An Overview of the Finances

What’s pushing our rates up?

We know that finding money to pay for a rates increase is hard for many households. We have looked carefully at how to keep next year's increase to a minimum. We have brought down the rates increase by proposing to increase certain user-pays fees and charges. We are proposing to pay the deficits (losses) of certain Council facilities with loans for three years. We’re also moving some of our lower priority capital expenditure to future years.

There are various reasons why we must raise Napier’s rates. In previous years, Council made decisions that would result in rates increases for 2024-27.

These decisions include using loans to:

• pay for some of our housing portfolio budget
• keep Napier Aquatic Centre’s building and equipment operational
• reduce the rates increase for the 2023/24 Annual Plan.

Other factors that mean we need to increase rates include:

• increased labour costs (staffing)
• inflation impacts on our operating costs, including insurance
• cyclone recovery costs
• funding needed for essential projects.

Proposed rates increase for 2024/25

We are proposing an average rates increase of 23.7% for 2024/25 with further rises in each year of our Three-Year Plan. This is an average of $13.66 per week, or $710.28 per year. Included in this is a proposed Resilience Rate. You can read more about this here.

Check our online rates calculator to see what this means for your rates bill in 2024/25.

We carefully considered whether a smaller increase was a better option. The consequence of a smaller increase would be borrowing more for operating expenses. Ratepayers would have to pay for this borrowing in time, which would result in higher rates increases in years 2 and 3 of this plan. We therefore ruled this out.

Increasing rates to 23.7% reduces our need to borrow to pay for operating expenditure. This will ease pressure on ratepayers by having lower future rates increases. It also means we can ensure we have the right amount set aside to properly maintain our physical assets.

Why do we need to borrow?

Some of our infrastructure (physical assets) is getting old and needs fixing or replacing. We have a big programme of work ahead of us to address this. We are borrowing to fund this as it would be too much of a burden to ratepayers if we increased rates to pay for this work.

Our city’s infrastructure benefits not only the current generation of ratepayers but also generations to come. We are using long term loans, so today’s ratepayers are not paying for all the debt. Instead, the repayments are spread over many years so future ratepayers contribute to the cost of the infrastructure too.

We are carefully managing our borrowing and staying within our debt limit of 175% of our income. We use the Local Government Funding Agency to get the best deal on interest rates for our loans.

We are looking to develop a commercial investment portfolio to reduce our reliance on borrowing and rates in the future.

For more details on our finances, see the Financial and Infrastructure Strategy page here.