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Submissions on the Christchurch City Council Draft Long Term Plan 2015-25

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Submissions on the Christchurch City Council Draft Long Term Plan 2015-25 Submissions on the Christchurch City Council Draft Long Term Plan 2015-25 Heard Submissions Volume 1 Monday 11 May 2015 CHRISTCHURCH CITY COUNCIL DRAFT ANNUAL PLAN 2015-25 SUBMITTERS WHO WISH TO BE HEARD MONDAY 11 MAY 2015 Submission Page Time Submitter No No Canterbury Employers' Chamber of Commerce 1:00 pm 12470 2 - Peter Townsend Central City Business Association 1:20 pm 13048 14 - Antony Gough and Lisa Goodman New Brighton Business and Landowners' Association 1:30 pm 13662 18 - Paul Zannen New Zealand Manufacturers and Exporters Association 1:40 pm 14383 39 - Peter Suckling Unions Canterbury 1:50 pm 12432 42 - Karena Brown Rail and Maritime Transport Union Lyttelton Port and Rail 2:00 pm 12364 50 Branches - John Kerr Rail and Maritime Transport Union - South Island 2:10 pm 12343 52 - John Kerr Alliance Party 2:20 pm 12667 53 - Kevin Campbell Christchurch & Canterbury Tourism 2:30 pm 13020 54 - Timothy Hunter Labour Party Christchurch Central South Branch 2:40 pm 13606 65 - Peter Tuffley J. Ballantyne & Co Ltd 2:50 pm 13360 67 - Philip Richards Lyttelton Harbour Business Association 3:00 pm 13639 69 - Lottie Harris Project Lyttelton Inc 3:10 pm 13770 73 - Wendy Everingham Akaroa Museum Advisory Committee 3:20 pm 12544 76 - Pam Richardson 3:30 pm BREAK 4 pm - 8 pm COMMUNITY BOARD SUBMISSIONS 13724 Akaroa/Wairewa Community Board 79 13792 Lyttelton/Mt Herbert Community Board 87 13811 Hagley/Ferrymead Community Board 94 13736 Riccarton/Wigram Community Board 105 14370 Shirley/Papanui Community Board 109 13806 Spreydon/Heathcote Community Board 115 14576 Burwood/Pegasus Community Board 118 13788 Fendalton/Waimairi Community Board 122 - 1 - - 2 - Canterbury Employers’ Chamber of Commerce Submission on “Smart Choices 2015-2025 Christchurch City Consultation Document” Prepared by Peter Townsend April 2015 1. INTRODUCTION The Canterbury Employers’ Chamber of Commerce (CECC) is pleased to submit in response to the “Smart Choices 2015-2025 Christchurch City Consultation Document relating to the Long Term Plan” (LTP). We consider this LTP to be the most critical in living history and one that will have more influence in determining the future direction of our city than any other plan to date. We understand that the LTP process and required inputs are described by the Local Government Act 2002 and subsequent amendments in 2014 which now require that the LTP include a financial strategy and infrastructure strategy. Clearly this plan is positioned very much in the context of city recovering and involves trade-offs and compromise to achieve optimal outcomes. It is a plan that is in the context of a city that is facing major financial shortfalls (currently projected at $1.2 billion) and some hard choices in this context. It is critical as a city we understand that: a. This is a time for calm heads and brave decisions. b. We need to work from first principles and have a strong vision for our city. c. There needs to be a significant emphasis on strategic thinking. d. We need to recognise that we are going to have to do things differently in the future than we have done in the past. e. There are serious considerations around long term benefits vs short term savings. f. We need to contextualise the central city as an ecosystem for generating growth of the wider Christchurch area. g. We have to carefully assess the level of capacity and capability the Council has to undertake its own on-going tasks. h. We need to measure how we are making progress in the context of this city’s recovery and growth. 2. SETTING THE SCENE The LTP consultation document clearly indicates the most important issue that the Council is looking for feedback on, relates to the proposals for finding more capital and specifically the consideration of either wholly or partially selling down some of the Councils assets. There is a fundamental premise under-pinning the consultation document that the Council must create a new programme approach to financing, infrastructure, planning prioritisation, operation and implementation of its service delivery based on robust, interconnected and affordable infrastructure and financial strategies. It must do this in the context of an acceptance that all costs are not yet known or CECC Submission on “Smart Choices 2015-2025 Christchurch City Consultation Document” Page 1 of 11 April 2015 - 3 - understood. But we applaud the Council for being forward looking, for looking past the rebuild and for embracing a new brave and refreshing approach. The Council is bound to stay within statutory limits (fiscal thresholds as required under current legislation) while undertaking earthquake recovery rebuild functions as well as its normal large asset maintenance programme and planning for future growth. The CECC takes some heart in the programme that is outlined in the plan and accepts the assurances that the physical systems and buildings that economic and social growth depend on, will be delivered. a. We note that the proposed base-case financial strategy involves releasing $750 million in capital by selling shares in some or all of the companies owned by CCHL. b. That rates are proposed to increase by 8.75%, 8.5%, 8.5% and 7.5% over the next four years. c. That the Council will be reviewing its programme of major works. d. That the Council will be relentlessly seeking further operating savings. e. The Council will manage its debt prudently. We also note that the infrastructure strategy relates to a new approach to infrastructure investment and is being risk managed through prioritising renewals and replacements of identified critical elements of the three water (fresh water, sewerage, stormwater) and road networks. The rest of the asset systems are being “sweated”, suggesting that replacement will not happen until the asset meets 120% of its useful life. This means capex will be deferred, but will likely result in increased opex through increased maintenance and temporary repair costs and may also impact negatively on levels of service (through more disruptions). The consultation document also describes transformation opportunities to build back a better city, including: a. Regenerating and developing the residential red zone. b. Creating a world class network of cycleways and the shift in the travel options available to people. c. Restoring the Avon and Heathcote Rivers. The challenges facing the Council over the next ten years are enormous, but if the right decisions are made and implemented we believe the Council will play a positive and critical role in assuring our city’s robust future. 3. RISKS Given the enormity of the undertaking facing the Council we believe it is appropriate to highlight our interpretation of the major risks to good outcomes: 3.1. The infrastructure (and resultant financial) strategies are aiming to meet a set of social, economic and environmental outcomes. However, in this phase of recovery, there are many moving parts to a complex rebuild, with multiple internal CCC programmes as well as multiple other programmes (such as the Crown’s rebuild programmes). This highlights risks to successful outcomes for the community. The good news is that these are acknowledged by the Council. The concern is that there appears very little fiscal headroom in the draft LTP to absorb financial shocks that the Council may face in the next few years. We believe the financial shocks will be a reality and do need to be accommodated. CECC Submission on “Smart Choices 2015-2025 Christchurch City Consultation Document” Page 2 of 11 April 2015 - 4 - 3.2. Specific Risks Regarding Capital Raising Not enough capital may be realised through the financial strategy. We are strongly supportive of the Council maximising income through the strategic sale of selected Council owned assets. We believe the short game is to resolve the Council’s financial shortfall. The long game is to position those assets through equity partners who will add significant strategic value and make Christchurch more internationally significant as a result. However, it is possible that not enough capital may be realised through the financial strategy. The specifics of the options being developed for the capital realisation programme, that is how much of each asset will be sold, are yet to be accepted by the community and the Council. We know that independent advice is being developed on the capital release options for CCHL prior to the release of any capital Council has resolved to “review and consider independent expert advice on the optimal capital realised release programme”. This options report is due out in 2015, we consider this to be a critical step in asset realisation and we will be working closely with the Council to ensure the community clearly understands the critical need to, not only sell assets, but to strategically position them. There is however, risk in the fact that the Council may not find the strategic partners it is looking for to get the best value from its asset sales programme. We are also concerned in the context of insufficient capital being realised, that the estimates of insurance proceeds coming back to the Council will not meet expectations. We have some reservations with respect to the estimates of the costs of implementing the flood protection programmes which we consider may be understated. 3.3. Further unquantified risks relate to the programmes of work involving the infrastructure strategy being larger than anticipated which may push the financial envelope past the statutory short term financial threshold. For example: a. Natural hazard risk mitigation may be more costly than anticipated. Natural hazards risk assessments are not complete. This means capital works investment is being described without all information available on best outcomes. In addition, land settlement has exposed new areas to flood risk and adversely affected the natural drainage of some areas of the city.
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