Financial sustainability means finding a balance between the services we provide and the cost to the community.
If we invest more or provide services to a higher level, it incurs higher costs for the community recovered through rates and fees. Conversely, investing less and reducing services can result in lower rates and fee increases. However, many people value those services, and investing less would mean passing on extra costs to future generations.
We are not immune to the price increases being faced by people across our District. Council’s costs are also rising at an even faster rate than households, due to the higher share of our spending going towards construction and engineering work.
Our preferred Option A
Continue to deliver the current levels of service, respond to climate change, and invest in community facilities.
We consider our proposal has the right balance between rates increases on the one hand and on the other:
- Sustaining important services that enable the community to carry on with and enjoy daily life.
- Maintaining infrastructure to prolong its useful life and renewing it when required.
- Responding to climate change.
- Providing for growth in the District’s population.
- Managing the environment.
- Modernising our digital services.
- Investing in community facilities across the District.
| Benefits | Costs |
|---|---|
| Providing the infrastructure and services needed to support our economy, employment growth and housing needs. |
Rates and debt increases particularly in the first two years. |
| Continued delivery of services to our community, meeting all our responsibilities as a unitary council. This supports the social, economic, environmental and cultural well-being of the District. |
Higher debt means that a larger share of the revenue we collect from rates and charges in the future will be used to repay borrowing. |
| Infrastructure assets will be maintained and potentially higher costs and rates in the future are avoided. |
|
| Access to libraries will be maintained with current opening hours continuing, along with the current level of programming and support available. This would continue to support equitable access to information, education, and literacy opportunities for the whole community. | |
| Not-for-profit community organisations will continue to benefit from our contestable community grants funding, enhancing their ability to leverage other sources of funding and valuable volunteer hours to benefit the community. This supports social connection and wellbeing, particularly for marginalised groups. | |
| Advocacy for key industries such as hospitality, tourism and agriculture will continue. Regional promotion will continue to have a joint focus for both Nelson and Tasman attractions and events. This will support the economic contribution that many businesses provide to the community. | |
| The functionality, hygiene and aesthetic appeal of our parks and public places will be maintained. This supports both tourism and quality of life for locals. |
In our proposal for the 10 Year Plan, rates revenue increases of 9.6% and 7.2% respectively (excluding growth) are forecast in the first two years, with the average per annum rates revenue increase (excluding growth) over the whole 10 years forecast to be 4.6%.
The average rates cost per property (incl GST) for our proposed Plan is $4,744 from 2024/2025.
Net debt reaches $437 million in 2033/2034. This means net debt per household is projected to grow by 25% in real terms (adjusted for the impact of inflation).
Effect on levels of service: ↑
Alternative Option B
Reduce our services to the community.
To reduce rates increases over the ten years the Council could cut services. A range of possibilities are outlined below. The cut in services would affect the staffing numbers assumed in our proposed plan. This option identifies possible cuts to services for libraries, community partnerships, economic development and parks and reserves. Following consultation, the Council could choose to reduce some or all of the service reductions described in this option to help moderate rates increases. Alternatively, or in addition to reducing the services identified in this option, the Council could choose not to develop new community facilities and/or invest less in transport.
This reduction would shorten opening times to only four days a week, with no weekend hours. There would be a substantial cutback in library-based events and support, such as authors’ talks, film nights, children’s story times, holiday programmes, wriggle and rhyme sessions for babies and parents, housebound services, dementia and ESOL support groups, research assistance and digital support. There would be fewer new books, quickly resulting in an outdated collection. The processing of books, magazines and other borrowing materials would slow down, reducing the availability of these resources to the public. Furthermore, unexpected closures of libraries may be more frequent when staff members are sick.
| Benefits | Costs |
|---|---|
| Reduces rates increase. | Has a lasting impact on the community’s access to information, |
| Reduces community access to library buildings | |
| Disproportionately affects people with limited disposable | |
| Risks long-term economic impact by undermining community |
Compared with Option A - rates revenue decreases (all types of rates) by:
Year 1: $129,000
Year 2: $538,000
Year 3: $551,000
Years 4 – 10: $4.3 million
Compared with Option A this is equivalent to an average rates decrease of $23 (incl GST) per household/business per annum from 2025/2026.
Impact on debt: $0
Impact on levels of service: ↓
We generally provide community grants ranging from about $500 to $5000 to approximately 100 community organisations each year. The sorts of activities supported through these grants are arts, museums, sport and recreation, emergency services, environmental, social services, festivals and events, heritage, culture, economic development and work with children and youth. We also work with other organisations to provide a range of community education, arts projects and active recreation activities and opportunities to the community.
This reduction in resources would result in a substantial decrease in the community grants we could provide which would in turn result in fewer activities and services being provided by community groups and could in some cases, result in their closure. Lower grant funding would lead to fewer volunteer hours in the community groups funded, decreasing volunteer contributions to the public. This option would also mean our programme of community education, arts projects and active recreation opportunities would become more limited.
| Benefits | Costs |
|---|---|
| Reduces rates increase. | Social, cultural and environmental wellbeing within the community reduced. |
| Community members more likely to be marginalised, such as elderly, youth or low-income families may face a reduction or discontinuation of support from organisations that receive community grants. | |
| Lack of support for community organisations risks hindering local economic development and social cohesion. |
Compared with Option A – rates revenue decreases (all types of rates) by:
Year 1: $248,000
Year 2: $254,000
Years 4 – 10: $2.0 million
Compared with Option A this is equivalent to an average rates decrease of $11 (incl GST) per household/business per annum from 2025/2026.
Impact on debt: $0
Impact on levels of service: ↓
In this option the Council would no longer fund:
• The Nelson Regional Development Agency (our regional economic development agency).
• Tasman Bays Promotions Association and Golden Bay Promotion Society to provide local visitor information centres in Motueka and Tākaka.
• Nelson Tasman Business Trust to provide free assistance and advice to both start up and existing businesses in the District.
This reduction would stop strategic economic development planning for the combined Nelson Tasman region. Without contribution from the Council, there would be no support for firms in the same sector to work collectively to increase business across the region. Advocacy for the economic needs of the region would be reduced substantially and there would be less support for key sectors such as aquaculture, horticulture and tourism. Our ability to access Government funding for economic development would be compromised.
Reductions in economic development resources would see regional promotion become more Nelson city-focused (rather than the wider region). There would be a reduction in the promotion of Golden Bay and Motueka accommodation, food, transport and business activities, and substantially reduced face-to-face information for our visitors. Finally, there would be a noticeable decrease in direct consultations, network events, and training or mentoring provisions for small and start-up businesses in Tasman.
| Benefits | Costs |
|---|---|
| Reduces rates increase. | Negatively impacts the tourism and hospitality sectors, affecting accommodation, food, transport, and business activities. |
| Hinders overall business innovation and growth across the region. | |
| Reduces the economic contribution that businesses provide to the community. | |
| Reduced access to Government funding to support economic and business activity in Tasman. |
Compared with Option A - rates revenue decreases (all types of rates) by:
Year 1: $130,000
Year 2: $265,000
Year 3: $407,000
Years 4 – 10: $3.4 million
Compared with Option A this is equivalent to an average rates decrease of $11 (incl GST) per household/business per annum from 2025/2026.
Impact on debt: $0
Impact on levels of service: ↓
This reduction would result in a decreased annual planting in prominent and visually significant areas. This includes sentimental settings like cemeteries and memorial gardens, where the impact of reduced funding would be notably felt.
It would also mean the removal of litter bins, dog doo bins and doggy doo bags and dispensers.
| Benefits | Costs |
|---|---|
| Reduces rates increase. | Less aesthetic appeal and overall quality of gardens in prominent and sentimental areas. This may lower the appeal for tourists, having a negative impact on local businesses. |
| Reduced greenhouse gas emissions | Potentially higher litter and waste dumped in parks and public places and higher costs to clean this up. |
| Increased cases of dog faeces left in parks and public places. |
Compared with Option A – rates revenue decreases (all types of rates) by:
Year 1: $264,000
Year 2: $312,000
Year 3: $303,000
Years 4 – 10: $2.5 million
Compared with Option A this is equivalent to an average rates decrease of $13 (incl GST) per household/business per annum from 2025/2026.
Impact on debt: $0
Impact on levels of service: ↓
Alternative Option C
Sell Council Assets
We have built up a variety of assets and investments over the years. However, selling some of these assets isn’t a straightforward process due to legal constraints. There are a range of opinions within the community about the value of the Council holding these assets, and proposals to sell them become quite divisive. The option of selling our assets is a complex one, involving careful consideration of each context, potential impacts on the community, and the long-term financial and operational effects.
The process to sell assets at competitive prices takes some time so any sales are unlikely to reduce rates in 2024/2025 and have only minor impact in 2025/2026. The assets listed here are the main opportunities available to sell assets.
This company holds the Council’s shares in Nelson Airport and Port Nelson, both of which are deemed strategic assets by the Council. As of March 2023, the value of these shares amounted to $189.5 million. These holdings represent a significant aspect of our strategic investments.
The council holds various property investments, such as land intended for sale, commercial properties, and community housing. We could consider selling some of these assets or engaging in sale and lease back arrangements. For instance, there are properties at Māpua Wharf and a commercial property in Richmond, with a combined value of $6.4 million, that fall into this category.
* Property sales are subject to the Public Works Act 1981 provisions that require in general that land be disposed to the former owner if it is no longer required for the original work. The implications of the, yet to be determined, Wakatū Tenths Claim, also apply. We have agreed to consult with Wakatū Incorporation should the Council contemplate disposing of land in the area concerned.
The value of the Council’s forestry holdings stood at $33.8 million in 2023, but this value fluctuates throughout the life cycle of the forests. Currently, we are entering the lower part of that cycle. It’s important to note that the forests on Moturoa/Rabbit and Rough Island aren’t up for sale; they are part of a reserve with its own legislation. We also need to highlight that $18.8 million in income from forestry surpluses is specifically allocated to servicing and repaying loans associated with the environmental flows and the public good aspects of the Waimea Community Dam. These forestry surpluses also play a role in funding parks and reserves while contributing to a reduction in general rates overall.
| Benefits | Costs |
|---|---|
| The proceeds could provide a one-off injection of funds into the Council. This could be directed towards reducing rates increases, lowering debt or re-investing in higher earning assets. | Reduction in ongoing revenue streams: Selling assets would result in a decrease in continuous revenue streams that currently offset rates. |
| Asset sales can transfer operational and financial risks from the Council to the private sector. | Loss of Council control and direct influence: Asset sales would mean relinquishing control and direct influence that we currently hold over the management and strategic decisions related to these assets. |
| Generally there would be no short-term impact on the services we provide as the assets are either not required for service delivery or are replaced by sale and lease back arrangements. | Long-Term cost increases: While asset sales may provide short-term financial relief, there’s a potential for long-term costs associated with leasing or contracting services that were previously owned and managed in-house. |
| Impact on Council services: Privatising assets through sales may shift the focus from public service to profit in some cases, potentially affecting the quality and accessibility of certain Council services. | |
| Delayed impact on rates: Asset sales are complex and would likely take several years to complete. This means the decision would not have any impact on rates in the first years of Tasman’s 10-Year Plan. | |
| Community opposition: Council asset sales have the potential to be a contentious issue within communities, leading to opposition from residents who value the Council as the owner of these assets and the services they provide. |
To reduce the rates revenue increase in Year 1 (2024/2025) by 1% requires asset sales of approximately $1 million. Alternatively the proceeds from asset sales could be used to reduce our borrowing.
