Annual Plan reflects economic realities

The council adopted our Annual Plan for 2022/23 during our most recent meeting. The Annual Plan is when we look again at our 10-year long term plan (LTP) to ensure that road map for the district still stacks up for the current year. As you know, a lot has changed. Sharply rising inflation, unpredictable and uncertain supply chains, workforce availability within our supply networks, and the day-to-day hit on productivity caused by high numbers of COVID-19 infections have up-ended many of the forecasts we made almost two years ago. Many budgets for council projects have been revised up to accommodate cost increases. The biggest disruptors to council budgets have been inflation and interest rates, both of which are much higher than we could have anticipated when the LTP was adopted.

Councillors were keenly aware that ratepayers are also under financial pressure with spiralling price increases and record levels of inflation when we met on 30 June. We were determined not to increase that burden any more than necessary so trimmed our work programme and deferred other spending wherever possible. Those decisions were not easy. Projects were included in the LTP because communities, councillors and staff agreed they were necessary to help improve the wellbeing of our district. Affordability, economic recovery, and the need to fund essential services were our key considerations at that time and these goals remain critical to what we want to achieve. Where there is critical need, operating budget variations have been limited. Other budgets have been tightened to provide headroom so that changes are as cost neutral as possible. The result is a revised work programme for 2022/23 that carries forward projects that were delayed this year. It also revises timeframes for work planned in the new financial year that we are unlikely to have capacity to deliver.

After adjusting inflation and interest, the net effect of the changes we adopted has added just over $400,000 to our overall budget, or 0.44 per cent. That has given us an average rate increase of 5.44 per cent, which is slightly above the 5 per cent we originally projected. That is well below the 6.4 per cent maximum we set in our Financial Strategy. Remember that is an average for all Far North properties. It does not mean everyone will see rates rise by 5.44 per cent. Individual ratepayers can find out what their rates will be by checking the Rating Information Database on the council’s website.

Other key differences between this Annual Plan and year two of the LTP are an increase to forecast operating expenditure from $148.8 million to $154.4 million, and a decrease in debt from $193.8 million to $171.3 million by the end of the 2022/23 financial year.

We expect that ongoing government reforms will require that we continue tweaking our priorities over time. Until we have greater certainty, our best option is to continue the course we set in the LTP.