Annual Plan 2026 - 2027 Pre-Engagement

For most of the past decade Council has been running at a loss. That means we’ve not been bringing in enough revenue to cover expenditure, despite budgeting for surpluses. This has emptied our reserves and depreciation funds.

With waters assets, and waters debt, moving to Southern Waters from 1 July 2027 – Council had envisaged returning to surpluses in future, as water capital expenditure makes up 65% of the 2026/27 capital spending.

However, with a projected $14 million loss ($5 million operating, $9 million in water depreciation) for 2026/27 to cover operating expenditure and depreciation funding for waters, this requires a financial adjustment.

Some projects have been deferred to keep rates low in prior and current Annual Plan or Long-Term Plans. That means the work still needs to get done but can be put off until a later date.

For instance, in 2025/26 – the Mayor and Councillors deferred replacing the Oamaru Airport runway for two years, so that the $2.8+ million cost would not be on the rates for that year. The runway can be preserved a little longer and paid for later – however it meant that the Airport could no longer be used for drag racing.

Deferred work is work that still needs to get done.

The Mayor and Councillors have gone line-by-line and remove projects from the Annual or Long-Term Plan. Some of these may have a business case and a budget, so we know exactly what we’re saving – last year $7 million dollars of projects were removed from the budget.

Sometimes this can be Council focusing on their core services or ending funding for projects that Council has committed to in the past but don’t necessarily meet what Council needs to be doing with ratepayers’ money today. Or they just didn't seem to be a "need" at the time.

These projects can always come back later, but they don’t need to get done.

Sweating the assets means getting the most efficiency and value from current assets without investing new capital.

This has been done for decades. A lot of our infrastructure, especially some of our water and wastewater pipes, is at or over 100 years old. It was bought and paid for a long time ago, and the low-cost-to-the-ratepayer-approach to them was to fund for repair only, rather than replacing. That way, services are maintained and the assets aren’t replaced until they absolutely must be.

This approach is no longer possible; there’s no sweat left in the asset.

Depreciation funding means raising a small amount of money each year for the eventual replacement of assets like pipes, buildings, park benches etc.

In 2025 Council approved un-funding water asset depreciation for the 2025/26 and 2026/27 financial years to keep rates low. That removed $18 million from revenue required by Council in these two years.

This isn’t a new approach for any Council and reducing funding or unfunding depreciation in previous years has kept rates low without significantly impacting services. However, in the longer term that reduces the funding available for maintaining or replacing assets.

There is a lot of capital expenditure to be done, and not a lot of depreciation funding to do it.

In 2020, Waitaki District Council joined the Local Government Funding Agency (LGFA). This was initially joined to borrow $15 million to build the Hamnak Pipeline, connecting townships South to Moeraki to the Oamaru Water Supply.

The LGFA is a Government-backed funding agency designed to allow Councils to invest in infrastructure and projects long term, so ratepayers today and tomorrow can pay for the assets they’re using.

Over the last six years, Council has invested $50 million in water infrastructure, and $40 million in other major projects, thanks to using the LGFA for long-term financing and access to additional funds.

It stops rates from jumping wildly year-to-year based on capital expenditure. It also means today’s ratepayers won’t be paying for the whole of the asset – spreading the cost over all users over its entire life.

However, Council has a debt cap of 175% of its revenue. Council’s revenue is made up of its rates, fees and charges, as well as Central Government funds and grants, and donations.

We know the cost of food and rent, and everything else, has risen sharply over the last few years. But the services and infrastructure Council delivers; resurfacing roads, upgrading and maintaining pipes, looking after property, parks and reserves have been subjected to even bigger price rises.

Right now, fuel is the big cost-increase driver. To deliver our infrastructure projects requires getting materials, plant and people to site, getting the work done, and then moving on to the next job. In March diesel prices jumped 43% in New Zealand, and the knock-on effects will be felt in the contracts for our roads, pipes and parks projects.

In the 2025/26 financial year there are around $11 million in waters projects that will be carried over into 2026/27, and about $2 million in roading projects.

These are the core services projects from last year’s 2025-34 Long-Term Plan that may have started but were not completed in the current financial year (2025-26). 

The Government’s Local Water Done Well reforms require Council to deliver a Water Services Delivery Plan (WSDP). While our initial plan proposal was rejected, the programme of work itself was increased following encouragement by the Department of Internal Affairs and Council is required to undertake its water infrastructure upgrades ahead of the formation of Southern Waters from 1 July 2027.

For the 2026/27 year, the water capital expenditure is $37 million. This must be delivered, as it will be a part of the new WSDP we will submit to the DIA by 30 June 2026.

The projects planned in the Long Term Plan 2025 – 2034 are the result of Council going line-by-line on the nine-year budget and focusing on the core functions of Council.

We’re also required to resurface a specific % of roads each year by the Government, maintain our levels of service, and comply with the water services regulatory requirements.

The $14 million deficit is made up of $9 million per year in unfunded water depreciation and $5 million where revenue does not meet the operating costs of running Council.

Council has a 175% debt to revenue cap. With cost increases across the board, carry-over projects, and the requirements of the water reforms, we are nearing the debt cap limit which is based on our revenue, including rates.

The transfer of water assets, and waters debt ($50 million at present) to Southern Waters on 1 July 2027 will reduce Council’s overall debt – but the transfer of water charges to Southern Waters will also reduce Council’s revenue, and debt cap, at the same time.

Waitaki District Council will be consulting on its Annual Plan in late April and early May 2026. The Annual Plan covers the 2026 - 2027 financial year, and includes all of Council's operating and capital spending, and sets the rates at a level to pay for this.

We'll be providing more information between now and then, and giving you the opportunity to ask questions - in person, and online - when the consultation begins. Until then, head to the Consultation site here.

Next year Waitaki District Council will be creating its 10-year plan. 

This will be very different from those in the past. It'll be the first one where water infrastructure, assets, services and charges are no longer part of Council's budgeting.

This will mean Council's overall debt will decrease, but with water charges being managed by Southern Waters, its revenue will also decrease.

Council will be engaging with the community later this year about what Waitaki looks like 2027-2037 and beyond.

From 1 July 2027 your water will be managed by Southern Waters, a Joint CCO owned by Waitaki, Central Otago, Clutha and Gore District Councils.

This means you'll be charged separately for your water, it won't be a part of your Council rates bill.

Council's existing water debt, water assets and infrastructure it paid for will transfer to Southern Water, and your water bill will support paying off the debt on the water infrastructure for the Waitaki District. It will be like paying for electricity, or any other utility.

This is a big change, and is a part of the Government's Local Water Done Well reforms.