‘Nobby’s view’ of council budget backed by advice

Invercargill mayor Nobby Clark says economic commentary about cost pressures backs up his quest to cut $40 million of spending from the city council’s Long-term Plan.

The Invercargill City Council has enlisted Infometrics to provide some economic detail to help with its financial planning.

Infometrics economists Brad Olsen and Nick Brundson spoke to councillors on Tuesday, while Clark also had a brief conversation with Olsen when they were both in Nelson this week.

The message was clear that inflation would continue to add cost pressures to councils. The rate of inflation is expected to peak between 7% and 8% this year and remain elevated until 2024.

During the mayoral election campaign, Clark talked about wanting to cut $50m of spending from the Invercargill council’s Long-term Plan.

Clark has suggested stopping stage two of the streetscapes project and halting the council’s civic administration building upgrade as well as the museum storage facility at Tisbury.

‘‘I was intending to take $50m [of expenditure] out – that was my vision. But that will depend on what happens with the new museum and the storage facility that goes with it.’’

Clark said the latest information from economists firmed up his view that stopping both the next stage of the streetscapes project and the upgrade of the civic administration building – to save $40m – was needed.

Olsen had suggested local councils might struggle to deliver on their longterm plans given the cost pressures, Clark said.

‘‘It just reinforced what I already knew. But rather than it just being Nobby’s view of the world, it was Brad [Olsen’s]. They are pretty accurate with what they do.

‘‘We will still do the museum, but we need to take some heat out of the front end of the Long-term Plan.’’

Clark said if the council borrowed less than expected over the next two years it would help ease pressure on the council’s finances and on ratepayers.

His personal view was that $40m less in borrowing was a good target.

‘‘If you are not borrowing $40m then you don’t have to use your operational budgets, which are under pressure now, to service that debt.’’

The halted projects could still be completed at a later date, Clark said. But with the advice given he expected a delay of at least two years was needed.

Clark wanted to ensure ratepayers were not lumped with a large rate rise while also dealing with rising inflation in their day-to-day lives.

However, Clark reaffirmed that he had not wavered on his view that the museum build was a top priority for the next three years.

‘‘It would be easy to cut that out, but given we are relatively conservative in our debt loadings, and our net debt is low in comparison to most councils, I think we should still go ahead with the museum,’’ he said.