Aerial photograph taken over Hastings, Hawke's Bay. Photo/Warren Buckland
Aerial photograph taken over Hastings, Hawke's Bay. Photo/Warren Buckland
THREE KEY FACTS
Hastings District Council faces severe debt, with spending outpacing revenue, and urgent infrastructure needs.
Cyclone Gabrielle and inflation have intensified financial pressures, with a potential $711 million debt by 2030.
Council must find savings, reconsider projects, and collaborate regionally to secure Government funding for 2025.
Damon Harvey is a Hastings District Councillor.
OPINION
Hastings District Council, like many across New Zealand, is drowning in debt, spending more on daily operations than it takes in – mostly from us, the ratepayers.
This is a wake-up call. We’ve poured more than$100 million into water services since the Havelock North water crisis, but there’s still more than $270m needed for waste and stormwater projects.
Secondly, Cyclone Gabrielle ravaged the region, and while the Government has offered some support, the council is footing much of the bill for bridge and road repairs, along with $50m for buying at-risk properties. And we must be ready for the next natural disaster.
Thirdly, inflation and high interest rates have compounded the problem, while the Government is tightening its purse strings, leaving councils without the support they once had.
As a councillor, our dire financial position is a huge concern and we must be laser-focused on finding significant savings to minimise greater financial pressures on you and your family.
I am concerned that the council might have to borrow $28m between 2024 and 2026 just to stay afloat.
Our total debt could hit $711m by 2030, and if inflation remains high, that figure could balloon by another $100m by 2034.
By 2030/31, the interest cost per property across the district will be $1160. Imagine what your overall rates will be by then.
Hastings District Council currently has a borrowing limit of 250% of its revenue. However, with planned infrastructure projects totalling more than $700m – including renewals, growth, and the cyclone rebuild – we’re set to breach this limit, reaching 258%.
The likely outcome? A credit rating downgrade from Standard & Poor’s, possibly dropping us to an A- rating and lowering our borrowing cap to 175%.
Right now, the council borrows from the Local Government Funding Agency, which offers more favourable interest rates than banks.
But if we drop to an A- rating, we’ll be forced to turn to banks, resulting in higher interest rates and nearly $1m in additional annual repayments.
Prime Minister Christopher Luxon, speaking at the local government conference held in the swanky new Wellington conference centre – funded by ratepayers to the tune of $180m while water burst from streets nearby – made it clear: councils need to get back to basics and do them well.
So what’s the plan to stop the debt level rising and reduce rate hikes?
Working parties have been formed to focus on finding savings, and we need the best minds in the room to make it happen. We must ask tough questions and keep ratepayer interests front and centre.
We need to scrutinise the council structure to find savings, dive deep into the infrastructure works programme to identify what’s crucial and what can be deferred, reassess service delivery expectations and trim back where needed, and consider selling off any non-essential assets.
You have also all been hit with a double whammy of rate rises with the regional council’s switch from land value to capital value, going against the wishes of most ratepayers.
Given that all our councils are financially challenged it’s time for greater collaboration, by sharing many more services, such as building consenting and regulatory, parks and recreational services, marketing and communications, and IT.
This will start with Three Waters and the Government is looking for regional service provisions – but that should be just the beginning.
The Government is offering the carrot of regional deals – asking councils to get together and present a strong business case that is focused on economic growth and productivity, delivering resilient critical infrastructure, and improving the supply of affordable, quality housing.
We need to be one of the five regions selected for funding in 2025.
In the meantime, I strongly challenge you to talk to your elected councillors, as at the end of the day it’s your hard-earned money that is being spent.
