Council revises rates increase

TARYN UTIGER
Last updated 05:00 26/02/2014

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The proposed rates rise is trimmed further and there will be no borrowing.

The New Plymouth District Council yesterday released a revised draft annual plan after its earlier version sparked a public outcry and drew widespread criticism from councillors, many of whom had been elected on an austerity ticket.

This year's proposed rates increase will now be 2 per cent, down from 2.8 per cent. The long term plan had originally set the increase at 6.6 per cent.

And the controversial plan to borrow $2.8 million to keep rate rises down has been scrapped for this year.

Council chief executive Barbara McKerrow said over the last two weeks the team had searched every budget, line by line, to find a further $1.5m of internal savings.

But many of those savings were one-offs, she said, and could not be captured again in the future.

Avoiding borrowing $2.8m had largely been achieved by not adding inflation to the council budgets.

This meant council managers would have to work with a budget that had not increased with the rate of inflation.

However, the council could not continue to rely on one-off cost cutting measures like this and more sustainable savings would be needed to avoid rates skyrocketing in the future, she said.

While the newly proposed 2 per cent rates rise did make the increase more affordable the report accompanying the draft annual plan said it would put some upward pressure on future rate increases.

But the downside is that under the revised draft annual plan rates next year would rise from 6.4 per cent to 7.8 per cent and council would also borrow $2.8m from itself.

Mrs McKerrow said hard changes would be made before that figure was set in stone.

It is being proposed that the $400,000 entertainment underwrite fund, which was axed by the council earlier this month, should stump up $200,000 for an independent review into the efficiency of the council, to help find further savings.

The 2 per cent rates increase, achieved without borrowing money was exactly what new councillor Len Houwers had been pushing for.

He had called on Mrs McKerrow to find the $2.8m the council was set to borrow in the "big budgets".

"The whole council got behind this. Nearly all of the councillors were unhappy with borrowing, so this is a victory for everyone, even for the organisation," he said.

However, Mr Houwers said there was no point in the council just shifting the problem out to the future and Mrs McKerrow's proposed review would find ways for the council to work smarter.

"This has bought us 12 months of time to make changes," he said.

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The council's controversial Perpetual Investment Fund continues to pose problems.

More than $16m was meant to be released from the PIF for this draft annual plan but because the PIF is underperforming the council is proposing to take a release of $9.1 million.

This is despite Taranaki Investment Management Limited (TIML) advising that the release should not be more than $7m.

Mr Houwers said the council needed to find a way to fill the gap that had been left by the PIF.

"The council is learning to live within our means as well as the needs of the community. Now, at least, we have a bit more time to make some permanent changes," he said.

- Taranaki Daily News

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