Wellington City Council reveals proposed cuts in cost crunch

Wellington Mayor Tory Whanau said she was open to selling the council's shares in the airport, in an interview with Newstalk ZB Wellington Mornings this week. Photo / Mark Mitchell

Wellington City Council is proposing to axe funding for a local pool rebuild, sell its shares in the airport, ditch skatepark refurbishments, and defer road resurfacing.

The council has lifted the lid on the service cuts under consideration as it puts together the upcoming 10-year budget known as the long-term plan.

Mayor Tory Whanau said it was far from an austerity budget and promised to continue to invest in the city.

“We are not facing a financial crisis, but we are facing some challenging times.”

Whanau wanted the budget to deliver a Courtenay Place precinct plan including better lighting and new safety ambassadors ($2.5 million), more trees and two new central parks ($4.2m), and projects to address climate change, such as a new climate resilience fund ($17m) and switching from gas to electric for heating swimming pools ($25m).

The cycleway network rollout that’s proved controversial among some businesses will continue. However, this will be done in a “pop-up” style at a cost of $110m and more expensive work to make the changes permanent, such as through kerb realignments, will be deferred.

“I have championed a laser focus on a city centre that is bustling and green, bringing nature back into our city like never before, while promoting a vibing local scene where people come together to have fun, where businesses are supported for success.”

The council has been batting away claims it is facing a financial crisis while three prominent Wellingtonians have taken matters into their own hands and paid for independent experts to take a look at the books. The resulting analysis found a potential $1 billion funding gap in unbudgeted costs.

The council has also faced criticism for keeping the state of its books behind closed doors until this point.

Wellington City Council is proposing to sell its 34 per cent share in the airport. Photo / Mark Mitchell

It’s too early to say what the rates increases will be. Council officials are working towards an average increase of 5-8 per cent each year over the next decade, but they admit this will be challenging in the present economic climate.

It is likely that higher rates hikes will be needed in the first few years of the long-term plan, but officials could not say how much.

Further work is needed to re-phase some capital spending to make sure the council does not breach its self-imposed 225 per cent debt-to-income ratio limit.

Council documents say there are significant demands on the budget.

“The cost pressures that the council faces arise from the need to look after existing infrastructure and assets which is costing significantly more in this inflationary environment, investing in ageing infrastructure like three waters and earthquake-prone buildings, as well as funding work that supports the city to deliver a high quality of life for all residents in the future.”

Wellington Water, which manages the council’s three waters assets, has signalled “significant” investment is required but detailed options were not yet available.

Ditching skatepark upgrades at Ian Galloway and Waitangi parks will save $1.1 million and deferring upgrades on Begonia House would yield $12m.

Cutting the Khandallah Pool rebuild would save the council about $11.7m.

Deferring road surface renewals and reducing footpath upgrades would save $39m.

The council is also proposing to “sweat” some assets like sports fields, meaning they would be used right until the point they need renewing.

Council documents warn this could result in the deterioration of sports field conditions over time leading to poorer playing services and less use, although officials are fairly confident they can manage this risk.

As well as cuts, there is also a proposal to sell the council’s 34 per cent share in Wellington Airport, worth $278m, and sell ground leases, worth $245m.

Both are considered important revenue streams but there is concern they are effectively the only two investments in the council’s portfolio.

“It is not well diversified and is highly exposed to situations like the Covid-19 pandemic. The investment portfolio could not be easily utilised in a disaster, such as a significant seismic event,” council documents say.

Whanau told NZME on Monday she is open to selling the airport shares as long as the money is used to reinvest in good projects and not to pay down debt.

The council is proposing to reinvest the money in a perpetual investment fund.

Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.