This is an HTML version of an attachment to the Official Information request 'Request2 for the detailed Transport Rate Calculations outlined in the GWRC 2020/21 Annual Plan'.


CONFIDENTIAL 
Annual Plan 2020/21 Update
Council Workshop, 23 April 2020



Agenda
CONFIDENTIAL 
Background/Context
Proposed Savings
Proposed Funding
Other Issues
Consultation
Next Steps



Background / Context
CONFIDENTIAL 
Average rates increase as per planned 
expenditure in year three of the 2018-28 LTP 
was 6.3%
Council decisions in 2018/19 pushed this rate 
up to 10.1%
Additional significant cost pressures added to 
the projected 2020/21 rates increase by a 
further approx. 8%
An Activity Review was undertaken during late 
2019 to find cost savings and efficiency 
improvements.
A prospective rates increase of 9.8% was 
endorsed in Dec 2019.




Drivers of the prospective 9.8% ($13m) rates increase
CONFIDENTIAL 
Public transport costs
5.8%
Reduction in reserves usage
2.7%
Accommodation
2.0% 
Debt servicing costs
0.8%
Wages movements
0.8%
Natural resources plan
0.4%
Riverlink
0.4%
LGWM
0.4%
BAU savings
(3.6%)



Proposed Savings/Funding - Summary
CONFIDENTIAL 
Option One
Option Two
%
Value
%
Value
($'000)
($'000)
Starting level
9
          .80         1
  3,367
9
          .80        1
  3,367
             - 
EV/BNR/RS1
-        1
   .40 -          1
   ,910
-        1
   .40 -         1
   ,910
Wages  & Salaries
-        0
   .80 -          1
   ,091
-        0
   .80 -         1
   ,091
Capital Programme
-        0
   .20 -              273
 
-        0
   .20 -             273
 
 PT reductions in service
-        0
   .35 -              477
 
-        0
   .35 -             477
 
Reduce customer engagement -        0
   .15 -              205
 
-        0
   .15 -             205
 
Other savings
-        0
   .25 -              341
 
-        0
   .25 -             341
 
Fund LGWM over 20 years
-        0
   .25 -              341
 
-        0
   .25 -             341
 
6
          .40
8
            ,730
6
          .40
8
           ,730
Use of Reserves 
-        1
   .70 -          2
   ,319
-        1
   .70 -         2
   ,319
Debt Increase
-        1
   .70 -          2
   ,319
-        4
   .70 -         6
   ,411
Proposed rates increase
3
          .00
4
            ,092
0
0
Further savings of 3.4% matched with 
additional funding of 3.4% to achieve a rates 
increase of 3%



Proposed Savings - Detail
CONFIDENTIAL 
EV/BNR/RS1
Delay the introduction of EV buses and 
changes from the bus network review 
until 1 July 2021
Delay changes to the Hutt train 
timetable until 1 July 2021
Given the current status of these 
projects this is likely to be a two to 
three month delay 



Proposed Savings - Detail
CONFIDENTIAL 
Salaries & Wages
Hold all salaries and wages at current levels 
for the full year.
Capital Programme
Delay capital expenditure for 12 months in 
the following key areas:
• Bus real time systems upgrade
• Bus on-board announcements
• Some bus and station upgrades
• Some parks capital programmes
• Some flood protection works



Proposed Savings - Detail
CONFIDENTIAL 
PT Service Reductions
These savings recognises that it will likely take 
some time for patronage on public transport to 
rebuild to the previous numbers and that it is 
probable a reduced level of service will apply for 
some time.
The exact level is difficult to calculate but needs 
to take into account:
• Maintaining the viability of operators
• That social distancing will need to be 
maintained on public transport for some time



Proposed Savings - Detail
CONFIDENTIAL 
Customer Engagement
The current strategy is based on  engaging with 
communities to raise GW’s relevance and 
reputation
This savings would limit the level of work in this 
area and delay some activities for 12 months 
delay  
Fund LGWM over 20 years
LGWM is currently being funded over 10 years 
(for the business cases), however, the life of the 
project is likely to be significantly longer



Proposed Funding Options - Detail
CONFIDENTIAL 
Use Of Reserves
Option one proposes that 50% of the shortfall to 
reach a 3% rates increase is funded from reserves 
Reserves are created from rates that were not 
spent in the year they were collected
Using $2.3m of reserves is at the top end of 
available reserves that are not tagged or linked to 
a specific activity
As the reserves are not cash backed this would 
result in an overall increase in debt adding 0.25% 
to rates increase for the next 10 years.



Possible Funding Options - Details
CONFIDENTIAL 
Debt Increase
Increase debt by $2.3m  (option one) or $6.4m 
(option two)
Both options are well within our capacity to 
borrow but would increase debt servicing costs in 
future years
Option one would result in future rates increases 
of ~0.25% for the next ten years
Option two would result in future rates increases 
of ~0.5% for the next ten years



Other Issues
CONFIDENTIAL 
A key assumption in the Annual Plan is that any 
shortfall in public transport will be covered by 
NZTA – while this is likely in the short term the 
length of this has yet to be confirmed
Other revenues are likely to fall but very difficult 
to estimate by how much
Costs are also likely to be lower as full programme 
delivery unlikely to be achieved
Working assumption at this time is that these will 
largely offset and be monitored and managed 
during the year


Bulk Water Levy
CONFIDENTIAL 
The increase in the bulk water  levy is current budgeted at 
6.1% ($2.1m)
Current reserves
$15m
Bulk Water Supply contingency fund $38m
Use $1.05m of reserve to reduce to 3.05% 



Consultation
CONFIDENTIAL 
A rates increase of 3% would not 
require consultation, but rather an 
engagement progamme of work
At a rates increase of 0%, consultation 
would be more of an issue but 
probably not required


Options to reduce rates increase–consultation requirements
CONFIDENTIAL 
LGA:
-
Section 95(2A): no consultation required where there is no significant or material 
difference from the relevant year of the LTP.
-
Sections 78(1), 78(3) and 79(1): In their decision making process Council must 
consider the views and preferences of persons likely to be affected by, or have an 
interest in, the matter and should use their discretion to decide if the matter is 
significant enough to those affected and interested persons to warrant a 
consultation. 
Consultation in the current environment would need to look different, but still ensure 
that all of our community have fair access to participate in the process – notification 
via website, Social Media channels, radio, posters, billboards, newspapers; no in-
person events, or hearings; submissions received via phone, text, online, or post. 
A number of Councils* are choosing not to consult on their 2020/21 Annual Plan and 
will focus their consultation on the 2021-31 LTP pre-engagement. This is being driven 
by a lack of anything significant to consult on and a desire to support their 
communities who will have different matters on their minds over the 
coming weeks and months.
*Bay of Plenty Regional Council and Porirua City Council are two recent examples.



Proposed Savings/Funding - Summary
CONFIDENTIAL 
Option One
Option Two
%
Value
%
Value
($'000)
($'000)
Starting level
9
          .80         1
  3,367
9
          .80        1
  3,367
             - 
EV/BNR/RS1
-        1
   .40 -          1
   ,910
-        1
   .40 -         1
   ,910
Wages  & Salaries
-        0
   .80 -          1
   ,091
-        0
   .80 -         1
   ,091
Capital Programme
-        0
   .20 -              273
 
-        0
   .20 -             273
 
 PT reductions in service
-        0
   .35 -              477
 
-        0
   .35 -             477
 
Reduce customer engagement -        0
   .15 -              205
 
-        0
   .15 -             205
 
Other savings
-        0
   .25 -              341
 
-        0
   .25 -             341
 
Fund LGWM over 20 years
-        0
   .25 -              341
 
-        0
   .25 -             341
 
6
          .40
8
            ,730
6
          .40
8
           ,730
Use of Reserves 
-        1
   .70 -          2
   ,319
-        1
   .70 -         2
   ,319
Debt Increase
-        1
   .70 -          2
   ,319
-        4
   .70 -         6
   ,411
Proposed rates increase
3
          .00
4
            ,092
0
0
Further savings of 3.4% matched with 
additional funding of 3.4% to achieve a rates 
increase of 3%



Next Steps
CONFIDENTIAL 
Guidance from Council on level of rates 
increase
Further understanding of the impacts 
of COVID-19 on work programme
Prepare draft annual plan based on the 
above and report back to Council on 11 
June 2020