Part A: Introduction

Overview

The Local Government Act 2002 requires us to plan in 3-year cycles. Every 3 years, we consult the community on a draft Long-term plan (LTP). This sets out our intentions for the decade ahead – what we’ll do, how we’ll do it, how much we’ll spend, who will pay, the levels of service we’ll provide, and how we’ll measure the quality and effectiveness of our work.

Our goals

We’ve put in place clear goals.

The Council has a vision for the city, Wellington Towards 2040: Smart Capital. It aims to grow and sustain the city as “an inclusive place where talent wants to live”.

The strategic vision is supported by four community outcomes or long-term goals:

Connected city: With improved physical and virtual connections, we can unleash the potential of Wellington’s people and businesses. Technology reduces the city’s physical distance from the world and markets, and the city’s compactness allows for relationships to form with ease.

People-centred city: Cities compete more for people, in particular, for the highly skilled, educated people who already make up a large proportion of Wellington’s population. It will become increasingly important to draw on these strengths, to ensure the city is open, welcoming, vibrant and embraces diversity.

Eco-city: We can build on current environmental strengths to transition to a low carbon future. As an eco-city, Wellington will achieve high standards of environmental performance, coupled with outstanding quality of life and an economy increasingly based on smart innovation.

Dynamic central city: By fostering the central city as a hub of creative enterprise, we can lead the region to the next level in economic transformation. With universities, research organisations and creative businesses all clustered in or near the central city, Wellington can grow, taking the wider region to the next step in prosperity and quality jobs.

The Long-term plan 2015–25 (LTP)Top

The LTP was adopted in June 2015 as our key strategic planning statement for the next 10 years. It also identified the key work programmes and financial parameters for a 3-year period. The key objectives of the LTP are:

To fund the proposed investments we have developed a financial strategy that:

Detail on the LTP is available at: http://www.our10yearplan.co.nz

Annual Plan 2016/17

Annual plans give effect to LTPs. They identify, in detail, the proposed activity to be undertaken by us and how expenditure will be funded for a given year. 2016/17 is the second year of our LTP 2015–25.

As a result of recent changes to the Local Government Act 2002, any proposed variations to the activities and budgets contained in an LTP require explanation and justification in an Annual plan consultation document. This consultation document becomes the basis for engagement with our ratepayers and stakeholders on an Annual plan. This is because we are required to consult those in the community “who will or may be affected by, or have an interest in” an Annual plan before it is adopted, if the proposed plan includes “significant or material differences from the content of the LTP for the financial year to which the proposed Annual plan relates”.

The Annual Plan 2016/17 is the first developed under these new statutory requirements.

Financial summaryTop

Measure Annual Plan 2016/17  Long-term Plan 2015–25
  2016/17 2016/17
Operating expenditure $462.6 million $458.6 million
Capital expenditure $180.8 million $172.5 million
Average rates increase after growth 3.6 percent 3.6 percent
Forecast year-end borrowings $479.1 million $492.0 million
Operational expenditure funded by rates 65 percent 65 percent
Rates distribution 45 percent commercial
55 percent residential
45 percent commercial
55 percent residential

The Council is in a sound financial position as indicated by our AA Standard and Poor’s credit rating. We will continue to manage the financial challenges associated with the costs of creating resilient and vibrant communities and a strong economic environment.

Setting limits on our rates and borrowings requires prioritisation of spending decisions and ongoing review of existing services. The parameters we set for our rates levels and rates increases as part of the LTP are:

Rates limits: 2016/17
Rates increase limit (after growth) first triennium average 4.5%
Rates increase limit (after growth) 10-year average 3.9%

The average rates increase (after growth) signalled in the LTP for 2016/17 was 3.6 percent. The Annual Plan 2016/17 remains at this level and is compliant with the LTP financial strategy limits shown above.

The parameters we have set for borrowings as part of the LTP are:

Borrowings limits: Operating targets Prudential limits Annual Plan
2016/17
Long-term Plan 2015–25 limit:      
Net borrowing as a percentage of income <150.0% <175.0% 109.9%
Prudential limits:      
Net borrowing as a percentage of income <150.0% <175.0% 109.9%
Net interest as a percentage of income <15.0% <15.0% 5.3%
Net interest as a percentage of annual rates income <20.0% <20.0% 8.8%
Liquidity (term borrowing and committed loan facilities to existing external net debt) >115.0% >115.0% >115.0%

For 2016/17 we are within all of the operating targets.

Operational expenditure

Operational expenditure provides for all of our day-to-day operations and services, from waste disposal, water supply and maintaining our roads to issuing building consents, running our recreational facilities, maintaining our parks and gardens and delivering events.

The Council plans to spend $462.6 million on operational expenditure in 2016/17. This compares with $458.6 million forecast for 2016/17 in the LTP. Changes to the operational expenditure can be found in the Funding Impact Statements.

Sources of operational funding

Sixty-five percent of our operational expenditure is funded from a combination of general rates (paid on all properties) and targeted rates. The remainder is funded from user charges, ground and commercial lease income, dividends and other revenue such as grants and government subsidies.

The graphs below show how we are splitting our operational expenditure and how it will be funded in 2016/17.

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*Graph reconciles to 'Total Expense' in the Prospective Statement of Comprehensive Revenue and Expense p.108.

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*Graph reconciles to 'Total operating funding' in the Whole of Council Funding Impact Statement p.80.

Capital expenditureTop

We’re continuing to invest in our city’s infrastructure while focussing on city resilience.

Capital expenditure pays for purchasing, building, developing or renewing the Council’s assets (eg pipes, roads, libraries, swimming pools). Our capital expenditure (excluding “carry-forwards” and loans to other organisations) is forecast to be $180.8 million in 2016/17.

Sources of capital funding

We fund capital expenditure from depreciation, borrowings, NZTA subsidies, grants and development contributions. For asset renewals, the main funding source is rates funded depreciation. For new assets and upgrades, the main funding sources are borrowings, subsidies and grants.

The graphs below show how we are spending our capital expenditure and how it will be funded in 2016/17.

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Engagement and consultation process

Prior to the development and publication of the Annual Plan 2016/17 Consultation Document we gave Wellingtonians the opportunity to share their ideas related to the objectives of the LTP – how to grow Wellington’s economy, be a smart resilient city, and make better use of infrastructure like parks, roads and libraries. The Council received 131 submissions and 184 ideas through our website’s online form, social media, email and by post. Fifty-seven submitters spoke to Councillors at panel hearings held on Monday 22 and Wednesday 24 February 2016.

The panel hearings were a new initiative to give an opportunity for people to highlight new ideas and to do it in a less formal way. For Councillors it provided valuable feedback on the issues that matter to local people and different community groups.

In March 2016 we issued a Consultation Document that highlighted the six key proposals for change we wanted to bring to residents’ attention and to get their feedback. These issues have been identified as either significant and/or material in nature and are different from what was proposed in the LTP. The six proposed changes were:

Urban Development Agency – Creating a new Council-controlled organisation (CCO) with land development powers that was not specified in the LTP.

Climate Change Action Plan and resilience – Proposing a new programme of work with ongoing costs and operational changes for the Council that was not contained in the LTP.

Food Act fee changes – Changing the fee structure from that outlined in LTP.

Zealandia governance changes – Creating a new Council-controlled organisation (CCO) that was not specified in the LTP.

Kilbirnie Business Improvement District – Including a new targeted rate to be applied to commercially rated properties in this area.

As a result of the initiatives process and the panel hearings, the Consultation Document also proposed a number of other initiatives Councillors wanted to be considered for funding in 2016/17. These initiatives were included in the Consultation Document so Councillors could gauge the level of public support for them before making any final decisions on the content of the Annual Plan 2016/17.

The Annual Plan 2016/17 Consultation Document was launched by the Mayor on 29 March. A series of consultation events were held over the following month to provide more information on the LTP and its objectives, and the proposed changes to the LTP contained in the Consultation Document. These consultation events also provided stakeholders with an opportunity to discuss the future needs of their interest area.

Because a greater number of people are choosing to engage with us through social media, we also adopted a continuous conversation approach on our Facebook and Twitter accounts, and our other social media channels. Over the consultation period a range of tweets and Facebook posts were made by the Council about the Annual Plan 2016/17 and the proposed changes to the LTP. These social media posts were used to raise awareness of the engagement and consultation process and to encourage people to make submissions. Other awareness raising activities included emails to over 1200 stakeholders, media releases, and advertisements in both the Dominion Post and Wellingtonian newspapers.

Submissions received

During the engagement and consultation process 808 written submissions were received: 114 filed online, 341 sent by email and 353 by post. All those providing written submissions were able to present in support of their submission at oral hearings. Oral hearings were held in the week beginning 9 May and 74 people choose to present. While some submitters provided feedback on issues raised in the Consultation Document, some submitters sought funding for a range of community initiatives not previously identified.

The submission process showed general support for the changes to the LTP and the new funding initiatives. After some minor alterations due to feedback received through the consultation process, all proposals included in the Consultation Document were included in the proposed Annual Plan 2016/17. Also included in the proposed plan were a small number of additional initiatives that arose through the consultation process and oral hearings, along with some funding and budget phasing proposals that arose after the Consultation Document was issued.

In early June final decisions on the content of the Annual Plan 2016/17 and the rates levels for 2016/17 were made. In their entirety these decisions resulted in:

The details of the key projects and their overall costs for 2016/17 are outlined in the next section of this plan.

What has changed after the consultation process

The feedback has resulted in the confirmation of projects and programmes. However, the work programme outlined in this document is not the same as the one consulted on. Changes made by the Council after hearing from the community include: