Finance and Infrastructure Strategy

We have prepared a combined Financial and Infrastructure Strategy (F&IS) to satisfy the requirements of the Local Government Act 2002 and the Severe Weather Emergency Recovery (Local Government Act 2002—Long-term Plan) Order 2023. The joint strategy sets out the key infrastructural and financial considerations and challenges that must be overcome to meet our short- and long-term strategic objectives.

The financial aspects of the strategy include our intended levels of service over the next ten years, our limit on rates increases and borrowing and an assessment of our ability to maintain levels of service and meet additional demands within rates and borrowing limits. The strategy also specifies Council’s policy on giving securities for our borrowing, and what we’re trying to achieve in holding and managing any investments and equity securities.

The infrastructure section of the strategy outlines significant infrastructure issues faced by Council, and the main options and their implications for managing those issues. It contains a description of the major capital projects that Council is proposing or implementing, including cyclone recovery projects.

It describes the likely funding options for those major projects and the implications of those options for rates and debt.

What is infrastructure?

Infrastructure is the system of physical assets that supports our daily lives.

• Roads and footpaths
• Three waters (water supply, wastewater, stormwater)
• Parks, reserves, and sportsgrounds
• Public buildings and facilities
• Rubbish and recycling

Where are we now: financial and infrastructure ‘health’

• Current external debt: $10 million (as at 30 June 2023)
• Projected debt at 30 June 2034 $0.5 billion.
• Capital plan of $1.1 billion over 10 years.

Infrastructure issues of note

Affordability and fairness across Napier’s generations

We need to balance rates affordability against the need to take good care of assets like roads and reservoirs. We have a lot of work to do to modernise and futureproof our ageing physical assets and improve our resilience against natural disasters. Our community also expects to see continual improvement of services because of regular rates increases. The cost of major asset upgrades must be spread across the generations who will benefit from them.

This Three-Year Plan proposes an average rates increase in 2024/25 of 23.7% and steady increases over the next ten years. We’re also planning to borrow to make sure we can deliver projects when they are needed. We will regularly look at our levels of service to ensure what we’re focusing on lines up with what the community expects and is willing to pay for.

Ageing assets

Many of Napier’s physical assets are over 50% through their useful life. This means their reliability is now less predictable and more frequent maintenance is needed. Additionally, our population is increasing so we are outgrowing our infrastructure. More infrastructure will be needed, meaning we need to ensure we have the funds to do this. We plan our maintenance and improvements according to the best information we have about our assets, but we know there are gaps. Those information gaps make it harder to maintain or replace assets before they fail. We’ll consider the condition of assets, so we know what to prioritise for maintenance and upgrades, while still maintaining day-to-day operations and reacting to unanticipated failures.

Cyclone recovery

Cyclone Gabrielle means we’re still facing unanticipated costs and challenges to fix or replace lost assets, such as bridges. We also need to adapt important physical assets, such as our Wastewater Treatment Plant, so they are protected against failure in future events. We will plan and prepare for future resilience and make targeted improvements where most needed. This will allow us to take care of the most urgent needs, while preparing for well-researched, long-term resilience planning. The cyclone showed us that we need to act now. Having important physical assets out of action for a long time had serious negative impacts on our community.

Preparing for climate change and natural hazards

With land increasingly at risk from erosion and coastal inundation, we must strengthen existing structures and ensure new developments can withstand the tests of weather and time. Sustainable land use and comprehensive water management will help to prevent issues before they arise. Improving our readiness for emergencies is vital for our safety. By proactively tackling these risks, Napier can ensure a sustainable and resilient future for its residents and businesses.

We’ll prioritise actions that can make a big difference now, without overwhelming our budget. This will allow us to take care of immediate concerns effectively while planning for broader improvements as funds allow. It's a practical step forward, demonstrating our commitment to keeping Napier safe and sustainable, ensuring we do what's necessary today to protect our community tomorrow.

Significant infrastructure projects over next 10 years