Wellington City Council's latest budget blowout: $56m GST error found in housing project
Tuesday, 3 February 2026
The Wellington City Council’s latest budget blowout has been revealed ‒ a $56 million shortfall between what was budgeted and reality.
The second phase of the council’s social housing upgrade programme (Hup2) had plenty of known numbers: A $446m budget over a 10 year programme, 825 units across about 50 projects with 2308 beds being brought up to standard.
But during a councillor briefing it was revealed that one vital number was missing: The 15% GST bill, which the council could not recover. That equated to $56m in real terms.
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Council staff said they were going to now go and try to find savings in the budget to mitigate the hit.
The blowout comes after two blunder-induced rates errors, just months into a new triennium, as the new council deals with the fiscal fallout of last term’s $80m sludge plant blowout and a $147m blowout on fixing the Town Hall.
Councillor Andrea Compton, an accountant by trade, said it was clear council staff had known of the error for a while, as it had already sought outside tax confirmation, but only briefed councillors last week.
“We still don’t know how it happened,” she said.
Asked whether it was an easy mistake to make, she said: “It would have been a bit of a stomach-drop moment for the staff member that discovered it.”
Councillor Rebecca Matthews, who has focused on housing in her time on council, said the error was not as easy to catch as it could appear. Most council spending did not incur GST but residential tenancy spending was a relative anomaly.
The council was funding the project via borrowing but the eventual repayments were ring-fenced to come exclusively from rental revenue, Matthews said.
She was happy with savings being found in the existing budget so long as “warm, dry, safe and pleasant” housing for tenants was the end result.
HuP2 was a 10-year budget and there were bound to be variances as it went along. Less than a year in, the actual spending was already $6.5m short of budget, she said.
Planning and Finance Committee chairperson Diane Calvert questioned why, if $56m in savings could now be found, those cuts could not be found when the previous council signed off on the $446m budget over 10 years.
Mayor Andrew Little said independent tax advice confirmed GST had to be applied when it was originally thought not to be necessary.
“The budget for the programme is now being reviewed, with a view to ensuring this does not cause further costs,” he said.
A council spokesperson said in a statement that due to the complex nature of the transactions related to the Housing Upgrade Programme and Te Toi Mahana, staff sought independent advice on any potential implications relating to GST.
“The advice received was HUP2 budgets must be GST-inclusive. As part of the annual plan, we are reviewing the social housing capital expenditure budget, and this has identified potential reductions to mitigate this impact. Any mitigations will not result in a reduction in HUP2 places.
“We will update the mayor and councillors further as part of annual plan and long-term plan preparation work in coming weeks.”