Council’s buy now pay later mentality must stop
Tasman is a growing district. The way we provide for this growth has a significant impact on liveability, climate resilience and the economic sustainability of our district.
New residents become new ratepayers, which is great for sharing costs. However, new residents also require new infrastructure and services.
Put simply, the more residents share the same pipes, the lower our council’s ongoing operational expenditure (Opex) and the healthier its finances. The more spread out new residents are, the more pipes are needed to service their new homes and neighbourhoods.
Urban sprawl is great for a quick financial sugar hit. The initial infrastructure is mostly paid for by developers (or by extension by the new home buyers), while new ratepayers contribute to councils’ revenue immediately.
However, sprawl is detrimental to the long-term balance sheets since the ongoing maintenance and renewal of the extensive, sprawling infrastructure falls back on the community some decades later.
The rates from residents in these new, low-density neighbourhoods rarely meet the costs of maintaining their infrastructure. This means negative cash-flow, debt and unhealthy council books.
The United States city of Houston is as good an example as any of a sprawling new-world city. On March 26, Houston's mayor Mike McGinn declared: “City is broke – we have a US$160 million deficit”. At the same time, the Texas state government is investing US$9.7 billion to “improve” Houston’s highway system and thereby further cementing the city’s unsustainable settlement patterns.
Keep that in mind when considering what to make of the NZ Transport Agency’s's $500 million Hope Flyover.
While Tasman is not Houston, the principles at play are the same here.
Tasman's towns, like Houston, have almost exclusively grown through low-density urban sprawl.
This starts to impact the Tasman District Council’s finances and requires ever higher rates and debt to balance
the books. With proposed annual rates increases of nearly 10% and still increasing debt in the draft 10-Year Plan (LTP) currently out for consultation, the council’s hunger for revenue is becoming painful and unsustainable for many of our residents.
Continuing with the same growth strategy and the same settlement patterns is not going to bring any relief in the future - it is only going to exacerbate the problem.
With up to $394m budgeted to “maintain and improve the level of service” and $341m for “renewing assets”, the Opex position already makes up nearly three-quarters of the council’s total balance sheet, leaving ever less money available for capital expenditure needed to change our current trajectory.
It is more important now than ever to be clever about our investments and to make sure that they result in healthier finances, also known as lower rates and lower debt per capita in the future.
To achieve that, we need to stop having petty discussions about whether we like cycling or driving better or whether Kiwis can possibly live in anything other than standalone houses.
The council needs to stop the buy now pay later mentality and instead make joined-up, strategic investment decisions based on simple economics.
Now is the time for our council to beef up investments that push more efficient, well-designed “brownfield” intensification of our centres, not sprawling greenfield expansions that we’ll come to regret later.
As a bonus this strategy is also highly effective in reducing our collective greenhouse gas emissions while delivering much more attractive urban living conditions and protecting our productive land. This may cost more initially, but we will reap the benefits in the years to come. We cannot kick the can down the road any longer.
It would be helpful ifthe council’s draft LTP spelled out some important correlations: e.g that active transport investments reduce road usage and thereby reduce maintenance costs or that public transport along with civic investments are prerequisite for intensification, which again reduces long-term Opex.
It is time we applied a wider lens to these considerations.
With an average rates increase of only $11, no ongoing operational costs and a benefit-to-cost ratio of 10 to 25 the enhanced investment in walking and cycling infrastructure is a no-brainer.
Increasing the frequency of public transport services would still be comparatively cheap, adding just $98 to the average rates and operational costs of $26.2 million over 10 years.
Extensive investment in road infrastructure on the other hand is expensive (up to $216 increase in average rates plus additional debt funding) and has a benefit-to-cost ratio of often less than 1 – making driving more convenient, leading to more traffic, more sprawl and higher Opex for the foreseeable future.
Active and public transport, as well as some civic investments are somewhat budgeted for through the draft LTP. However the council should also put money aside for proactive planning and urban design, significant infrastructure upgrades in urban centres, setting up congestion-charging, park and ride, strategic property purchases, subsidies for desirable developments and potentially council-led pilot projects to kickstart private investment in urban intensification.
I agree with Tasman mayor Tim King that "navigating the next decade requires a balance between delivering important services and maintaining affordability." However, let's be strategic about which infrastructure investments really are essential to safeguard vital community services and a sustainable future for Tasman.
Consultation on Tasman’s 10-year Plan 2024 to 2034 is open until April 28.