Background information

Message from the Mayor and Chief Executive

Over two years on from the first outbreak of Covid-19, we are still very much feeling the effects of this worldwide pandemic. As a result of this ever-evolving landscape we find ourselves in, we must continue to adapt and find ways to move forward as a district.

Last year, we set out our long-term vision and plans for the Taupō District. As part of this, we needed to look at how we could support our economic recovery in a post-lockdown environment. A key piece of this puzzle has been delivering a significant programme of investment in our core infrastructure – to create local jobs and support our economy. Much of this has been government-funded – an opportunity that we have been fortunate to take up on projects district-wide.

Now, six months on from setting that plan, we are re-looking at how we are delivering for our district as part of our Annual Plan. We are reviewing what is achievable in the current climate, looking at how we can be nimble in our approach, and thinking about both the immediate concerns of our community alongside the district’s medium- and longer-term needs.

What we aim to achieve is balancing affordability for ratepayers with maintaining the levels of service and investment that our district needs to thrive. At the moment, it is well-known that inflation is increasing at rates not seen for over three decades. That has significant ramifications on affordability and in turn deliverability.

In this Consultation Document, we have set out the major projects we had planned for year two of our Long-term Plan, and how the current climate has affected these – primarily in terms of costs – and what we are proposing for these.

Alongside this, we are also asking for feedback on a couple of policies - our fees and charges and our significance and engagement policy which we have recently updated.

Please take the time to read through this Consultation Document and the issues we have highlighted in it. We want to hear from you – our community – on whether you think we have this right, whether we have prioritised appropriately, and what is important to you.

Why we want you to have your say

Council’s Annual Plan outlines the services, key projects, and initiatives we intend delivering for our community in the coming financial year. This website outlines the key issues we want your feedback on.

It’s just as important to let us know the things you support as well as the things you don’t as what you tell us will guide our future decision making.

Submissions closed at 4.30pm on Thursday 14 April 2022. Thank you for all of the submissions received.

WHAT HAPPENS WITH MY FEEDBACK?

When you make a submission, you will be given the option on whether you want to present your view to the Council in person. If you do, we will book a time for you to attend a public meeting which will be held on 23 and 24 May 2022. You will be given up to five minutes to present your submission and answer any questions. Hearings in Turangi and Mangakino will be arranged if there are enough people wanting to present. Alternatively, you could choose to present your view to the Council through a video call - please let us know if you would prefer to present this way, and we will be in touch to make the necessary arrangements.

All submissions will be considered by Council regardless of whether you want to be heard or not. Final decisions will be made at the end of the public meetings and the Annual Plan 2022-23 will be adopted at the end of June 2022.

Kindly note that all submissions will be made available to the public via the Council website, including your name, but not contact details. This is in accordance with our Privacy Statement.

What Council does

We deliver a diverse range of services for and on behalf of our community that affect how we play, live, work and engage with our environment. These are the things that help make Taupō District a great place to live and enhance our reputation as a destination of choice for tourists.

The services we provide are not just those that are mandated by the Local Government Act 2002, but equally importantly, reflect the aspirations of our community and the things you have told us that you would like to see or have across our district:

Community Services
Water
Transport
Community Facilities
Wastewater
Solid waste
Stormwater
Democracy and Planning
Investments
Economic Development

How Council plans

The law requires councils in partnership with their communities to prepare Long-term Plans every three years. These Long-term Plans set out everything we intend to deliver for the Taupō District community over the next ten years and how we will pay for them.

The Long-term Plan sets out the community outcomes we hope to achieve, the projects and activities we will undertake to achieve these community outcomes and the level of service the community can expect.

The plan also includes how much we expect things to cost, how we’ll pay for them and what it all means for the rates you pay and the money we borrow to make up the difference.

Long-term Plans are designed to provide a long-term focus by looking a decade ahead. But they are also reviewed and consulted on every three years; and an annual plan is prepared for each of the years in between.

Council calendars run from 1 July of the first year to 30 June of the following year.

You may recall that we came to you about this time last year with our draft Long-term Plan and talked about these same things with you. The feedback from the community helped us to finalise that draft document and our final Long-term Plan came into effect at the end of June 2021.

You can view our Long-term Plan at: taupo.govt.nz/LTP

We are now halfway through the first year of our Long-term Plan and are in the process of preparing an annual plan for the second year of the Long-term Plan.

Ongoing effects of COVID-19 and a fast-changing economic environment

There is little doubt that the Covid-19 pandemic has had devastating health, economic and social impacts on businesses and communities across Aotearoa. Lockdowns and movement restrictions that have been put in place to limit the spread of Covid-19 have sharply disrupted the way we live and work, changing the very nature of our social fabric.

Work had only just begun in earnest on our Long-term Plan when the pandemic began, and very quickly, the plan became not just about shaping our community’s aspirations for the next decade, but also about taking immediate actions to support the local economy. Council was not alone in taking this approach, other councils across New Zealand and the Central Government adopted a similar tactic.

Across the nation, there was a steadfast commitment to work together with our communities, businesses, and all levels of government to respond to this crisis and create a better future. The strategy to limit the damage caused by the pandemic was two-pronged. The first, to mount a resilient public health response and the second, by introducing a raft of economic measures to cushion the effects on livelihoods and well-being, as well as support New Zealand’s economic recovery.

As an organisation responsible for undertaking many infrastructure related projects, Council has the ability to help stimulate the economy through undertaking capital projects and renewals. Our Long-term Plan was developed with these considerations in mind and scenarios on the likely impacts of Covid-19 on Taupō’s local economy were factored into our economic assumptions. As a result, adjustments were made to bring forward the timeframes for undertaking capital projects, upgrades and renewals that had been identified as critical to maintaining access to fundamental services and facilities needed for everyday living.

A key consideration has always been the need to balance our community’s ability to pay, while progressing key capital projects that are instrumental in maintaining and improving Council’s services and delivering these within an expected time-period. We also worked to ensure that Council’s Covid-19 response, while ambitious, did not deviate significantly from the course set out in previous financial and infrastructure strategies.

We also considered possible risk factors. At that time, the risks we identified were the possibility of supply chain disruptions overseas and limiting the ability of the local supplier market to deliver required materials in the needed volumes. There was also the risk of future lockdowns delaying projects.

Since the Long-term Plan was prepared, it has become increasingly clear that the nature of the challenges posed by Covid-19 to the economy differs from what was anticipated. In the wake of the global Covid-19 response, the construction sector is facing an unprecedented level of pressure in supply and demand for building materials both domestically and internationally, resulting in a sharp surge in costs and delays and disruption in construction and infrastructure projects.

In a matter of months, we have seen supply chain-related risks evolve from a minor peripheral issue to a key risk consideration for parties entering a construction contract. While supply chain risks are not unknown in the construction industry, the impacts of Covid-19, as well as the surge in demand for materials overseas have worsened some of the key factors that are leading to the current supply constraints.

These constraints include shortages in raw materials and competition in manufacturing slots, low shipping container availability, congestion in ports and delayed port clearance and a restriction in the ability to move materials through domestic travel routes.

At a local level, Council is also having to grapple with human resource constraints, both within our own staffing pool and our contractors having staffing shortages as well. Again, we are not alone in facing these challenges, and across the country, a number of councils are citing similar constraints in finding staff with the relevant technical and/or project management skills and retaining them in their workforce.

The result of these constraints is that projects are now costing far more to complete than they would have as recently as a year ago. Even where it is possible to recruit appropriately qualified technical staff, the challenges posed by supply chain problems, and periodic Covid-19 lockdowns are working in tandem to draw out the project delivery timelines far beyond what was planned and cost significantly more than anticipated.

How we will decide on projects

As a result of the challenges discussed in the previous section, it is increasingly clear that our operating environment has changed and the project planning and implementing approach that was decided on as part of the Long-term Plan process will no longer serve us well.

The identification and funding approval process that all projects go through before being confirmed as viable is rigorous and underpinned by considerations of value to the community and statutory regulations. We are therefore confident that the projects identified in our Long-term Plan remain vital to the ongoing wellbeing of our community. Council remains committed to delivering these projects, however there will need to be changes to the delivery timeline.

We know that our project delivery pipeline is ambitious, but it would be deliverable within a ‘normal’ operating environment. These are however not ‘normal’ times and there is every possibility that our operating environment will change even more in the coming year – although the nature and severity of those changes are hard to predict. Therefore, there is every possibility that Council may need to delay the delivery of some projects, bring others forward or adjust the scope and cost of some projects to get best value for money.

In the following sections of this consultation document, we will talk about what changes – either in cost, scope, or delivery timeline that we will be making to some of our key projects. These are projects that have been identified as being of major interest to the community or central to Council fulfilling its legislatively mandated roles.

However, Council does a great many things in the community and not all of them meet the threshold of key projects. It is therefore not practical to list the details of every single Council activity and considerations around their delivery here.

When deciding whether to modify the scope or delivery of a planned project, Council’s decision-making will be guided by:

the need to maintain a balance across the four pillars of well-being – cultural, environmental, economic, and social
prioritisation in line with the eight strategic priorities that we identified and developed as part of the Long-term Plan
resource considerations such as the availability of materials, contractors, and appropriately skilled staff

Alongside these considerations is the fact that Council has a number of carry forward projects that we are still delivering, and which also continue to require materials, staffing and financial resources.

Our carry forward projects are the largest they have ever been, and this is further compounded by the delivery of Central Government funded shovel-ready projects. Council’s choice of what uncompleted projects from the 2021-22 financial year to carry forward to 2022-23 will be limited to:

Projects for which Council has received funding and is committed (in writing) to completing; and/or
Projects where there is a legal or contractual commitment in place which needs managing through to completion.

All other projects not commenced by the close of the 2021-22 financial year will only be considered for delivery in 2022-23 in accordance with the decision-making criteria set above. No work will commence on these projects until a decision has been made to continue the project. If a project no longer exists in the form originally intended or approved, it will be set aside and not carried forward.

What does this mean for my rates?

The 2022-23 average rates increase forecast in Council’s 2021-2031 Long-term Plan was 7.35%, however that is likely to rise by around 1%. The increase is largely being driven by rising costs in the solid waste management part of our operations.

The most significant cost impact in our solid waste operation has been the cost of carbon units which we purchase to offset our greenhouse gas emissions. We look to purchase those units at the lowest price possible and budget for future increases. Unfortunately, the market price of those units has been increasingly volatile and has risen dramatically, more than doubling in the last 12 months.

We have also seen rising general inflation across the economy applying significant upward pressure to many of our costs, particularly materials and labour costs. This mirrors the impacts we have seen across our capital investment programme. Despite this volatility, we are working hard to keep a limit on operating expenditure in the 2022-23 year. Our primary approach to dealing with inflation is to seek operating efficiencies and improvements to offset its effects.

While there is some uncertainty around which capital projects the market conditions will enable us to deliver in 2022/23, we still expect the total capital invested to be broadly aligned to the Long-term Plan. This means that the cash required to apply to interest and depreciation will remain at a similar level.

It’s important to remember that rates for individual properties are not restricted by the rates increases limit of LGCI +2.5% average rates increase limit signalled in our Financial Strategy.

They will vary depending on a range of factors including property revaluations and whether the property is used for business, residential or farming purposes.