[As published in March/April BayBuzz magazine.]
After a holiday pause to catch their breath (thankfully, heaps of recovery repair didn’t cease), our councils returned to full steam by mid-January, with most beginning their official public meetings in the first week of February.
In February I had the opportunity to interview our four mayors and Regional Council chair in depth to get a sense of their priorities for the year ahead. Each of these interviews is reported on our website.
This article discusses the more overarching issues and challenges these leaders identified:
• Learning from disaster reviews
• Recovery priorities and implementation
• Immediate budget planning – your rates
• Long term local government financial sustainability
• Spatial planning for the region
Running through all of these is one word – infrastructure!
Disaster reviews
Three major formal reviews into cyclone impact and response are underway. And some authorities are digging deeper into their own situations – NCC with its review of how council managed the immediate crisis and Wairoa taking a community-based look at its flood protection options.
HBRC itself commissioned the HB Independent Flood Review, looking at all the region’s flood protection schemes from Wairoa to Pōrangahau and how each performed and the decisions made by HBRC during the cyclone. It will also recommend options for increasing the region’s long term flood resilience. The review panel is led by Dr Phil Mitchell, co-founder and partner at Mitchell Daysh, a leading environmental planning practice. That review is due in June.
The region’s civil defence group (HBCDEM) review is looking at operational handling of the immediate emergency, a very targeted period of time, with a particular emphasis on the systems and processes, and roles and responsibilities of group members and partners. This review is undertaken by a panel led by former NZ Police Commissioner Mike Bush and overseen by our four mayors and HBRC chair and their CEOs. A report is due to them on March 25.
And finally, the Government Inquiry into Response to the North Island Severe Weather Events is scheduled to report its findings publicly on 24 March. That Inquiry is looking into our overall national disaster response readiness, whatever the event (severe weather, tsunami), using the recent weather disasters as a guide. This review is led by Sir Jerry Mateparae, with Hastings food industry veteran Julie Greene serving on the panel.
As Mayor Alex Walker noted, we all have localised views about what happened, what impact, what was done or not done. We still need one unified regional picture of the event, its impact and its lessons. The broad reviews will provide that. Then, as HBRC Chair Hinewai Ormsby said, “The worst thing would be not to learn and change.”
Recovery priorities and planning
Each council is beavering away with its own recovery workplan and with the resources immediately available.
For CHB and Hastings, the focus is roading and bridge repair. Mayor Walker’s mantra is ‘pipes, pumps, plants (as in waste disposal) and roads’. Mayor Hazlehurst calls herself “The Infrastructure Queen”.
For HBRC its silt and debris removal, stopbank repair, and completing its flood protection review. HBRC is also overseeing plans for addressing remaining Category 2A and 2C housing. For seven targeted locations, full business cases must be put together and communities engaged to establish the best paths forward in terms of flood protection solutions and future development.
Needing to prioritise water infrastructure spending, Napier is re-examining business cases for all its commercial and tourism-related facilities and improving internal readiness for future crisis management. Redevelopment of the severely flooded Awatoto area is the main recovery focus, with an effective stakeholders group at work.
And for Mayor Craig Little, the focus is river protection and housing, with still over 100 people unable to return to their stickered homes. Restoring housing carries a $7 million price tag. Given Wairoa’s isolation (“Our journey to Napier especially is not enjoyable … can now be two and a half hours or more!”), he’s passionate about his community’s recovery being locally led, from flood planning to organising and training locals to do high standard home repairs. Funding assistance aside, he says “We in Wairoa need to sort ourselves out from within.”
While all that work is underway, the Hawke’s Bay Regional Recovery Agency has been created, funded though June 2025, to help identify, prioritise and coordinate region-wide recovery needs. The HBRRA has a board chaired by Blair O’Keeffe (also Napier Port Chair among other governance roles), with Ross McLeod (former HDC chief) as chief executive.
It has been this agency’s job to prepare and advocate a unified regional ‘ask’ to central government, first to the Labour team and now to the Coalition Government. Effectively, the agency is the region’s chief lobbyist to central government, and gets high marks for that role from our elected leaders. “They’ve done a fantastic job,” was a typical comment.
It will also be this agency’s task to work with councils to prioritise recovery works, as it sinks in that neither the funding nor the practical capabilities (labour, materials, machinery) will exist to ‘do everything at once’. The serious allocation of scarce resources against a ten year calendar of recovery is yet to begin. And that assumes no catastrophe in the meantime!
Councils’ immediate budgeting
The government, bowing to realism, has given our councils dispensation to prepare only three-year Long Term Plans (LTPs) in this planning and budget cycle. So each council is well along in preparing its plans that will go to public consultation in April/May, with final plans adopted by June 30.
And the handwriting is on the wall … get ready for significant rate increases over the three-year windows of these plans. The first bite was taken when councils revised their 2023/24 budgets just after Cyclone Gabrielle. But given the trauma of the disaster, it was a relatively small bite … not close to recovery costs councils were already incurring. Now, with costs somewhat better identified, every council is looking at ‘double digit’ rate increases; some could top 20%.
As I listened to our mayors and HBRC chair, I was left with no doubt that these councils are working as hard as they can to mitigate their rate increases. But the realities are inescapable:
• Recovery costs will be enormous and ongoing – roads and bridges alone could top $1 billion.
• Legacy under-spending on water infrastructure – any elected official who’s served more than ten years should be thankful for a ‘statute of limitation’ that prevents their incarceration for malfeasance.
• Uncontrollable cost increases – interest rates, insurance, general inflation.
For most of our councils, these expenses and their drivers account for 75% or more of their budgets. Only then do you reach ‘non-core’ activities. Mostly a domain of nickels and dimes.
At that point councils re-examine reducing service levels, deferring ‘less essential’ initiatives, re-calibrating rate structures (e.g. general vs targeted/user pay, capital vs land value), borrowing, stopping subsidies to their ‘commercial’ operations, slashing their support of community groups and, if they have any (like HBRC), improving their investment returns or divesting.
Roading contractors won’t suffer in this process, community service providers and cultural entities will.
And then councils turn to central government!
Councils’ long term sustainability
And where will that lead?
I mentioned above that the HB Regional Recovery Agency was the chief lobbyist/spear-carrier for the region’s ‘ask’ of central government. The agency prepared a BIM (briefing for incoming ministers) before Christmas and since has met with new Ministers including the PM. As I write, the ‘ask’ is being refined and numbers added.
But this budget cutting, tax reducing government will be a stingy one. And whatever help it might be inclined to give, those details can’t be firmly known until the government formalises its first Budget in May. Leaving our councils twisting in the wind until the last month or so of their LTP planning.
And leading Mayor Kirsten Wise to comment, “We must plan to pay our own way … any government assistance would be welcome gravy.”
There will likely be some “gravy” – ‘there’s lots of government budgets and always some money laying around’, if I can paraphrase our chief lobbyist – but don’t count on a bailout anytime soon. “We’ve got to have our hand in there,” says Mayor Little.
This forecast extends to ‘3 Waters’ as well.
Mayor Wise expressed confidence that the government will support the kind of regional water infrastructure plan that HB mayors had advocated in opposition to the Labour consolidation. The government’s plan is called ‘Local Water Done Well’
So far, it’s a plan without funding, there’s no indication that central government will fund the massive required infrastructure investment. In fact, they are signalling they won’t.
Standard & Poor Global Ratings, judge of the credit worthiness of many NZ local councils, recently downgraded its outlook on 15 local councils, including Hastings District Council.
The agency commented on ‘’3 Waters’: “Labour’s reforms, if implemented, could have alleviated a significant portion of sector debt.” And on the government’s pending plan: “The final design of Local Water Done Well will be vital for addressing the rising revenue and expenditure mismatches in the sector.” Agency spokespeople hammered home their concerns about water funding in their streamed presentation of their analysis.
As it stands, any new regional entity will need to come to terms with how ‘3 waters’ investment will be funded by local residents and businesses, a decision that includes how the ‘poor cousins’ in CHB and Wairoa will be supported by Hastings and Napier ratepayers. Mayor Wise says the mayors are committed to sorting that … “We won’t back off now!”
Mayor Little is hopeful of that. “They need to make sure their communities are strong on that!”
Given low expectations of government largess, in each of my interviews, the discussion shifted from tomorrow’s council budget to the long term financial sustainability of local government.
It’s not surprising that each of our mayors and our HBRC chair lament that the funding model for local government is broken. But as self-interested as they are, they’re absolutely right. And every objective, experienced analyst of the situation agrees … and has for some years now.
Most recently, the case has been made by a panel commissioned by the Labour Government in a Report issued last year, called The Future for Local Government. Despite being a product of the deposed regime, it’s a ‘must read’. Believe me, it’s been well-studied by our local leadership.
Read the report here.
It makes and documents a number of fundamental points:
• Central government has continually initiated policies and devolved responsibilities to local government without providing the funding for their implementation.
• Or when funding is dangled, it carries local matching obligations – like some of the recovery money HB has been allocated – or is ‘go, stop, go’ ruining effective programme delivery.
• At the same time, local councils are closer to the problems – like housing – on the ground and better able to craft effective community-based solutions.
• The ‘menu’ of options available to local councils to raise funds is too constrained.
• And the ‘take’ from our dual taxpayers/ratepayers is both far too skewed toward central government, with the local government ‘take’ essentially flatlined for years.
As shown in this graph.
The report recommends a variety of measures to redress this situation. These include an ‘intergenerational fund for climate change’ driven by regional/local decision-making, enabling councils to introducing new funding mechanisms (community bonds, suggests Mayor Walker), more outright cash commensurate to devolved place-based responsibilities, and central government agencies paying rates and charges on their properties.
Of course, the wise panel also recommends local council ‘consolidation’, offering two models.
I asked my interviewees if they saw any sign the Coalition Government might buy into recommendations like these, ‘not invented here’.
There was considerable optimism about this, most thoroughly described by Mayor Hazlehurst, but with the others agreed on the message.
Looking forward, Hazlehurst is “excited” that the government might move toward some sort of ‘Regional Deal’ approach – 30 year funding plans covering the full range of government support to local/regional authorities, providing both dependable long-term funding levels and with substantial local discretion about how programmes are planned and implemented.
She believes Hawke’s Bay has an excellent prospect of being a ‘first cab off the ranks’ for such a deal, in part due to the regional advocacy around ‘3 Waters’, in part to the effectiveness of the Regional Recovery Agency, and in part to the steady work of the HB Mayors Forum in recent times, forming and ensuring various planning and project collaborations.
What BayBuzz likes to term ‘amalgamation by stealth’.
In a recent interview, Infrastructure Minister Chris Bishop spoke enthusiastically about regional deals:
“Those are long-lived partnerships between central government and local government, setting out a plan for a region over 10, 20, 30 years, saying: ‘Righto, as a region, you’ve got these priorities; as a central government, we’ve got these priorities; let’s get some agreement on what those are, let’s get some funding structures in place, let’s map out the region, spatially plan the region – particularly around housing and major transport, major industry and things like that – and let’s get the funding structures in place to make sure we can go ahead with that. And that is extremely popular with local government.”
Even assuming ‘Regional Deals’ become a reality, it’s hard to imagine such a profound shift in the central/local government funding paradigm happening quickly – significant local rates increases are locked into our future.
Regional spatial planning
Speaking of paradigm change, as Bishop mentioned above.
Another mandate of the Labour regime in its RMA reforms was a requirement for regional spatial planning. As you’ve heard, the Coalition Government is dumping Labour’s legislation.
Our mayors have been outspoken in favour of the need for regional spatial planning – how do we rationally place people, homes, businesses, medical facilities, public infrastructure across the Bay. So I asked if they would pursue such planning whether nor the government mandated it.
Thankfully the answer from all was a resounding “Yes”. “There’s absolutely a will to do this,” says Mayor Hazlehurst.
That’s a positive note to end on. Let’s now hold them to it!
Pulling together an article like this takes quite a bit of effort — chasing councils for the info, interviewing elected leaders, reading pertinent reports, writing the piece. BayBuzz can only do it with your subscription or donation. We’re not nearly as rich as Newshub (gone), Stuff, or even HB Today! And unlike those, totally local. Please help us out.