We use fees and charges to collect costs directly from individuals who use a service. We also try to get grants and subsidies where we can (such as the $20 million we received from the government’s Covid-19 Response and Recovery Fund in 2020), and have investments that give us a return – all of this helps to reduce how much we need from rates and loans.
This graph shows projected sources of revenue for the 10 years.
We look after about $1.17 billion worth of infrastructure, assets and facilities - that includes roads, pipes, buildings and land, right down to the bins at the domains.
We also undertake the large task of running, regulating and monitoring all the goings-on that contribute to where and how we live, work and play in our district.
We estimate it will cost us a total of around $576 million over the next 10 years to look after what we have and provide all of our services (our operating costs).
It will cost another $354 million to upgrade our assets and build new ones (our capital costs).
This has resulted in some deferred costs, which are now in the first years of this 10 year plan. We also have a significant programme of infrastructure work which is impacting the rates.
This means there are higher rates increases in the first few years of the plan. We have set limits on our total rates, and how much rates can increase by each year.
LGCI, Local Government Cost Index, is effectively inflation for councils. It is a value that is calculated specifically for us, based on the price of items that councils use, such as bitumen and civil contracting services. The amount that affects your rates bill, is the rates increase plus LGCI.
We generally use reserves (savings) that were created from selling capital to fund other capital projects. Reserves created through profits (our investments) are used to offset rates in the year they are realised.
We have chosen to use $377,700 in Year 1, $300,000 in Year 2 and $500,000 in Year 3 from our Forestry reserve (which contains $7.6 million) to offset the general rate. We believe this is the best option to keep rates affordable for our community, while still ensuring we have reserves available for the future.
Just as you would get a mortgage for your family home, we borrow to build or renew our infrastructure. Using loans allows us to spread the cost of a project across the generations who get to use it. It would neither be affordable nor fair to charge the ratepayers the full cost the year a project was built – we call this concept inter-generational equity.
Our 10 Year Plan has been prepared based on the following limits on
We rate for depreciation each year based on how much it would cost to replace an asset, divided by its expected useful life. These funds are then used for any capital work that is required on that asset. Any funds that are not required in the year they’re rated for, are held for future expenses. We see this as fair, as this spreads the costs evenly across the ratepayers who use the asset over its lifetime. This is the principle of intergenerational equity.
However, due to our concern about the affordability of the rate rises, we have chosen to only fund deprecation on the equipment at the EA Networks Centre to the value that is required for capital works in the year we are rating for it. In addition, we have also only partially funded depreciation on the Ashburton Library & Civic Centre building across our 10 Year Plan (this affects Year 3 onwards).
For this 10 year plan, we have also increased or added some additional fees to better cover our costs.
We have not previously had a charge for inspecting swimming pool fences. This charge reflects the costs we incur, and is in line with what other councils charge.
We incur costs to carry out building inspections that are around our district. We charge for the actual inspection, but this charge does not cover our travel costs. We are proposing to introduce a one-off charge for each consent to assist with the costs of travel.
We have increased these by $5 to better reflect the costs we incur.
Under the Waste Minimisation Act 2008 central government will begin increasing the waste disposal levy from July 2021. The increase in fees reflect this additional cost along with the rise in costs of transportation of waste.
We have lowered the minimum green-waste charge at the Ashburton and Rakaia Resource Recovery Park to reflect that the average green-waste drop-off over the past 12 months was 46.9kg.
We have also altered our fee structure at the Ashburton Airport, and have landing fees proposed per weight of the aircraft or an annual landing fee.