Tough decisions, strong future - Statement from Chairman Nicol Horrell
The Council is asking Southlanders to consider some tough options to ensure a strong, resilient future for our region.
Environment Southland’s Long-term Plan 2021-2031 draft consultation document, Tō tātou haerenga – Our journey, will go to a Council meeting on 3 May 2021 for approval to be publicly released. It follows 18 months of work by councillors and staff and sets out the significant environmental issues the Council is facing and its options for addressing and funding them.
The biggest challenges ahead of us are to deliver on what our communities and the government are asking of us, especially with regard to freshwater quality and climate change. Development in the region has led to a decline in freshwater leading to poor ecosystem health, particularly in our lower catchments and estuaries, and many waterways that are unsafe for people to enjoy and drink from. The unpredictability of climate change impacts means we have to increase the resilience of our communities so we are prepared for unexpected events.
The following are our priority work programmes.
WATER AND LAND
- Implementation of what is the Government’s most substantial change to freshwater management in a generation with further impacts expected from the Three Waters reform and the reform of the Resource Management Act.
- The Government’s Essential Freshwater package introduces new rules and regulations to stop further degradation of New Zealand’s freshwater resources and to improve water quality within five years, as well as reverse past damage and bring freshwater resources, waterbodies and ecosystems to a healthy state within a generation.
- The package provides a framework to achieve the environmental outcomes our communities want. Their implementation requires an increase in the volume of work, resourcing and costs to meet the targets. This has implications across the Council, especially within our planning environment, our consents area and in the compliance space.
- The completion of our shovel ready projects. As a result of Covid-19, we were successful in securing funding from the Government’s economic stimulus package for flood defence resilience projects, which the Council consulted on late last year. The Government pays 75% of the cost of these projects and the Council needs to contribute 25% or $4.8 million, which, because it was unexpected, was not budgeted for. The funding means Southland’s flood defences can improve the resilience of our communities, years sooner than we would have been able to without it.
- Upgrades to our systems. It’s clear, we need to upgrade our technology to focus on higher priority work. With the increased requirements of the National Environmental Standards for Freshwater Management, we need to make changes to our technology now. We are going to see in an increase in consents required and expect further demands on our monitoring and compliance. We also need to ensure the large volume of data we collect is managed in a way that assists us and the community to make good decisions.
- Continuing our marine activities including harbour master, coastal planning and marine biosecurity. In the past, this has largely been funded by marine fee income from cruise ship visits, amounting to $2.8 annually. However, this was lost due to Covid-19 and it is very unclear when and to what extent the cruise industry will return. We cannot bank on it.
The Council funds its activities from a variety of sources including dividends from its majority shareholding in South Port, financial investment, fees, charges, levies and rates.
During the past 18 months the Council has had a significant reduction in income and its workload has increased substantially due to Government requirements and community expectations, particularly in relation to freshwater and climate resilience.
The Council is proposing two options for rates increases to fund costs of the work programme over the next three years.
Option 1 is the Council’s preferred option. It proposes a 20% average rates increase, which minimises the debt we incur, the time to repay it and how much of future rates are used to repay debt.
Option 2, which proposes a 16% average rates increase, will take us longer to repay and comes with increased risk. The longer timeframe means there is more risk of rising interest rates and pressure on our future income to repay the debt. It also means a higher probability of unexpected events, which might not allow us to repay the debt in the time predicted.
By way of example, for a $320,000 home in Invercargill the regional council rates would be $269 per year for Option 1 (20%), an increase of $66 or $259 per year for Option 2 ($16%), an increase of $53.
We have budgeted for an operating deficit in the current financial year, which is forecast to continue for another three years, even with the proposed rates increases. We plan to borrow to fund the deficit.
While it is not normally prudent to manage council activity with a deficit, we accept taking on debt as a short-term option a necessity, rather than increase rates even further than proposed.
The Council has put in a lot of effort to come up with a balanced budget. We’ve been guided by some key principles including ensuring that everyday costs for services are met from everyday income. There were no easy decisions in these challenging times. Increasing people’s rates is always difficult and we’ve strived to strike a balance that will ensure we can continue to deliver the services Southlanders expect from us.
View the agenda and draft consultation document for the Council meeting at 10am on Monday 3 May 2021.