Mayor Sam Broughton has warned ratepayers could face an increase of 20 per cent or even higher, which could be on the way from the 2024/25 financial year.
Broughton says potential increases are caused by rising interest rates on council debt, inflation and taking on more staff, with the council increasing staff from 509 to 586, costing $32.748 million in the 2022/23 financial year compared to $28.799 million in the 2021/22 financial year.
This year rates increased by an average of 5.9 per cent – one of the lowest increases in Canterbury – to fund a $184.5 million capital spend and $177.4 million operating spend.
The potential for the Christchurch City Council to ask for help funding the $683 million central city Te Kaha stadium has not been included in Broughton’s estimates.
Broughton said because no formal proposal has come from the city council he would not say whether he would support it. But he said Selwyn residents would benefit from the stadium.
No other councils in Canterbury have committed to funding assistance.
Said Broughton of the potential rates increase: “I won’t, our council won’t and our community won’t accept any numbers higher than 20 (per cent). We also won’t accept a zero because that means we are going backwards.”
The warning comes as many councils face financial pressure, with the Christchurch City Council looking at a potential 18 per cent rates rise next year and Hamilton City Council a 25.5 per cent rise next year.
“Even if we were to do nothing more it would cost more this year than it cost last year,” Broughton said.
He said it would be a balance between projects the council could complete and affordability for ratepayers.
“In Selwyn, we have prided ourselves on wanting to stay ahead of the game in local government, making sure all the infrastructure is looked after.
“We have to think about how we set up a community that is good not just for those that are here now but for future generations as well, so those things have meant if we want to stay ahead of the game it will require continued investment.”
If the council was to complete all of the projects currently slated in its 2024-34 Long Term Plan, it would mean about a $173 rates increase by 2034.
Affecting the council’s planning is a lack of direction on what the Government is intending to do with Affordable Water Reforms, with the council running two budgets – one with water services costs and one without.
“We need certainty by this side of Christmas on where water is going,” Broughton said.
While the Government has not indicated its plans for funding water services, it has said the Affordable Water Reforms will be repealed.
Broughton, who is also chair of Local Government New Zealand, said the current funding system for councils is ‘broken’ because all it has to rely on is rates and debt.
“That is the reason why many councils have got these large rates rises at the moment,” he said.
Broughton said funding is LGNZ’s top priority.
Helping the council in its planning was a rise in its debt borrowing caps from 160 per cent above income to 220 per cent above income, giving the council more flexibility in the amount of debt it carries.
In the 2022/23 financial year, the council was carrying $139.289 million in debt.
Also to be discussed as part of the LTP process is the council’s investment strategy and whether it will want to sell or acquire any assets. Currently, the council owns $132.224 million of shares in different companies, the largest being $106.5 million in Orion.
The council will start public consultation on the LTP in April.
