The starting point
We're keeping things ticking
Through our consultations last year, and through conversations with people in the community, we hear that you want us to keep delivering our existing services, and you want them managed to at least the same standard, so this is what we are planning.
That doesn't sound like a big deal - but it sets the starting point for all our forward planning. Just like when you set a budget at home, and you start by listing all your regular costs - like groceries, power, internet etc. Our regular costs are things like operating pools, keeping our library books current and relevant, checking playgrounds are safe, providing animal control services and much more. And just like your budget at home has to increase overtime as costs like power and insurance go up, our costs to deliver our services increase too.
We're looking after what we've got
We have approximately $663 million invested in our assets –that’s our roads, our pipes, our treatment plants, our buildings and more.
We spend almost $20 million each year on maintenance and operations, and $13 million per year (on average) on renewing assets that have reached or are nearing the end of their life.
We’re planning to continue with our maintenance and renewals programmes to ensure our assets remain in average to good condition and continue to deliver the expected level if service (regardless of who will own or manage those assets into the future).
Everyone knows that their house roof needs replacing roughly every 25 years. If we were smart, we’d put aside a little bit of money every month, so that when the roof needs replacing we have the money there ready to go. That’s why we collect rates each year to pay for the future replacement of our assets (called depreciation funding). We have $663 million worth of assets and property, so collecting money as we go to pay for their future replacement is financially responsible.
36% of total rates collected over the next ten years will be put aside for replacing our existing assets, and over a third of that goes towards our roading network. This allows us to replace our critical assets at the end of their useful lives, without having large spikes in rates.
We’re also planning to improve the information we hold on our assets condition and how critical they are. This will help to address another of our key challenges - affordability. Smarter asset management will mean we’re optimising our investments, only replacing critical assets, and help us to smooth our costs over time.
What is an Infrastructure Strategy?
It sets out how we will manage our assets to ensure they keep delivering the expected services over the next 30 years. There are four main challenges that set the starting point for our infrastructure: growth and demand, resilience, compliance & affordability. This section summarises our Infrastructure Strategy. You can read more about our Infrastructure Strategy here.
We're playing it safe
Just like you need to be prepared for an emergency at home, we also need to ensure our infrastructure can cope with challenges - whether that’s drought, changing weather patterns, or natural disasters like an earthquake. This is called ‘resilience’, and is both a key challenge for us and is a long term strategic issue for New Zealand.
Higher temperatures and less rainfall across New Zealand (and particularly the Waikato Region) means there is likely to be more frequent droughts and water shortages. We have taken this into account when planning and budgeting for our infrastructure. Completing our renewal programme and providing additional infrastructure also helps make our current network more resilient. A more resilient network also supports and improves public health and the environment.
We're planning for growth
Our towns are growing, and are forecast to continue to grow, mostly in urban areas. This growth is great for building thriving communities and it increases the number of ratepayers to split the total rates bill across, but that growth also requires improvements to our infrastructure – like roads, pipes etc.
We are already working on projects to cater for this growth – such as increasing the capacity of the Morrinsville water supply, and upgrades to the Morrinsville and Matamata sewer mains to ensure they have sufficient capacity. Planning for sustainable growth and managing demand is another one of our key challenges. We plan to provide additional capital and operational expenditure over the next 30 years to provide for this growth.
These projects are must-do’s - if we didn’t do them, our district wouldn’t be able to continue to grow, and in some cases (like Morrinsville’s water) the infrastructure already struggles to keep up with demand.
We’re planning to spend $16.1 million on growth related projects over the next ten years. These costs are proposed to be funded by Development Contributions (the fees that developers pay to cover infrastructure costs caused by their developments). Increasing the capacity of our infrastructure also makes our network more resilient – improving our ability to cope with severe weather events like drought and flooding.
We’re doing the work we have to do
We know we talk about compliance a lot – but that’s because it comes with a hefty price tag. When central government change the regulations(like they have done with drinking water regulations and the national policy statement for fresh water in recent years), we have to work towards complying. This will be something many farmers can relate to, with the costs associated with complying with tougher environmental standards.
Compliance is another of our key challenges, and putting it simply, it means:
- our water supplies will meet drinking water standards
- our treatment plants will meet resource consent conditions
- we will reduce death and serious injuries on our roads
Over the next ten years we’re expecting additional capital spending of $28.3 million to meet increasing compliance requirements, and an average of around $1.1 million each year in related increased operating costs.
It’s a huge cost, and we have to comply with it, but at the end of the day, it also provides better services to our community.
We're keeping our word
We made a commitment in 2018 to Matamata Futures Trust to provide $2 million towards a new indoor stadium in Matamata – this funding was part of our last Long Term Plan, which we consulted the community on in 2018. They’ve been fundraising and planning based on this funding commitment – so we have included this funding in the draft budget for 2023/24. The funding will be provided when construction begins.
What does this all mean?
The costs of delivering our current services, maintaining and renewing our assets, planning for growth, and complying with regulations all add up. On top of just doing the basics however, you’ve told us you expect and want more.
The next section outlines some of the exciting projects we’ve proposed to deliver on this over the next ten years. These projects come with costs to both deliver the asset or activity, and then the ongoing costs to operate and eventually replace the asset again in the future. These costs have been included in the rates impact throughout the following section.
Below is an overview of what the rates increases look like for two example properties over the next ten years, including all of the work that we consider to be the basics (our starting point), and the projects we have proposed throughout this document.
$550,000 urban property
Connected to all services (e.g. water, wastewater, rubbish)
Proposed increase for 2021/22: $235 (9.34%)
Average annual increase for the next 10 years: $188 (5.77%)
An extra $3.61 per week = one pack of choccie bikkies
$8 million rural property
not connected to services
Proposed increase for 2021/22: $1,434 (14.39%)
Average annual increase for the next 10 years: $631 (5.11%)
An extra $12.13 per week = two large coffees