By Priyani de Silva-Currie

A few days ago I wrote about Councils and the need to understand what was essential, as they put down the foundations for their Long Term Plans. This leads to the discussion around how Councils balance the need to focus on what’s essential, while playing a part in rebuilding the economy.

Role in stimulating the economy

Just as some Councils are quickly moving to reduce spending, the Government is spending more to stimulate the economy – and Councils have a role to play in this. Councils, right now, are the delivery agent to help our communities and businesses thrive again.

Councils have already been called upon to provide lists of feasible projects that the Government can use to fund and deliver recessionary interventions. From here, Councils will then need to make further decisions and plan for how to deliver these. They need to consider the programming and procuring of the large projects they will invest in, while assessing and prioritising what’s important. Continuing to fund and programme business as usual activities is also vital - the past has taught us this valuable lesson.

Just as Councils were asked to quickly provide infrastructure wish-lists in a short period of time, they could well be asked for lists of other activities that will help to stimulate the local economy.  History has shown that stimulus packages can be fast to market and acted upon without extensive preplanning.

Regardless of where the funding comes from, Councils will need to review their current LTP and asset management programmes to ensure an ‘economic stimulus’ lens has been applied across activities, have their priorities set and then be ready to respond.

Where Councils are asked to insert or fast track projects into their LTP’s, I would warn to exercise caution! In my next post I will advise on developing three scenario options, but today I am going to advise Council’s to allow for the lifecycle costs of these new projects within their 30 year projections.

Lifecycle cost is by far the most ‘expensive’ part of asset management and usually follows the 80:20 rule of 20% capital and 80% lifecycle cost. It’s logical someone has to pay, therefore will rates increase to cover this cost, or those who benefit from the project or programme pay? The Government fiscal injection could fund the initial capital spend, but not the long term cost, so that coupled with the Council’s spending limits and debt ratios may put many Council’s in untenable situations.

To discuss this topic, or for other Long Term Planning support, contact Priyani de Silva-Currie.

priyani@justaddlime.co.nz | 021 347 107