Councillors Prepare for Capital Expenditure Review Amid Rates Cap Proposal

Councillors will revisit the capital expenditure programme in March and April to set new priorities in light of potential changes to rates increases. Sandy Graham, the council’s chief executive, highlighted the challenges ahead during a recent meeting, noting that if debt servicing consumes a significant portion of any permitted rates increase, councillors may face limitations in their decision-making.

The government intends to implement a system next year that compels councils to consider the implications of a cap on rates increases. This change will directly influence the city council’s long-term plan for 2027-2037. While the council could defer addressing this issue until next year, it is proactively evaluating the environment in which it will operate.

Last year, the council approved a capital programme worth $2 billion spanning nine years as part of its 2025-2034 long-term plan. For the fiscal year 2025-2026, a capital expenditure of $231 million was budgeted. However, the latest projections suggest the council will only deliver $207 million, raising concerns about a “chronic and continuing” underspend, as noted by Cr Russell Lund.

Reasons for the underspend include delays in project timelines and a cautious approach to spending. Graham remarked, “We are actively managing spend to try and minimise debt and interest costs while still trying to deliver.” Despite the looming rates cap, Lund emphasized that the council would not intentionally delay projects.

Graham also pointed out the complexities involved once projects are underway. “Once we set things in train, it’s far harder to stop them if we’ve got contracts that are in delivery,” she explained. She recognized that the scale of previous spending necessitated a more measured approach moving forward.

In a contrasting viewpoint, Cr Lee Vandervis expressed relief that the current capital spend is significantly lower than that of the previous council, which he described as “quite adventurous.” He believes maintaining a reduced capital expenditure will help the council meet the anticipated 2% rates cap in the future.

Outside the meeting, Cr Andrew Simms advocated for preserving the council’s borrowing capacity for essential projects, specifically citing the Smooth Hill landfill development, which requires $92.4 million in capital expenditure. He identified this project as high-risk and suggested it might be avoidable.

Cr Christine Garey emphasized the need to address community expectations regarding project timelines. She pointed out that half of the year-to-date capital expenditure was allocated to Three Waters initiatives, with a further quarter dedicated to roading and footpaths. She received feedback from constituents who anticipated various projects to be completed sooner.

Garey also hinted at the possibility that a change in government could influence the feasibility of sustaining a rates cap. “Let’s remember there is an election this year, too,” she remarked, indicating that political shifts could have significant implications for local governance.

The council’s upcoming deliberations will be critical as it seeks to balance fiscal responsibilities with community expectations in a potentially shifting financial landscape.