‘Prudent approach’ to GDC finances

Gisborne District Council building

Gisborne District Council faces a “serious situation” of financial sustainability as it tightens its belt to pay for cyclone recovery costs. 

A recent audit report says the council needs to take a “prudent approach” to finances due to the costs of recovery work, high inflation rates and the uncertainty of water reforms.

The council’s Long Term Plan already set out a budget at the “bare minimum level of service”, chief executive Nedine Thatcher Swann said during this week’s
audit and risk committee meeting.

“We are in a really serious situation in terms of the financial sustainability of the council and the ability to deliver and meet community expectations”.

The impact of this was stressed staff and a community that had been hurt, she said.

Gisborne is still cleaning up after Cyclone Gabrielle over a year ago.

The  overall cost is expected to be $1.1 billion. However, the audit report says there is only $260 million of confirmed infrastructure funding.

The cost of restoring and maintaining local roads is estimated at between $465 and $725m, but the current secured funding is $210m, the report says.

“Management will continue to take a prudent approach with the council’s finances,” the report says.

Other financial risk factors include high inflation, higher interest rates and emerging risks from water reforms

Audit and risk committee independent chair Bruce Robertson said the council needed to balance being prudent — what could be extracted from the community versus the level of services offered . . . “which is the minimum of what we want to provide”.

Ms Thatcher Swann said the council needed to look at the sustainability of its approach.

“We’re likely to have another declared state of emergency in the next 12 months. We’re going to have changes around the Three Water legislation. That’s more work for our policy team . . . who are already doing catchment planning and resource planning”.

The council needed to prioritse its activities, she said.

“We’ve been clear in our annual plan draft consultation document that we will not be taking on new projects unless external funding comes along with it.

“Over the next three years there are going to be specific priorities that relate to healing our environment and our place, but also, as part of our vision, it is for our future as well.”

The former Government aimed to upgrade water infrastructure through Three Waters, which later became the Affordable Water Reforms.

Under the new Government, the legislation has been canned and new plans are under way for a more locally-led approach.

Mr Robertson said there needed to be a sustainable solution to water reforms.

“I want a 10-year plan as well as a three-year plan. How are we protecting our future position in the current plan?”

Ms Thatcher Swann said they had spoken about what would happen in regards to Three Waters and “giving ourselves the ability to move in that space as well”.

Mayor Rehette Stoltz said how they positioned themselves in the next year in order to make sure it was sustainable was a massive focus.

“But we cannot be everything to everyone for the next while.”

The council needed to springboard in the year 2027 it had a 10-year plan, she said.

“I also want to make it clear that as governors we are aware that it is going to be three years of bare basics.

“We have made it very clear that the next three years are not aspirational. It’s just getting the basics done.”