Part C: Financial information

2017/18 Financial overview

ANNUAL PLAN

Annual plans give effect to Long-term Plans (LTPs). They identify, in detail, the proposed activity to be undertaken and how expenditure will be funded for a given year. 2017/18 is the third year of our Long-term Plan 2015–25 (LTP).

FINANCIAL SUMMARY

Measure Annual Plan 2017/18 Long-term Plan 2015–25
Operating expenditure $480.3 million $473.5 million
Capital expenditure $182.5 million $206.3 million
Average rates increase after growth 3.3 percent 5.1 percent
Forecast year-end borrowings $528.2 million $570.2 million
Debt over operating income 114.7 percent 124.4 percent

The Council is in a sound financial position as indicated by our AA Standard and Poor’s credit rating. We will continue to manage the financial challenges associated with the costs of earthquake strengthening our assets and our weathertight homes liabilities.

Setting limits on our rates and borrowings requires prioritisation of spending decisions and the ongoing review of existing services. The parameters we set for our rates levels and rates increases as part of the Long-term Plan 2015–25 are:

RATES LIMITS

Rates limits 2017/18
Rates increase limit (after growth) first triennium average 4.5%
Rates increase limit (after growth) 10-year average 3.9%

The annual plan rates increase is 3.3 percent, which is 1.8 percent below the increase signalled during the Long-term Plan. This means the 3-year average rates increase is at 3.9 percent, which is below the limit set at 4.5 percent in the LTP and this is compliant with our 10-year limit.

The parameters we have set for borrowings as part of the Long-term Plan 2015-25 are:

Borrowings limits Operating Target Prudential Limits Annual Plan
2017/18
Long-term Plan 2015–25 limit:      
Net borrowing as a percentage of income <150.0% <175.0% 114.7%
Prudential limits:      
Net interest as a percentage of income <15.0% <15.0% 5.5%
Net interest as a percentage of annual rates income <20.0% <20.0% 8.6%
Liquidity (term borrowing and committed loan facilities to existing external net debt) >115.0% >115.0% >115.0%

For 2017/18 we are within all our borrowing and prudential limits.