Anyone who’s been paying attention will have got the impression that there are people in our community expressing their concerns around the development of the 2025 Annual Plan. I applaud that dedication in engaging with the council. Democracy needs engaged groups and individuals.

Equally, it’s really important that the council communicates to provide clarity, and that’s the purpose of this fortnight’s column.

The annual plan the council is developing for the 2026 financial year covers the second year of the 10-year Long Term Plan 2024-2034 (LTP).

Under normal circumstances annual plans usually involve relatively minor adjustments to the LTP, unless there are significant changes in circumstances and budgets. If there are significant changes, then the council would be legislatively required to undertake a formal consultation process, and while necessary in those circumstances, the process is onerous and costly.

The current annual plan doesn’t trigger a consultation, which could be considered a silver-lining cost savings.

The LTP24-34 consultation, which received almost 1000 submissions, asked the community, “How quickly should we close our funding gap?’”

Given the background information, a significant majority of ratepayers chose the option to “close the gap in the medium term (in six years) to ease the burden now”. I believe that since we operate in a democracy we are compelled when faced with such a convincing result to preference the wishes of the many over those of the few.

The development of the LTP 24-34 began in the third quarter of 2023 and took until June of 2024 to complete. During that period there was a significant amount of negotiation around the council table. As the mayor and the leader of the process, I made my expectations abundantly clear and have remained consistent on what I wanted. Those expectations are published on the council website: whakatane.govt.nz/mayors-LTP-expectations. My expectations included living within our means, doing more with less, focusing on critical infrastructure and exploring non-rates revenue sources. And, of course, I called for a halt to increasing staff numbers. I see no reason to substantially change my stance. As it turned out, my stance was very much in line with subsequent Government expectations.

During the LTP development process, a significant amount of financial information was shared by staff to councillors and the public, including transparency over a funding shortfall of $14m.

Inflationary pressures meant that about 11 percent of the projected Year 1 rates increase was going to be required just to maintain levels of service to the community. That is to do nothing extra. Councillors accepted that. Three project lists were then compiled A, B and C. List A consisted of projects deemed to be essential to maintain levels of service. I personally opted for very little of list B and none of C, but, of course, there are 11 voices around the table representing different constituencies.

The initial draft budget started with 27.8 percent increase in the average Whakatāne rate in Year 1 of the LTP and this was signalled through our council communications channels and picked up by the Beacon on December 20, 2023. This put the compounding rate increase over three years in excess of 50 percent. Following many iterations, much negotiation and substantial culling of the initial budget, the council landed on a 15 percent increase in the Year 1 average rate, 12.7 percent in Year 2 and 9.5 percent in Year 3 for a compounding 42 percent. The process was onerous but thorough and included a record number of submissions following a comprehensive engagement process. We landed on about the averages rates increase for all councils across New Zealand.

The council received almost 1000 submissions from individuals and groups and heard from approximately 80 submitters during public hearings that occurred in April and May 2024.

Councillors appreciate that a large swathe of our community is under unprecedented financial pressures with New Zealand experiencing technical recession in the third quarter of 2024, a slowing economy, low productivity growth and cost-of-living pressures due to remnant inflationary pressure. As you well know, the CPI figure that is most often used to measure inflation, while positive, means prices keep rising.

The council also experiences inflationary pressures and rather than using CPI it is arguably more appropriate to use the Local Government Cost Index. The council doesn’t buy the same goods and services as normal folk. A rule of thumb that has been used in the past is trying to contain rates increases to within LGCI plus 2 percent.

In the fourth quarter of 2024, staff followed the council’s direction to find savings as circumstances changed again (including lower inflation and interest rates). This presented the council with three main options including (1) directing savings entirely to reducing rates, (2) reduce rates and the opex deficit faster or (3) put all the savings toward reducing the opex deficit. After lengthy discussions on December 19, 2024, the council struck a balance between rates relief and quicker debt reduction (option 2).

It gave staff clear guidance to prepare a budget based on those discussions.

No person around the table likes carrying the Opex deficit because that needs to be serviced. The choice is between reduced acute (short-term) pain versus chronic (longer-term) pain. This was the option that was put to the community during the LTP consultation.

The fact that the community made its preference clear during the LTP was probably a major determinant in where the votes fell recently.

Our LTP initially planned for 32 additional new staff over three years. I am on the record as sharing concern over FTE and have advocated strongly for no new FTE. Indeed, our new chief executive has us now taking on no new staff in the second year of the LTP and has reduced the number of new FTE (over the course of the LTP) to 26 – I feel he’ll be aiming to go even lower. No doubt in 2026 those around the table will get to revise this number again.

Next week, the council will debate the proposed annual plan budget. The annual plan is due for adoption in June.

I encourage residents to maintain interest in the process to build their understanding – it may well inspire people to stand in the local elections this year.