Mayor Grant Smith's optimism faces a big challenge in year ahead
In 1991, the TVNZ programme Frontline visited Palmerston North on the eve of Ruth Richardson’s mother of all Budgets.
Although the city had escaped the worst of the recession, due partly to Massey University and the Department of Scientific and Industrial Research, Frontline journalists found a sense of economic pessimism among locals.
Then-Mayor Paul Rieger talked of retailers, small businesses and manufacturers he expected to fail over the next few months.
On Monday, current Mayor Grant
Smith will deliver his annual State of the City.
Like Rieger, he usually speaks of the positive impact of employers such as Massey University, IPU and research and development organisations that still support our economy. But unlike Rieger, Smith is forcefully optimistic about Palmerston North’s future and opportunities, while acknowledging the issues.
Economists are predicting a tough economic environment and an increase in unemployment nationally, but that does not always impact Palmerston North as severely — as was the case in 1991. Manawatu¯ ’s diverse economy, backed by agriculture and central government employers, performed better than most regions during Covid-19.
The Central Economic Development Agency (Ceda) was set up by the Palmerston North and Manawatu¯ councils to develop and monitor the region’s economy. Its last quarterly report in September 2023 said the Manawatu¯ region’s GDP had grown by 18.2 per cent in the past five years, compared with a national figure of 12.9 per cent. Employment was also up 1.8 per cent compared to September 2022, with 1029 new jobs created.
Palmerston North City Council is hammering out its Long-term Plan. Elected members are working to find a difficult balance between creating and preparing for future developments while managing increasing costs in business-as-usual areas such as roading and water care. In November 2023, the council was looking at a 14.3 per cent increase in rates for 2024-25 simply to maintain basic operations.
The elephant in the room will remain central government water care reform. Here, the council has been planning, and must continue to plan, for all eventualities. About $647 million in capital expenditure might be needed for the wastewater treatment plant and upgrade alone, and $7m in annual costs, if reform does not play out as expected. The council has wisely kept public discussion open over the past few years around the uncertainty and potential outcomes.
The council has been tough in examining cost reductions such as the Streets for People roading and footpath upgrades around Te Marae o Hine/The Square and Cuba St at an estimated $27.7m collectively. Smith has kept a close hold on the priorities. Long-term Plan items are: rolled over from the previous plan agreed three years earlier areas of need identified by staff and items referred to the plan by the council over the past few years.
For items to be removed, a majority of councillors must vote for removal or allocate $0 to the project.
On December 18, a proposal to remove an upgrade to the Conference and Function Centre from the draft Long-term Plan received seven votes for and seven against. This tie meant the proposed upgrade remained in the draft plan. Several items that day failed in a tie, such as a 15 per cent reduction in the international relations budget. This leaves these costs in the draft plan, without a mandate or majority of councillor support.
So, as Smith sets the direction for the city, he will have to bring together residents and uncertain costs around major infrastructure and keep the support of councillors who did not vote for parts of the draft plan. And like looking back on Mayor Rieger, only time will tell if Mayor Smith finds the right balance for the future of Palmerston North.
stefan speller is a Palmerston North governance board chairman, speaker and local government commentator.