What's happening to rates?

Since the cyclone, we have incurred significant unplanned costs, and helped administer the following activities:

• $40M – infrastructure repairs plus $35M forecast still to be completed
• $15M – general cyclone costs including Civil Defence
• $142M – local government silt and debris
• $52M - commercial silt and debris
• $8.5M – Disaster Relief Trust
• $7M – Regional Recovery Agency
• $4.7M – woody debris

We are going to be feeling the impacts for a long time. However, we expect most to be covered by our insurance and NEMA.

We introduced a Cyclone Recovery Rate in 2023-24 to raise around $5.9 million (including GST) to help pay for response and recovery costs we didn’t expect to be covered by other sources. This is helping with some of the costs.  

We still require funding to:

• continue to repair assets that were damaged in the cyclone
• cover loan and interest costs incurred to fund remediation of damaged cyclone assets not covered by insurance
• continue to support silt and debris waste management 
• collect environmental disaster impact data.

This year, you will not see a separate charge for this on your rates bill as this has been absorbed into the General Rate.

Proposed rates for new flood schemes

In August 2023, as part of the region’s cyclone recovery funding package negotiated between the Government and Hawke’s Bay’s five councils, we agreed to fund $44.15 million of the nearly $250 million flood mitigation programme. Delivering this programme is a top priority.

We will borrow this funding but need to decide how to repay it; a variety of options exist as discussed on our pages: Investing in resilient flood infrastructure.

In 2020-21 the Regional Council resolved to have a zero-rate increase to lessen the financial impacts of Covid across our region (deferring the 7.3% rates increase).

This happened at the same time we were implementing a step-change in activity, particularly in areas of land and water to achieve results on-the-ground at pace and scale, as well as in other areas of capital expenditure such as sustainable homes, asset management, and system integration software.

As a result, Regional Council borrowed to fund the proposed works for four years and defer the impact on ratepayers.

While beneficial at the time for our ratepayers, that decision is now having a significant cumulative impact on rates required. Not only are we replacing loan funding with rates funding, but we also need to repay the original loans with interest. This has a $4.44 million impact to rates in 2024-25 and another $4.12 million in 2025-26. The 2024-25 year will be the fourth and final year of borrowing for operating expenditure as agreed in the 2021-2031 Long Term Plan.

We have investments that our ratepayers benefit from.

Investment income is used to reduce general rates and allows ratepayers to realise some of the benefits from the investment portfolio each year.

Our investment portfolio includes:

• Managed funds
• Leasehold property in Wellington and Napier
• Majority shareholdings in Napier Port and FoodEast Limited Partnership
• Forestry
• Carbon credits.

On average over the last five years, we have received $11.8 million of normal income each year from having these investments.However, this is substantially less income than we had planned due to Covid, Cyclone Gabrielle, and other global events impacting local and international markets.

Compared to what was forecast in the 2023-24 Annual Plan, we anticipate our cash income to be down $3.8 million in 2024-25, $3.3 million in 2025-26 and $2.8 million in 2026-27, should no other changes be made.

We have reset our expected returns in line with the current financial outlook.

We expect inflation to increase costs by $1.35 million in 2024-25. In the two years after that we are expecting annual increases of around $1 million.

Our insurance premiums are also increasing significantly jumping from $1 million in 2023-24 to $2 million over the three years of this plan.

Public transport is important because it connects people to jobs, education, healthcare, and social activities while reducing traffic congestion and pollution. It is vital particularly for people who can’t drive for one reason or another, such as those with disabilities, the elderly, young people, and people on low incomes.

Through contractors and on behalf of the Regional Transport Committee we provide public bus services (in and around Hastings, Flaxmere, Havelock North, Taradale, and Napier) and Total Mobility taxi services. We charge a targeted rate to Napier and Hastings urban ratepayers to help cover these costs.

The Regional Transport Committee is made up of representatives from the region’s five councils and Waka Kotahi NZ Transport Agency plus advisory members.

The cost to provide public transport is increasing significantly over the three years of this plan.

* The total cost is covered by the targeted rate plus passenger fares and Waka Kotahi NZ Transport Agency subsidies.

The increases are due to:

Greater demand for Total Mobility taxi services

Uptake of this service has increased since a government subsidy introduced in July 2023 made it cheaper for eligible people to use. More trips taken come at a cost.

Growing costs to provide public buses

Driver salaries have increased and we’re facing significantly higher than planned indexation costs in our bus contract. Indexes are used to adjust the price paid for fluctuating costs such as fuel, road user charges and maintenance.

Providing a better bus service

In the 2022 consultation of the updated Regional Public Transport Plan many of you told us that we need to improve the bus service so you will use it.

We are planning to make bus trips faster using more direct routes with more frequency and better times. Improving the service comes at a cost. The MyWay Hastings on-demand pilot will continue for one more year. On-demand services could be reconsidered in the future to complement our new improved service.