Key projects at risk as major rates hike looms for Hutt City – and others

Wednesday, 1 November 2023

The earthquake prone Petone Grandstand looks set to become a victim of the Hutt City Council’s perilous financial situation.

Hutt City rates could climb as high as 19.9%, forcing the council to consider “brutal” spending cuts and the mayor warning of “funding crisis” across the country.

With the situation mirroring that of neighbouring Wellington City – also battling significant cost blowouts to major projects – Hutt mayor Campbell Barry says the rating system is unsustainable.

“This is a crisis across New Zealand, unless the funding mechanisms change council’s will continue to struggle,” he said.

Wellington City rates this year increased by 12.9% are likely to go even higher in future. The council will release further information about its Long-Term Plan later in the week, where it is expected to indicate which capital projects will be cut to make room in the budget.

In recent weeks Wellington City councillors have been undertaking closed-door discussions about how to scale back the expensive capital works programme - which was projected to hit $566m this year.

Barry said the incoming government had to find new ways to fund local government. Regionally, there was clear need for three water reform, which he hoped would still continue.

More than five hours into the Hutt City meeting on Monday, financial strategy and planning manager Deepu Nunnian left councillors speechless.

The Petone Wharf has been damaged by earthquakes and storms. It has been closed since 2021. The council is now proposing to spend $6m to demolish it.

She said despite best efforts to remove items from the draft plan, a potential rates increase of 19.9% loomed. That was a slight improvement on the initial figure of 20.7%.

Barry said the figure was a reminder that a lot more work was needed.

All Blacks great Bob Scott once played on the Petone Rec in front of adoring crowds. The historic grandstand now looks to have an uncertain future.

“If we are going to get the rate increase down, we are going to have to be quite brutal.”

The council’s dire financial situation, which resulted in its Standard and Poor’s rating going from a stable to negative outlook, was attributed to a number of factors.

Large increases in the cost of bulk water, construction, insurance, staffing, borrowing and three waters had resulted in the operating budget increasing by $173m over the 10-year period of the draft plan. Councillors were also warned debt was rising significantly and in 2029, could be as high as $684m.

The proposed increase in the operating budget did not include what is expected to be a significant jump in the capital budget for three waters.

The Petone Library building is in need of a major upgrade but that seems unlikely to happen.

There was also a suggestion the council could face an increase for RiverLink, which has a budget of $700m. Last month, Barry conceded that budget would come under significant pressure.

Councillors were given three potential rates options: 8.9%, 13.9% and 20.7%.

Locals are sure to oppose any move to demolish the Petone wharf.

A rate increase of 20.7% would see rates on a property valued at $815,000 increase by $658 annually – a weekly jump of $12.66.

After the meeting Barry emphasised no decision had been made and it would now be up to the community to tell the council what it was prepared to fund.

The draft plan looks to be bad news for Petone, with councillors supporting demolishing the historic Petone wharf at a cost of $6m.

The future of the earthquake-prone Petone Grandstand and the Petone library also look uncertain.

Residents would be particularly upset to see the wharf go, councillor Tui Lewis said.

“It is just devastating for Petone, which has waited for so long but there is just so much pressure on the budget.”

Barry said when he became mayor in 2019 he was aware there had been significant under investment in infrastructure. He was determined to invest in the future of the city, but said councillors must be realistic about what ratepayers could afford.