A comprehensive financial study has confirmed that not only is a separate Wairarapa unitary council financial y viable, it is also likely to be the best option for meeting the needs of local As wel as explaining why formation of an independent unitary authority wil have a manageable impact on rates, the authors of the study also strongly warn against losing local control over strategic decisions affecting the financial and economic future of the Wairarapa.
Commissioned by the Wairarapa Governance Review Working Party, the just-released financial study “Assessment of the viability of a Unitary Wairarapa Council” was compiled by consultants MartinJenkins (Martin, Jenkins & Associates Limited) and the corporate finance and economics advisory company Taylor Duignan Barry Ltd, who advised the Royal “There is a significant risk that under a Super-city option the voices of the 40,000-strong population of the Wairarapa wil be drowned out by those of the 450,000 people in the Western Area,” says their report. “This risk is al the greater given the values, preferences and lifestyles of the large metropolitan community of Wel ington are likely to differ from those of the minority and largely rural/provincial community in the Wairarapa.” The independent study includes a detailed analysis of the potential impact on rates of “losing” the $8 mil ion difference between the regional rates currently col ected from Wairarapa residents and the Greater Wel ington Regional Council’s spending in the district, which is the so-cal ed “Wairarapa subsidy”.
The removal of unnecessary costs, increased dividends from the Port Company, the impact of the impending sale of forestry cutting rights initiated by the Regional Council, and other changes expected to result from a separate unitary authority taking responsibility for regional council functions, are projected to reduce the cost of the “Wairarapa subsidy” from $8 mil ion “On top of this, the Wairarapa can reasonably anticipate efficiencies in the region of 3% of its operating expenditure as a result of merging its three councils” says the report. “When combined with the adjusted subsidy figure, we estimate that under a Unitary Wairarapa Council, the notional funding deficit sits at approximately $2-$2.5 mil ion over and above Given the current strong financial condition of the three Wairarapa district councils, the report says any deficit that may arise can easily be managed by either a phased increase in rates over several years, or no additional increase in rates but a reprioritising of existing plans, or by funding the deficit from debt to be repaid from the relatively healthy forecast surpluses sitting in their current long-term plans.
The three councils currently have around $10 mil ion in cash and investments and these are forecast to increase in value steadily over the 10-year horizon of the long-term plan. With current debt total ing around $70 mil ion, the net interest costs amount to only 5% of total operating expenditure – “a very manageable level”.
“In general, we assess the Councils as being in a reasonably good financial position with an ability to withstand financial shocks, which is an important feature of viability in our view,” While acknowledging that there are and wil continue to be social and economic links between the Wairarapa and the rest of the Wel ington region, the report says these relationships do not provide a rationale for co-governance of the areas, and are not whol y reliant on, or necessarily impacted by, local governance arrangements.
“In terms of the functions of local government, much of the Wairarapa is relatively self- contained. It has its own water catchments, shares no water network connections with the west, has quite different resource management needs and drivers, and the priorities of its residents differ in many ways from those in the cities to the west.” The MartinJenkins report also expresses the view that the “Wairarapa Local Board”, as proposed under a Super-city administration, would be unlikely to have sufficient influence on important policy matters, with control of only 5% of the budget.

Source: http://www.wairarapasfuture.govt.nz/Portals/12/Martin%20Jenkins%20Report%20-%20Wairarapa%20governance%20media%20release%2011%20April%202013.pdf

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