How much will the plan cost?
In this Long-term Plan, we know we can continue to invest in making Wellington thrive but need to balance the pace of our investment with what we can afford. As a community, we need to make some tough decisions about what to prioritise.
We’re in a difficult financial environment. We’re not alone in this – local government across the country is facing tough financial constraints. Inflation has increased and, interest rates and insurance costs have continued to climb.
Over the next 10 years, we plan to spend about:
- $4.8 billion in capital costs to make improvements in the city
- $11.4 billion in operating costs providing the hundreds of services Wellingtonians use everyday – libraries, swimming pools, recreation centres and sports fields, through to festivals, footpaths and our many regulatory services.
We have created a budget that results in a rates increase in 2024/25 of 16.4% (after growth in the ratepayer base) and an average annual increase over the 10 years of the plan of 7%. The sludge levy, which is in addition to general rates, will be introduced from 2024/25 and is a further 1.6% increase (average annual increase of 3.6% over the 10 years of the plan).
But we need to make some careful decisions about priorities, pace, and acceptable levels of risk. We have carefully and thoroughly worked through how we can slow down the pace of our capital works programme while still focusing on core infrastructure. A lot of our investment is in physical assets in Wellington, meaning we’re very exposed to insurance cost increases and lack of availability. We need to consider the risks around that.
Where does the money come from?
The money for operating expenses comes mainly from rates, fees, and charges from those using the services, revenue from investment income e.g. ground lease income and any Wellington International Airport dividend. Debt funds the majority of our capital projects - our development projects and renewing and upgrading our assets and infrastructure.
We are proposing to increase some of our fees and user charges (non-rates revenue) to minimise the impact of the increasing costs to rates. We are also making small changes to our Development Contributions Policy on how we fund growth in our infrastructure.
Read more detail on these cost pressures on page 11 of our consultation document.
Balancing Act
When interacting with our budget, think about questions such as: Why is this service important? Do I want to change what is provided now? Will the community benefit? Who can afford to pay? This can be both an interesting and challenging exercise!
