Financial ‘nightmare’ for Porirua facing rate rise up to 18%

Friday, 17 November 2023

Uncertainties about the future of water reform has pushed Porirua City Council into a “nightmare” scenario with potential rates increases as high as 18%. Pictured is a protest against the water reforms outside Porirua City Council building in June 2022.

Porirua ratepayers face potential rates increases as high as 18%, despite more than $100 million in cuts to capital spending and a three-year halt on new projects.

Uncertainty over the future of water reform is hanging over the council, prompting Mayor Anita Baker to say local government was in “major strife”, echoing comments from her Hutt City counterpart Campbell Barry earlier this month.

A council paper on Thursday warned that on its current course, the council’s capital programme is likely to lead rates increases of 24% - a scenario Baker called a “nightmare” - made up mostly of the city’s wastewater, stormwater and drinking water services.

“This is a signal to government that local government is not funded correctly. Local government needs waters off its books - we are all broken.”

Council officials proposed to cut the capital programme budget by $120 million - $60m each for this financial year and next to hold the rates increaseto 18%, instead of 24% - but full details are yet to be confirmed.

Porirua Mayor Anita Baker said water infrastructure needed to be taken off local government’s balance sheets.

In anticipation of the outgoing Labour government’s water reforms, the Porirua council pumped most of its capital spending budget into its water infrastructure over previous years, in hopes that handing them over to a new public water entity would free up funds and borrowing headroom on other spending.

But the incoming National government promised to replace the reforms with a system in which water assets would remain in local control, and bring in a new Water Infrastructure Regulator to set and enforce standards.

The council paper warned because the council still has water infrastructure on the balance sheets, and it could not spend on water infrastructure as aggressively as in the past without a monumental rates increase.

The Porirua City Council aggressively pumped money into its water assets assuming a public water entity would take them under the water reforms.

“This is why we have no choice but to cut the amount of money we are spending on water services,” said Baker.

Council plans to only continue committed work like the central city wastewater storage tank, and push out new projects by at least three years.

Items that could be delayed included a $26m plan to refurbish facilities at Tītahi Bay Beach like the toilet block at the bottom of South Beach Access Rd; $8m upgrades to Te Rauraparaha Arena; or the $20m allocated for town centre development in the eastern suburbs.

The council is also attempting to reshape budgets to squeeze funds to explore the idea of an organics collection service.

Although councillors weren’t comfortable with the proposed rates increase, Baker said, some of the costs - like contracts already committed to run basic council services - were immoveable.

The councillors will decide their preferred rates level and council budget at a December 14 meeting after a series of closed-door discussions throughout the rest of the month.