The Balance Sheet
The Council’s primary costs lie in providing and maintaining the infrastructure that supports our district. These include capital expenses (CAPEX) — one-off costs for assets like roads or underground pipes that deliver long-term benefits — and operational expenses (OPEX) for the administration and upkeep of these assets.
These costs are funded through a combination of revenue, debt, or asset sales. While it is standard and often prudent to fund CAPEX through debt — spreading costs over the asset’s lifetime — OPEX should be covered by annual revenue. Consistently relying on debt to cover operational shortfalls can create compounding financial stress over time and pass unnecessary interest burdens onto future ratepayers. Debt servicing currently costs TDC $11 million per year — that is equivalent to the cost of building one new swimming pool each year.
The Challenge
At present, it appears the Tasman District Council is facing such a financial challenge: its operational costs are outpacing its revenue. In addition to approving a nearly 9% annual rates increase to raise additional revenue, the Council recently (on 8 May 2025) voted to fund a remaining $6.4 million operational deficit through additional borrowing, to be repaid over five years, and through the one-off sale of ETS credits (asset sales), at a time when market conditions may not be favourable.
While this may help alleviate short-term pressure and avoid steeper rate increases this year, such measures do not resolve the underlying structural issue. Deferring the problem shifts the burden to future administrations and reduces our financial flexibility down the line. As someone who may be part of that future administration, I am deeply concerned about the long-term implications of this approach and what it signals about current fiscal priorities.
Too much focus, in my view, is being placed on optics and short-term fixes, and not enough on addressing root causes.
Reset Council spending
If we are serious about improving the district’s financial health and relieving pressure on ratepayers over the long term, we need a renewed focus on managing operational costs and making strategic capital investments that yield lasting value.
Reducing core services like library hours or public rubbish bins, in my view, are not the most effective way to reduce operational expenditure. Instead, opportunities should be examined in areas such as staffing levels, operational efficiency, and overall governance practices — matters which fall under the leadership of the Council’s Chief Executive Officer.
Even more critically, we need to take a strategic view of our infrastructure. The efficiency of our assets, and the cost to maintain and renew them over time relative to ratepayer revenue, must be scrutinised. In many cases, new developments are not financially self-sustaining, with long-term OPEX costs exceeding the rates revenue they generate. In previous columns (Tasman District Council needs to stop buy now pay later mentality and Rates rises and cost savings), I explained this in more detail and estimated $380 million in unnecessary infrastructure costs over the last 15 years alone due to low-density, inefficient development patterns.
Is this the right time for TDC to be building new community hubs in Wakefield and Tapawera, both funded by rates rises and yet more debt, and prime examples of Council investments that will never yield a positive return? Maybe instead we should invest in less glamorous, but more effective upgrades to our pipes and services to transition our towns and villages towards a more efficient settlement pattern — a measure that actually would yield a positive return to TDC’s balance sheet?
Transparency
I believe in a transparent, principles-based approach to governance. I disagree with Tim King when he calls for higher fees and charges “because otherwise the rates would go up”. Fees and charges should be “user pays” and not be utilised as an instrument for revenue gathering. Operational deficits should be clearly acknowledged and openly discussed. If they require difficult decisions — including potentially higher rates — then those choices must be explained clearly and justified to the public. Avoiding hard conversations through asset sales or debt only postpones the inevitable and reduces our capacity to act when future challenges arise. We need to leave some financial headroom to be able to respond to unforeseen hazards (e.g. like flooding).
We should expect that resolving these long-standing financial issues will take time and, at times, require difficult trade-offs. But facing these challenges honestly now offers us the best chance of building a more sustainable future for our district.