Key variances for 2013/14


Our approach to developing this plan has been to build on the commitments we made in the 2012-22 Long-term Plan to implement our Wellington Towards 2040: Smart Capital vision, while also focussing on issues such as growing our economy and increasing our resilience. We are aware that rates affordability is a key challenge, and as a council we are also facing cost pressures from interest, depreciation and maintaining levels of service. We believe we have developed a plan that has the right balance - focussing on efficiencies and modest cuts, while investing in new opportunities that will help the city grow.

This approach includes:

Our target average rates rise was 2.5%. The draft plan had outlined an average rates increase of 2.8%. The final plan, as a consequence of the following variances, has met our target rates rise of 2.5%.

Delivering affordable rates

In considering what we could do to reduce our costs to ratepayers we identified a number of savings and efficiencies. These primarily consist of efficiencies in the way we operate that can reduce costs without adversely impacting on service levels, or the outcomes we are seeking for the city.

The following efficiencies and savings are planned for 2013/14.

Changes to the Leisure card scheme

We are planning to cease proactive development of programmes and services for leisure card holders in partnership with other providers and health organisations. The leisure card itself will be retained.

We will also respond to initiatives proposed to us from other organisations and the wider community where possible.

This will achieve savings of $75,000 per annum.

Hazardous trees

We are permanently reducing the funding for hazardous tree removal by $100,000. We have adequately managed the risk within normal weather conditions for the past three years.

Patent slip jetty

We are removing funding for the demolition of the Patent Slip Jetty, which will reduce budgeted expenditure by $100,000. The jetty removal is not a high priority nor a high risk as it is currently fenced off.

Wellington Zoo Trust

We are reducing the operating grant to Wellington Zoo Trust by 3% or $84,000 from the 2012/13 level. The 2013/14 grant is set at $2.7 million.

Positively Wellington Tourism (PWT)

PWT successfully promotes tourism. However, we are reducing the operating grant to PWT by 3% or $140,000 from the 2012/13 level. The 2013/14 grant is set at $4.6 million. We are not reducing the $1 million grant funding for the Australian Marketing initiative or funding for Destination Wellington.

Southern Landfill Improvement

We were planning to undertake significant capital works to develop the next stage of the Southern Landfill in Happy Valley. A reduction in current waste volumes indicates that the timing is less pressing. This has allowed us extra time to secure a resource consent from the Greater Wellington Regional Council for this work. This will reduce our capital expenditure in 2013/14 by $8.2 million.

Plimmer Bequest Project

The timing of beautification work at Alex Moore Park has been moved forward to align with the construction of the new synthetic turf. This has no impact on borrowings due to the funding coming from the Plimmer Bequest Trust. This will increase expenditure in 2013/14 by $358,000.

Change to Operating Model of Crèche at WRAC

We will continue to run the crèche, but will be changing the operation model to a cost recovery basis. This will require users to pay between $3 and $4 per hour for the service, regardless of the level of subsidy available from the Ministry of Education. Users with children aged over 3 years who use their 20 hours free entitlement for this service will not be required to pay for the service.

This will deliver $40,000 of savings.

City Housing

The construction contract for the Berkeley Dallard Upgrade Project was awarded in February 2013. As a result, we now have more certainty over the timing of costs. The Newtown Upgrade Project is now nearing completion and this also has given some certainty over budget requirements for the 2013/14 year. This has resulted in a net reduction in capital expenditure for the 2013/14 and 2014/15 years, as the budget for Berkeley Dallard will incorporate a carried forward amount from the 2012/13 year.

Over the 2011/12 and 2012/13 financial years a significant amount for upgrade projects has been capitalised. The actual average life that has resulted from this is lower than what has been budgeted for. This change in assumption increases the amount of depreciation that will be charged in the 2013/14 year.

The following budget changes are:

a) Capital budget
2013/14 ($2.2m) - reduction in cost
2014/15 ($1.1m) - reduction in cost
2015/16 ($0.1m) - reduction in cost
b) Operating budget
2013/14 ($3.7m) - increase in net income
2014/15 $1.0m - decrease in net income
2015/16 ($2.3m) - increase in net income

Regional amenities fund

In the 2012-22 Long-term Plan, the Wellington City Council’s contribution to this fund in 2013/14 would have increased from $594,000 to $1.188 million. We have decided to only increase our contribution to $609,200 in 2013/14. While the Fund is a good regional initiative, the funding pool is not yet committed to specific projects. We believe that Wellington City Council’s share should not increase disproportionately to that of other councils, given we are already a core funder of many regionally significant arts and environmental attractions and events. The level of future contributions to the Fund will be considered following discussions with the other contributing councils.

Fees and charges

For 2013/14 we are increasing user fees and charges in a number of areas. The increases reflect cost pressures on the services provided by Council and increasing the fees ensures that ratepayers are not over subsidising services Council provides, and that we will not have large increases in the future. Our fees and charges are set in accordance with our Revenue and Financing Policy, and depend on a range of factors including who benefits from the activity. Areas where fees are increasing include:

A full list of the updated fees and charges can be found on page 108.

Investing in the futureTop

We have budgeted additional funding to build on our strengths as a city and continue working towards our Wellington Towards 2040: Smart Capital vision.

Smart Energy Capital

We have agreed funding of $250,000 for two years to work in partnership with others to grow our reputation as a smart city, stimulate economic activity, reduce climate change emissions, and improve health for residents and workers. Our intent is to develop funding partnerships in some or all of the following priority areas:

Built Heritage Incentive Fund

We have agreed to increase the current Built Heritage Incentive Fund (BHIF) for 2013/14 from $329,000 to $400,000. The purpose of the BHIF is to help with conserving, restoring and protecting Wellington’s built heritage. The Fund also helps meet some of the additional costs associated with owning and caring for a heritage property.

Part of this increase in funding will be used to provide an additional resource to establish which buildings will benefit most from the fund, and to meet with building owners to discuss their earthquake strengthening requirements.

Greening of Taranaki Street

We’re going to progress work on the greening of Taranaki Street.

Taranaki Street is a major movement spine within the city that is currently traffic dominated. It will be used in the 2015 celebrations as a key access to Memorial Park and is part of important connections between other places of national importance such as Parliament and Government House.

The redesign of the streetscape will prioritise pedestrian comfort through landscaping, paving and lighting. We have budgeted $150,000 for 2013/14 to develop concept design options and costs for an interim project.

Civic Square Review

We have agreed funding of $150,000 to investigate opportunities for the future of the Civic Square precinct - given the need to address a number of earthquake prone building (and other) issues in this area.

Miramar Peninsula Framework

We have agreed funding of $50,000 to undertake work on the development of the Miramar Peninsula framework in preparation for the next Long-term Planning process.

The Miramar Peninsula Framework is intended to be a Long-term Planning tool, looking at a wide range of issues relevant to the Miramar Peninsula and outlining a strategy to guide future development and investment.

Capital Education Initiative

The Capital Education Initiative aims to improve the facilitation of school visits to the capital.

We have committed $60,000 to fund a strategic marketing campaign to New Zealand schools promoting Wellington, our facilities and unique offer as a destination for educational visits. This campaign will be hosted through Positively Wellington Tourism and Wellington Museums Trust, and incorporate a teacher-specific landing page on www.WellingtonNZ.com which will launch by 2015.

Safer speed limit in the CBD

We are committing $40,000 to undertake consultation on a possible reduction in the speed limit across the Central City to 30 or 40 kph. Results from this consultation will be incorporated into the 2014/15 annual planning process.

Clyde Quay Marina

We are providing $205,000 for a wave study, geotechnical investigations and an assessment of the harbour floor for the proposed Clyde Quay Marina Upgrade. Any funding for the capital works of the Clyde Quay Boat Harbour Redevelopment Plan will be subject to our normal annual and Long-term Plan processes. We will also be reviewing the Memorandum of Understanding with the Royal Port Nicholson Yacht Club.

Zealandia

We have agreed to increase our operating grant to Zealandia by $175,000 for the 2013/14 year. This is to support the new board and to provide Zealandia with a higher level of financial security, and enable the Trust to focus on implementing strategies for improvement.

Living wage

We have provided $250,000 in 2013/14 to commence implementation of a Living Wage for Council staff from 1 January 2014. Prior to this we will develop a Living Wage Framework and report to Council in November. This report will outline the phased implementation of a Living Wage and determine the role we can take in advocating for a Living Wage Capital.

Shelly Bay

We have agreed to consider the future of Council owned buildings at Shelly Bay in accordance with the Miramar Peninsula Framework. We believe that any assessment of our ownerships of these buildings should take into account the heritage values, appropriate economic returns and good urban planning and design.

Cycling network

We have agreed to increase our investment in the cycle network by $250,000 operating expenditure, and $250,000 capital expenditure for 2013/14. This will be used to explore improvement options and to develop a programme of works that delivers a “cycling brand” to Wellington. This programme does not need to be consistent with the New Zealand Transport Authority (NZTA) requirements and can target the development of a comprehensive cycling network that includes recreational scope in addition to the existing focus dedicated on commuting.

Orchestra wellington

We have committed to increase the Cultural Grant pool by $112,000 per annum, and to grant this funding to Orchestra Wellington in 2013/14 and 2014/15, after which its three year contract with Council will be reviewed.

Lombard Lane

There is a development proposal for this site to develop ‘high street’ retail along Victoria Street and boutique retail along Lombard Lane. This proposal meets an important criteria set out in the Central City Framework which is about partnership between public and private sectors.

For these reasons, we have agreed to commit $150,000 to work with the developer of the site bordered by Manners, Victoria and Bond streets to enhance the public spaces of Lombard Lane and Denton Park. Funding would cover design, feasibility, costing and legal work.

Wellington Waterfront Limited

We oversee the development of the waterfront and implementation is managed by a Council-controlled organisation – Wellington Waterfront Ltd. Development of the waterfront is guided by the Wellington Waterfront Framework that was established in 2001.

During the 2012-22 Long-term Plan process, the Council consulted on and agreed a three year plan Waterfront Development Plan, to give greater visibility to Council’s future plans for the waterfront. There are three proposed variances to that plan, agreed to on the basis that Wellington Waterfront Limited is able to source new revenue to fund them and that they will not require any increase in the Council loan. These include:

The updated Waterfront Development Plan for the 2013/14 can be found on page 119.

Growing our economyTop

We are proposing a number of actions in response to the economic challenges Wellington faces.

Firstly, we are increasing the capability of Council’s ‘economic growth group’ to deliver on our Economic Development Strategy. While the Destination Wellington initiative is progressing, we have identified the need for additional resources to; progress other key aspects of the strategy (including Open for Business), strengthen our relationships with the business sector and progress partnerships.

In addition to this, we are actively seeking out and progressing key projects that will contribute to diversifying and growing Wellington’s economy. Some projects, such as a convention centre and the airport runway extension, have been investigated and discussed previously. Others are emerging from within Council and the community. We are proactively looking to advance appropriate projects by working in partnership with others including central government. To attract support, we believe that a project must be able to demonstrate an economic return on Council’s investment.

To enable such investment, we need to develop the mechanisms through which we can readily respond to opportunities as they arise. This includes making financial provisions to enable investment in the right projects and appropriate decision making processes for applying that investment.