Napier owns investments and assets that, with careful management and expert skills, could realise revenue, Kirsten Wise says.
Napier owns investments and assets that, with careful management and expert skills, could realise revenue, Kirsten Wise says.
OPINION
A council is not a business, but in some areas we do need to think and act like one.
Our first responsibility is always to our community - as well as being our residents, we need to think of them as shareholders with interests in the facilities, assets and investments we hold on their behalf.
There have been some provocative headlines over the past few weeks as councils propose rates increases to their communities. The overarching question is: Are our councils - and therefore their communities - strapped for cash?
Rates are half the picture when it comes to council finances. As rates increase throughout the country, it’s important we also talk about the rest of the financial picture.
And we need to make the most of expert advice so revenue streams are working hard, bringing in as much return as possible wherever and whenever it’s appropriate to do so.
Napier Mayor Kirsten Wise.
We have 14 facilities that we run for Napier. While many of them are in place for the benefit of our community, some are visitor attractions and have the ability to bring in revenue we can use elsewhere in the city.
We need to consider how to get facilities with the potential to be commercial into a position where they can realise that potential and be financially self-sufficient. Doing what we’ve always done will not help us get ahead.
We can’t expect to see different results if we keep doing things the same way.
Part of our fresh thinking is looking at how our investments are managed. Napier owns investments and assets that, with careful management and expert skills, could realise revenue for our people.
We want to set up Napier for a more financially sustainable future by managing our assets - like Parklands property development - in a way that maximises financial return.
As part of our draft three-year plan, we want to set up an investment portfolio for Napier with a Council Controlled Trading Organisation (CCTO) managing the city’s investment assets.
Returns from actively managing council’s investment portfolio could be significant over the long term.
Our forecasting tells us the portfolio is conservatively estimated to generate a $5 million return in 2025-26, with this expected to grow every year. In 2034-35, about $8m of income from property and cash assets is forecasted.
To put this in context, $5m is equal to the rates funding we use to run sports grounds for a year, and $8m equates to the rates funding for Napier’s two libraries over 18 months.
We expect to be generating this amount every year. In about 10 years, the percentage of rates saved per property is expected to be about 5 per cent.
We’re also proposing increases to fees and charges. Areas throughout councils bring in money, from facilities hire to parking. In our draft three-year plan we are proposing increasing parking fees, for example.
We have been through our budgets with a microscope to find savings and ways to leverage what we have to benefit our community.
We must also look outwards.
We have a 26 per cent share in Hawke’s Bay Airport, for example, so we have an invested interest in ensuring it thrives.
We also have a role in keeping Napier on the central government agenda so funding that’s made available is tagged to Hawke’s Bay and can benefit our community.
Our ultimate goal is to reduce our reliance on rates funding. We’re proposing a big step this year, but more high rates increases are not sustainable for our community. We need to find new avenues of income to fund the services and facilities our residents want and need from us.
We are acutely aware of the pinch people are feeling. That tight fiscal climate is affecting households and councils nationwide.
We are putting in place measures to make sure we can deliver what our community needs from us now, but also ensure we’re setting future generations up with a strong and sustainable foundation.
We will have to make some big decisions to respond to the situation the country is in, but we are ready for that.
We are going to be bold and we are going to adapt to make sure we get through this together.
