A change from capital investment on big projects, such as
Toitu Otago Settlers Museum. Photo by Peter McIntosh.
Dunedin city councillors will have to choose between a
2.8% rates rise and extra spending on key priorities -
including debt repayment - that will drive up the bill for
The choice was presented in the 2013-14 pre-draft annual
plan, to be considered by councillors in public for the first
time this week.
Details of key issues facing the council - including the
financial future of Dunedin Venues Management Ltd and the
Forsyth Barr Stadium - are yet to be revealed, and could yet
alter the picture.
The budget's early draft shows council staff have gone beyond
targets set by councillors, who wanted any rates increase
limited to no more than 4% for the coming financial year.
That was part of self-imposed caps introduced last year that
aimed to restrict rates increases to 5% in 2012-13 - a target
that was later met - followed by 4% and 3% in the two
Councillors had also asked for additional savings for the
coming financial year, 2013-14, to free up 1% of any 4%
increase for spending on other priorities.
Council chief executive Paul Orders said staff had managed to
do slightly better during a series of bruising budget
meetings, resulting in savings totalling $5.6 million and a
proposed rates rise of just 2.8%.
That represented a significant change from the 7.6% rates
increase forecast for 2013-14 during last year's budget
round, he said.
The cuts also created ''a level of headroom'' for councillors
to make decisions about how best - or if at all - to spend
the $1.4 million difference between a 2.8% and 4% rates
increase, he said.
Dunedin Mayor Dave Cull said the early budget was ''a very
creditable result'' but he doubted 2.8% would be the final
Councillors could choose to defer any additional spending but
there appeared to be a will among them to address other
pressing priorities, he said.
Councillors would have to remain disciplined in their desire
to spend money, he warned.
''Councillors have differing views about what they want to
spend money on. The reality is, there isn't a lot of it.''
Councillors could opt to invest in a new events fund to
attract more headline acts to the stadium, or further
accelerate stadium debt repayments to save money in the
longer term, he said.
That would see the forecast rates rise pushed back up to 4%,
if all of the $1.4 million was committed, Mr Cull said.
He supported spending the extra $1.4 million and accepting a
4% rates rise but hoped councillors would not go beyond that
''Nothing is locked in - it's up to council - but I would
hope we wouldn't go beyond that.''
Mr Orders said the cost-cutting had been achieved in part by
reduced staff costs, including not filling all vacancies,
absorbing inflation and strictly controlling the council's
capital spending programme.
The council was also, for the first time in a decade,
repaying more debt than it was accruing, as it worked to
reduce core council debt to $200 million by 2021-22. The main
drivers for the 2.8% rates increase were inflation, increased
debt servicing costs - up $1.4 million for 2013-14 - and
increased renewals funding in the water and waste services
and transportation departments.
Overall operational costs had increased by just $500,000 as
costs were cut in other areas, while capital spending had
been cut in half, from $105 million in 2012-13 to less than
$50 million in each of the next three years, Mr Orders said.
That reflected an organisation moving into ''savings mode''
after 20 years of investment in key infrastructure and
capital projects, including upgrades to the city's drinking
water and waste-water treatment facilities and Toitu Otago
Settlers Museum, and construction of the stadium, he
The challenge for councillors was to stick to the council's
long-term plan by restraining capital spending and,
therefore, debt for the next decade, he believed.
''That's a crucial issue in terms of managing council
Mr Cull said the council had ''turned a corner'' in debt
repayment but its overall financial position remained
However, key reports were yet to be made public, including
one discussing the financial future of DVML, the stadium and
the need for a new events fund.
Others would consider options for the Waipori Fund, car park
operations in Dunedin and the city's aquatic facilities, as
well as the future of the council's investment property
Mr Cull was yet to see the reports, but said councillors
would have to decide whether to help DVML produce ''a