Response to claims about Council's Financial Position

The primary reasons for the position the Waitaki District Council (and every Council in the country) is

1. Historical underinvestment in water infrastructure, and
   
   
2. The legal requirement by the previous and the current government for councils to invest in meeting improved standards for drinking water and wastewater
   • 4 October 2021 – Water Services Bill granted Royal Assent and becomes law as the Water Services Act 2021 No 36 (as at 03 September 2024), Public Act Contents – New Zealand Legislation creating the new regulator.
   • 15 November 2021 – Taumata Arowai becomes the water services regulator
   • 14 November 2022 – New Drinking Water Quality Assurance Rules. Standards, Rules, and Aesthetic Values | Taumata Arowai and Acceptable Solutions | Taumata Arowai come into effect.
3. The significant inflation experienced by local government for infrastructure such as water and roading – far higher than general inflation, and the continued imposition by governments on councils of new responsibilities with no funding, which means the ratepayer picks up the tab of meeting government directives and laws. Council has been open about these challenges, including the below information in our Enhanced Annual Plan  in 2024.
   
   
   

4. Unfunded mandates from successive governments – imposing new requirements and duties on councils without any funding to go with it, leaving councils and ratepayers to pick up the tab of government policy

5. The broken funding system for local government

In the face of legal requirements (and to avoid paying rate payers’ funds in fines) the fairest way to fund investment in water and other infrastructure, is debt. This spreads the cost of infrastructure over the generations that use it and is the approach to developing infrastructure which the Government recommends Councils employ.

Using debt to spread the costs of long-term assets means that councils can invest for long term growth and pay back their debts across the lifetime of new assets, ensuring the costs of those assets are paid for by those who use them, rather than simply pushing up rates today. – Minister Brown, August 2024

The alternative proposed by the article / association – pay as you go – would create huge spikes in rates for the years in which infrastructure is delivered, that would sink most household and business finances.

For example, with the recently commissioned Omarama Water Treatment Plant, which was needed to provide safe, reliable drinking water for residents and meet the legal water standards, would cost each ratepayer an additional $8609 in rates in the year the scheme completed, under your funding proposal. 

This council has recognised the need to change radically – not something recognised by most councils yet.

It has taken the brave decision to transform how it operates – not an easy thing to do. We are transforming the council so that it can be more effective and efficient in the face of challenges all councils face.

It is more than a restructure – it is a fundamental change to the way we deliver for customers, communities and rate payers. Crucially, it aims to ensure we can deliver what our community wants and needs and live within the community’s means, keeping things affordable.

It is both ironic and counterintuitive that a Rate Payer Association which demands that Council should be more efficient and effective, demands the stopping of the very programme to achieve that.

Having got this far, that would be an unjustifiable waste of rate payer funds and would mean having to add cost back in to go back to the old ways of delivering, including adding back in the 9% staff FTE we have saved through the transformation programme.

This and every council have stood up to this and the previous government highlighting in particular:

Unfortunately, the Government dismissed the Future of Local Government review findings in 2024, which meant the proposals regarding revenue and funding made by Councils to both the current and previous Government would not be considered.

This Council, in the face of rising costs and to keep rate rises down has reduced its budgets significantly.

In March 2024 the Council had planned water infrastructure upgrades of $426,600,000 for the next ten years. This is what is required to meet the legal requirements set out in law by Parliament. This programme was developed on the understanding that the water services, costs and debt would transfer to a new entity proposed by the last government.

The current government changed the reform approach to water which means the assets and the cost of meeting legal standards, stayed with local communities. 

This programme was now unaffordable. In the Draft Enhanced Annual Plan, we proposed $24 million dollars of water projects. By the time the plan was approved that was $17 million - a cut of $7 million.

Since then, we have continued to work on the programme, and the planned expenditure for the Draft Long-Term Plan is $188 million dollars, or under half of what was originally planned. Here’s a timeline of events.

In the current Long Term Plan, if the Council had done nothing, rate rises would have been over 20%. The Council has cut out major items of expenditure to get the proposed rate down to 10.3%. However, we are not finished yet.

The Council has publicly committed to looking at how it can get rates rises down further and is investing huge amounts of time in getting out into the community to understand residents and ratepayers' priorities so the tough decisions can be made.

This is a genuine consultation with the council doing more to engage the community in the Long Term Plan than ever before and going far beyond what most councils do, to understand community views. We have had the largest community submission response to our Long Term Plan on record, with over 600 individual submissions made in four weeks, and in-person hearings to come.

The description of Council as addicted to debt, or likening to a substance abuse issue, is extremely disappointing. Council has always been transparent about its borrowing, and purposes of that borrowing. In the monthly Performance, Audit and Risk Committee meetings, which are public and livestreamed, we outline Council’s financial position.

This includes the table below, which explains precisely what LGFA financing has been used for since joining as a shareholder in 2020. As reported, $50 million is water infrastructure upgrade work. $13 million is related to property. $2 million is related to delivering roading works – including emergency works in 2022. $21 million is split between Project Reclaim, parks and recreation and upgrading our digital services to better serve the community.

Please also note that this does not include the recent decision to pay down $15.6 million dollars in borrowing made by Council on February 27 2025, which will bring this total down to around $70 million dollars when combined with the deferral of projects decided by Council in December 2024.

This shows Council’s commitment to staying within borrowing limits agreed by the Mayor and Councillors, and using the returned investment funding to reduce our overall debt position.

The chart below, taken from early 2024, demonstrates that Waitaki District Council is in a better position regarding its net debt and the limit on its debt, compared to many other Councils around New Zealand.The article also put last years rate rise at 15%, as at that point Council had not undergone its Enhanced Annual Plan, which reduced the final figure to 13.43%, demonstrating that projected figures are not final or planned figures.

• The 2018-21 Long Term Plan set a maximum external debt at 100% of total revenue, of which Council had none at this time. However, it did have internal loans – where Council invests its reserves or funds from one area into another part of Council. This was debt, as Council borrowed from itself, but not external debt.
  
  
• The investments made in Observatory Village and Lower Waitaki Irrigation did not come from “surplus funds” as claimed, but from reserves built up for renewing assets that were invested to produce a return for Council, and the community.
  
  
• The author quotes from the 2018/2019 Annual Report to present a ‘happy’ picture of Waitaki District Council and compare it negatively to reports from 2021/2022 onwards. This avoids the reality indicated in 2019/2020 and 2020/2021, showing the impact of the COVID-19 pandemic and staffing changes throughout that period.
  
  
• Here is a table of Council staffing over the last nine years. It shows a rising staff number in FTE roles from 2016 until 2022 and slowing recruitment and the reduction in FTE staff numbers in subsequent years. 

• At the current projection, the number of FTE Roles at Council at the end of the 2024/25 year will be lower than when the current Chief Executive assumed his role in 2021
  
  
• The claim that staff numbers have risen to 283 is also inaccurate. That number is the total number of people on Council payroll during a financial year. That means whether they work full time, or a single day per week, they are counted in this number. Counting the total head count does not give an accurate picture of staff numbers which is why we use FTE.
  
  
• Council employs casual and part-time workers, all of whom make up this number (e.g. if we employed 4 people as lifeguards for 10 hours per week each, this is 4 employees but only 1 FTE of 40 hours per week).

• The claim that “Rates will soar by 56% on average since 2019” is extremely misleading. It totals rate rises since 2021 but also includes next year and the year after's potential rates rise figures, whilst using an inflation figure for the past three years only. Council has not set the rates for 2025/26 or 2026/27 yet and whilst inflation is coming down, we know there will be inflation over the next two years.

• It is a shame this misrepresentation was used in a recent edition of the Oamaru Mail. Rates will not have risen by 55% or 56% between 2021 and 2025.

• By the end of the 2024/25 financial year, since 2020, rates will have risen by 36.6% or an average of 7.32% per year. And this is despite the massive inflation in costs councils have experienced, which, as we have reported, are way above household inflation.

•  The miscalculation also includes 0% rate rise that was implemented in 2020, during COVID-19. The document ignores this, and starts counting at 2021.This is misleading, as the 0% had to be accounted for in future ratings as while the rates were frozen, Councils costs were not. This can be seen below where operating income and operating expenditure for Councils across the country decoupled in 2020.

• On average, rates have risen at an average of just over 7.32% per year since the beginning of the COVID-19 pandemic.

• The most significant rise in this time, of 13.43%, directly related to responsibility for water assets being returned to Council in February 2024 – and the associated costs of maintenance, upgrades and delivering water services.

• The “plans to increase” debt are projections and are subject to changes and decisions as part of the Long-Term Plan 2025 – 34, and future Annual and Long-Term Plans. These are not set in stone. 

• The Government’s Local Water Done Well Policy, has directed Council to explore and consult on models of water delivery. The Government’s financial model is to allow a Council Controlled Organisation to borrow up to 500% of its income. 

“LGFA has confirmed it can immediately begin lending to water CCOs that are financially supported by their parent council or councils. LGFA will support leverage for water CCOs up to a level equivalent to 500 percent of operating revenues – around twice that of existing councils – subject to water CCOs meeting prudent credit criteria. This will enable councils to better manage debt and make essential infrastructure investments without drastic rate hikes.” – Minister Brown

That is not a Council “scheme”, it is the water reforms the current Government has introduced and the funding model for those reforms.

• Council joined the Local Government Finance Agency, a Council Controlled Organisation established under the Local Government Borrowing Act (2011) and the Local Government Act (2002) in 2020 to address future funding challenges in replacing infrastructure.
  
  
• The first borrowing from LGFA was $15,000,000 to fund the development of the Hamnak Pipeline and other waters projects, in November 2020. Further borrowing was made from July 2021 to follow Council’s decision to borrow to invest in water infrastructure made that same year as part of the Long Term Plan agreed in June 2021. This was in response to the Government requirement for all councils to invest more in water following the Havelock North incident and fatalities.

• The NZ Government is a 20% shareholder, and the member Councils are 80% shareholders. You can read all about them, here: Providing diversified funding sources for NZ local authorities | New Zealand Local Government Funding Agency.
  
  

• As this infographic demonstrates from last year, Waitaki District Council is one of the Councils with lower debt – it also shows that last year’s rating rise was 15%, when in fact it was 13.8% as the data was provided before the finalization of the Annual Plan. This shows our commitment to reducing expenditure, more on that later.

• The description of Council borrowing as ‘unlimited’ is untrue, and the allusions to addiction problems are extremely unpleasant. Council has a 175% of revenue debt cap and has consulted with the community in both 2024/25 Enhanced Annual Plan, and the current 2025-2034 Long-Term Plan, clearly explaining this.
  
  

• The number quoted for Maven was included in the allocation of $4.5 million made for Transformation not an additional cost as the article sets out. All of this has been part of repeated Annual Plans and approved by the Mayor and Councillors on several occasions throughout this process.

• While total people employed by Council in the financial year has risen to 283 since 2019, this is the total number of people employed by Council in a year, including casual, temporary and part time staff who may work limited hours or only for a single week. However, this is misleading and to understand the true staff numbers, the Full Time Equivalent (FTE) number of staff is the best indicator.
  
  For example if we employed 4 lifeguards at the Aquatic Centre for 10 hours a week each, this would equate to 1 FTE lifeguard working a standard 40 hours per week. Employing more people part-time is not the same as increasing staff numbers as the article misleadingly portrays.

• The claim that the vast number of employees weren’t for hiring people like ‘clerks, mechanics and guys who get their hands dirty’ is also inaccurate. Our largest FTE increase (in 2021/22) was due to employing water engineers to ensure Council had the capability to deliver water infrastructure upgrades, and hand over assets and services as legally required to in June 2024, before legislation was repealed in February 2024.
  
  Council no longer has a Climate Change Advisor, thanks to transformation. Our communications team has grown, but through taking communication roles and functions that were previously distributed across the organisation and consolidating them in one team. This includes roles that were in roading, waste and cultural services that are now part of the Communications team, delivering engagement in a more coordinated way across the range of council functions and activities.
  
  This change is part of the transformation ambition to work more efficiently and effectively, and in this case, is enabling us to engage more but by utilising existing staff differently including bringing them together as a team.

• Instead of “Parmley summoned the councillors” on 8 December 2021, let’s tell the truth.
  
  At a scheduled meeting of full Council (sorry we know it is less dramatic but no one was summoned) a 3 Waters Investment Programme Report was presented to Council, Page 163 - 170. This was a follow up to the proposals agreed in the 2021 LTP (before Parmley arrived).
  
  This was a result of direction from the Department of Internal Affairs, as part of the ongoing water reforms made by central Government. That direction was for all councils to invest more in water to meet new legal standards, following the Havelock North enquiry.
  
  
  • It was also a key performance indicator, set for the Chief Executive by the Mayor and Councillors upon his employment in 2021. The KPI was one of a number requested of the Chief Executive weeks after he commenced in role and was set as a KPI at the same meeting on 8 December 2021, on Page 56:
    
    “Agree a revised 3 Waters Investment Programme - 7 December 2021 (for completion 1 July 2024)”

• It was not the Chief Executive wanting them “rushed forwards”, it was an instruction from the Mayor and Councillors to present a proposal for bringing forward investment and nowhere in the report did staff say “it was urgent”.
  
  Instead they said, on Page 166;

“Adopting the appended 3 Waters Investment Programme 2022-24 is recommended, allowing Council the opportunity to address emerging critical risks, make decisions on key issues and ensure projects of high value to the community, that may not be a priority for the new entity, are at least commenced.”

 The motivation therefore of the Council, was to protect the interests of the district and its communities in the face of a government reform that was to take local control of water away from the council and community. 

There are some significant factual errors here.

• The current Government did not rescind or repeal the previous Government’s water reform proposals until February 2024. In doing this, they rescinded the proposal to move water out of councils in to new entities, but they did not rescind the water standards councils are required to meet and therefore the legal requirement to invest more in water.
  
  
• Claiming projects that were planned, consulted on and approved before the 2023 General Election and change of Government are an example of continued borrowing after the 2023 election is misleading.

• The described projects of the Weston water mains and the Otematata water mains were included in the 2023-24 Annual Plan, which are an example of Council delivering projects the community needed ahead of the transfer of assets in June 2024.

• This was outlined by the Chief Executive in the 2022/23 Annual Plan, Pg.4, where he states Council’s opposition to the programme and the reasoning for the decision made by the Mayor and Councillors to bring forward the programme of works.

• Council is legally bound to follow the legislation and direction of the Government in office.
  • This meant that between 2017 and 2023, Council was guided by the Three Waters/Affordable Water Act reforms of the Government at the time.
  • Similarly, Council is now following the Local Water Done Well legislation and the direction of the present Government.

     

• With the repeal of Three Waters, Council immediately set to reducing its proposed investment plan.
  • Last year the next decade projected project spend was $426.6 million.
  • Last year’s Draft Annual Plan proposed $24 million in water projects.
  • The final Enhanced Annual Plan 2024-25 approved $17 million, a cut of $7 million.
  • This year’s Draft Long Term Plan sets out spending of $188 million over the next nine years. In a year, we have cut the investment programme in water infrastructure by $221 million dollars.

• It is disturbing that a respected Ratepayers Association would publish something that described the Chief Executive, acting at the direction of the elected representatives of the community, following public consultation across many years as a ‘regime’.
  
  
• This is the nature of the local democratic system – the Mayor and Councillors decide what is to be done and direct the Chief Executive what to do.
  
  
• The claim here is now that rates have increased 56% since 2021. They have not, and the footnote notes that it includes – again – the proposed rise for 2025/26, but forgets it's also included the projected 2026/27 rise when making the claim earlier.
  
  This claim is false. Despite using projected rate rises, the article quotes an inflation figure for the years gone, but not the two future years it has included – not comparing apples with apples and therefore creating a misleading and fictitious picture.

• Council received the petition by ratepayers in August 2023, and the 13.43% rate rise which followed in 2024 was directly influenced by water assets being returned to Council in February 2024 – and the associated costs of maintenance, upgrades and delivering water services.
  
  The ratepayer's association often calls for Council to neither raise rates, nor sell assets, but even against inflation – this leaves only additional borrowing or significant cuts to services, both of which would be extremely unwelcome by the community.

• Council agreed to fund $10 million of the Network Waitaki Events Centre, and has also agreed to a further $5 million which will not be sourced from rates funding as specified at the time.

• Council has had strong community support for both of these decisions, and for the Events Centre itself in the public consultation that has taken place, and we are delivering what the community has asked us to deliver.
  

  “Of the 259 submitters who responded to the question about the Indoor Sports and Events Centre, and how much Council should contribute to the proposed centre, 78% were in support of the proposal and 22% were against.”–Long Term Plan 2021 - 31

• The future role of the Taward Street site will be considered, but our focus at this point is delivering the Events Centre the community requested. The suggestions made could make an excellent Long Term Plan submission.

We have stated the following in our Online Q&A’s, on our Consultation FAQ page, in an extensive post explaining the situation on Facebook and was reported in the Oamaru Mail. We invite everyone to read the facts.

• Waitaki District Council didn’t qualify for the Contaminated Sites Remediation Fund application as a Territorial Authority, only Unitary Authorities and Regional Councils could apply.
  
  
• ORC applied on our behalf in 2018 and that was rejected. When approached in 2021 Ministry for Environment informed us we wouldn’t be on their priority list, and that the fund (about $2.3 million) wouldn’t really cover projects like Reclaim.
  
  
• Council didn’t miss the opportunity to apply for the $6 million the Minister announced in February 2024, as claimed. It was announced as discretionary emergency funding as part of the wider CSVL announcement. We were not given the opportunity to apply for that funding.

• While the Minister announced they would create a fund in February 2024, it wasn’t established until the May 2024 Budget. Council had conversations with MFE in May but our project was already underway and would be near completion before we could even make an application.

• The Contaminated Sites and Vulnerable Landfill fund opened for application in October 2024.

• If we’d paused Project Reclaim in February 2024, or May 2024, Council and its contractors would still be waiting as the funding panel to consider applications only met for the first time this month.

• Council did not “pay more” to the contractor for the excavation that severed Beach Road in two places. The northern site had the road built directly over the fly-tip site in the 1970’s, the southern site required excavation to remove all of the waste that was placed there over many decades by the community.

• The aim was to remove all of the waste that was found. This was to ensure this was one job, done in full, now. The waste needed removing and has been removed.

• Suggestions that we could have done half a job and rock armoured the rest would only mean we’d have paid a significant amount to not have completed the job and would have to pay more, later, to remove the remaining waste as erosion continued. The contractors were contracted to remove all the waste there, not the estimated level of waste.
  
  Instead of doing half a job twice, we did the whole job once.

• In the first three bullets the author presents one project as if it was three - “identity and story telling”,  “Development of the Waitaki story”, “the new logo for the district” are not three projects but one. The misleading way this is presented you would believe that the budget for these is $765k ($75,000 + $590,000 + $100,000). It is not – the budget is $100,000.
  
  
• Identity and storytelling is aimed at boosting Waitaki District’s economic growth and making it an attractive place for investment and visitors, together with potential future residents who have the skills our businesses, schools, hospital and other services need.
  
  Our District has never had a brand, and now will do so, for the reasons above. It also ties in with the community demand to replace the 16-year-old signage at many townships around the Waitaki District.
  
  This was also funded through the Tourism Grant, rather than borrowing by Council as the document the author links to as evidence clearly states.
  
  We have two new options for a logo, developed at no additional cost and offered for community comment earlier this year – as reported on in the ODT and published on Council’s facebook.

• The Marketzone improvements were a part of the 2020 Harbour Masterplan which was publicly consulted on extensively with over 887 responses.
  
  The project was also scaled back to the West side of Scotts Brewery. Funding for this project included $335,000 from the Government’s Tourism Infrastructure Fund and $145,600 from the Harbour Endowment Fund (a ringfenced fund that reinvests income from the harbour area back into the harbour).
  
  The new road entrance, designated mobility parking, pathway connecting Waterfront Road and Wansbeck Street, and new surface and drainage has been widely welcomed by the community.
  
  The footnote quoted by the author is the recommendation to Council from the Harbour Area Subcommittee recommending scaling back the project, and shows a clear breakdown of costs (Pg. 33 – 37) – Council’s, the TIF and Harbour Endowment funding.

• Better access to the top of Puketapu on a publicly owned track (the current access is reliant on the goodwill of the landowner) has been a consistent demand of the local community. The figure quoted is misleading as it states the cost of the project not the cost to the Council.
  
  Funds have been allocated to the Puketapu Track project from the Better Off Funding, following requests from the local community and the Community Board to Council (the funds having initially been earmarked by council to revitalising the Palmerston town centre).
  
  The funding plan relies on the local groups in Palmerston accessing other funding. 

• The Awamoa Toilet block was at the end of its useful life. Dark, hard to clean, difficult to access for those with mobility needs and no longer fit for purpose. The demolition of that block, the installation of the new well-lit toilets and the landscaping around the site cost $379,000. But this is not the cost to the Council and ratepayer.
  
  Of that total, $172,000 came from MBIE funds and $207,000 from ratepayer funding. Of the total spend, $220,000 went to local contractors and organising consents. The rest went to getting the NZ manufactured toilet block, and a Geotech firm from Dunedin.
  
  Council has continued to inform the community about the progress of these toilets following the 2023 media release quoted.
  
  In April 2023 with a LGOIMA which broke down projected costs of the project at $ 422,480.00 (including contingency funds) , in October 2023 and in November 2023 with an additional media report in December 2023.
  
  Awamoa Park got a better, more accessible, well lit, easy to clean toilet block for just over $200k of ratepayer funding, while $220k was put into the local economy as a result. 

• The District Plan review is a legal requirement. The current review has been ongoing for nearly a decade. It is untrue to say costs have soared because the Council wants to impose Maori overlays and greatly expanded natural feature overlays. Both Sites and Areas of Significance to Maori, and the Outstanding Natural Features elements are legally required in a District Plan under the Resource Management Act (RMA). 
  
  Last year’s Enhanced Annual Plan, linked in the document, specifically states that funding is due to “Processes required under the Resource Management Act 1991.”
  
  This is not a case of Council ‘wants’, it’s a case of Council following its legal duties in developing the plan according to law.
  
  The Proposed District Plan submission process opened on March 1 2025, and we welcome submissions on the proposed District Plan.