What guides us?
A number of policies and strategies help guide Councillors and staff to plan and make decisions. This is supplementary information for our draft Long Term Plan
The Financial Strategy was reviewed as part of the Long Term Plan process, it ensures that Council is spending within its means on services the community wants. It outlines Council’s self-imposed limits for the total level of rates, the percentage increase in total rates, and the level of debt.
For more details, please view our Financial Strategy (LTP Supporting Information - Section 3: page 111)
Proposed rates increases for the next ten years have been limited to the Local Government Cost Index (LGCI) plus four percent. The LGCI measures the year-on-year price change of goods and services typically used by local authorities.
The costs and impacts from maintaining current services and assets is a major driver for the affordability of investing in additional services and higher standards. Council carefully assesses all of the financial impacts on the affordability of rates from next year through to 2025, with an eye on the longer term impacts from the Infrastructure Strategy. Council brings these financial issues together in the Financial Strategy. The overall goal of the Strategy is a continued financial viability through sustainable growth and investment in efficient and affordable infrastructure.
Balancing our budget
Council is required to balance its budget. This means operating expenses should be covered by operating revenues. Over the term of the plan an overall net deficit of $5.6 million is proposed. Council considers it is financially prudent to have an operating deficit. The main reasons are:
- not funding depreciation on non-strategic assets
- not funding depreciation on the portion of roading subsidies by New Zealand Transport Agency
- not funding the interest expense on loans taken out for growth purposes when the interest and principal repayments will be met from future development contributions.
Planned infrastructure asset renewals over the first five years are forecast to be met from annual depreciation charges and utilisation of the Council’s depreciation reserve which currently stands at around $7 million. In the following five years, however, planned renewals are expected to be significantly lower than forecast depreciation charges and the depreciation reserve will be replenished. Council only commenced funding depreciation in 2009 whereas some of our assets are 100 years old. Consequently there will be times when the depreciation reserve goes into deficit. Any short-term deficit in the depreciation reserve will be funded through loans until the reserve is replenished by on-going depreciation charges.
Council rates limit
Over the next 10 years, Council has resolved to keep average rates increases within the weighted average local government cost index (calculated by BERL) plus four percent. This reflects the need to budget for inflation increases that affect Council operations (pipelines, roads, energy, staff costs etc). The Council aims to maintain the current levels of service delivered to residents by completion of the upgrades to Feilding waste water; and provide an increased level of service from the refurbishment of the Makino Aquatic Centre, the building of a new cycleway and the completion of the Green Spine railway land beautification project.
The proposed rates increases for the draft Long Term Plan 2015-25 are as follows:
The graph above indicates total rates increases over the ten years 2015-25. The most significant rise is forecast in 2016/17 at 5.9% with the lowest in 2021/22 at 2.3%. Over the next ten years, the average total rates increase per annum is 3.7%.
Council has taken a prudent approach to debt levels and has kept borrowing below the maximum debt levels set by Council in the financial policies. This approach allows flexibility for future generations to make strategic decisions and retains the ability for Council to meet unexpected demand for significant funds, including natural disasters or major failures in key assets.
The above chart shows Council’s proposed debt over the next 10 years, together with the maximum planned debt allowed by the Financial Strategy.
The Infrastructure Strategy helps identify key future issues and sets out how Council will fund the replacement of water, wastewater, stormwater and roading assets as they wear out, and the building of new infrastructure to support expected growth. The Council has adopted the following key objectives for infrastructure:
- Providing affordable infrastructure
- Meet new resource consent standards for Feilding and meet Manawatu River Accord commitments for all urban areas
- Invest in infrastructure in the Feilding growth precincts that will cater for forecast growth over the next 30 plus years with staged development of the identified growth precincts (funded from Development Contributions)
- Ensure capacity is available to support the development of the wider Manawatu as Food HQ for New Zealand and specifically food innovation and processing in the District
- Funding will fit within the Financial Strategy rating and debt limits for the first 10 years, and will be consistent with the Financial Strategy funding strategies for years 11 to 30.
For more details, please view the full Infrastructure Strategy (LTP Supporting Information - Section 3: page 125)
The District is experiencing modest growth of around 0.3 to 0.9% a year. This is not placing stress on Council infrastructure as there is spare capacity. The current upgrade programme is mainly related to increased environmental standards, not insufficient capacity, although capacity is being increased in Feilding for future industrial growth. The costs of meeting higher standards have been more significant than the impact of forecast growth over the last ten years, and this is expected to continue. This strategy shows Council is prudent and has the capacity and ability to cater for expected growth with currently known assets while meeting stated levels of service.
Through detailed condition assessment programmes now imbedded in operational budgets, Council is moving towards planned maintenance. This approach minimises the risk of mechanical breakdowns and other faults. This work is essential to maintaining the current level of service to the community. In April 2014, Council changed its Utility Asset Management Software. Condition rating and confidence will improve over time as this new system becomes fully populated with asset data. This information is the best information available to Council about these assets. For some assets (e.g. underground pipes) the information around age, type, and quantity is reliable. However, it is acknowledged that current information around condition has some limitations. Where these limitations, exist the information will be reviewed as new information becomes available. Updated information could result in changes to the costs or timing of planned expenditure.
Significance and Engagement Policy
This policy guides Council on significant decisions about how to inform, consult, engage, involve or empower those affected in the decision-making process and what should be consulted on.
Development Contributions Policy
Council is reviewing its Development Contributions Policy. Section 106 of the Local Government Act 2002 requires Council to have a policy on development contributions and for it to be reviewed every three years using a consultation process.
A Development Contribution is required when:
- the effect of the development is to require new or additional assets or assets of increased capacity in terms of the network infrastructure, reserves and community infrastructure; and
- the Council incurs capital expenditure to provide appropriately for those assets.
We are consulting on this proposed policy separately. Please read the full policy including the proposed changes on our website here.
Other policies, strategies and plans that have an impact on Council decision-making:
Economic Development Strategy (in progress, available late 2015)
Feilding Urban Growth Framework Plan
Waste Management and Minimisation Plan
State of the Environment Report
- Code of Conduct
- Procurement Policy
- Community Hall Management Policy
- Community Development Funding Policy
- Leases Policy for Community and Recreation Groups
- Leisure and Recreation Action Plan (in progress, available late 2015)
Council Controlled Organisation summaries:
Rating System (LTP Supporting Information - Section 3: page 199)
Rates Remission and Postponement Policies (LTP Supporting Information - Section 3: page 212)
Revenue and Financing Policy (LTP Supporting Information - Section 3: page 219)
Statement of Accounting Policies (LTP Supporting Information - Section 3: page 184)
Significant Forecasting Assumptions (LTP Supporting Information - Section 3: page 240)
Māori Capacity to Contribute to Decision Making (LTP Supporting Information - Section 3: page 268)
Asset Management Plans
- Community Facilities
- Stormwater, Water Supply and Wastewater
New Zealand Transport Authority Financial Assistance Review (58KB pdf)
One Network Road Classification (2MB pdf)
Drinking Water Bylaw
Horizons One Plan (external website)
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