Economic uncertainty a challenge for long-term planning
Public consultation for Environment Southland’s Long-term Plan 2021-2031 consultation document, Tō tātou haerenga – Our journey, is scheduled to start on Tuesday 4 May 2021.
Chairman Nicol Horrell said planning for the next ten years at a time of such economic uncertainty has been challenging.
“The impacts of the Covid-19 pandemic on our budget have been significant, with the reduction in investment income and the almost total loss of our marine fees from visiting cruise ships. Add to this the costs of damage repair from the 2020 flooding event and it makes developing a balanced budget a very difficult task.”
Recent media articles focused on a $4.6 million surplus as at 31 December 2020. Most of this surplus related to our investment portfolio, and was only a mid-year result which could change significantly buy the end of the financial year. It’s important to realise that as of 31 December 2020 our end of year forecast was an operating deficit of $500,000.
“We have to prepare our budgets and make plans for the future based on what we know and a number of assumptions about the future. It’s not appropriate for us to rely on money that isn’t actually realised.”
Chairman Horrell said planning for the longer term means they need to make some assumptions about what the future holds. The assumptions which guide this Long-term Plan include a lack of cruise ship income for some time, increasing costs to meet the growing requirements of legislation and community expectations, as well as significant uncertainty in investment income.
Councillors last year established a strong set of financial principles on which to base all of their financial decisions and budgeting. These include ensuring everyday costs are met by everyday revenue so the burden of today’s spending is not felt by future generations.
“Along with this, we always aim for rates to be affordable and equitable, while working to provide more certainty for ratepayers in the coming years.”
Chairman Horrell said building financial resilience is key to this Long-term Plan, by having the necessary funds, debt capacity and insurance to allow for future unforeseen events.
“We know from experience that we need to plan for things such as extreme weather events, but we’ve also learned a lot over the past year about the impact events like a pandemic can have on us.”
View the agenda and draft consultation document for the Council meeting at 10am on Monday 3 May 2021.