Three Year Plan 2024 - 2027 FAQs

The Three Year Plan was open for formal consultation with community from 10 April to 12 May, with a range of opportunities for community to provide feedback.  Council proposed three budget options that explored a lower, central and higher rating impact across four trade-off investment and service areas:

• land transport,
• drinking water and wastewater,
• prioritising stormwater following Cyclone Gabrielle, and
• other service reductions and efficiencies.

We heard from community that rates affordability is our biggest challenge. Council also heard that despite this, our community understands the need for continual investment.  You can find this information in our Consultation Document and supporting information on our website.

The feedback from community was to retain our strong focus on core infrastructure, in particular on land transport and water services.

Council have confirmed this approach, with focus given to the most urgent key infrastructure priorities.  

 The community supported retaining the current library services provided in the District as they are essential hubs for community. This feedback, supported Council in their decision to retain the current levels of service, with no reduction in opening hours.

Reductions in services made across the organisation include:

• Permanent closure of the Waipawa and Takapau Transfer Stations from 29 July 2024.
• Reduced hours at Porangahau Transfer Station.
• No new rates funded roles for the next 24 months.
• Further reductions in organisational wide costs including staffing costs.
• Reducing and deferring open spaces and community facilities renewal projects for the next three years.
• Reductions across many other activities.

The submissions received provided Council with guidance on what really matters for the community, including what was important and what wasn’t.

 Council listened to this feedback and then debated the trade-offs. They voted on what to change and what to adopt. These decisions are now adopted as the Three Year Plan that sets the budget and direction and priorities for work for the Central Hawke’s Bay District Council.

We appreciate the time and effort so many people put into the consultation process, your voice was heard.

No one wants rates to rise, including us. We know times are tough and unfortunately, the cost-of-living crisis affects everyone. Councils are no exception. Our situation is made even more challenging as we recover from Cyclone Gabrielle.

Nationally, councils and communities are facing an average increase of 15 percent and in Hawke’s Bay we are also grappling with infrastructure and funding challenges following the cyclone.

It has become more expensive to deliver the significant infrastructure and services communities need from us due to inflation, rising interest rates, rising insurance costs and changing government priorities.  (For example, bridges are 38 percent more expensive to build, and both roads and water supply systems are 27 percent more expensive.)

This core infrastructure investment makes up over 80% of the total annual Council spend.

Councils are also required to do a lot more now by Central Government (meeting growing water quality standards, Three Waters reforms, RMA reform and health and safety legislation for example). We are facing other pressures that require new spending, such as demand for infrastructure in high-growth areas, adapting to climate change and natural hazards.

The budgets are determined in the Three Year Plan. Now adopted the first year of the plan becomes Councils operating budget and determines that year’s rating requirement. For the following two years, years two and three plans will be the starting point for setting those years annual budgets. These will be reviewed and any matters that have come to light in the intervening 12-24 months can be factored in.

This means that if something unexpected happened (like another Cyclone) causing a change in priorities or assumptions on which the budget was constructed, a budget change can be made to address it, and this will flow through to a change in the rating requirement.

The next Quotable Value (QV) property valuation (September 2024) will inform the rates distribution for the financial years 2025/26, 2026/27 and 2027/28 and may further effect how rates are distributed. The new property values from QV will take effect from 1 July 2025.

We do not want rates rises to continue, but what happens in the future is affected by many things, some of which are outside our control. We know rates increases like this is unsustainable over the long term for our communities.

 We will always prioritise continuing to provide the services the community wants and needs in the most cost-effective way possible. We are working with other councils and advocating to central government for other ways to fund our essential work.

 The level of rates increases is being driven by high inflation (higher than seen in the last 20 years), rising interest rates (at levels not seen since 2007 global financial crisis), rising insurance costs (due to higher levels of climate change related claims), and changing government priorities.

The green bars over the life of the Three Year Plan show that the replacement of our assets are/will occur quicker than they will wear out. That means the average age of our assets will be younger and less likely to be used to the point of failure.  This is a positive story of our investment.

Trade-off #1 - Land Transport

Many of the submissions made by the community had a focus on Land Transport and highlighted a shared concern to see safer roads.

Council agreed and confirmed an additional increase of 0.6% ($205,000 coming from rates, with a further $295,000 from NZTA Waka Kotahi). This will be used to deliver a one-off catchup on metaling rural roads (delivering an extra 8.3 kilometers) and a one-off catchup on roading reseals (delivering an additional 6 kilometers of reseals), subject to Council receiving the equivalent funding from NZTA-Waka Kotahi.

Yes, the increased amount for Land Transport on the preferred option will mean that the rates increase is higher by 0.6% than was proposed. The effect of this increase is $3.44 in next years rates for every $100,000 of a property’s land value for the coming year.

Trade-off #1 - Land Transport

We work hard every year to secure external funding to ensure we can deliver on the projects that we have prioritised while reducing the rating impact on our communities.  

At this point, no new funding has been confirmed by the Government.

Trade-off #1 - Land Transport

Unfortunately not. The increase is a strong start however we need to make increases for at least the next ten years to achieve the level of investment required in our road network.

While we’ve had some initial Government funding, we still have $129 million of roading repairs from the cyclone to fund. We made an allowance in the Three Year Plan, but we await confirmation from Government on what this will be. If we do not receive the funding requested, it will take over a decade to make the critical roading repairs that are needed.

Trade-off #2 - Water

No, but it will help to continue to address our historical issues and future water needs. It’s also includes a number of urgent and critical projects such as the Waipukurau Second Supply project, pipeline renewals and replacing the 100 year old reservoirs in Waipawa.

 The nationally managed Three Waters Programme proposed by central Government has been repealed, which means that Three Waters remains a core Council activity. Consequently, the clear capital programme of the 2021 Long Term Plan was phased due to the uncertainty in what a Hawke's Bay Waters Model could look like. Council has prioritised progressing this with our wider regional Councils as we face major affordability challenges created by the delivery of Three Waters activities in our district.

Trade-off #2 - Water

People connected to drinking water and wastewater networks pay a targeted rate because they directly benefit from these services.  Drinking Water and Wastewater activities are funded solely by this targeted rate.

Trade-off #3 - Stormwater

A step change in levels of investment in the stormwater activity has been made within the Three Year Plan. This will enable a regular maintenance programme for our open drain networks and regular inspections of piped network.

While this maintenance will ensure the network consistently operates as designed, areas of the network may not cope in large rainfall events. A capital investment programme to reduce flood risk throughout the network is also included in the plan across all three years that aims to minimise this flood risk.

The increased maintenance programme is expected to start early in the new financial year while improvements to reduce flooding risk are spread over the next ten years. 

Trade-off #4 - Service Reduction and Efficiencies

No, the Waipawa Library will not close, it will continue to operate as is. Feedback from the community made it clear that the Waipawa Library service is a valuable resource that should be retained.

Trade-off #4 - Service Reduction and Efficiencies

Yes, they will close on 29 July 2024.  There is an alternative Transfer Station (Waipukurau). This decision helps reduce the rates increase.

We’ve done our best to create a budget that addresses the most urgent priorities ahead of us. We proposed options and trade-offs available to us. The submissions we received provided us with some clear guidance on what really matters for the community, what was an acceptable trade-off and what wasn’t.

Council is required under the Building Act to undertake swimming pool inspections every three years to ensure fencing is compliant with the Act.

 The fee and charge covers the cost of carrying out inspections.

 In early 2024, we reviewed our Revenue and Financing Policy and rating system to determine how Council’s costs will be divided across the community between rates and user pays (fees and charges). This resulted in a proposal to move the cost of swimming pool inspections for those that have a fixed pool from a ‘fee and charge’ to a targeted rate payable by pool owners averaged over three years.

No. Feedback from pool owners indicated that the majority of the respondents want the current fee and charge structure to remain. That is each pool owner will be invoiced a separately from their rates at the time of their three yearly inspection.

As the Upper Tukituki Scheme Review is yet to be released later this year, some key infrastructure projects, including our wastewater treatment plants and the Tukituki (Tarewa) Swingbridge have been delayed until we understand the implications of this review. Consequently, the Three Year Plan Budget has been adjusted and key projects, including the swingbridge have been rephased.

We’ve made changes to our Development Contributions Policy, the mechanism that allows us to recover the cost of infrastructure upgrades caused by district growth from developers. This policy is part of the Three Year Plan.

 There are some amendments to the growth projects and subsequent contributions, including changes for smaller dwellings. You’ll note changes to some development contributions, more notably for Otāne and Takapau.  This is due to us having recalculated future growth projects and growth projections. For example, the growth forecast for Otāne has decreased from 150 new houses over ten years down to 104.

 Even if the capital program didn’t change, then the cost is spread over 1/3 less developments compared to three years ago. Likewise, in Takapau the 10 year waters capital program that was assumed to be growth related was only $453k in 2021, but now it is assumed to be $1.5m. This is partly due to cost escalations, partly to do with program changes, and partly due to changes in growth assumptions.  

No. Council budgets for business as usual, but it does maintain an adverse events fund and insurances that are designed to react to moderate sized unforeseen events. Unfortunately, Cyclone Gabrielle was of a size that the impact was beyond Councils normal resources and will take several years to fully recover from.

We put forward three options that include significant reductions to reduce the level of rates increases. Everything was looked at with intense scrutiny, including how we can be more efficient, where we can cut back and where we can find alternative funding in proposing these budget options to ratepayers.

The adopted Central Option already includes over $1.5m of operational savings out of the organisation and leverages external funding to help offset some of the rates increases. This comes with some hard reduction in services choices, for example the Waipawa and Takapau Transfer Stations will close.

What we can’t stop doing is:

• Services we are required by law to provide, such as consenting and compliance
• Essential services, such as 3 Waters, roading, refuse and cemeteries
• Investment we need to make and that you have asked us to prioritise: land transport, critical three waters investment and cyclone recovery. 

Yes, we ensure we get value for money from contractors, and consider carefully where and how we use them.

Council’s procurement policy, which is based on Ministry of Business, Innovation and Employment best practice guidelines, means we run a competitive process and must seek tenders from multiple vendors to ensure we are getting good value and a good return.  Audit New Zealand check a number of procurements to ensure we comply with our policy and that council buying provides value for money for the ratepayer.

When it comes to roading specifically, we are bound by Waka Kotahi New Zealand Transport Agency policies and guidelines around contractor procurement, traffic management and quality as they fund 59 percent of local roads in our district, and this is criteria for receiving the funding.

We employ in-house where the volume of work justifies it and where we can manage the scale and specialist equipment required.

The Council has two main types of rates.

• Districtwide rates, which include General Rates, Land Transport Rates and the Uniform Annual Charge. These pay for services that everyone has access to and can use such as roads across the district, refuse and recycling (excluding kerbside collections), libraries, parks, public swimming pools, community facilities, cemeteries, consenting, compliance, Mayor and Councillor representation, and council administration. Many of these activities are only partly rate funded and are also funded by user pays or central government subsidy.
• Targeted rates only apply to ratepayers receiving that service. This includes kerbside waste and recycling collection, drinking water supply, wastewater disposal, stormwater and swimming pool inspections. Here only those ratepayers receiving those services pay (predominately rate payers living in the district’s main urban areas). 
• Stormwater is largely a targeted rate (85 percent) paid by ratepayers in our towns. The remaining 15 percent is paid as part of General Rates as the stormwater network helps to protect shared services and infrastructure such as our roads and townships with essential services, such as the medical centre, libraries, supermarkets, petrol stations and more. 

Unlike some other Councils, Central Hawke’s Bay District Council doesn’t have an investment portfolio, such as Port or airport shares, or other significant investments that it can sell to raise funds and lower rates. 

Eight years ago, Council reviewed all its land holdings and identified approximately five small pieces of land it no longer required, which were sold in 2022. 

We may be able to help. We recognise it’s particularly tough for people on fixed incomes and that’s why we have support available for those that qualify due to hardship.

Rates are rising everywhere, with an average of 15 percent across the country due to things like rising inflation, insurance, cost of borrowing, legislative costs and historic underinvestment. Regionally councils are also grappling with significant infrastructure and funding challenges following Cyclone Gabrielle, which is one of the reasons our regional neighbours are facing significant rates increases, too.

If you are struggling, please contact our rates team and see if you qualify for assistance. We have rates postponement policies and there are rebates available for those who meet a certain threshold. Please visit our website to find out more or call 06 857 8060. https://www.chbdc.govt.nz/services/properties-and-rates/rates/rates-rebate/ 

We may be able to help. We know times are tough for everyone and particularly for people on fixed incomes and do have support available for those that qualify due to hardship.

If you are struggling, please contact our rates team and see if you qualify for assistance. We have hardship rates postponement policies, there are rebates available from the Government for those low income earners, and Council has a rates postponement policy for superannuants that meet certain criteria.

Please visit our website to find our more or call 06 857 8060. https://www.chbdc.govt.nz/assets/Uploads/Rates-Remission-Postponement-Discounts-and-Collections-Policy.pdf