Overview of our performance

Overview of our performance – the money

The Council has performed well financially over the past year. Our financial position remains healthy. The Council has maintained its AA credit rating with Standard & Poor’s, the highest for a public sector entity. Our debt position is very conservative and we work with other Councils to reduce costs wherever possible.

$494.5
million
cost of running the city for the year 2016/17

Our total expenses for the year were $494.5 million ($453 million 2015/16), which represents the cost of running the city during the year. Of the $494.5 million, $15.5 million relates to the November earthquake.

$7
billion
of assets

The Council provides a broad range of services to the city through a range of infrastructure networks and facilities (the Council’s assets). These have been built up over many generations and assets support services that provide both social and economic benefits for Wellington. Seven billion dollars worth of assets equates to around $33,000 net worth of value for every person in the city.

$10.6
million
underlying net surplus for 2016/17,
​2.1% of operating expenditure

The underlying surplus is the reported net surplus ($31.7 million) less any government funding for capital projects ($30.3 million), plus items either not required to be funded by ratepayers or the difference between actual items budgeted for this year ($7.1 million) and other adjustments ($2.1 million) that do not affect the rating requirements of the Council.

$6.52
 
cost of delivering all Council services per resident per day

Our services include managing and maintaining facilities like libraries, swimming pools, sportsfields, community centres and parks, as well as keeping our roads and footpaths at a high standard, making sure we all have safe water to drink, and supporting arts, cultural and sporting events.

$137.2
million
of capital spend for 2016/17

We spent $137.2 million on building new assets for the city. This was lower than our planned $204.9 million. This is as a result of the November earthquake disruptions and the re-phasing of some projects over a longer period of time.

$419
million
borrowing position for 2016/17

This is an increase of $22.4 million from last year. This equates to $2,015 per person in Wellington. We use borrowing to spread the cost of new facilities or infrastructure over the multiple generations that will benefit from that facility or infrastructure. We believe this is the fairest way to do things.

$1:1.20
 
debt servicing costs to investment returns

For every $1 the Council incurs on paying interest on debt, it receives $1.20 from its investments.

AA
 
credit rating

The Council is in good financial health and has an AA credit rating with Standard & Poor’s.

Sources of revenue $m

Rates are our main source of funding, with revenue from operating activities (including user fees) the next largest source. We also receive revenue from other external sources (mainly government) to fund capital expenditure, revenue from interest, and dividends.

Operation Expenditure (net) budget vs actual spend ($,000)

Operating expenditure (gross) by area $m

Our activities and their related expenditure are divided into seven strategic areas of focus, as shown in the graph. During the year we delivered a wide range of services, from resurfacing roads and managing the water network to providing parks, pools, sportfields and libraries, at a cost of $6.52 per day per resident.

Operation Expenditure (net) budget vs actual spend ($,000)

Capital expenditure by area $m

We have a comprehensive renewal programme for our assets and have completed $137.2 million of capital expenditure, which equates to 67 percent of our capital expenditure plan for the year. Delays in a number of projects occurred during the year due to changes in design, negotiations or consultation and consent requirements and will be proceeding in the next financial year.

For details on the capital expenditure underspend, please see the table on pages 20 and 21.

Operation Expenditure (net) budget vs actual spend ($,000)

Underlying surplus $m

The underlying surplus

The underlying surplus provides a comparison with the rates requirement we budgeted for in our Annual Plan to achieve a balanced budget. It shows how closely our annual income matches how much we spend in any given year. A balanced budget helps ensure that we are not passing the costs of running the city today onto future generations and imposing future costs on current generations. Our goal is therefore to have an underlying surplus or deficit close to zero.

This year we had an underlying surplus of $10.6 million, mainly due to lower debt servicing costs as a result of deferred capital expenditure, and higher than budgeted revenue from dividends and from our landfill.

To get from net surplus to underlying surplus, the following is excluded:

  • Revenue received for capital items – for example, the funding we receive from NZTA for roading
  • Non-funded transactions – either where, through the Annual Plan, it is deemed appropriate that future ratepayers share the costs incurred in a particular year, or where another organisation is liable for the funding
  • Other minor adjustments

These items are excluded because they generally don’t affect rates and were excluded from our Annual Plan balanced budget calculation.



The table below summarises the capital and non-funded adjustments made to the net surplus to arrive at the underlying surplus.

Net underlying surplus Actual
$M
Budget
$M
Variance
$M
Reported net surplus 31.7 12.8 18.9
Exclude items or budgeted differences not required to be funded 7.1 11.2 (4.1)
Exclude government funding for capital projects (30.3) (35.0) 4.7
Other adjustments 2.1 11.0 (8.9)
Underlying surplus 10.6 0.0 10.6

Capital underspendTop

Many of our significant capital projects involve collaborative partnerships with community, suppliers and other stakeholders. We also want to ensure projects are fit for purpose as circumstances or requirements change. The timing of these projects therefore needs to be flexible. In addition, the November 2016 earthquake led to an increased focus on the city's resilience and contributed to the delay or rephasing of some projects, which resulted in a capital underspend at the end of the 2016/17 year.

Project $m   Comments
Movie Museum and Convention Centre 13.3   Project delayed – we are working with The Movie Museum Limited (TMML) to formalise terms. Once this is complete detailed designs and construction will commence. This is expected in 2018.
Branch library upgrades 6.3   Delays to the start of the upgrade of the Johnsonville Library due to a change in the project brief and design. The project will now be completed by mid-2019.
Housing upgrades 5.4   Arlington Site 1 has been delayed, with procurement still in progress. The start of the Arlington Site 2 project was delayed, with completion now expected by mid-2018.
Office resilience and efficiencies 4.7   The Workplace project was put on hold following the November 2016 earthquake. The project will be reassessed once the future of the Council office buildings is determined.
Waterfront developments 3.7   Work on Frank Kitts Park and North Kumutoto public space projects was delayed due to a prolonged consents and approval process. The Frank Kitts Park project is unlikely to start before April 2018, while the North Kumutoto project has started and is due to be completed by July 2018.
Cycling improvements 3.6   The revised cycling programme was approved in August 2016. This resulted in significant rephasing of the cycling budgets in 2016/17 and beyond. The revised programme will be delivered in upcoming years.
Central City Framework 3.2   Largely due to the delay in the start of the Lombard Lane upgrade project caused by additional project scope. This project is now due to be completed by February 2018.
Suburban centres upgrades 1.1   The delivery of the Tawa Town Centre upgrade was delayed due to additional consultation required to ensure that the project met the needs of the community. The upgrade is now due to be completed by February 2018.
Safer roads projects 1.1   The focus in 2016/17 was on planning and engagement for the long-term work programme for safer speed limits in residential areas. The actual work programme will be completed in upcoming years.
Venues renewals 1.6   Work at the St James, Opera House and Town Hall was deferred to align with the earthquake strengthening projects for the St James and Town Hall.
Civic property renewals 2.6   Planned work for the Civic Administration Building (CAB), Municipal Office Building (MOB), and Central Library was delayed due to the uncertain future of these buildings. The work programme will be reviewed when the future of these buildings is clearer.
Housing renewals 2.3   The 2016/17 work programme was reviewed, with some scheduled work delayed until 2017/18 or deferred indefinitely.
Aquatic facility renewals 1.2   Under budget mainly due to changes in the Freyberg Pool renewals programme, where some components (roof renewal, carpeting and lighting) were able to be delayed until the next pool closure in 2017/18 or later when earthquake strengthening is planned.
Basin Reserve 1.8   Delayed start to the contract including work on the RA Vance Stand. This work will be completed in the first half of 2017/18.
Building resilience 1.2   Under budget due to delays in the earthquake strengthening programme, in particular the Town Hall and St James Theatre projects.
Other
 
14.6   Smaller miscellaneous delays in a number of projects.
2016/17 Underspend 67.7