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How much does it all cost?

The proposed 5% total rates increase in 2015/16 is made up of:

  • Inflation 2.2%

  • Reorganisation 1.5%

  • Depreciation 0.5%

The above costs come about from external factors and previous Council decisions

  • New and improved services 0.8%

The above costs come about from the decisions we will make as part of this plan

Inflation

You might be aware that household inflation is fairly low at the moment. However, that is not reflected in the price increases facing councils. Household inflation is measured by the Consumer Price Index (CPI). However, this measure is only marginally useful for councils which have different cost pressures than households. Instead, New Zealand councils use the Local Government Cost Index (LGCI) to determine inflation and this year the LGCI is 2.2%. It incorporates the cost pressures associated with roading and construction costs that are influenced by commodity prices and the availability of specialist staff. The LGCI was developed by Business and Economic Research Limited (BERL).

Reorganisation

In 2014, Manawatu District Council carried out its first significant reorganisation since it was first established in 1989.

The restructure was necessary because for the past quarter of a century more and more central government responsibilities have been handed to Local Government. During this period, we’ve also seen a transformational shift in communication mediums that have led to residents having higher expectations. Alongside this, we are one of only a few rural districts around the country that is growing and in order to attract and retain residents and businesses we need to be responsive and supportive.

Council now has a new customer and business focused reporting structure; our offices have been transformed into a business hub. We are using more online communication methods to keep customers informed and to ensure residents are better able to have their say on projects; and, we are working to ensure our response times to queries are continually improving.

The restructure led to an increase in staff numbers and operational costs. We believe this cost is necessary to help us create the best rural lifestyle in New Zealand.

Depreciation

Most assets lose value or depreciate over time and eventually they need to be replaced. Depreciation is a method of allocating the cost of an asset over its useful life and is a way of addressing intergenerational equity. Depreciation represents the charge to current ratepayers for the use of the asset during each year. In the 2015/16 year, 0.5% or $140,000 of total rates increase will go toward depreciation. One example is the increase in depreciation cost of stormwater infrastructure. This has increased by approximately $86,000 in 2015/16 as a result of additional assets that were built in the previous year and increases through revaluation.

Depreciation is charged on all assets by allocating the cost or the revalued cost of the asset over the estimated useful life. The asset value increases due to regular revaluation and capital expenditure. With minor exceptions Council funds all depreciation from rates and revenue. This money is put aside and used to fund asset renewal expenditure as required.

For more details, please review our Financial Strategy (LTP Supporting Information - Section 3: page 111)

New and improved services

The 0.8% equates to about $224,000. It is made up of increases to a number of budgets across the board. We’ve worked hard to keep this percentage increase low and in order to do that we’ve also reduced a number of project and operational budgets. However, we still require 0.8% more in order to deliver the services and projects we said we would. Here are some of the budgets which have increased:

  • Rubbish and recycling kerbside collection contract increases by $100,000 in year one of the Long Term Plan
  • Awahuri Forest/Kitchener Park Trust: Supporting the Trust to continue to enhance and protect the park $75,000 per annum 2015/25
  • Formalising the legal access to the Wastewater Treatment Plant at Kimbolton: $50,000 in year one of the Long Term Plan
  • Spatial Plan for whole District: $25,000 in year one of the Long Term Plan
  • A community survey to check customer satisfaction levels with the services we provide: $20,000 in year two of the Long Term Plan
  • Seismic Investigation Feilding Wastewater Treatment Plant: $15,000 in year one of the Long Term Plan.

* Please note items above add up to more than $224,000. Savings have been made in project and operational budgets. However, some project costs have also increased.

Rates and finances

Operating Expenditure by Activity

Sources of Operating Revenues

Proposed Capital Expenditure

Examples of different property categories

What your rates are spent on per week