Council is facing several challenges that are having an impact on our region now and we expect them to continue in the coming years. The challenges, including uncertainty about changes to central government policy and the timing and implications of those changes, increasing regulatory complexity, the impacts of climate change, and others are discussed here and in the draft Financial Strategy. Several of these challenges are interconnected and create a complex funding environment.

The focus of the 2024-34 Long-term Plan is:

• Continuing our commitment to improving public transport as per the 2021-31 Long-term Plan and 2022-32 Regional Public Transport Plan. (See What we are committed to deliver: Public transport).
• Resourcing the increasing complexity and changing policy and regulatory requirements from central government. (See Responding to legislative requirements: Pressure on our strategy, science and regulatory activities).
• Transitioning to a more holistic "integrated catchment management" approach which recognises that land, water, plants, animals, and people form an interconnected system, from the mountains to the sea. This transition is a significant and complex planning project which will take three years. Our intention is that it will be ready for implementation in year 4, the first year of the next Long-term Plan (2027). (See Issue 2: Planning for the future).

These three focus areas will mean a substantial increase in the rates requirement for the first three years of this Long-term Plan, which will exceed Council’s self-imposed percentage increase limit, before returning to increases of between 2.5% and 3.8% from 2027-28 onwards.

The Financial Strategy sets out (at a high level) Council’s operating expenditure and its capital expenditure, the impact of significant changes to levels of service, and summarises how Council funds its activities. For the detail on how Council funds each activity, see the draft Revenue and Financing Policy in the Supporting Information). The Financial Strategy also paints the overall rates and debt picture for the ten years covered in the Long-term Plan. The rates and debt profiles are summarised below.

Council’s proposed rates increases will exceed its self-imposed limit of no more than the predicted BERL inflation rate plus 3% for the first four years of this plan. This is due to a significant increase in budgeted expenditure related to increased resourcing requirements, insurance costs, and increased levels of public transport service in Palmerston North and Whanganui. From 2027-28 onwards, the rates increase will range between 2.5% and 3.8%. This is predominantly in response to inflation, with our level of service planned to be maintained at similar levels.

Council’s debt profile is expected to increase between 2024-25 and 2026-27, peaking at around $83M in 2026-27, before dropping away in the latter years of the plan. As a proportion of our revenue, this equates to 65% in 2023-24, rising to 72% in 2025-26 of this Long-term Plan, before reducing to 45% by 2033-34. Our debt ceiling is set by the Local Government Funding Agency at 175% of total revenue. Council’s debt as a percentage of its revenue will stay well under the Local Government Funding Authority limit of 175% of total revenue for the full duration of the plan, maintaining our flexibility to respond to unforeseen circumstances.