‘take’ from the tax/rate-paying population has remained proportionally constant.
Still, I observed to Mayor Walker, when you publish your new Three-Year Plan in a few weeks, and assuming it includes a 20+% rate increase, your ratepayers won’t be wistfully dreaming of a ‘new paradigm’ for central/local government responsibilities and funding, they’ll be clamoring for lower local rates, full stop. ‘Get back to core business, cut the waste and fluffy stuff.’ What will you say to that?
She responded …
“In our budget, fully 75% of the spend is for pipes, pumps, plants (of the waste treatment variety) and roads. That’s as core as it gets. Then from the 25% take rubbish pick-up and landfill, a sizable cost and necessity, and about 100 hectares of parks and reserves to maintain.” Her point, what is discretionary? “Take away the 25% and nobody will mow the lawn or take care of the cemetery and our halls and facilities will fall into wreck and ruin.”
She looks forward to the consultation process where ratepayers can identify the opportunities they see for savings. Meantime, she notes the importance of regaining ratepayers’ trust and confidence in council competence and priority setting by “showing value and physical progress now” on key tangibles like roads.
All this will come to a head shortly. Agenda papers for upcoming council meetings will surface in the next few weeks, with a draft plan agreed in March, then out for consultation in April.