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Regional Council plans 3% rates increase; agrees on loan to Stadium

News from Greater Wellington Regional Council
The Regional Council today agreed on an average 3 per cent increase in its 2020/21 regional rates, instead of a 6.3% increase which had earlier been considered.

The decision was made during discussions about the draft annual plan, after careful consideration of the impact COVID-19 and will be achieved through a mixture of savings, reserves, and borrowing, so the council can continue to invest in key work programmes such as public transport, flood defences and environmental work.

Chair Daran Ponter says the region is facing increased pressure on costs associated with activities and progressing major projects but the impact of COVID-19 on communities would come first.

“COVID-19 has had a substantial impact on our communities, leaving many with financial hardship and stress. With this in mind, we have carried out a line-by-line review of all our activities to identify cost savings and efficiency improvements so we can deliver our planned work programme while keeping the financial burden on communities to a minimum.

“Obviously the overall impact of COVID-19 will still have to be worked through and the council will have to be agile in its response over the coming year. This includes uncertainty over the level of fare revenue from public transport as people’s travel patterns change,” says Chair Ponter.

The Regional Council will deliver a work programme with a reduced rates impact from that envisioned in its Long Term Plan for 2018-28. This reduction equates to an average increase of $0.21 and $1.18 per week for residential and business ratepayers respectively, and an average decrease of $0.18 for the rural ratepayers across all the Wellington Region.

As part of the draft annual plan, the Council discussed a joint loan with the Wellington City Council to support the Wellington Regional Stadium Trust at a cost of $2.1 million to Greater Wellington, repayable over 10 years. This loan facility, if needed, has been assessed as not significant or material, with very limited impact on rates in 2020/21.

The Council also considered its ambitious target to be carbon neutral across all of its operations and subsidiaries by 2030. The draft annual plan for 2020/21 includes a new $2 million internal budget for the council’s low carbon initiatives which will be funded by borrowing and paid back from the sale of Greater Wellington’s New Zealand Council Emissions Trading Scheme units, which are presently valued at around $7.2 million.

“This council is committed to its goals of being a regional leader in environmental matters, upholding our carbon neutral goals and building trust with our communities through sound fiscal responsibility,” adds Chair Ponter.

With no significant departure from the Long Term Plan for 2018-28 no consultation will be required on the draft annual plan. The council will provide the opportunity for people to give early feedback on the direction of the Long Term Plan 2021-31.

A final annual plan for 2020/21, related rates and charges resolutions will be presented for consideration at Greater Wellington’s Council meeting on 25 June 2020.

Wellington.Scoop – June 10
The Wellington Regional Council will tomorrow be voting to increase regional rates by an average of 3 per cent. Councillors are being told that this is the preferred increase, though other options (not being recommended) are 6.3 per cent or zero percent. The council says it

…is facing increased pressure on costs associated with activities and progressing major projects. In response to this, we have carried out a line-by-line review of all our activities to identify cost savings and efficiency improvements to keep the rates increase to a more satisfactory level. The average rates increase has been arrived at through a mixture of savings, use of reserves, and borrowing, so Greater Wellington can continue to invest in key work programmes such as public transport, flood defences and environmental work.

The emergence of the COVID-19 pandemic in March and subsequent Alert Level 4 lockdown had a substantial impact on our communities, including financial hardship and stress. Greater Wellington is mindful of keeping rates at a level where we can deliver our planned work programme while managing the increased costs and keeping the financial burden on communities to a minimum.

Councillors are also told that the Stadium Trust has financial problems and that it is seeking a loan of $2.1m from each council.

The Trust has approached the Regional Council and Wellington City Council as joint settlors for financial support over the next 12 months. The Trust is anticipating an 85 percent drop in revenues and requires funding to meet operational costs and committed capital expenditure. The Trust has a high level of short-term uncertainty with the return to normal being constrained by both the Government’s restrictions on mass gatherings and the closure of international borders.

Metlink is also facing financial problems and the council is hoping for more financial support from the government.

Metlink is continuing to experience “unprecedented impacts” from the COVID-19 pandemic, including a significant loss of patronage resulting in lower revenue. The New Zealand Transport Agency is working to provide financial support for the period up to 30 June 2020, for revenue lost from free travel and significantly lower patronage. While fares will be reintroduced from the beginning of 2020/21, we anticipate that, for the foreseeable future, patronage numbers and fare revenue will be considerably lower than pre-COVID levels. There could be as much as a 40 percent drop in revenue.

The draft Annual Plan 2020/21 assumes that any shortfall in revenue will continue to be financially supported by central government. Without such support, the council would be required to either: a Significantly increase its debt levels (by around $20 million), which would add a significant burden to future ratepayers (an increase in rates of approximately 1.9 percent for 10 years to repay the loan) to maintain the current levels of service
or b Reduce service levels to generate savings (of around $40 million) that would bring into question the viability of public transport in the Wellington Region. Officers continue to liaise with the Transport Agency and Government on this issue, but at this time we do not have a firm commitment to financial support moving forward.