By Rob Pascoe (Chartered Accountant, Former Hamilton City Councillor, and Hamilton Ratepayer)
At the Hamilton City Council meeting on February 11 2025 elected members considered the first iteration of the 2025/2026 Annual Plan. This essentially updates the Long-Term Plan, approved in June 2024 with known and probable changes for the 2026 year only. More changes may be made before sign off in June.
It’s a pretty unimaginative report (Open Agenda 11 February 2025, page 177 onwards). Gone are the talented veterans David Bryant and Tracey Musty who would have contributed to the metrics and style of the report, and perhaps a missed opportunity for the new CFO to shine in adding his professional skills to inform elected members of opportunities and consequences in this election year budget.
The agenda item was reported as being received late, but there is no indication in the minutes when it became available to elected members, and if they had a chance to fully read it, caucus with staff and colleagues, and when informed question council staff in a public meeting.
The report did not include a set of financial statements, as would have been expected, to update and provide context on the impact of the new spending on overall city finances. Nor did the report suggest opportunities for elected members to consider cost reductions or income options to fund the new expenditure.
With no new income streams the default position falls on council to fund increased expenditure with additional debt.
Nowhere in the report is there an update on how the target rate introduced in the last council term to fund the additional regulatory costs then imposed on councils. It should have, as I suspect these costs will have reduced enough to warrant a review with the removal of any excess rating not now needed.
As I understand it, the remaining major review imposed by central government is the waters project. Hamilton previously undertook a waters review and from my recollection the model now being sought is very similar to that recommended in the Cranleigh Report in 2015. This report would be a logical cost-effective starting point.
In the waters space, it seems to me Hamilton’s major challenge is to find other partners to join a proposed water company for this region. This is easier said than done, as “old thinking” within local councils has in the past indicated a reluctance to join and share their assets with each other.
The annual plan update suggests new expenditure in the following areas:
- Improving democracy by providing more staff support during the 2025 election period;
- Increasing consultation with Iwi;
- Addressing illegal dumping of rubbish;
- A smart bin trial;
- Subsidies for small scale community development;
- Report costs and study associated with the local alcohol policy aimed at reducing harm in the community.
A number of these new spends relate to the “well beings” now being removed from the Local Government Act. In addition, the government has asked councils to get back to the basics and focus on beneficial outcomes for residents. The takeaway here is that the majority of current Hamilton councillors are ignoring this.
The Net result predicted and reported is:
- Net Debt of $1.282 billion by 30 June 2026. (amount predicted in 2024 Long Term Plan $1.571 billion)
- Debt to revenue ratio (i.e. borrowings measured against revenue) 262% (Estimated in LTP 276%)
- Balancing books deficit for year to 30 June 2026 of $22 million (estimated in LTP to be $22m)
You would at this early stage in the LTP expect outcomes to follow those agreed with the community and signed off in June 2024. What remains a concern is the balancing the books deficit of $22 million. This is an operating deficit council will need to fund by increasing debt.
Yet despite year-on-year rate increases of 16.5% (2024) and the proposed 15.5% (2025) council can still not balance its books! The majority of this council who support this addiction to spending continue to show a lack of fiscal prudence and are out of touch with the views of their community
There is optimism in the report that surpluses will return in later years of the LTP. But, there has only been 2 surplus years in the last 25 years!
The spendthrift culture of the majority of councillors is sadly expected to continue unless personnel changes are made at this year’s elections.
Councillors approved this budget at the Meeting (Draft minutes)
Elected members, even in election year, remain oblivious to the effects of increasing expenditure without suitable increased revenue streams. Some of the expenditure in the list above are relatively minor but in aggregate along with other increased operating costs continue to add up to either increased rates or debt – debt is ultimately funded by increasing rates at some time in the future. A number of the new expenditure items are cumulative and continue to be incurred annually throughout the long-term plan period.
Councillors, even more so in election year, need to be focused on outcomes that support the ratepayers and city residents.
Most ratepayers will have received and paid their first installment of the new higher rate before the October elections.
As voters we need to be aware of the recent voting behaviour of elected members to ensure those wasting city funds are appropriately censured when they present themselves for re-election.
[The content of any Opinion pieces represents the views of the author and the accuracy of any content in a post labelled Opinion is the responsibility of the author. Posting of this Opinion content on the CityWatch NZ website does not necessarily constitute endorsement of those views by CityWatch NZ or its editors. CityWatch NZ functions to provide information and a range of different perspectives on New Zealand’s cities and local councils. If you disagree with or dispute the content, CityWatch NZ can pass that feedback on to the author. Send an email to feedback@citywatchnz.org and clearly identify the content and the issue.]
Further reading on this issue
OPINION: Hamilton City Council’s Credit Downgrade Not a Surprise
