Our rates challenge

The current economic environment we are all living and working in is challenging.

When Council set the Long-term Plan in 2021, we had a forecast rates increase of 3.74 percent for the 2023 -24 year. Since then, the state of the New Zealand economy has changed considerably, and this has a direct impact on what councils can deliver and at what cost.

Currently Taupō District Council is dealing with the financial effects of the global pandemic, weather-related disasters, overseas influences such as the war in Ukraine and global supply issues. These are all influencing our high inflation, rising interest rates, and constraints on resources and supplies. In addition to an increase of around 25 percent in construction costs, there have been uncontrollable cost increases across the board, including in basic items like fuel, electricity, and insurance costs.

This means it will cost Council more to invest in, maintain and operate its assets and services, such as looking after our parks and reserves and operating our libraries, pools, and community facilities.

When we first forecast how much rates revenue we would need in 2023-24, the impact of all the factors above meant we were looking at a rates rise of around 15 percent, just to continue with our current work. We knew this would be unacceptable to the community.

In response, we have looked at every single Council operating cost and rationalised budgets as much as we can. We have also gone through our capital and community projects list to determine which projects are essential to deliver and whether they can realistically be delivered in the coming year.

Aside from reducing operating costs and slimming down our capital projects, about the only other appropriate lever to reduce the rates increase is to delay some of our depreciation funding. While this will provide some short-term rates relief for this coming financial year, we do need to balance this against the burden on our future ratepayers. Delaying depreciation funding should only be a short-term intervention to smooth the rates rise in this year. This delayed funding will have to be added back on to rates in the next year or two to ensure the ratepayers who are using the assets pay their share of the use of those assets.

Bearing those factors in mind and after extensive work, the final result is a proposed average rates increase of 8.6 percent in the 2023-24 year. While we realise this is still a considerable change from what was originally projected, this is realistically the lowest figure we could get to in the economic climate, without drastic cuts to Council’s levels of service. It is no exaggeration to say this is one of the most difficult Annual Plan budget-setting processes we have ever undertaken.

So, we are asking you, our community, to help us make some tough decisions. These decisions, and the options, are laid out here. Please read and consider them carefully and let us know your thoughts as we find a way through the challenges we face in this Annual Plan.

Our rates challenge

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