Timaru council adopts LTP, overall rates increase of 15%

Tuesday, 2 July 2024

Timaru’s councillors have adopted the district’s Long-term Plan with a 15% overall rates increase in the first year and a 12% increase in each of the following two years.

But before the plan was adopted, a change to the budget to upgrade Aorangi Stadium was questioned, with the project described by councillor Stacey Scott as “the poor cousin’’ of other Timaru District Council works.

Scott said the LTP consultation document listed the stadium project as costing $25 million, but this had dropped to $22m in the document presented to councillors at Monday’s meeting.

Chief financial officer Andrea Rankin said according to the LTP, an additional $1.5m had been listed for the project in 2027.

“So the total for Aorangi Stadium over the life of the plan is $24m,” she said.

Scott said that meant they would be $1m short.

When Rankin agreed it was a typo, Scott questioned what the figure should be.

“If we’re including the $1.8m to do with the Aorangi master plan document, it is just over $24m.”

Scott said it was still $1m short, asking: “Can someone tell me why we’ve dropped a million dollars?” Rankin said she did not know.

Council chief executive Nigel Trainor agreed there was a discrepancy, but said because a costing had been done for a lot less than $25m, the budget had been “pulled back to $22m”.. The decision had been made in a workshop, he said.

Scott said the project had not gone out to the market yet. As it had been consulted on at $25m, she felt “very uncomfortable” with the change.

Trainor said the decision to pull the cost back had been made by people in various workshops and by councillors.

Scott asked if other councillors had decided this, adding: “I obviously was not attending.”

Councillor Stu Piddington said “it was a weird way to do things”.

“We consult on a number. we haven’t even tested the market, and then if it comes in at $25m we’re going to be told, ‘Oh, we’re not going to do it – it’s $3m over.’”

Trainor said the LTP could still stand, “and if it comes in at $25m you can notify in your Annual Plan a material change”.

He said there was pressure on the council’s debt cap and that was part of “getting to the $2.5m”.

Scott replied: “And this project was the easiest one to throw some money out of? We couldn’t have taken $200,000 out of everyone else?

“It seems that this project is always the poor cousin, and it hasn’t even got anywhere. Wouldn’t it be nice if we pulled $3m out of a few other things.”

Speaking via video link at the meeting, the council’s auditor, John Mackey, described the LTP round as difficult with the uncertainty of Three Waters, major financial pressures and a change of government.

Councillor Allan Booth told Mackey he had concerns about the council running unbalanced budgets over the past three to four years.

“It’s not like it’s a small amount. It’s a significant amount of money each year,’’ Booth said.

He said the use of vested assets had disguised the fact the council had been running unbalanced, financially, “for probably four years now”.

“At what stage do you, as the auditor, actually say, ‘Hang on, guys – you need to actually sort this out’? More cash out than cash in is a problem.”

Mackey said part of the document being adopted with the LTP was the financial strategy that “has to be prudent”.

“So, yes you highlight the fact that the accounting measure for profit, your surplus or deficit, includes contributions towards capital or spending.”

He used what the council received from NZ Transport Agency Waka Kotahi to construct its roads, and what it received from vested assets, and financial contributions as examples.

Booth said, after reviewing the previous two LTPs, each had blown out. The first “showed us going to debt of $161m, the second around $280m”.

“And here we are now up at $450m, and so I can only assume the next Long-term Plan we’re going to be around $600m. And therefore the assumption that perhaps something should start equalising at some point is not actually happening.”

Mackey said with the last LTP, the council was to move into revaluing its infrastructure assets.

“When you were doing it on historical costs, you weren’t actually reflecting what it was actually costing and you haven’t moved as yet to revaluing your buildings.

“But, with not revaluing from back originally when the Timaru District Council was formed you’ve actually been under-rating and under-charging your community.”