7 May 2015

Wellington Council’s big plans must stack up, says Chamber

Wellington City Council must ensure each of its big projects stack up before it proceeds with them, Wellington Employers’ Chamber of Commerce says in its submission on the 10-year plan.

The Chamber is “on the whole” positive about the Long Term Plan (LTP) and the additional investment sought from ratepayers for the growth projects.

But it says that support comes with “important and non-negotiable caveats”. They are:

• For each invest-to-grow project there must be a robust business case, cost-benefit analysis, and return on investment.

• Additional rates raised for invest-to-grow projects must be ring-fenced to those projects only – “not base-lined for other activities or councillor’s pet projects” – and should be returned to ratepayers if they are not used.

The Chamber is also concerned with how the long-term strategy is to be funded and the significant rates increase.

“We are concerned that when you compare the rates collected in the year 2014/15 to the amount projected to be collected in the year 2024/25, it is an increase of 61.28 per cent, or $147,926,000.

“The LTP proposes to increase rates by an average of 3.1% a year. In addition, it proposes an invest-to-grow programme that would mean a 0.8% increase in rates, to an average of 3.9% annually over 10 years. The council justifies this increase as a trade-off as it will invest in projects to expand the city’s economy and grow the rating base.

“We are concerned that 80 per cent of what’s being asked for is just ‘business as usual’. This leaves just 20 per cent for the additional invest-to-grow projects.

“The rates increase for ‘business as usual’ needs to be lower. We question why the increase is so high, given that current inflation is sitting so low. We do not accept council’s assertion that any reduction in the 3.1 per cent means a cut in current services. Instead, we would submit that all services should be assessed to find efficiencies and make better uses of technologies available. A line-by-line exercise should be undertaken by officers to provide council with a clear picture of each business-as-usual item, to start to look at how savings, efficiencies and productivity could be raised.”

The Chamber has continued concerns that project funding is not apportioned against demonstrable benefit from the groups it is funded from.

“Wellington City businesses – commercial ratepayers – own 21 per cent of Wellington City’s total rateable property but pay 46 per cent of the rates. We continue to be concerned that, given this breakdown, the rates burden does not lie where the costs and benefits fall.

“We would recommend that the business rating differential is lowered and greater transparency in numbers and the detail provided.”

The Chamber said the big projects were important in lifting Wellington’s growth rate, which it was concerned about. Annual economic growth to December 2014 was just 2.7% compared with the national average of 3.3%.

It also made it clear that it does not support the council’s introduction of a living wage nor plans to expand it.

Chamber Chief Executive John Milford, who spoke to the submission at the council hearing today, says it is essential that the council’s big projects are fully costed and that the plans and processes are watertight.

“This approach is in everyone’s best interests. We support the principle behind these projects because we need them to help drive our economy forward but they must be managed very carefully and very prudently.

“That’s why robust business cases, cost-benefit analyses, a demonstrable return on investment, and the ring-fencing of rates for specific projects are non-negotiable in our eyes.”

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