Draft Annual Plan 2025/26

In 2021 when Three Waters Reform was first proposed, the government aimed to centralise the management and ownership of stormwater, drinking water, and wastewater into four regional co-governed entities, moving these responsibilities away from councils.

Our Council had a range of concerns and fundamentally opposed the forced removal of public-owned assets.

We consulted the community, and 95% of respondents told us that they opposed the reform and valued local ownership and control over water services.

Waimakariri District Council led the formation of Communities 4 Local Democracy (C4LD), a coalition of around 30 councils advocating against Three Waters.

C4LD lobbied for local say, and community assets remaining in community ownership. We put forward an alternative reform model that emphasised local say and ownership, while being agile enough to meet higher regulatory and financial sustainability standards.

This policy formed the basis of Local Water Done Well — the reform proposal adopted by the new Government in early 2024.

The policy allows for local solutions and arrangements to be made to address water infrastructure needs while maintaining local ownership and representation.

As a Council, Waimakariri has heavily invested over many years in our water infrastructure and security on behalf of our community and with our environment in mind, and we aren’t facing the same up-coming infrastructure costs as some other communities.

Over the last 20 years we’ve invested over $100m in our water infrastructure to ensure it is of the highest quality and standard and we are planning to ensure it stays this way. We also have a 150 year infrastructure strategy to fund these assets for our community.

Our water-related assets together have a value of $1,103m, and we have a further $112.7m allocated in the Long Term Plan to support drinking water safety upgrades, improve our wastewater treatment infrastructure and address flood risks in our District.

Legislation passed in August last year requires councils to create a Water Services Delivery Plan for the provision of drinking water, wastewater and stormwater services. This plan details how councils will meet higher standards, investment, and regulations and needs to be sent to the Government by September.

In anticipation of this deadline, Hurunui, Kaikōura, and Waimakariri District councils announced that they had been exploring potential efficiencies that could be achieved through collaboration.

We had utility and infrastructure advisers Castalia, undertake modelling for us looking at drinking water and wastewater services. Stormwater was not included as the close link between stormwater infrastructure with roads and reserves means delivery of these services cannot readily be separated from Council ownership.

Several models were considered and modelled for the delivery of drinking water and wastewater services:

• Internal business unit within the council — this is essentially the existing approach to service delivery
• 2 + 1 model — Hurunui and Kaikoura contract WDC to provide management, operational, and maintenance of water services
• Management-Operation-Maintenance (MOM) model — All councils maintain their own assets but form a co-owned MOM entity that manages operations
• Joint Council Controlled Organisation (CCO) — The three councils set up a company that would own the water assets and deliver water services
• Solely owned CCO — Each council sets up its own company that would own the water assets and deliver water services.

Modelling of future costs, based on various scenarios, has shown that in the first 10 years the preferred model for Waimakariri is an internal business unit.

This is essentially the same as we have now but meets the new Government legislative requirements.

Through a business unit we retain effective control and influence which is what we heard was important when we engaged with the community.

Across the longer term (ten years or more) there are possible efficiencies in other structures. However, these would likely be offset by the costs of setting up a new organisation. There would also be a duplication of overheads across other Council operations.

Any decision to change the way water services are provided in Waimakariri also needs to consider more than just financial matters.

Provision of water services is integral to other Council activities such as land use and infrastructure planning. Taking these factors into account, the Council considered the advantages and disadvantages of the options available during a meeting earlier in the year.

Council considers that the most cost-effective way to provide water services for ratepayers, is through an internal business unit and offer to share/provide management and technical services with Hurunui and Kaikoura councils or their organisations.

There is merit in looking at activities our councils jointly undertake through shared services that provides efficiencies and savings while retaining localism. We will continue to explore these discussions going forward.

An internal business unit is the best model for Waimakariri District being a growth council, but also allows our council through shared position to provide water services to one or both councils through shared services arrangements.

As the proposed approach is to continue with our existing service delivery model there is no impact on levels of borrowing, levels of services or future rates compared with existing arrangements.

Any possible shared service arrangement with Hurunui and Kaikōura would similarly not impact on levels of service or rates compared with existing arrangements as the cost of providing services would be fully recovered from the other councils.

And as described above it is unlikely that the other arrangements that involve Waimakariri being part of a CCO would bring significant financial benefits and that is why we recommend an internal business unit as our preferred option.

It also aligns with feedback we received from the community in 2021 when Three Waters Reform was

first proposed. At the time thousands of Waimakariri residents provided feedback to the council to opt out, with 95 per cent who responded to a survey on the issue saying they wanted water to be managed locally with strong local say.

Further information including technical reports on options as well as previously received community feedback is available in documents tab of this project page.

In October last year the Council had to revise its roading programme after a drop in co-funding from NZ Transport Agency.

The cost of building and maintaining local roads is shared between central government, through NZ Transport Agency (NZTA) and local councils.

NZTA contributes to local roads from taxes whereas councils contribute from rates and borrowing, in what is known as the ‘local share’.

Councils’ set new projects and maintenance budgets for these assets in the Long Term and Annual Plans while waiting for confirmation of co-funding from NZTA. If funding isn’t delivered at the expected level this requires a re-budget and re-prioritisation.

In the last Long Term Plan, Waimakariri District Council asked NZTA for a $9.5m contribution towards roading improvement projects. NZTA allocated $0.7m — leaving a shortfall of $8.82m for roading improvements.

For road maintenance Council received only $49.8m of the $59m needed to maintain our districts roads.

Overall, this left the Council with a $13.5m gap within its budgeted operational and capital programme over three years to 2026/27.

Council instructed staff to rejig, reduce-scope, and progress some projects to design stage only to work within the available budget, this is what is now reflected in the Draft Annual Plan.

We know that many people in the community are feeling the pinch. Because of this our non-negotiable was not to increase costs overall and to live within our budget. What we’ve done is re-prioritise and defer work to a level that stayed within budget.

The council added $0.93m for a small programme of works including minor safety improvements for schools, high-risk rural intersections, roadside hazard removal and improvements at Fernside Road /Todds Road intersection.

It did this by delaying several other projects in future years which did not get funding through the National Land Transport Fund, noting these can be reconsidered in this Draft Annual Plan.

These projects are listed below.

The complete list of projects is available in the full Draft Annual Plan.

The Council acknowledges the growing cost pressures on our community, with essentials increasing significantly over recent years.

These pressures impact households as well as the Council. Specifically, our ability to maintain services and infrastructure, with growing insurance premiums and inflation making balancing the budget a challenge.

Local Government inflation continues to run higher than CPI. The Local Government Cost Index (LGCI) is 3.4% compared to the Consumer Price Index (CPI) which is now 2.2%.

Inflation over previous years has driven up the price and cost of essential construction and maintenance activities.

This increase affects assets like roads, bridges, and water systems, which are crucial for local communities and heavily funded by council budgets. For example, work commissioned by Local Government New Zealand found that over the past three years, costs have gone up significantly:

• Bridges are 38% more expensive to build
• Sewage systems are 30% more expensive
• to build
• Roads and water supply systems are 27%
• more expensive to build.

As the value of assets increase, the Council needs to increase the amount we put aside for maintenance and future asset renewal. The council also needs to fund depreciation as a means of meeting its obligations to the LGA of keeping intact intergenerational equity.

As asset values have inflated, insurance premiums need to rise sharply — and this has been between 12% and 30% in the last few years.

This is due to higher inflation as well as more frequent severe weather events, such as Cyclone Gabrielle and recent regional flooding increasing the risks being faced by insurers.

These pressures require the Council to consider options like raising rates or lowering levels of service to balance the budget and manage debt responsibly.

However, it’s important when thinking about the Council’s borrowing that we put this into perspective. In 2023/24 Council’s annual operating revenue was approximately $127m, with net debt sitting at $177m.

This is a 1.3:1 debt to income ratio and well under the Government threshold for a growth council. This is also backed up by community-owned assets (roads, reserves, water plants etc) valued at approximately $2.8 billion.

For a household comparison, most mortgage borrowing in New Zealand is capped at a 6:1 debt to income ratio (for owner occupiers), many of whom have their home as their major asset. This common debt ratio is 2.4 times higher than Council’s self imposed limit and 4.3 times higher than Council’s debt currently.

Waimakariri District Council is financially in good shape. We know this because Council’s financials are audited annually by Audit NZ and credit rating agency Standard and Poor’s has confirmed its AA-/A-1+ with a stable outlook for the Council. For comparison, most major New Zealand retail banks have a Standard & Poor’s Rating of AA-.

It is important to the Council to balance affordability for residents, especially when we know households are under pressure, without compromising our position as a financially prudent Council that plans for growth as well as the maintenance and replacement of community assets.

For this reason, in the Draft Annual Plan, we have chosen to continue the direction set out in Year 1 of the LTP where we do not fully fund depreciation to ensure rates increases remain manageable. However, this is not a viable long term strategy which is why we are progressively funding depreciation in subsequent years.

Rates Remission for Secondary Dwellings

The Council is looking to introduce a Rating Remission Policy to make it easier for ratepayers eligible for a rates reduction for their second dwelling to apply for the reduction.

The Council sets several rates as a fixed charge per separately used and inhabited part of a rating unit. This allows a separate set of fixed charges to be set on multiple dwellings on a single piece of land. One set of fixed charges is applied to each dwelling.

The Council provides an exemption “where the second dwelling is occupied by a member of the ratepayer’s household, or the second dwelling is not let or available to be let.”

The current process requires an annual application and rates relating to the second dwelling to be removed from the rates invoice altogether, prior to setting rates.

Council wants to change this process to a remission policy. Under a remission policy the multiple charges will remain on the rates assessment and a remission credit will be applied for second dwellings that meet the eligibility criteria. The rates invoice will be for the net amount of rates less remission.

This change in process will allow for greater transparency, eliminates manual rates adjusting, the criteria can be targeted easier, as well as less administration.

Discount for early payment of rates

Ratepayers that pay their annual rates (including arrears) by the date of the first instalment penalty date are currently eligible for a 4% discount on some rates (as defined below).

Under the policy, rates that can be discounted are the General Rate and Uniform Annual General Charge, roading rates, community parks and reserves, Pegasus services rate, community libraries and museums, community swimming pools and Canterbury Museum rates.

As an example of the savings that can be made per property, the median value of the discount received in 2024/25 was around $82 per property. The reduced income to Council because of the discount was estimated to be $195,000 for the 2025/26 year.

Waimakariri is unusual in offering a discount for early payment of rates and staff have only been able to identify two other councils that currently offer discounts, both are in the North Island and they offer 2% and 2.5% discounts.

The Council proposes to amend its Rates Policy to remove this discount (section 4) from the Policy. Early payment discounts tend to favour ratepayers that have the means to pay early, and the cost of the discount is met by the balance of ratepayers.

If this is done no discounts will be available for the early payment of rates payable for the 2025/26 year.

Ratepayers not utilising this discount can still pay their rates as usual.

You can find the draft changes to the rating policy in the documents folder.

The Development Contributions Schedule is revised each year. Periodically the council reviews the document and over the years has made small amendments to the policy to take into account our changing environment and needs.

The Council has reviewed its Development Contribution Policy to confirm that the elements of the policy are still relevant for administration of development contributions.

Development Contributions

• The key topics considered under this review include:
• Making an amendment to include a calculation for the Oxford Wastewater Treatment Plant/Schedule

A review of fees and charges generally to ensure those who benefit from the service pays for it.

You can find the development contributions schedule in the documents folder.

Make a formal submission here