Council tackles $900m shortfall

18:39, Aug 04 2014

The Christchurch City Council is re-thinking all its activities and embarking on the biggest cost-cutting exercise in its history as it attempts to reduce a funding shortfall of up to nearly $900 million.

"We need to revisit what we do and when we do it - across all council activity," Mayor Lianne Dalziel said.

"We need to come up with a carefully considered and robust financial strategy that protects the future economic and social health of Christchurch."

Dalziel's comments followed the release last week of a long-awaited report into its finances by investment bankers Cameron Partners. That report found the council was likely to face a shortfall of $783m to $883m by 2019.

In a joint statement council chief executive Dr Karleen Edwards and chief financial officer Peter Gudsell said there was no easy or simple solution to a funding gap of the size the council was facing and it was important that all options were thoroughly assessed because of the potential flow-on effects.

Part of the advice they would be preparing for the council over the coming weeks and month would be around prioritising and timing spending across all areas, including drinking water, road networks, anchor projects and community facilities.

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The council would need to look at making choices around what activities and services it provided and how they were delivered.

The focus would be on core activities and how to provide them more efficiently. Minimum targets would be set for reducing operating costs over the next three financial years.

"Even with budgeting restraints, rate rises over the next three years will be necessary to support the debt we need to carry from 2017 to 2019," Edwards and Gudsell said.

To avoid rate rises of about 20 per cent next year capital needed to be released from Christchurch City Holdings Ltd, but the tax implications of a sale or partial sale were complex and would require detailed analysis.

Dalziel said she and Edwards planned to set up an expert advisory group to work with the council to develop a Long Term Plan that would shape the city over the next decade and beyond.

They would draw on local, national and international advice and expertise in areas including housing and business.

Edwards would also be working with the Canterbury Earthquake Recovery Authority (Cera) and the Treasury on a review aimed at resolving the outstanding issues about the timing of, and relevant contributions, to the repair of the quake-damaged horizontal infrastructure.

"In the spirit of co-operation we will be working closely with the Crown to ensure our budget processes and priorities are fully aligned and that they promote the regeneration of the city as a whole," Dalziel said.

Earthquake Recovery Minister Gerry Brownlee has already signalled he might be willing to delay construction of some central city anchor projects in order to ease pressure on the council's finances.

The Press